"THE single transaction that caused the CL Financial empire to fall."
This is how Peter Permell, chairman of the CLICO policyholders group, has labelled a billion-dollar purchase of property in Florida, USA, known as the Green Island Transaction. Permell is now calling on Attorney General Anand Ramlogan to conduct a forensic investigation into the billion-dollar deal.
Today, Permell and representatives of the CLICO policyholders group will meet with Anthony Colman, lone commissioner in the Commission of Enquiry into the collapse of CL Financial and the Hindu Credit Union to discuss the land deal.
The enquiry resumes this morning at Winsure Building, Richmond Street, Port of Spain.
The CLICO policyholders group held a press conference at Cascadia Hotel and Conference Centre in St Ann's yesterday.
At the press conference Permell spoke of the US$295 million purchase of 6,000 acres of land in Osceola County in January 2008, which he called the "most egregious example of mismanagement".
Permell said the purchase price of the land deal worked out to US$50,000 an acre.
Roy Partin and his family, the owners of the land, were willing to sell the property for US$200 million, Permell said. The transaction was conducted by British American Insurance Company Limited (BAICO).
BAICO is an 82 per cent owned subsidiary of CL Financial.
On September 4, 2008, the land deal was brought to the attention of the CL Financial board of directors.
At that board meeting it was agreed that British American's future was "possibly at risk".
Lawrence Duprey, CL Financial executive chairman, was authorised to take whatever steps he deemed necessary to correct the transaction.
Among the financing for the billion-dollar investment was a US$12 million loan from First Citizens Bank, a US$20 million loan from Caribbean Money Market Brokers (CMMB) and US$26 million from British American (Trinidad) Limited.
An Ernst and Young report has stated that "all the loans were in default".
On May 24, 2010, the Partins obtained a judgment for US$171,089,787.33 plus a per diem interest of US$95,205.48 for each day after September 1, 2010, that the money owed to them remained outstanding. On January 26, 2011, the Partins got back the property. Two lawsuits were filed by the court-appointed managers of BAICO at the United States Bankruptcy Court against former directors including Duprey.
BAICO's current managing director Ramchand Ramnarine filed a lawsuit to have both lawsuits dismissed on the grounds of "lack of personal jurisdiction". On September 28, Ramnarine's motion to dismiss was denied by the judge.
"The order states inter alia that based on the evidence currently before the court, there does not appear to be a forum that would provide a more efficient judicial resolution of this controversy," Permell said.
"It is likely that the claim against Ramnarine could be brought in another country.
"The Commission of Enquiry which was set up by the present administration was set up to investigate the causes for the demise of CLICO and British American and some of the subsidiary companies (of CL Financial including) CIB (CLICO Investment Bank) and so on. What these documents are saying is that that particular transaction is the single transaction that one can point to that actually caused those companies to become insolvent and therefore that transaction caused significant losses to British American Trinidad, First Citizens Bank which is a state-owned bank, CMMB, which you know is now taken over by First Citizens Bank and CLF because CLF committed itself to take over the project," said Permell.