Maroc - NEWSDAY.CO.TT - A la Une - 01/Sep 07:43

Lawrence Duprey’s many faces

EVERYTHING King Midas touched turned to gold. And, for a while, so it seemed with Lawrence Duprey, who died this month at 89. Under his reign, the CL Financial (CLF) empire grew to include at least 52 companies in at least 28 countries, with a reported asset base that moved from $27.5 billion in 2003 to $101 billion in 2007. It employed 9,886 people. It held the largest indigenous insurance company in the Caribbean, Clico. It was obligated to 235,000 traditional and non-traditional policyholders. It was the majority shareholder of the largest bank in TT, Republic Bank. It owned what was then the largest single-train methanol plant on the planet. It even owned the largest distillery in America, which sat on the site of an ancient aquifer in Lawrenceburg, Indiana. In 2007, a glazed façade, with marble cladding, went up over the historic company headquarters in downtown Port of Spain – across the road from the Red House – projecting invulnerability. It is often forgotten Midas was not blessed but cursed. With food and drink solidifying in his hands, he starved to death. The story is a cautionary one: sudden wealth is often linked to a sinister underbelly. Outwardly, Duprey and CLF told an exuberant, bullish tale, boasting, in the wake of the 2006 US subprime mortgage crisis, of having “assets and activities in every continent.” “As the global economy and financial markets enter a new and uncertain phase, the CL Financial group stands at the cusp of the next wave of growth and is preparing to shape itself as a formidable global player,” he wrote as group executive chairman in a letter to shareholders contained in the company’s annual report issued at the end of 2008. It was his last such letter. Mere weeks later, he was requesting an urgent, unscheduled meeting with Central Bank Governor Ewart Williams, on January 13, 2009. On that day, Duprey signed an alarming missive to the governor that said CL Financial had been “disproportionately impacted” by the global meltdown and was taking “urgent and decisive” action, but might need "urgent liquidity support” if conditions were to deteriorate. [caption id="attachment_1105930" align="alignnone" width="983"] Former Central Bank governor Ewart Williams during the Commission of Enquiry into Clico and Hindu Credit Union at Winsure Building, Richmond Street, Port of Spain in 2012. - FILE PHOTO[/caption] They did. CLF officials disclosed to the Central Bank Clico had a statutory fund deficit of $2.5 billion (later revised to $10.3 billion). Several other entities in the group were strapped for cash. Day-to-day operating costs could not be met. The group had been built on a nest of excessive related-party transactions, aggressive marketing, high-risk investments in illiquid assets, a very high leveraging of whatever possessions were available and gross management shortcomings related to governance and risk. Central Bank officials ascertained Republic Bank had reached the limit of loans it could grant the company. First Citizens Bank was exposed by at least $1.1 billion. It had been a house of cards hiding in plain sight. The CLF logo was, famously, a circular orb, suggestive of the group’s global ambitions. But this lay right next to a pyramid-like shape. One former director had warned company officials in an internal e-mail in 2006 that the company’s banking entity – administering a range of high-yielding “annuities” – was little more than a “Ponzi scheme” whose targets were getting higher and higher. It all came crashing down. By January 30, 2009, the government of the day had to act. The Patrick Manning Cabinet “ratified” approval granted by the PM to Minister of Finance Karen Nunez-Tesheira to enter a memorandum of understanding with CLF. A shareholder’s agreement, precipitated in part by the sale – behind the State’s back – of Clico Energy Ltd to a Swiss company, was entered into in June 2009; new management installed. Duprey was out. To date, the aftermath of the company’s crash has been dealt with by three prime ministers, three Central Bank governors and four ministers of finance. An official ministry estimate suggests $30 billion in state funding was diverted into resolving this difficult affair. The opportunity cost to the country will never be known. The loss of confidence in regulation is unquantifiable. But the fallout was not limited to one country. Major financial shock In 2011, the International Monetary Fund, taking careful note of the developments, reported: “The January 2009 collapse of TT-based CL Financial Ltd and related companies has represented a major financial shock to the Caribbean, which was already reeling from the global crisis. The collapse has had spillover effects in all 15 Caricom states except for Jamaica and Haiti, with exposures as high as 17 per cent of GDP for the Eastern Caribbean, leading to costly government interventions. “The collapse has placed at risk the assets of a wide range of depositors, investors and policyholders, including individuals, corporate and public pensions schemes, and financial institutions.” A 2012 report from the liquidator of Clico (Bahamas) Ltd yields an illustrative case of the real business model behind the company bluster. “Several months prior to liquidation, the company experienced cash flow problems as evidenced by its inability to pay US$2.6 million of claims,” said the report. “The company had no immediate plans or means to pay policy surrenders or maturities. “Since 2003, the company had advanced funds to Clico Enterprises Ltd (CEL). These advances were made by the company apparently for the purpose of paying the ongoing expenses of CEL and for its subsidiary investment properties. As at December 31, 2008, approximately US$73 million had been advanced to CEL and it is unlikely this loan can be recovered at full