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Tuesday 16 July 2019
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CLF shareholder threatens Central Bank with legal action

Central Bank of TT.

Photo by Jeff K Mayers
Central Bank of TT. Photo by Jeff K Mayers

ATTORNEYS for a CL Financial (CLF) shareholder have written to Central Bank Governor Dr Alvin Hilliaire asking for a “clear and finite” timetable for the bank’s relinquishing of the group’s insurance arm, CLICO.

In a pre-action protocol letter sent to Hillaire on Wednesday, on behalf of Natural Energy Vehicle Infrastructure Corporation of TT (NEVICOTT), attorney Peter Taylor said his client was concerned that the bank has not fulfilled its statutory obligations by relinquishing control of CLICO although the insurance conglomerate’s positive net worth was now in excess of $600 million and had been repaying its debts.

Taylor also reminded Hillaire of a statement he made in June, last year, in which the governor said the bank would relinquish control of CLICO “as soon as possible.”

“However almost one year hence, the bank is no closer to relinquishing its control of CLICO that it was when you uttered your comments almost one year ago and no recent indication has been given as to when, if at all, the bank expects to relinquish control of CLICO,” Taylor said, adding that NEVICOTT’s concern included “whispers” in the public domain of a proposed sale of the CLICO portfolio to SAGICOR.

Taylor said a court may “well find that the words ‘as soon as possible’ uttered one year ago are too vague and uncertain” to give comfort to CLF shareholders that the bank will fulfill its statutory obligations and release the now solvent CLICO, warning that the continued failure to handover the company to its shareholder was a clear breach of the bank’s statutory duty.

NEVICOTT has given the Central Bank governor 14 days to provide a clear timetable as to when it will relinquish control of CLICO.

NEVICOTT has also, in a separate court action, filed an application before High Court judge Kevin Ramcharan seeking to put a stay on the further sale of CL Financial assets until the joint liquidators present audited financial statements.

The shareholder has specifically asked for a stay of an August 2018 order authorising the disposition of Methanol Holdings Limited shares and an injunction to restrain the joint liquidators from soliciting purchasing the assets of CLF or the sale of any of the assets.

In its reply to NEVICOTT’s application, the joint liquidators have argued that there was no basis to grant the stay to stop the sale of Methanol Holdings and Holiday Inn as there was already a sale agreement in place for Holiday Inn which is due to be finalised in July and any stay may expose the company to a claim for damages if the transaction was not finalised.

In 2018, NEVICOTT wrote to the Minister of Finance, enclosing a letter of intent from a Middle Eastern investment bank that promised to raise US$2 billion on NEVICOTT's behalf in order to pay off the debt owed to the Government by CLF, as a result of the 2009 bailout of the conglomerate.

NEVICOTT became a CLF shareholder when it purchased 5,878 ordinary shares from attorney David Hannays, and had to apply to the High Court to have the CL Financial shares transferred to it, as the liquidation process is under judicial control.

In 2017, the Government filed a court action to have CL Financial placed in liquidation, following a threat by the group's shareholders to hold a special meeting to take control of the company.

In the hearing of the application before Ramcharan, the joint liquidators have also argued that NEVICOTT has not provided proof of funds, adding that the letter to the minister spoke of the investment bank saying it could help raise the US$2 billion, but did not say it actually had the money.

They also argued that the debt owed by CLF was US$4.7 billion and the Government was only a 40 per cent creditor of the entire sum due and owing.

Ramcharan will give his decision on NEVICOTT’s injunction application on July 9.

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