(Trinidad Guardian) Former CL Financial’s Group finance head Michael Carballo yesterday admitted he was the architect of intercompany loans. Carballo explained that after Angostura’s acquisition of Burn Stewart, the company was purchased by Clico because it signified a bad investment and could not have been kept on the Angostura books. He told the commission of enquiry Into the CL Financial Group and Hindu Credit Union yesterday he came up with a plan, to which CLF chairman Lawrence Duprey and former head of finance Andre Monteil, approved. “That plan was bought in by Mr Duprey and Mr Monteil,” he said, empahsising the need to insulate Angostura because it was listed on the stock exchange.
That plan was subsequently replicated for other major spirits acquisitions by the CLF group. During last week’s sitting of the inquiry, it became clear that inter-company loans were reasons for the collapse of Clico. Carballo admitted that one of the biggest, the almost US$700 million for the acquisition for Lascelles de Mercado, was the “one that broke the camel’s back.” During his cross-examination by Duprey’s attorney Rajiv Persad SC, Carballo said he remained open for an investigation by professional accountants on the structure of the inter-company loan. Carballo was questioned on the motive for paying CLF shareholders about US$23 million on January 23, which is the same day that CLF initiated talks with the Government of Trinidad and Tobago.
He explained that the major shareholders belonged to the Duprey family and there would have been “some sort of uprising had the monies not been paid.” Questioned on whether it would have impacted on the confidence of the organisation, Carballo responded: “It would have had a potential impact on confidence.” Earlier, Carballo was challenged on his claim that HMB shares were sold to Monteil at an undervalue when the company’s projections pegged their worth at $104 million in 2006. Carballo explained that it did not consider the forward earning potential of the shares nor did it factor in a premium for a major block of shares. Further, he slammed it as a “corrupt arrangement.” Daly’s cross-examination was yesterday muted as compared to the heated exchanges in last Friday’s hearing.
Several attempts to discredit Carballo’s credibility such as a letter which he signed authorising the employment of one individual was explained away as the wrong date.
In his opening remarks yesterday, Colman sought to clear the air on how the hearings were being conducted. He said counsel to the commission did not have a function analogous to a prosecuting attorney. Rather, the function was to obtain and present to the commission information and evidence and witnesses which in the face of it could assist the commission. Colman said the commission could identify witnesses which appeared to have logical evidence and where the witnesses did not provide a witness statement, the counsel to the commission could assist. Carballo is expected to conclude his testimony tomorrow. Former corporate secretary Gita Sakal and attorney Joanne Julien are expected to take the witness stand today.
