CL Financial & CLICO Fraud – Colman Commission lawyers edge further towards a cover-up

“The CL Financial Agents, many of whom masqueraded as ‘Investment Advisors’, appealed to people to close-off their other accounts and sell other investments so as to put as many eggs into that one basket as possible. “

The Colman Commission – Cloudy Concessions

by Afra Raymond

The Colman Commission held its first session of Hearings in the last week of June, so we were able to have moving reports from witnesses who had lost-out from various investments with the Hindu Credit Union (HCU).

I read those transcripts and it was painful to see the shape of this problem.  The most striking aspect for me was that the various attorneys seemed to have struck a compromise as to the parts of that evidence which would form part of the public record.

The main concession was that those witnesses did not have to state the amount of their investments for the record.  The reasoning seems to have been a stated fear of crime, but it is my view that this concession will compromise the effectiveness of the Colman Commission.  Given that the Commission is scheduled to resume its Hearings on 19th September, it seems timely to put these matters forward now.

To begin with, the two Golden Rules of investment are –

  • The Risk and Reward paradigm – Risk and Reward have an inescapable relationship – i.e. the greater the Risk, the greater the Reward and vice versa.
  • Investments need to be spread out so as to avoid undue concentration of risk – in colloquial terms, you should not put all your eggs into one basket, or bet all your money on one horse.

From these time-honoured ‘Golden Rules’, we derived the ‘Prudential Criteria’ which guide how financial institutions balance risk and reward.

Yet, despite the ‘Golden Rules’ the CL Financial and Hindu Credit Union chiefs were able to devise products which tempted tens of thousands of people to abandon those basic safeguards and invest in their products.  People who were normally sensible were tempted to abandon good sense and break both ‘Golden Rules’.  That is the measure of this tragedy.

Another point is that it was not only individuals who made that type of error, there were other people, with responsibility for managing monies, who also gave into the various temptations.  The sidebar has details on that.

Let us be clear that the scope of this fiasco is as broad as it is deep, with boundaries stretching from the delayed and misleading accounts to the mismatched funding/investment practices of the core companies, from the absence of proper corporate governance described by Dr. Euric Bobb to the negative impact of the extensive political donations made by the CLF group.

“The Executive Flexible Premium Annuity (EFPA) is at the heart of the tragedy – the most successful investment product ever designed and built in the Caribbean, while being, at one and the same time, arguably the most toxic.”

The duty of the Colman Commission is to probe how this fiasco occurred, recommend methods to stop a recurrence and also to identify responsible people who are apt for lawsuits or criminal charges.

We are now contemplating an inquiry into a large-scale financial collapse, which appears to have conceded the right of witnesses to withhold details about their investments.  We are able to read the name and age of the witness, but effectively barred from information as to the size of their investment or the proportion of their total portfolio that figure represents.  A Public Enquiry into a financial failure has conceded the right of the public to the basic financial information.  I say basic, because the fact is that without those thousands of EFPA and INC investments, there would not have been the cashflow to allow CL Financial to embark on that journey.

This appears to me to be a cloudy concession, to say the least, since it might represent the thin edge of the wedge in setting a precedent to allow subsequent witnesses to try obscuring or omitting financial details.  More importantly, the effect of that kind of concession is that it will almost certainly mask the extent to which the basic financial rules were violated.  That is not a philosophical question, because the CLF disaster only attained this scale and consequence as a result of these basic rules being broken.  Ergo, it is not at all possible to credibly examine the causes of the crisis, if one has conceded that those are areas which will not be publicly examined.

There was public campaign to persuade people to make these risky investments. 

That campaign was calculated to have them set aside the norms of good sense – the ‘Golden Rules’ were abandoned.

“The CL Financial Agents, many of whom masqueraded as ‘Investment Advisors’, appealed to people to close-off their other accounts and sell other investments so as to put as many eggs into that one basket as possible. “

After all, the more money you put with them, is the more interest CL Financial was offering.  We all know that is how the thing went.

At the same time, these agents were busy telling people that their product offered these tremendous rates of return and complete security of funds, etc. etc.  I bet everyone reading this heard those lyrics, at least once.

This concession is short-sighted and I am urging the Colman Commission to reconsider its position urgently.  There must be no easy concession to allow less light.

Sunlight is the best disinfectant

The depth of this tragedy can only be plumbed if we are able to see the true extent to which the ‘Golden Rules’ were broken.

The Colman Commission has to keep its focus.  That concession needs to be renegotiated, if it is not already too late.

