FOR THE THOUSANDS OF PEOPLE, many of them retired or approaching retirement, who put their savings into CLICO International Life’s (CIL) Executive Flexible Premium Annuities (EFPAs) in the decade or so before the company was taken over by Government and put under judicial management, it seemed like a great investment deal.
Why accept a measly three or four per cent interest rate from a savings account, or even five or six per cent from a Government bond or a fixed deposit when you could buy an EFPA from CIL and get an eight or nine per cent return on your money?
Had those people (and companies) known how much of their deposits were being paid out in bonuses and commissions to Leroy Parris, maybe they might have thought twice.
Parris, who was the chief executive officer of CIL and also the chairman of its parent company CLICO Holdings Barbados Ltd. (CHBL), it turns out, was apparently also chief salesman. I don’t mean as in relentless promoter of the benefits of EFPAs to pensioners and others who very often tossed their life savings down the EFPA black hole.
I mean the persons who got actual bonuses and commissions from the companies’ revenues. Millions of dollars’ worth of bonuses and commissions.
Some detailing of this seemingly lucrative set up have emerged now that the High Court has ruled – in the judicial manager’s favour – to release to the public the contents of the second part of a forensic report commissioned on CIL and its related companies.
From the first part of the report, released in 2011, we already knew about the cheque for $3.3 million paid on an invoice dated December 30, 2008 for legal services which was sent to CHBL by Thompson & Associates via an email account belonging to then sitting Prime Minister David Thompson, eight months after he was no longer the owner of the firm.
We already knew about the resulting CIL check being deposited to a bank account which was not operated by the new owners of said firm. According to the report, “We note that court filings made in connection with Mr. Parris’ company PFS has made against CHBL show this payment as being made to the benefit of PFS.” (Page 9)
The forensic team said: “In light of the evidence it appears that the invoice provided to Mr [Terrence] Thornhill and approved by Mr Parris to facilitate the payment to his counsel was false. (Page 10) . . . Mr Thornhill knew the true purpose of the invoice when he received it – the invoice was made to look as if it was for professional services so that confidentiality over the payment to Mr Parris was maintained.” (Page 11)
Acceptable transaction
The report said: “He [Mr Thornhill] believed that the creation, approval and submission for payment of a false invoice to facilitate a significant payment from CIL to Mr Parris’ benefit [via PFS] and to conceal its true nature was an acceptable transaction.” (Page 12)
But there were lots more bonuses and commissions besides that. According to the forensic report prepared by Deloitte Canada, from 2004 and 2007 over $4 million was paid by CIL to either David Thompson or Thompson & Associates, which “related primarily to annual bonus and override commissions apparently payable by CHBL to Mr Parris’ company.” (Page 9)
The report states that “for approximately half of these payments, documents we examined confirmed that these payments were made to counsel [Thompson] on Mr Parris’ instructions.” (Page 9)
One of the payments was in respect of the building of a house for Mr Parris: “A March 2004 statement provided to Mr and Mrs Parris shows that a credit of approximately $350 000 was applied to clear the outstanding balance of costs owing to CPDI [CLICO Property Development Inc.] in lieu of Mr Parris receiving annual bonuses of $200 000 apparently owing to him by CHBL for the years 2002 to 2003,” said the report (Page 12).
In fact, for the period January 1, 2003 to December 31, 2011, total payments relating to CIL and its subsidiaries were made as follows: Just over $4.5 million to “Professional Financial Services Inc./Leroy Parris” and $2.4 million to Parris’ firm Branlee Consulting.
The payments to PFSI/Parris “generally related to override commissions, club dues, management fees and the medical expenses”, while those to Branlee “generally related to override commissions as well as the rent relating to an employee seconded to CIL by Colonial Life in Trinidad.” (Page 13)
On May 8, 2009, just four days before the formal appointment of the Oversight Committee, which was going to ban all such payments, a cheque was paid to Branlee Consulting for override commissions earned for 2008 in the amount of $876 683, the report said. (Page 13)
CIL also purchased EFPAs in the name of Parris and Branlee Consulting with the source of the funds being described as “commissions”. (Page 15)
However, said the forensic team said, “We have not verified the value of any commissions or other compensation earned and paid to either Mr Parris or his companies.” (Page 15)
Although the document contains details of other transactions, for example relating to real estate purchase, these examples of payments to Parris and his companies provide a clue as to why the judicial manager may have applied for, and been granted, a freezing of assets, including bank accounts, belonging to the former chief salesman of CIL.
That court case resumes in mid-April. Meanwhile, the thousands of pensioners who dropped their hard-earned life savings down the CIL black hole are wondering how it could have all gone so wrong, right under Government’s nose.