Govt negotiates sale of CL Financial shares to Proman, ends Privy Council appeal

IN what was described as a matter “that posed a serious threat to the country’s economic well-being,” the Office of the Attorney General announced a decision to end a Privy Council appeal involving Proman Holdings Barbados Ltd and CL Financial Ltd (CLF).

In a release on January 19, the AG's office said after assuming office, the government was confronted with several complex legal disputes inherited from the previous administration, including the high-profile Privy Council appeal arising out of a controversial share transfer involving Clico Energy Company Ltd, now known as Process Energy (Trinidad) Ltd (PETL).

The dispute centred on a purchase and sale agreement dated February 3, 2009, under which CLF, purportedly acting through its then-chairman and director Lawrence Duprey, sought to transfer a 51 per cent shareholding in Clico Energy to Proman for US$46.5 million ($314.83 million). The transaction was challenged in the High Court, with Justice Devindra Rampersad ruling in September 2021 that the transfer was invalid.

Rampersad ordered Proman to return the 51 per cent shareholding to CLF and to account for dividends and distributions received. Those sums were ultimately valued at more than US$185.9 million ($1,258.63 million), exclusive of interest.

Proman appealed the ruling, but the decision was upheld by the Court of Appeal, which characterised the case as “high stakes, full-blown, adversarial litigation involving well-renowned titans of trade and industry.” Proman subsequently pursued a final appeal before the Privy Council.

The Attorney General’s Office said that immediately upon taking office, the government – as the majority shareholder and largest creditor of CLF– sought advice from King’s Counsel in London on the prospects of success before the Privy Council and the likelihood of the appellate court’s decision being upheld.

After receiving that advice, the government opted to continue settlement negotiations that had been initiated, but not concluded, under the former administration. The statement noted that careful consideration was given to the litigation risks involved, including the “very real possibility” that certain findings of the Court of Appeal could be overturned by the Privy Council.

Ultimately, CLF, with the express agreement of its liquidator and the sanction of the court, agreed to sell the disputed shares to Proman Holdings Barbados Ltd as part of a compromise to bring the Privy Council proceedings to an end.

The Attorney General’s Office said the completion of the transaction allowed the government to recover significant funds for the state while avoiding the substantial financial and legal risks associated with continuing the litigation before the country’s apex appellate court.

“This decision balanced the national interest, the prospects of success and the need to protect public finances,” the release stated, adding that the settlement brought finality to one of the most significant and long-standing disputes arising out of the collapse of the CLF group.

The Privy Council was set to hear the appeal on the controversial sale of Clico Energy’s assets (Barbados), a transaction carried out just days after the government’s 2009 bailout of the CLF group.

The appeal challenged Rampersad’s ruling, which voided the sale after finding the company was grossly undervalued, and a 2023 Court of Appeal decision that upheld the ruling and went further by finding the transaction was fraudulent.

The disputed judgment was valued at more than $2 billion, representing the purchase price and dividends collected since 2009.

CLF and Clico had maintained that the sale could not be ratified and argued that a fraud finding was critical to recovery efforts.

After laying the long-awaited Clico commission of enquiry report in Parliament on January 17, Attorney General John Jeremie, SC, said the state spent an estimated $28 billion rescuing CLF and its subsidiaries. An additional $3 billion to $4 billion was incurred in legal, accounting and administrative expenses linked to the collapse, imposing what the report described as a significant and long-term burden on public finances. He said the state could no longer justify the continuation of costly civil proceedings that have failed to deliver meaningful outcomes. He announced his intention to bring those actions to an end in a cost-effective manner.

On January 19, the Central Bank asked the High Court to adjourn the continuation of its long-running lawsuit against former directors of CLF and its former chairman, Lawrence Duprey, while it reviews the Colman report to determine whether it has a bearing on the case. Duprey, who was 89, died on August 24, 2024.

The matter, filed by the Central Bank in 2011, concerns allegations arising from the collapse of Colonial Life Insurance Company (Trinidad) Ltd and other entities within the CLF group.

Justice Robin Mohammed granted the adjournment to January 26.

In a press statement on January 17, the Central Bank acknowledged comments made by the Attorney General during the parliamentary sitting on Friday, and confirmed it is reviewing the document.

The bank said the report was “voluminous,” spanning 676 pages, and said it is carefully considering its full contents.

“The Central Bank is admittedly concerned that the process is such a protracted one,” the statement said. “The bank is giving its independent consideration to the wider implications for the ongoing litigation matter against former officers of the CL Financial group.”

The Central Bank added that it would provide further information “as and when appropriate.”

Also on January 19, an attorney for social and civil rights activist Kendal Dolly sought detailed information on legal fees incurred by the state in the matters relating to CLF litigation.

In two letters to Central Bank governor Larry Howai and the permanent secretary for the Ministry of Finance, Dolly, through his attorney, Ricky Pandohee, expressed deep concern over what he described as “substantial expenditure on legal fees” linked to several CLF and HCU-related matters.

Central to Dolly’s request is the Central Bank’s lawsuit against Duprey and the former CLF board.

According to the letters, the claim was filed approximately 15 years ago and remains unresolved, despite being governed by the Civil Proceedings Rules 1998, which are intended to ensure the timely disposal of cases.

“The fact that a civil matter could be pending for 15 years is of very serious concern to my client since the sums expended by the CBTT and Clico in legal costs would have skyrocketed.”

Dolly’s attorneys described the prolonged duration of the litigation as “of very serious concern,” arguing that legal costs for both CBTT and Clico would have “skyrocketed” over the years, ultimately burdening taxpayers. The letters also note that successive governments approved these legal expenditures for more than a decade.

The correspondence criticised decisions made under the former PNM administration, alleging that significant sums were approved for litigation that was either unsuccessful or should not have been pursued. Dolly has also signalled his intention to seek separate disclosures on matters taken to the Privy Council under the PNM government and the costs associated with those appeals.

“Of note is the fact that the People’s National Movement (PNM) approved significant expenditure on other litigation, which was either lost or should not have been brought.

“We have been instructed also to seek information concerning the matters needlessly taken to the Privy Council under the PNM government and the costs of those matters. We shall be doing so under separate cover.”

Under the Freedom of Information Act (FOIA), Dolly is requesting particulars on the total quantum of legal fees spent and approved by the state in relation to the Duprey litigation, the officials or bodies who approved the expenditure, and the process by which attorneys were selected. He argues that the information should be readily available, especially given the Attorney General’s public statements on the overall cost of the CLF matters. D

The FOIA applications stressed that the requested material constitutes public information and is urgently required due to what is described as a strong public interest component.

Pandohee reminded that the FOIA requires a response within 30 calendar days. If the request is denied, in whole or in part, the bank and the ministry are being asked to justify any refusal by reference to specific statutory exemptions and to release all non-exempt information.

The letters warn that failure to respond within the statutory timeframe will result in judicial review proceedings being filed in the High Court, but Dolly’s attorney said they hope the matter can be resolved “without further recourse to litigation.”