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(TRINIDA EXPRESS) FORMER executive chairman of CL Financial and CLICO director Lawrence Duprey acted oppressively, unfairly and with prejudice to the companies when he facilitated a deal to sell shares in what was then called CLICO Energy to Proman Holdings (Barbados) Ltd in February 2009.
CL Financial and CLICO together owned majority 51 per cent stake in CLICO Energy, which was sold to Proman Holdings on February 3, 2009 for US$46.5 million. Justice Davindra Rampersad said Duprey acted without due care and diligence and even failed in his fiduciary duties under the Companies Act as he failed to act honestly and in good faith with a view to the best interest of the companies, the judge found.
Justice Rampersad made his statements in a judgment delivered on Thursday evening, in a lawsuit brought by CL Financial Ltd and CLICO against Proman, Process Energy (Trinidad) Ltd (PETL) and Duprey.
In the case, CL Financial and CLICO argued that Duprey sold the 84,986,145 shares in CLICO Energy owned by CL Financial and CLICO, just three days after the CL Financial group was bailed out by the Government in January 2009. Proman renamed CLICO Energy to Process Energy (Trinidad) after it acquired the company in February 2009.
As part of his 87-page ruling, Justice Rampersad ordered Proman Holdings to return the 51 per cent stake held in Process Energy to CL Financial and CLICO. Proman Holdings was also ordered to pay CLF the dividends it collected from the shares since 2009 plus interest. On the other hand, CLF was ordered by the judge to reimburse Proman Holdings its purchase price plus in addition to interest.
At the time the deal was struck, CLF controlled 34 per cent of the shares of Process Energy, CLICO 17 per cent. Proman owned the 49 per cent balance. Given that Proman eventually bought out the shares held by both companies, this resulted in it controlling the entire company which held a sizable stake in Methanol Holdings Trinidad Ltd (MHTL) as well as stakes in other profitable energy companies. The International Court of Arbitration back in 2014, had ordered CLICO to sell the remainder of its shares in MHTL to Proman’s subsidiary Consolidated Energy Ltd (CEL) for US$1.175 billion.
In its claim, attorneys for CL Financial and CLICO contended Duprey did not have the authority to sell CLICO’s 17 per cent stake in Clico Energy, which they claimed was held by CL Financial in trust for CLICO. In addition to that, the companies claimed the shares sold were valued at US$130 million, way in excess of the $46 million for which it had been purchased by Proman. In its defence however, attorneys for Proman argued that CLICO did not have its stake registered in an attempt to avoid paying stamp duty.
However, in his ruling, Justice Rampersad said the court was convinced the transfer could still be registered and all CLICO needed to do was pay the requisite stamp duty and or penalties.
The judge said he was of the view Proman was aware of a sub-committee for the disposal of assets of the CL Financial companies “and the renewed requirements for shareholder resolutions thereby curtailing Duprey’s prior ostensible authority and also failed to make any inquiry whatsoever on the evidence before this court as to whether or not he was authorised to enter into this share purchase agreement in the very unusual circumstances that prevailed at the time,” he added.
Justice Rampersad said with the “business savvy persons” who were involved in the transaction, “the point of this sale at this time with such haste seemed to have been designed to ensure that Proman got it at the price that it wanted rather than at a fair market value ascertained in an arms-length transaction between two equal parties.”
“The fact that Duprey did not even utter a squeak in opposition is testament to the fact that he was working with Proman to do just that,” the judge stated. Although he noted that Proman officials were wrong to go ahead with the purchase of the company from Duprey, Rampersad ruled that their conduct did not constitute fraud.