Introduction to the Clico Collapse
The long-running High Court lawsuit related to the collapse of Colonial Life Insurance Company (Clico) has finally begun, over a decade after proceedings were initiated. The case started with testimony from former Central Bank governor Ewart Williams, who took the witness stand before Justice Robin Mohammed at the Waterfront Judicial Centre in Port of Spain.
Background of the Case
The lawsuit was filed in 2011 by the Central Bank and Clico against the late CL Financial founder Lawrence Duprey, Andre Monteil, former corporate secretary Gita Sakal, and several affiliated companies. The claims arise out of Clico’s failure, which led the Central Bank to invoke its emergency powers under section 44D of the Central Bank Act. The suit alleges that Clico’s operations were "grossly deficient" and that funds belonging to policyholders and mutual fund investors were diverted to support personal lifestyles and related private companies.
Testimony of Ewart Williams
Under cross-examination by Christopher George, attorney for defendant Andre Monteil, Williams was questioned extensively about regulatory oversight of Clico prior to its collapse. George focused on a December 2005 investigation carried out by the Inspector of Financial Institutions into Clico’s operations. The investigation produced a report recommending that the company bring its operations into compliance with the Insurance Act. Williams accepted that Monteil was not among Clico’s senior management officials involved in that exercise.
Investigation and Findings
The former Central Bank governor was also questioned on testimony he gave before the Commission of Enquiry (CoE) into the Clico collapse, particularly concerning the company’s statutory fund. While Clico’s records reflected an excess of approximately $500 million at the end of December 2007, Williams told the CoE that Central Bank assessments showed a deficit of about $600 million. Williams described the shortfall as a technical one, explaining that the Central Bank’s calculations did not include fixed deposits that matured and were renewed in January 2008.
Allegations Against Defendants
The defendants, including Duprey, Monteil, and Sakal, are accused of mismanaging Clico and misapplying and misappropriating its income and assets. The lawsuit seeks damages, restitution, and recovery of losses said to total several billion dollars. The allegations against the defendants include diverting funds belonging to policyholders and mutual fund investors to support personal lifestyles and related private companies.
Aftermath of the Collapse
Clico and its banking and insurance subsidiaries were taken over by the Central Bank and the Government in January 2009 after Duprey sought State intervention when liquidity problems at Clico and Clico Investment Bank (CIB) became public. The group was soon overwhelmed by lawsuits from policyholders as it struggled to meet claims as they fell due. At the time, Clico was reported to have policyholder liabilities exceeding $12 billion.
Conclusion
The collapse of Clico has had far-reaching consequences, with millions of dollars lost by investors and policyholders. The lawsuit against the defendants is a step towards holding those responsible accountable for their actions. As the trial continues, it is hoped that justice will be served and that measures will be taken to prevent similar collapses in the future. The case serves as a reminder of the importance of regulatory oversight and the need for transparency and accountability in the financial sector.