value as CEL’s December 31, 2008, unaudited financial statements reflect assets of US$108 million and its liabilities are US$129 million, leaving a deficit of US$21 million.” That was just one year. The year before, US$57 million had been “loaned,” too. Duprey is gone, but the saga continues. To date, a court case relating to Antigua and Barbuda and Grenada is pending before the Caribbean Court of Justice, which could result in further costs for the TT government. The disputed sale of Clico Energy could be heard by the Privy Council. This all tells a different story from what has been told in the past week about the businessman. “A visionary,” said President Christine Kangaloo. “An outstanding philanthropist,” said Carlos John, who had worked with him. “A true leader,” said the TT Insurance Institute, in a joint tribute with the Association of TT Insurance Companies, “a stalwart in the insurance industry.” Even Nunez-Tesheira – the country’s first female finance minister, whose own political career was seriously damaged by revelations relating to the CL Financial fiasco – admired his focus on “the game” and deemed him “a great businessman.” [caption id="attachment_1105933" align="alignnone" width="1024"] Carlos John, a former UNC minister and Clico executive greets a well-wisher during the funeral of former prime minister Basdeo Panday in January 2024. - Roger Jacob[/caption] Such tributes are not contradictions. They are proof of the enduring success of the Duprey brand; of a figure who was able to convince large swathes of people that, for him, philanthropy existed alongside the unbridled pursuit of profit. Is it possible the two impulses sat innocuously next to each other. But it is also possible one side of his personality expiated for or even enabled the other. There is a cravenness, almost an obsessiveness, to Duprey’s business dealings alongside his stated wish to alleviate regional poverty. He created an empire, and it is not unimaginable that this was always a case of the emperor’s new clothes. Inheriting uncle’s company On December 15, 1936, Clico, or Colonial Life Insurance Company – CLF’s core business – was founded by Duprey’s uncle, Cyril Lucius Duprey. [caption id="attachment_1105931" align="alignnone" width="1024"] The Edward Street entrance to Clico's head office in Port of Spain. - File photo[/caption] The late historian Gerard Besson described Cyril Lucius as someone named after Greek missionaries and popes, who went to Nelson Street Boys' RC School and worked on his father’s cocoa estates. In the depression of the 1930s, his parents lost their house and estates in Santa Cruz, Carapichaima and Talparo. Cyril migrated to the US for a time before returning to live in Belmont. In 1927, while he had been away, he had the idea of Clico. He had regional ambitions, with a dream of being present in all the Caribbean islands. If that dream was extravagant given social realities relating to race and class, Cyril’s modus operandi was not. Clico’s first office was on Queen Street, Port of Spain and consisted of two rooms. Agents shared one table. Cyril, who would eventually be awarded the Trinity Cross, would drive to the oilfields in the south to sell policies. He was, in the historian’s words, a “thrifty man,” who frowned upon self-dealings and loans for his employees, who kept wages low. The person who inherited the company he built could not have seemed more different. When Lawrence Duprey took over the reins after Cyril’s death in 1988, he changed things. The nephew had attended Fatima College in Port of Spain (he was feted by the school in 1995 at a golden jubilee dinner at the Trinidad Hilton ballroom, alongside Police Commissioner Jules Bernard, Justice Melville Baird, cricketer Brian Lara and sprinter Ato Boldon), before reportedly moving on to McGill University in Canada. He established CLF as a holding company in 1993. Relatives were listed among its officials, including Roger Duprey (executive director) and his wife Sylvia Baldini-Duprey (deputy chairman, who may have attended just one board meeting). Many perceived his global push as a sign of his entrepreneurial acumen. But even before the events of 2009, some were wary. The late Sidney Knox, who led the rival conglomerate Neal and Massy – now Massy – for decades, was concerned when the CLF group took hold of Angostura in 1998. Angostura, at that stage, owned 20 per cent of Neal and Massy. “Knox feared that Clico’s executive chairman Lawrence Duprey was going to strip the liquor company or plunder its cash flows to finance other companies in the Clico group,” writes Knox’s biographer Robert Clarke. Knox had retired, but still sat on the Angostura board. A plan was devised to get the shares out of CLF hands. “Duprey had a lot of other things on his mind at the time all over the world,” Knox claimed. “I was able to half-con him into doing this because he was so distracted.” Yet if he was often distracted, there is much to suggest Duprey had deliberate focus. His uncle may have wished to take the company up the islands, but he took it all over the world, including places like the Sultanate of Oman. Cyril, once praised by Dr Eric Williams, never wished to get involved in politics. His nephew, however, openly courted it. Politics good business Among the CLF family were figures like Carlos John, at one stage a UNC minister, and Andre Monteil, a PNM treasurer. Faris Al-Rawi, before becoming a PNM attorney general and current government minister, was briefly on the board of one entity, while Dr Bhoe Tewarie was a CLF director before becoming a minister in the UNC-led People’s Partnership. In a large entity operating in a small country, such overlaps may well be inevitable. But they nonetheless also bolstered the group’s aura of untouchability. [caption id="attachment_1105932" align="alignnone" width="1024"] Former finance minister