The saga of CL Financial

CARLTON REIS

THE saga of CL Financial (CLF) is one of high-flying ambition brought low. Once among the Caribbean’s largest privately held conglomerates — before its 2009 liquidity crisis in Trinidad and Tobago — the company’s collapse has cast a long shadow over company governance, state intervention and shareholder rights.

After more than a decade under the oversight of court-appointed liquidators, the time has come for a return of control — for the liquidator to resign, and for CLF’s shareholders to exercise their rightful prerogative of selecting a board of directors.

Why the liquidator should resign

First, the duration of the liquidation process has become unduly extended. The original bailout and takeover decisions stretch back to January 2009. Over more than a decade the liquidators have retained effective control of CLF’s operations and asset dispositions. Yet from a shareholder-rights perspective, it is difficult to justify the permanent displacement of governance rights in favour of a single appointed body without fresh democratic renewal.

Second, various reports and court actions suggest significant transparency, accountability and conflict issues in the way the liquidation has been handled. For example, one court case found that the liquidators’ remuneration and expenses needed closer scrutiny, and that they had a duty to account fully to stakeholders. At the same time, there have been complaints by residual shareholders of undervalued asset sales and lack of clarity in the liquidation process.

Such a situation undermines confidence that the liquidators are acting unambiguously in the interests of all stakeholders. A change in governance is overdue.

Third, shareholder groups have increasingly pressed for their voice to be heard again. The long absence of a shareholder-appointed board has bred disillusionment. Yet, after the acute crisis phase is over, the argument that only a neutral liquidator can protect the public interest loses some of its force. If CLF is to rebuild or move beyond liquidation and asset disposal, then returning governance to those who hold equity makes both commercial and moral sense.

Why control should go back to shareholders

The core purpose of a corporation is to be governed by its shareholders via a board of directors. Shareholders provide capital, accept risk, and deserve to choose those who run the company. In CLF’s case, the prolonged absence of shareholder-driven governance is an anomalous distortion of that relationship.

Moreover, the liquidation process has fundamentally altered the nature of CLF. The initial state-backed bailout aimed to protect depositors, policy-holders and the financial system at large; but years later the group remains in limbo, with little sign of a normal shareholder-governed enterprise.

Returning control to shareholders does not mean ignoring the lessons of the past — far from it. Rather, it invites a fresh start: a board of directors selected by shareholders, with clear accountability, modern governance, external audits, and an open‐book approach. This would restore investor confidence and enable strategic repositioning.

It also addresses the equity-concerns of minority or residual shareholders whose interests have been sidelined. If asset sales were made, or value destroyed, without shareholder oversight, accountability must follow. But if CLF is to have any future beyond simply winding down, shareholders must once again decide the direction.

Counter-arguments and response

Critics will argue that the systemic risk during the crisis justified long‐term external oversight. Indeed, the group’s collapse exposed vulnerabilities not just in CLF but across the region.

Yet those exceptional powers should not become permanent fixtures. The crisis phase is over – and the purpose of liquidation oversight, to preserve value and protect stakeholders, has been served. Continuing indefinitely strips shareholders of their rights and signals that the market cannot trust the governance model moving forward.

Another counter-argument is that returning governance prematurely could destabilise ongoing asset realisations or creditor negotiations. But this can be managed: a transition plan can be put in place where the liquidator remains in a “winding-down” role while a shareholder-appointed board handles strategic oversight. In this way the heavy lifting of reconstruction begins with a new governance structure, yet obligations to creditors and policy-holders remain respected.

In sum, CLF's story is exceptional — but its governance predicament is not. For too long shareholders have been relegated to the sidelines while a liquidator unilaterally controlled the company’s destiny. The time has come for a reset. We should invite the liquidator to step aside, formally hand over control, and allow shareholders to appoint a board of directors that can chart a renewed course.

Such a move would restore the fundamental principle of corporate governance — that those who invest should govern. It would revitalise confidence, bring transparency, and mark a meaningful transition from crisis remediation to future-oriented corporate renewal. Trinidad and Tobago’s financial system, its investors and its entrepreneurs deserve no less.

Carlton Reis is the managing director of Dalco, the largest shareholder of CL Financial.