straight to the point – from different points of view

A winning hand for CLF shareholders

A winning hand for CLF shareholders

For those of us of a certain vintage, one abiding memory is that of a character in a popular American show called the A-Team. Upon successful completion of that week’s routing of the bad guys, the team leader John “Hannibal” Smith would say “I love it when a plan comes together”. I can just see the CLF shareholders and several others now uttering that famous phrase.

 

I refer today of course, to the recent report in a national newspaper, a short extract of which I reproduce now:

After five years and over $20 billion, the government is expected to soon exit CL Financial (CLF) with a full repayment of money spent on the conglomerate and its former illiquid insurance company, CLICO.

 

This could pave the way for former chairman Lawrence Duprey, should he choose to reclaim the remnants of his once powerful global conglomerate since he still owns a 30 per cent shareholding of CLF.

 

The exit has been on the cards for over a year, following repeated extensions of the Shareholders Agreement between Government and CLF, as both parties awaited the valuation of the Methanol Holdings (MHTL) shares by the International Court of Arbitration (ICC).”

 

This revelation  is apparently creating a great deal of angst among the population. Some people even feel betrayed. After all, they argued strongly that taxpayer funds should not be used to bail out policyholders and creditors who they say took a risk and should suffer the consequences when the company failed. Those people now see that taxpayer money will have effectively been used to reward those who really ought to have borne all the risk – the shareholders including Duprey and his family.

 

Lest you forget the history of the shareholders of CLF. In addition to having enjoyed lavish dividends down the years on the backs of policyholders and creditors, we have the following from an article by Afra Raymond:

  • 18thNovember 2008 – CLF publishes its 2007 Annual Report, including its audited accounts, which showed assets of $100.666Bn and after-tax profits of $1.74Bn.
  • 13thJanuary 2009 – CLF writes, under Lawrence Duprey’s signature, to the Governor of the Central Bank to request urgent financial assistance.  See pg 628 of Hansard of 4th February 2009 for the text.  That letter specified that CLF’s asset value was $23.9Bn.
  • 16thJanuary 2009 – CLF pays a dividend of $3.00 per share.
  • 23rdJanuary 2009 – CLF convenes its final AGM before the ‘official’ collapse.
  • 30thJanuary 2009 – The bailout of CLF is announced at a Press Conference at the Central Bank.  All the speakers at that event stated the CLF asset value at $100Bn.”

 

To summarise, three days after seeking, and obtaining taxpayer funds to save their struggling company, the CLF shareholders paid themselves a hefty dividend while claiming to be unable to pay policyholders and creditors. Such a payment was probably illegal. We have not been told whether the government ever demanded, much less achieved repayment of said divided, but the same beneficiaries now stand to gain at the end of the sorry exercise. We should all be angry.

 

My anger is worse because it is clear that this was the plan all along. “Hannibal” would have been beside himself with pride. Consider the timeline.

  1. Company in trouble, shareholders going to lose everything
  2. Get government to bail them out using taxpayer dollars
  3. Pay themselves immediate dividend despite crying lack of funds
  4. Wait a few years and get back control of billion dollar company

I can hear Hannibal’s words ringing in my ears now.

 

The beauty of all this is that it is the culmination of a very carefully orchestrated plan whose eventual outcome was always to be the enrichment of shareholders at the expense of policyholders, creditors and taxpayers. Lest you believe I am engaging in speculative hindsight, I quote from my own published analysis of three years ago:

So let’s see how Mr. Duprey and his friends would have fared over the three year period. They brought to the table a deficit of 14 billion dollars which they were 100% responsible for. They emerge from the other end with 51% of a company with net assets of 5 billion dollars i.e. about 2.5 billion dollars accruing to them.

In three years their financial position would have improved from minus 14 billion to plus 2.5 billion dollars; in other words a net gain of 16.5 billion dollars. And what have they done to deserve this you ask? They have contributed not even one dollar, they have lifted not one finger, they have sold not one insurance policy. What have they done to deserve this windfall? Their leader, Mr. Duprey simply spoke with his people in government”.

You can find the full article, titled Winners and Losers at http://www.straighttalktt.com/media/?p=64.

 

They have done all this under cover of the Central Bank Act as was, and the surreptitiously proclaimed amendment (*) that shields them from the courts regardless of how illegal their actions were.

 

So the plan was clear, and it has been brilliantly executed, complete with the distraction of blaming the policyholders, all the while with the clear intention of enriching the shareholders at everyone else’s expense. We are now witnessing the closing acts of this macabre event, scripted by brilliant minds and executed to perfection in full view of a gullible public.

 

* Note – the amendment has twice been ruled to be unconstitutional, though the government is appealing one of the rulings. There is hope still.

 

David Walker

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