The Sidebar

The levels of responsible investors

Apart from the individual investors who suffered from their misplaced faith in the CL Financial and HCU Products, there are others who also need to be examined by the Colman Commission if we are to have a proper picture of those events.

Firstly, there are the Credit Unions, who were acting for many small and relatively unsophisticated investors.  Several Credit Unions placed heavy investments into these EFPA products, which of course was a product approved for individual investors.  The nature and extent of those Credit Union investments need to be a living part of this enquiry.

Secondly, there were yet another species of large-scale investors who were the chiefs of the State-owned National Gas Company (NGC) and the nation’s largest pension plan, the National Insurance Board.  Those two companies were reported to have invested the sums of $1.1Bn and $700M, respectively, in a Clico Investment Bank (CIB) product called the Investment Note Certificate (INC).  This was another ‘gravity-defying’ product which offered attractive rates of interest along with the guarantee of being backed by good-quality investments.  Like a close relative of the EFPA.

In ‘Taking in Front’ published here on 25th April 2010, I examined the NGC’s involvement in those CIB products.  At one point, up to 40% of NGC’s money was with the CL Financial group, so it is clear that its own Board policy on the placement of large-scale, short-term deposits did not insulate that State Enterprise from the temptations which afflicted others.

Given that the highest levels of commission were paid to the agents for these products which yielded so much cash for the CL Financial group, Colman has to ask whether inducements were ever offered to these people in positions of trust.  Apart from the question of possible inducements, the real question is whether the kind of over-concentration of deposits which exists is at all compatible with the proper execution of one’s fiduciary duty.  Colman will never know unless he withdraws that fatal concession.

Afra Raymond is a Chartered Surveyor.  He is President of the Joint Consultative Council for the Construction Industry and Managing Director of Raymond & Pierre Limited.  This series on the CL Financial bailout can be viewed or readers’ comments made at

BFP Editor’s note: This article is printed as received with the exception of the main title “CL Financial & CLICO Fraud – Colman Commission lawyers edge further towards a cover-up” which is BFP’s phrase. BFP also changed some of the paragraph breaks and placed certain words in bold and colours etc.


Filed under Barbados

5 responses to “CL Financial & CLICO Fraud – Colman Commission lawyers edge further towards a cover-up

  1. Not our Shona

    LMAO…..where is redjet now??? Remember all the truth Blanche, Dorothy and Karen Walker use to say? You all must feel like real idiots!!!!

  2. Colman

    Leadership always starts at the top.

    One has to ask how Sir Athony Colman could have so little integrity and no balls to have his hearing bushwacked by the same people ( lawyers, politicians and swindlers ) who stole from the policyholders and investors?

    He obviously didn’t earn his title by creating waves and defending the little guy.

    Does he know he and his title are being used as enablers of corruption?

  3. Anonymous

    Look at the transcripts it is a laughing stock. Coleman Pannell (CP) are NOT interrogating the person appearing before them. How can he find out what went wrong, how it went wrong etc. The CP are allowing those persons appearing before them just read out what they have to say. It is madness and meaningless havinbg an Inquiry.

  4. Sarah Daniels

    Again,I suspect that Sir Athony Colman does not want to rock the boat in which he or his family or friends “may” be in. Is he that mad to allow the very persons who robbed from the policy holders to get away with it. How can he find out what si happening if HE DOES NTO PROPERLY INTERROGATE THEM, get Order from Couirt to force release of documenst to the Commission. Unless he can start doing this do not expect anything to come out of this apart from a gloss over and vastly more tax payers dollars wasted by having “such an Inquiry”. A concerned taxpayer should apply to the Court for Judicial Review to force the Injury to carry out its statutory functions thus forcing the issue to the Privy Council.
    The implications of having such a Inquiry is most important for the Caricom since it affects the proper governance and free and informed investment in the region. It affects peoples retirement savings and its importance ought to be tested and clarified future for the record so that swindelers are kept at bay. Are those “illegal advice” given by lawyers to their clients governed by legal professional privilege when the dominant purpose is to swindle and create sham transactions. The short answer is No. He is a QC he ought to know that or he is suffering from wilful blindness – which undermines his integrity. What will Colemen do about it sit back and not obtain Court Orders to force the production of these documents. What use is this Inquiry in the 21 Century. Just to create a SHAM waste more tax dollars in PRETENCE that they doing something for the swindled public. Act NOW or forever hold thy peace.

  5. Sarah Daniels

    NO BODY INTERESTED ABOUT THIS COVER UP? Are we all that blind and stupid? Sorry, we are in fear of speaking out..