‘Why did T&T state regulators fail to act over CL Financial?’

(Trinidad Express) Even as public hearings into the collapse of financial giant CL Financial continue to reveal a disturbing picture of corporate greed, reckless dealings, dishonesty and misconduct at the highest level of the country’s largest conglomerate, questions remain about the role of the state regulators and auditors on record, PriceWaterhouseCoopers (PWC).

Questions have been raised about what the state regulators at Central Bank knew, when they knew it and what, if anything, they did about it.
The chief regulator and Central Bank Governor Ewart Williams is on public record that he had concerns about the country’s number one insurance company, CLICO since 2004 but claimed impotence in the face of inadequate legislation.

In his January 30, 2009 containment effort to rescue the floundering conglomerate, Governor Williams complained that the Central Bank had been “stymied” by inadequate legislation from going after the rogue insurance company.

He said in the intervening years prior to the CL Financial crash the Central Bank was forced to watch helplessly from the sidelines as the country’s number one insurer sailed perilously closer to the edge.

He cited several areas of concern including excessive related- party transactions, mismatch between short-term liabilities and long-term assets, lack of fiscal discipline and fudges on filings.

In subsequent post mortem reports and court filings, Governor Williams and his Inspector of Financial Institutions Carl Hiralal painted a picture of a conglomerate run amok under the direction of reckless top executives bent on using investors’ money to enrich themselves.

Hiralal, in a civil action lawsuit against Andre Monteil, former group financial director and Richard Trotman, former president and chief executive officer of CLICO Investment Bank (CIB—currently under a court-approved liquidation), went further, accusing the two of a series of wrongful actions in connection with the sale of a CLICO-owned block of shares in the Home Mortgage Bank (HMB) to Monteil.
The lawsuit was sharply critical of the entire CIB board of directors, accusing them of failing to implement proper controls and breach of directors’ fiduciary duties.
But documents and other information obtained by the Sunday Express show that Hiralal and other government regulators took no steps to question or challenge transactions or balance sheet statements at CIB prior to the January 2009 collapse.

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