Former CL Chief Financial Officer (CFO) Michael Carballo told the commission, “Arnaud was jailed for mail fraud in the US...I don’t know the details. We all knew within the group that Arnaud was jailed and he could not re-enter the US.”
Carballo said de Trabuc profited from commissions from all sides of lucrative group deals. He said that placed pressures on Clico and other group subsidiaries.
Carballo CL's top managment considered de Trabuc “our man in Europe” but the man's shady past was well known by all at CLF, including former executive chairman Lawrence Duprey. Carballo said Duprey ignored warnings about de Trabuc, whom he said was employed at Angostura Swiss and earned “significant" amounts of money.
“When he was terminated I sought to recover funds from Arnaud,” Carballo said. “He was utilising funds for his personal purposes, buying properties for himself. He was a very loose character,” Carballo said.
Carballo said Duprey saw a benefit in it "even though Lawrence knew there was a risk."
He added, "I think Lawrence was willing to live with the risk of Arnaud for the benefit of making contacts. Arnaud had his benefits even though he was jailed for mail fraud.”
Carballo said he knew the man and "got along very well" with him.
“Lawrence and Arnaud co-existed on a level whereby they both knew what the objective was and the objective was to expand the CL empire in order for the CL drinks portfolio to stand in the top ten spirits companies in the world,” Carballo said. “So he used Arnaud — a guy with significant international contacts.”
Carballo suggested that CL used the prestigious Angostura brand to secure financing for risky deals and racked up "crippling" inter-group debts. He said there was a failure to conduct “full” due diligence before deals which led to unexpected losses after deals.
Carballo claimed Duprey pushed through such deals, encouraged by figures such as Arnaud and the company incurred millions in losses.
Carballo said when he took over as CFO in 2008, CL Financial had $3.3 billion in debt to Clico. He said it was company practice to keep risky deals off the books of Angostura by arranging inter-group funding.
“You had to keep Angostura pristine,” he said. He explained that it was because Angostura was a publicly listed company and the CL conglomerate was made up of 289 entities in 32 countries with interests in real estate, financing, spirits and energy.
“They wanted to grow it into a global empire,” he said. “It was very easy for us through Angostura to approach bankers confidently in order for us to raise financing and this was actually done in a number of acquisitions,” Carballo added.
Carballo said Clico became the company that took on the risks and clean up the balance sheet of Angustura, which was absorbing the losses from a bad deal in the purchase of a loss making Scottish company, Burn Stewart Distillers.
Carballo also told the enquiry CL subsidiaries were doing things the approval of the parent company. He said one of those deals was done by British American, which bought Green Island for $1.8 billion (US$300 million).
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