(Trinidad Express) Insurance giant CLICO was a “ponzi scheme”, former chief executive officer (CEO) Gene Dziadyk stated in an internal e-mail to top executives three years before the company’s collapse.
This was revealed by Queen’s Counsel Peter Carter, lead counsel to the Commission of Enquiry into the collapse of CL Financial, three of its subsidiaries and the Hindu Credit Union (HCU), during his examination of Wendy Ho Sing, the Central Bank’s Deputy Inspector of Financial Institutions yesterday.
Carter read portions of an internal e-mail sent by Dziadyk to Karen-Ann Gardier, CLICO’s former financial controller, and Ian Garcia, CLICO’s former chief marketing officer, on April 11, 2006.
The Express obtained a copy of the 36-page correspondence.
Dziadyk, a Canadian actuary, served a six-month stint as CLICO’s CEO before he was fired by executive chairman Lawrence Duprey and retained as a consultant and director at the insurance company.
The subject of the e-mail was entitled “Asset management”.
In the introduction, Dziadyk states he does not “think it serves anything to pull punches” in the e-mail and will be “direct”.
Dziadyk also called for the “general reaction” of Gardier and Garcia to the document.
“Am I missing the boat? Off on some bad tangent? Am I panicing (sic)? But I can tell you this, the chairman won’t like any of this one bit and if you think he’d like to wring my neck now, just wait for the fireworks in NYC.”
Dziadyk was scheduled to present a business plan to Duprey in New York on June 12, 2006, following a board meeting of CL Capital Markets.
Gardier and Garcia were also expected to attend.
“This is no time to pull punches; we need a full understanding of where we are. The objective is to develop a plan appropriate for CLICO, not just to satisfy the chairman’s global aspirations,” Dziadyk stated.
Dziadyk questioned whether Duprey, who he described as an egomaniac, could be reined in.
“Can he be reined in? Does he realise how precarious his holdings are? CLICO is exposed and shaky. The regulatory environment is closing in—a capital appreciation business model is seriously constrained within a financial institution,” the e-mail stated.
“The chairman has a global vision but lacks focus, and little regard for cost borrowing. He doesn’t care for details, but wants to be seen as a guy who owns lots of stuff around the planet.”
“Look up ‘ego’ in the dictionary and you’ll see him, says he’s operating at a level above Jack Welch (former chairman and CEO of General Electric). He really believes that,” Dziadyk stated.
He then listed a summary of CLICO the way he saw it.
Dziadyk said CLICO was paying the country’s highest interest rates on deposits and was the “cash engine” for CL Financial.
Borrowing between companies within the group was another problem Dziadyk addressed.
“It’s all in the family and so inter-twined there’s a domino exposure. With CLF at the centre, the group is as strong as its weakest link, as any problem anywhere jeopardises CLF, which owes just about everybody else tons of money,” the e-mail stated.
“CIB (Clico Investment Bank) is rumored to be a basket case, but has been for years. And CLICO is constantly fighting that image too,” said Dziadyk.
“Generally, every risk known to man and then some are in CLICO’s balance sheet.
“No liquidity in CLICO assets, chairman not for selling assets, so it’s a ponzy (sic) scheme and annual sales targets keep getting higher and higher, as do interest rates it pays,” the e-mail stated.
According to www.moneyterms.co.uk, “a ponzi scheme promises investors a high rate of return in a short time. The money that is collected from investors is used to pay the return. This means the scam can run for some time because investors appear to be making the promised return”.
The scheme is named after Carlo Ponzi who ran a huge ponzi scheme in the United States in the 1920s, the website stated.