Karen Nunez-Tesheira during an interview in 2022. Nunez-Tesheira received approval from the Patrick Manning Cabinet to enter into a memorandum of understanding with CL Financial on January 30, 2009. - AYANNA KINSALE[/caption] It is often overlooked, too, that Manning’s political career was in profound ways intertwined with the Clico empire. The PNM leader’s reign was ensnared by scandals relating to share transfers and self-dealings tied to his party officials; his finance minister Nunez-Tesheira paid a heavy political price after allegations of using insider information to warn relatives and withdraw deposits; one PNM attorney general abruptly resigned after reports of an unspecified “conflict” arose relating to CLF matters; and, most dramatically, there was the affair relating to attempts to remove Chief Justice Satnarine Sharma, a tangled web that also enfolded Chief Magistrate Sherman McNicolls and Attorney General John Jeremie. A main inflection point of that turbulent matter was the emergence of word of suspicious land transactions and a mysterious cheque relating to CLF company entities, all in the wake of the trial of Manning’s biggest political foe: Basdeo Panday. [caption id="attachment_1105934" align="alignnone" width="928"] Former prime minister Basdeo Panday in 2018. In 2006, Lawrence Duprey claimed money not declared by Panday to the Integrity Commission was a scholarship for his daughters. - File Photo[/caption] Duprey’s 2006 appearance in the trial of the former prime minister was as shocking as it was in line with the overlap between business and politics that arguably allowed his group businesses to conduct their affairs without real hindrance from regulators for years. The CLF executive chairman claimed money Panday had not declared to the Integrity Commission was merely an example of his famous philanthropy: it had been a scholarship to the UNC leader’s daughters in London. McNicolls was withering. “To support his case the defendant called Lawrence Duprey, who did not help his case at all,” the Chief Magistrate ruled. “His answers to questions about the scholarship which he called financial aid, and his business dealings were vague and not supported by any documentary evidence whatever and that makes his testimony in that regard highly suspicious. “If Mr Duprey was speaking the truth that it was financial assistance which adds up to a gift, then it was all the more reason why the defendant would want to deliberately withhold disclosing the account because it was given by a large businessman to the Prime Minister’s family and the consequences that would flow from such a transaction. The witness’s answers under cross-examination were vague and uncertain and left me with no alternative but to find that he was not speaking the truth.” Yet, did Duprey save Panday? The magistrate’s guilty verdict was later quashed on the basis of apparent bias when the web of CLF transactions and behind-the-scenes dealings came to light. Judges felt the magistrate may have bent over backwards to demonstrate he was not influenced by the murky machinations that occurred. Blanks CoE, moves to gag media Duprey attended the Panday trial. In contrast, he would later blank the Sir Anthony Colman Commission of Enquiry appointed to examine the causes of the collapse of his own empire in 2010. This was not just a matter of not taking the stand. Duprey’s attorneys appeared throughout the proceedings, which saw hearings from 2011-2013, had access to evidence, strenuously cross-examined witnesses, made legal submissions which occupied much enquiry time and submitted documents. In 2011, his lawyers asked for him to be excused from testifying, given simultaneous civil court proceedings against him, a request deemed “unusual” by Sir Anthony. After Director of Public Prosecutions Roger Gaspard announced a police probe, Duprey again asked to be excused, an application which was again blanked in 2013. He sought, unsuccessfully, to halt the proceedings. In the enquiry, former Central Bank deputy inspector of financial institutions Wendy Ho Sing deposed of an executive chairman who appeared to be a law unto himself. “In the face of the Central Bank’s insistence on good corporate governance, and despite his promises of compliance,” she submitted in a witness statement, “Mr Duprey deliberately flouted prudent corporate practice when, unbeknownst to the Central Bank, he procured for himself a power of attorney in relation to Clico, which he apparently concealed from the board, and which he exercised to divert dividend income due to Clico to other parts of the CLF group instead.” Duprey also did not appear in the lawsuit in which the Court of Appeal ruled the sale of Clico Energy to Proman Holdings (Barbados) Ltd was “fraudulent” and ordered him to reimburse CL Financial to the tune of $1 billion in 2023. He also failed to file a defence in a court case in which he was similarly ordered to repay $1 billion in relation to a company subsidiary relating to the Green Island project in Florida in 2017. It went further than non-appearance. In relation to Central Bank litigation, Duprey’s lawyers sought to have all his documents sealed off from the media, citing the risk of “pre-trial” publicity and prejudice. “I cannot agree with counsel for the applicants that criminal proceedings are imminent,” ruled Justice Robin Mohammed in 2014. “There is nothing before me to suggest that this is the case. In fact, as years continue to pass without initiation of any such proceedings, one leans more greatly towards the remoteness of such proceedings. It is not known if indeed charges will be brought.” While Lawrence Duprey lived, they never were. A death notice said a private funeral for Duprey will be held for family and close friends. It did not say when.   The post Lawrence Duprey’s many faces appeared first on Trinidad and Tobago Newsday.