CIB books in a mess – Central Bank Governor

(Trinidad Express) Non-performing loans on the books of the state-impounded CL Financial-owned Clico Investment Bank (CIB) could account for over 20 per cent, significantly more than the industry standard of two-to-three per cent, sources close to the bank have disclosed.

On Friday, Governor of the Central Bank Ewart Williams, the man tasked with shaping the architecture of a financial recovery plan for several finance companies within the troubled CL Financial Group, told the Sunday Express that: “The records of CIB (earmarked for liquidation) are in a total mess”.

And while Governor Williams declined to give specifics on the problems encountered in untangling the financial records at CIB, he conceded that it has led to a delay in the transfer of liabilities.

Included in the long roster of names that failed to service outstanding loans at CIB are several local and regional property-development companies, a failed bank in Grenada, a former government minister, a former Unit Trust Company executive director and several high-profile corporate figures.

The Sunday Express was told that CIB initially provided loan facilities of some US$7 million to the financially-troubled Capital Bank International Ltd of Grenada to lend customers money. And even as that loan turned sour on the books of the CL-owned bank, sources said CIB issued a new loan of US$10 million to the bank’s chairman and managing director, Finton De Bourg, to build a boutique-type hotel called Native Hut. That loan also went bad.

Early last year, the Grenada government, in a bid to protect depositors’ money, placed Capital Bank into receivership. The Grenadian bank is said to owe an estimated US$15 million to customers. Sources close to CIB say the local investment bank called in the two loans last July but is yet to recover any money. The matter is now the subject of a court action in Grenada.

Another transaction gone bad involved US$100 million in funding to Keirron Dolby, founder, major shareholder and managing director of DCG Properties Ltd. CIB approved the funding for a luxury resort with a Greg Norman 18-hole golf course in St Lucia.

An initial payment of US$73 million was made. The balance was not paid because it had exceeded the 25 per cent limit placed on borrowings on its capital base to any one client.

Some of the bad loans on CIB’s books are said to be more than ten years old. In 1997, the bank issued personal loans to former UTC executive director E Henry Sealy, economist Dr Ralph Henry and their development company, Cape Resorts Co Ltd, to build a hotel in Mayaro.

Two payments were made towards the original loan of TT$3.6 million to Cape Resorts, which currently stands on CIB’s books at TT$13.3 million, including accrued interest.

Former trade minister Ken Valley also has an outstanding debt to CIB of TT$1.5 million. The bank wrote Valley on August 28, 2008 threatening foreclosure on a February 2000 loan made to his Caribbean Shoppe business in St James.

Caribbean Shoppe has challenged CIB’s demand for repayment, insisting that it was not party to a 2002 debt consolidation, and also, that its original approach to CIB was for venture capital.

In the letter responding to CIB’s threat of foreclosure, Caribbean Shoppe manager Sharon Cedeno countered that CIB had breached its own agreement.

“Our approach to CIB in 2000 was for venture capital financing. Because of the processing time envisaged, bridge financing was proposed with the clear intention that it would be replaced by the venture capital funds. This explains why no repayment was ever requested nor paid on the financing.” Interest at a rate of 17.5 per cent per annum has pushed the original TT$300,000 loan to TT$1.5 million as of late last year.

Another loan that CIB has only recently moved on involves Anthony Pinto’s Coastal Development Co Ltd, which was given over US$5 million in September 2004 for a villa development along the North Coast.

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