(Trinidad Guardian) Unless the Kamla Persad-Bissessar-led administration is able to convince Lawrence Duprey otherwise, the shareholders’ agreement between the Government and CL Financial comes to an end in 110 days time. The agreement was signed by Conrad Enill, representing the Government, and by Duprey as a director of CL Financial and a number of the company’s shareholders including Leroy Parris, Mervyn Assam and Anthony Fifi. The agreement came into force on June 12, 2009. Clause 9.2 outlines the length of period of the agreement: “This agreement shall continue in full force and effect until the third anniversary of its signing, unless the objectives are achieved at a time prior to that date whereupon it shall terminate forthwith, or unless repayment at clause 9.1 hereof shall have occurred.”
Clause 9.1 states: “CL Financial will repay to the Government all such sums as the Government shall have expended and invested in furtherance of the Memorandum of Understanding and this agreement as punctually as the Government shall reasonably determine having given due consideration to an representation by CL Financial as to timing such repayment including such sums as have been advanced by the Central Bank for meeting liabilities of certain Clico Investment Bank depositors subsequent to intervention by the Central Bank.”
These clauses, in the understanding of an ordinary man, mean that the shareholders’ agreement expires on June 12, 2012 unless two things happen:
• The objectives of the agreement are achieved before that date;
• CL Financial is able to repay the Government all the money that the State “expended and invested” in facilitating the execution of the MOU and the agreement before June 12.
On the issue of the objectives of the agreement being achieved, according to recital I, the purpose of the agreement was to allow a new, Government-controlled board “to take over the management and control of the assets of CL Financial in order to execute the actions” outlined in the January 30, 2009 MOU and thus:
“1) Correct the financial condition of Clico, Clico Investment Bank and British American and mitigate the systemic risk that failure of these companies will pose and also to satisfy certain obligations of Clico Investment Bank;
2) Protect the interest of policyholders of Clico, and British American and the third party depositors of Clico Investment Bank;
3) Ensure that debts of the CL Financial group are managed and as appropriate satisfied;
4) And cause CL Financial to repay once obligations have been met such sums expended by the Government in furtherance of matters set out at one to three, above after which the Government will exit participation in CL Financial under this agreement and the Government directors will resign and participate in their replacement as directors.”
What an ordinary man would understand from the shareholders’ agreement is that unless all of the objectives outlined above have been met, the agreement comes to an end on June 12.
The questions then become:
• Has the Government-controlled board of CL Financial been able to correct the financial condition of Clico, Clico Investment Bank and British American?
• Has the Government-controlled board of CL Financial been able to mitigate the systemic risk that failure of these three financial institutions will pose?
• Has the Government-controlled board of CL Financial protected the interest of policyholders of Clico, and British American and the third party depositors of Clico Investment Bank?
• Has the board ensured that the debts of the group are well managed and that creditors arm as appropriate, satisfied?
• Is CL Financial able to repay the sums of money that have been expended by the Government in attempting to correct the financial condition of Clico, Clico Investment Bank and British American, protect the investors in the three companies and pay its debts?
Now, it was argued that one of the two reasons that would cause the agreement to end before June 12 was if CL Financial was able to repay the Government all the money that the State “expended and invested” in facilitating the execution of the MOU and the agreement before June 12. The sum of money that the Government has expended in saving CL Financial includes:
• The sum of TT$5.1 billion in bonds and advances that was advanced to Clico in exchange for a 49 per cent stake in the company;
• The sum of TT$2.3 billion that was advanced to bail out Clico Investment Bank;
• The sum of TT$1.5 billion that was floated as a bond by the Central Bank in order to pay Clico and British American holders of the annuity products TT$75,000;
• The sum of about TT$5 billion in what is in effect ten-year, zero-coupon bonds (which can be redeemed at 80 cents on the dollar and above) that is in the process of being issued to those policyholders;
• The sum of about TT$5 billion that will come from transferring TT51.7 million Republic Bank shares to an investment trust company; the units of which will be distributed to policyholders. By my count, the amount of money that the Government has expended thus far is TT$8.9 billion. The Government will spend another TT$5 billion when the zero-coupon bonds mature and the balance of the TT$5 billion is being converted from the shares held by Clico in Republic Bank. In other words, a total of TT$14 billion. If Mr Duprey is able to pay the Government TT$14 billion before June 12, the shareholders’ agreement ends immediately.
But what if the Mr Duprey is unable or unwilling to repay the TT$14 billion before June 12? Is the ordinary man to understand that CL Financial—which include 32.3 per cent of Republic Bank, 75 per cent of Angostura, about 90 per cent of Lascelles de Mercado, 51 per cent of Clico, which owns 56 per cent of Methanol Holdings (Trinidad) Ltd—will be returned to Mr Duprey on June 13 if he does not pay the Government TT$14 billion? I have carried out a diligent search of the document yet the clauses in which the obligation is placed on Mr Duprey, as the representative of the majority shareholder of CL Financial, to repay the sums expended by the Government after the end of the agreement seemed to have eluded me? Is it that the TT$14 billion obligation is understood to fall on Mr Duprey although this is not specifically stated in the agreement?
What are the Government’s options in attempting to seek recovery of the sums of money that the State has expended after the expiration of the agreement in less than four months? Is the shareholders’ agreement purposefully silent on its extension or renewal? Will the Government-appointed directors of CL Financial (including Gerry Yetming) be forced to resign on June 12 and participate in the election of Lawrence Duprey and others to the CL Financial board? Will Mr Duprey have the last laugh? Or will the civil case that was brought against him and others by the Central Bank prevent him from laughing at all?
