Dalco was a private Duprey company, which controlled the assets of CL Financial and Stone Street was a Monteil company. The lawsuit relates to the failure of CLICO, which is a subsidiary of CL Financial.
The Central Bank said in a formal statement it is exercising emergency powers under section 44D of the Central Bank Act Ch. 79:02 in respect of CLICO.
The bank's claims include allegations of mismanagement of Clico and misapplication and misappropriation of its income and assets to the detriment of its policyholders and mutual fund investors.
According to the bank its case is based on a breach of statutory and common law duties on the part of the defendants. It highlighted transactions, which it described as "egregious" and detrimental fo CLICO's assets and income.
They include transactions related to shares in Republic Bank Limited, transactions including spirits company Lascelles de Mercado, energy transactions including the sale of CLICO's stake in CLICO Energy Ltd, Florida property transactions and the sale of 7 million Home Mortgage Bank shares.
The legal pleadings highlight the subordination of the interests of CLICO, its policyholders and mutual fund unit investors to the private interests of Duprey and Monteil and their companies.
The CBTT claims that there was a lack of proper governance and that there was serial mismanagement and improper dealing with CLICO's assets and the funds of policyholders and mutual fund unit holders.
The CBTT claims that there was a lack of proper governance and that there was serial mismanagement and improper dealing with CLICO's assets and the funds of policyholders and mutual fund unit holders.
The Central Bank and CLICO said the action was based on forensic investigations commissioned by the Bank into the affairs of CLICO.
"The forensic work is continuing and may result in the expansion of this claim and further action," the Bank said.
Chairman of the CLICO Policyholders Group, Peter Permell welcomed the Central Bank's lawsuit. "This is a very serious issue for the Central Bank. To file such a lawsuit means that they would have made a prima facie case against them," Permell told the Express newspaper.
He added, "We would have to wait and see what happens now, this is very interesting times because this is unprecedented in our country."
Finance Minister Winston Dookeran told the Senate Tuesday the PNM injected $7 billion to save CLICO and another $13 billion is required.
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