CL Financial shareholders told to pay what they owe before threatening to sue

FIRSTLY, pay us what you owe.

That, in essence, was the main response of Chief State Solicitor Sean Julien to majority shareholders of CL Financial Limited (CLF) who initiated legal action against the State to stop the sale of Colonial Life Insurance Company (Clico) and British American Insurance Trinidad Limited (BAT).

In his three-page letter dated February 18, Julien said his response was on behalf of both the Ministry of Finance and the Office of the Attorney General.

Julien in his letter said CL Financial is still owing the Government in excess of $30 billion and CL Financial has been under a court appointed liquidator.

“Until CLF’s debts have been repaid in full (which is unlikely to happen any time soon) the joint liquidators (not CLF shareholders) have custody, control and beneficial ownership of the assets of CLF, save for Clico which is under the control of the Central Bank,” Julien stated.

In an apparent response to a Sunday Newsday’s article about the intended lawsuit, Finance Minister Colm Imbert tweeted: “Clico and CL Financial still owe the Government billions of dollars of taxpayers’ funds for the 2009 bailout and CL Financial is under the control of a court-appointed liquidator. Why do these former owners of these companies feel they could bully the Government into sacrificing the public interest.”

In November 2019, Imbert told the Parliament that CL Financial was owing the state $8.109 billion. The shareholders have been adamant that they are willing and able to repay their debt and regain control of the company.

On January 31, the 15 majority shareholders, comprising individuals and companies, wrote to Imbert, Central Bank Governor Dr Alvin Hilaire and Attorney General Faris Al-Rawi requesting that the sale of the insurance portfolio be stopped and for an independent valuation to be done.

The Central Bank took emergency control of Clico/BAT when the parent conglomerate, CL Financial, approached the State in 2009 for a bailout. Taxpayers funded an over $20 billion payout to prevent the company from collapsing and refunded depositors.

The shareholders’ attorney Nalini Jagnarine stated that the Central Bank failed to relinquish control of the entities after it became evident that they were profitable, contrary to Section 44 of the Central Bank Act. The act gave the Central Bank the authority to seize control of the entities. This was done in 2009 and continues today.

In his letter, Julien said whenever the Central Bank is of the view that it no longer needed to be in control of Clico, it will be returned to the shareholders of Clico, whom he said are the liquidators and the Government.

“The shareholders that you represent (and
a fortiori shareholders, which holds no shares in CLF) have no right title or other interest in the assets of CLF including its shareholding in Clico and have no or no sufficient interest to complain of any matter or decision relating to any of those assets.”

Julien said the January letter sent to his clients was misleading as the history of the takeover was not properly relayed. He added that if there are any attempts to regain power of the company, the Government will treat that as an act of hostility. He added that the insistence of the shareholders to add two additional names to the board of directors was in breach of the long-standing agreement between the Government and the shareholders.

“It is ludicrous to suggest that the proposed sale of Clico’s traditional portfolio can amount to a breach of the Government’s obligations,” Julien said, adding that one of his clients, the Finance Ministry, has not ordered the Central Bank in its dealings with Clico, either regarding the daily operations or the proposed sale.

“In the premises, all the claims, requests and relief sought by your letter are misconceived. We note that this is not the first time that your clients have sought use of the courts (or abuse the process of the court) to make frivolous applications resulting in orders for costs being made against them.”

Also responding to the shareholders were attorneys representing Clico who asked for one month to properly respond as their lead attorney, Senior Counsel Douglas Mendes, will be indisposed until March 30. Their letter, signed by Gabrielle Gellineau and dated January 17 came after the shareholders wrote to Clico’s board requesting that they intervene in stopping the sale of Clico to Sagicor be regaining control from the Central Bank.