TRINIDAD EXPRESS: Monteil to pay $98m to CIB

A WHOPPING $78 million in restitution plus approximately $20 million more in interest and legal costs have to be repaid to CLICO Investment Bank (CIB) by its former chairman, Andre Monteil, the bank’s former chief executive Richard Trotman and Monteil’s Stone Street Capital Ltd (SSC).

The mammoth payout was ordered by Justice Avason Quinlan-Williams last week, after CIB successfully convinced the court that Monteil and Trotman were dishonest, acted in bad faith, breached their fiduciary duties and did not act in the best interest of CIB when they facilitated a $78 million loan payment to SSC in February of 2007.

That loan, which CIB claimed was paid out after the bank’s internal controls were breached, was to facilitate SSC’s acquisition of CLICO’s 43.8 per cent interest of the Home Mortgage Bank (HMB) of which Monteil was chairman up until April 2008.

In addition to the payout, Justice Quinlan gave permission to CIB to trace assets owned by Monteil, Trotman and SSC acquired from the loan.

The Express has been unable to confirm whether Monteil and Trotman have appealed, or intend to do so, the judge’s ruling.

The loan was initially in the sum of $110 million and while some of it was repaid, the $78 million remained outstanding up to the time when the legal claim was filed.

Corporate deceit

In her 129-page ruling, Justice Quinlan-Williams described the case as one that involved a web of complex transactions and a cast of players, both individual and corporate, and “ingeniously crafted for the purpose of deceit”.

The evidence was that Monteil obtained the loan in February 2007 through SSC and later had it transferred to his other company, First Capital, which held more than 300,000 shares valued at almost $444 million in CIB’s parent company, CL Financial (CLF).

Monteil struck a deal with his former boss and chairman of CLF, Lawrence Duprey, for Duprey to take control of CLF’s debt and assets in exchange for an option to purchase CLF’s 43 per cent shareholding in the HMB.

In her ruling, Justice Quinlan-Williams said Monteil knew that the loan by CIB on February 14, 2007, for the benefit of SSC was unauthorised by the bank’s board of directors.

It was purely on oral terms between him and Trotman with no or any adequate security, was undocumented and was procured by Trotman without having done any due diligence.

The judge went on to add Monteil knew such a loan agreement was “highly irregular and not in CIB’s best interest, yet as chairman and director of CIB, he allowed it to happen, leaving CIB exposed and unsecured”.

Monteil, she said, also failed to declare the full nature and extent of his interest and for it to be recorded in CIB’s board minutes, he acted dishonestly by not disclosing the true purpose of the transfer and substitution of the 2007 agreements and that he “deliberately” misled Trotman and the CIB board that the transfer of loan obligations was to another of his companies— First Capital Ltd, St Kitts (FCL).

The claim was also brought against FCL but that portion of the claim was dismissed by the judge.

Monteil’s defence

In his testimony at trial, Monteil maintained he committed no wrong by borrowing the money to finance a share purchase for his private investment firm. He denied there was anything underhand in his transferring of the loan from SSC to FCL.

While he admitted SSC did not repay the $78 million, he went on to point out the money was instead transferred to Duprey who wanted the 337,269 shares he (Monteil) had in CLF.

The agreement was that Duprey would take over the loan debt and buy the CLF shares, which would have been transferred to FCL and later to Dalco, another company owned by Duprey.

Monteil stated he never informed Trotman of the deal between him and Duprey, since Duprey said he would do so himself.

With regard to Trotman, the judge said he also breached his fiduciary duties to loyalty, honesty, good faith and acting in the best interest of CIB and to avoid conflicts of interest; his contractual duty to act with the highest standard of professional and ethical competence and integrity; and his no-self-dealing duty to ensure Monteil fully disclosed the nature and extent of his interest in the transactions.

Extreme dishonesty

Against SSC, Justice Quinlan-Williams said having received the loan from CIB, knowing it was unauthorised and procured in breach of Monteil and Trotman’s fiduciary duties, it held millions, or its traceable proceeds, on constructive trust for CIB.

In voiding the loan agreement, the judge also ordered them rescinded forthwith and found that Monteil and Trotman liable to account to CIB for all assets now or previously in their possession acquired from the $78 million loan disbursement.

“Trotman and Monteil exhibited extreme dishonesty and breaches of duty in relation to both the loan and its transfer to conceal the true state of affairs,” stated the judge.

She added the dishonesty was well-hidden and was only revealed upon careful scrutiny of all the details relating to the loan and transfer.

“I have found the first and second defendants to lack credibility and in many respects to be untruthful witnesses, said the judge.

“Significantly, Monteil demonstrated his ability to be dishonest when he deliberately concealed the deal struck with Duprey. He caused Trotman to mislead the other directors of CIB to believe that the loan was being transferred to a wholly owned subsidiary of Stone Street.

“Monteil failed to disclose the sole purpose of the transfer and substitution and he lied to Trotman in pretending that the transfer was to rationalise Stone Street’s affairs. He knew that was untruthful, and that the purpose was to remove Stone Street’s liability under the loan and to gain control of the HMB shares,” stated the judge.

British Queen’s Counsel Michael Green together with attorneys Nadine Ratiram and Keliah Granger appeared on behalf of CIB, while Jason Mootoo, Christopher Sieuchand and Shivangelie Ramoutar appeared on behalf of Monteil and SSC.

Trotman was represented by attorney Matthew Gayle.