E-mails from whistleblower sparked withdrawals, claims witness
A SERIES of whistleblower e-mails sent from a former employee of CLICO alleging financial impropriety within CL Financial and its subsidiaries was responsible for the "sudden surge" in withdrawals by depositors.
This was stated by Michael Carballo, former financial director of CL Financial, as he took the witness stand for the second day at the Commission of Enquiry into the collapse CL Financial and the Hindu Credit Union (HCU) at the Winsure Building , Richmond Street, Port of Spain yesterday.
Carballo said a series of e-mails from a person who adopted the alias "whistleblower" was sent to Central Bank Governor Ewart Williams, "specific regulators and auditors and other members of the general public".
Former CL Financial chairman Lawrence Duprey, former group financial director of CL Financial Andre Monteil and former CLICO chief financial officer Karen Gardier expressed concerns about the "whistleblower" e-mails.
"The whistleblower e-mails contained information about the acquisitive nature of the CL Financial group, the aggressive stature of the CL Financial group especially when it came to investments and spending," Carballo said.
"The whistleblower e-mails would talk about regulatory issues, compliance with the statutory fund and the kinds of things that CLICO would do in order to, as the whistleblower e-mail would refer to it, 'getting around' and try to ensure that CLICO is made compliant to the statutory fund," he said.
Carballo said these "exaggerated" e-mails were spread prior to requests from policyholders and depositors to withdraw their funds.
"Let's say a copy of that whistleblower e-mail got into the hands of a few EFPA holders who had significant investments in CLICO and Clico Investment Bank. If those whistleblower e-mails did get into those hands and discussed issues that were not 100 per cent true and were perhaps over exaggerated, it could have caused a sudden rush on deposits," Carballo said.
"There were significant requests for withdrawals from deposits. There was a sudden upsurge in these requests, some even prior to contractual dates," Carballo said.
"The heat continued to pick up and we were all concerned about what this sudden surge of requests was about. We did not understand what was causing it. Was it the whistleblower e-mails? What was causing this sudden rush for request of repayment?" Carballo said.
Carballo said the increased demands for money in addition to "constraints" in lending caused by the Financial Institution Act were detrimental to CL Financial.