Report suggests CLICO ran elaborate scam

A Sunday Express investigation has revealed that there was an elaborate scheme within the CL Financial Group through which insurance executives at CLICO took advantage of a legal loophole to sell annuities, with attractive returns, and funnelled the money to ghost services to the group.

The paper said the alleged scam was uncovered by Canadian forensic investigator Bob Lindquist. It said sources said the scheme was similar to the Ponzi scheme operated by Wall Street money manager Bernard Madoff, who has been jailed in the United States for fraud.

U.S. prosecutors say the Madoff fraud amounted to nearly US$65 billion. Madoff surrendered to the authorities, pleaded guilty to all charges, including fraud, perjury, theft from an employee benefit plan and two counts of international money laundering, and was jailed.

The Express said the alleged CLICO fraud was launched back in 1997 and allowed insurance agents to earn huge commissions if they pushed the annuities, which offered a 30 per cent annual return, much more than what other insurance companies were offering.

It said Lindquist's preliminary findings have also found that CL Financial bought Jamaican rum producer Appleton for US$370 million, some US$150 million more than its original selling price.

CL Executive Chairman Lawrence Duprey is working on a new agreement with the government of Trinidad and Tobago through which he would hand over control of the CL group to the state. A relative is contesting that but CL officials claim they have the support of the required two-thirds of shareholders to let the deal go through.

One of the principal shareholders is Finance Minister Karen Tesheira who owns the critical shares that can shift the balance in Duprey's favour to hand the company to the government. Another major shareholder is former CL group financial director Louis Andre Monteil.

He told the Sunday Guardian that Nunez-Tesheira’s 10,410 shares would surely make the difference and give Duprey the clout he needs.

Duprey's new position is a departure from his original stand in January when government stepped in with a rescue package. According to the Express in the new deal he has dropped a clause that gives the state the right of the State to pursue criminal investigations in the event wrongdoing was uncovered.

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The January Memorandum of Understanding between CLICO and the government has a clear provision for Duprey to provide a guarantee to policyholders. However the Express Duprey breached that.

The Express said CL Financial's attempt to sell its 51 per cent interest in Clico Energy to Proman AG sparked the court action initiated by the Central Bank on February 22, when the Central Bank obtained an injunction preventing Duprey from disposing of any CLICO-owned assets.

The Express previously reported that its sources said the $300 million sale price was substantially less than the book value of the shares which are owned by CL Financial (34 per cent) and the insurance company, CLICO, 17 per cent.

Former attorney general Bridgid Annisette-George, Finance Minister Karen Nunez-Tesheira and Duprey recently met at the Office of the Attorney General for further discussions while the Central Bank going to court to get detailed financial information from the CL Financial Group, the Express reported.

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It said lawyers for the Central Bank are also seeking to challenge a High Court order which prevents the State from using disclosed information in any future criminal proceedings.