Black Immigrant Daily News
A transaction between Proman Holdings (Barbados) Ltd and CL Financial jefe Lawrence Duprey for the sale of Clico Energy’s shares – described as the crown jewel of the group – cannot be ratified, attorneys for the conglomerate and its subsidiary, Clico, are contending.
In response to Proman’s appeal against a judge’s ruling which voided the sale of the lucrative energy assets in Process Energy (Trinidad) Limited (PETL), made three days after the Government bailed out the companies in early 2009, attorneys for CLF and Clico have asked for the 2021 ruling to stand.
They have also asked the appellate court to make a finding of fraud on Proman’s part.
“Proman’s actions were not only dishonest but fraudulent,” Senior Counsel Fyard Hosein, who leads a legal team for Clico, insisted on Friday.
At the time of the deal, CLF controlled 34 per cent, Clico another 17 per cent, with the remaining shares in PETL, which previously operated as Clico Energy Company Limited, being held by Proman.
The deal resulted in Proman controlling the entire company, which held a sizeable portion of the group’s stake in Methanol Holdings Trinidad Limited (MHTL) and other minor stakes in profitable energy companies.
In 2014, the International Court of Arbitration ordered Clico to sell its remaining shares in MHTL to Proman’s subsidiary, Consolidated Energy Limited (CEL), for US$1.175 billion (TT$7.485 billion).
In October 2021, Justice Devindra Rampersad ruled that Duprey acted oppressively and unfairly prejudicial to both companies’ interests when he cut the deal to sell CLF and Clico’s 51 per cent stake for a little over US$46.5 million.
He also ruled that the company was grossly undervalued, and voided the sale, ordering Proman Holdings to pay CLF the dividends it collected from the shares since 2009, plus interest.
In turn, CLF was ordered to reimburse Proman Holdings for the purchase price, plus interest.
Proman Holdings appealed Rampersad’s decision and on Friday, Justices Alice Yorke-Soo Hon, Gregory Smith and Vasheist Kokaram reserved their ruling after a full day’s hearing.
Proman’s lawyer, Simon Salzedo, KC, said Rampersad’s ruling was erroneous as he failed to address the ratification of the sale by Clico and CLF.
Proman’s appeal centred on the issue of ratification and the exoneration of Proman in the transaction.
During his submissions, Salzedo took the judges through the history of the dispute set out in tens of thousands of pages of statements and other documents forming the evidence in the case.
He said the court could not grant the declarations sought by CLF and Clico in its original lawsuit if the sale was not considered valid. In fact, he said the “transaction was and remains valid.”
Salzedo said CLF and Clico continued to use the benefits of the proceeds of the transaction years later and it was “too late” now to take issue with it.
However, in response, CLF and Clico’s attorneys maintained that the judge’s findings could not be faulted although admitting he should have gone further to make a finding of fraud since his reasoning could only point to one of “fraud or dishonesty.”
Hosein said the “dishonesty” related to the sale of the energy shares at undervalue by parties who had no authority to do so.
That sale, he maintained, exposed CLF to liability and jeopardised the lifeline extended by the government since the transaction was in breach of the memorandum of understanding with CLF in the bailout and threatened to derail that financial arrangement.
He said any entity dealing with a company, knowing a director was acting without authority, could not rely on the transaction being a valid one.
He said the issue of insolvency was uncontested and where a company was deemed to be insolvent, then its creditors had a direct interest in any transaction which affected them. In this case, he said the sale of Clico Energy’s shares was a loss to CLF and Clico’s creditors and neither CLF nor Clico could ratify the transaction.
On the fraud allegation, Hosein said it was important for it to be settled and pronounced on by the Appeal Court since it can have bearings on recovery efforts by CLF and Clico if they are successful at the appeal.
He said this was even more important given Proman’s assertion that it could not pay the dividends owed to both entities.
Hosein also maintained that the judge’s findings on Proman’s third-party liability in the “unauthorised sale” was “plainly correct” and his findings clearly pointed to one of fraud or dishonesty based on the legal authorities on the issue.
“Proman’s state of mind was of the nature that is consistent with what was described…as dishonest.
“Proman was not an innocent third party in this.”
He said the judge correctly found that Proman knew that Duprey did not have the authority to sell the subject shares, and further that he was acting in a manner that was injurious to the interests of the respondents.
Hosein said when the “surreptitious sale” was effected, Clico was hopelessly insolvent and the “wanton act of dishonesty and fraud” was at a time when the country was reeling from the 2008 recession and the Government was trying to resuscitate the economy.
CLF’s attorney, Deborah Peake, SC, focused on the undervaluation of the shares, taking the judges through the evidence. She said the judge’s finding on the issue couldn’t be faulted. She also said there was no basis for sending back the case to another judge for consideration and reiterated that Proman knew there was a breach of fiduciary duty and that the shares were undervalued so the transaction should be set aside.
“We say the appeal (Proman’s) has to fail and be dismissed with costs.”
Friday’s hearing, which began at 9 am, ended at 4.30 pm after Salzedo rebutted the arguments advanced by Hosein and Peake.