Henry Comber, the Strongman of EuroAmérica Under Investigation by the FNE in the Failed Enjoy Merger

Chile, September 30th, 2024. 

Henry Comber, the Strongman of EuroAmérica Under Investigation by the FNE in the Failed Enjoy Merger

By Felipe Saleh

Henry Comber, once a star executive at Citibank and later at Euroamérica Seguros de Vida S.A., is now under investigation by the prosecutor’s office for an irregular scheme allegedly linked to the aborted merger of casino operators. This is not the first time suspicion has arisen regarding Comber’s involvement in companies where Euroamérica holds interests. In this case, he involved Euroamérica’s life insurance subsidiary in the gambling business.

The merger plan, which initially seemed flawless as a way to save the casino operator Enjoy from bankruptcy, continues to show cracks and has broadened regulatory scrutiny of its executives. Originally, Enjoy was set to merge with Dreams, another casino operator. Enjoy holds 31% of the licenses granted by the Chilean Gaming Board (Superintendencia de Casinos de Juego), while Dreams holds 27% of the 26 total licenses across the country.

Founded in 2001, Enjoy holds licenses to operate in (Chile) Antofagasta, Coquimbo, Viña del Mar, San Antonio, Los Ángeles, Pucón, Chiloé, and Rinconada de Los Andes, and also manages hotels in several of those cities. It also operates a casino in Punta del Este, Uruguay. Dreams, on the other hand, has licenses in Temuco, Valdivia, and Punta Arenas, as well as the Monticello casino, their flagship location in San Francisco de Mostazal.

Henry Comber Sigall, a Chilean civil engineer from the UC Chile University and former Citibank star executive in various Latin American countries, became a key figure at Euroamérica in 2005. He became the right-hand man to Nicholas Davis Lecaros, heir to the century-old company tied to Benjamin Davis Clarke, who had managed it as sole owner from 1999 until his death in 2010.

Currently, Comber serves as chairman of Euroamérica. In 2021, from that position, he spearheaded a favorable agreement for the insurance company, while also providing a last-minute lifeline for Enjoy, which had been unable to recover from the negative impacts of the COVID-19 pandemic on the leisure industry. In 2015, Enjoy’s short-term debt represented nearly twice its total assets. The company faced bankruptcy proceedings in the United States (where its bonds were traded) and in the 8th Civil Court of Santiago.

The plan to weather the storm was to convert debt into Enjoy shares, a proposal that was accepted, and Comber, as the representative of Euroamérica Holding, the main creditor, became chairman of Enjoy’s board on behalf of its now largest shareholder, with over 25% ownership.

The situation in December 2021 was especially dire. U.S. bonds represented 82.15% of Enjoy’s financial liabilities, equivalent to 89.4% of its equity; the company’s total liabilities were 2.76 times its equity.

Part of Comber’s merger strategy involved Euroamérica Life Insurance acquiring a 6.65% stake in Enjoy.

The evident complexity of this operation, which the Financial Market Commission (CMF) has yet to comment on, raises legal questions. For instance, whether there was a sale of shares between the parent company (Euroamérica S.A.) and its subsidiary (Euroamérica Life Insurance), a deal with at least two legally questionable aspects. First, that funds from thousands of retirees’ life annuities ended up in a company dedicated to gambling, which was facing losses and significant management issues. Second, that the transaction occurred between affiliated companies (Euroamérica S.A. and Euroamérica Life Insurance), potentially violating company regulations and possibly the law.

The plan moved forward, with favorable media profiles highlighting Comber’s negotiation skills and reputation as a tough finance professional. However, the media also spotlighted Comber’s issues during the 2013 reorganization of the real estate company Curauma S.A., led by businessman Manuel Cruzat Infante, still embroiled in court due to unclear actions by several key players, including Euroamérica Life Insurance representatives, such as Comber. In a previous case, they had leveraged a relatively small loan (approximately $26 million USD in 2004) to block a financial reorganization process in Valparaíso, its natural jurisdiction, and, through less than transparent means, transferred it to the 2nd Civil Court of Santiago (#CuraumaCase #CasoCurauma).

However, in the Enjoy case, the CMF was alerted to Comber’s scheme over the possibility that insider information may have been used by certain actors. The commission requested records of brokerage transactions made between April 28, 2020, and February 25, 2021, prior to the merger announcement. Among other reasons, because Enjoy’s stock rose by 85% just before the news became public.

The concern was further fueled by Comber’s past when he was the boss of Francisco Montaner Reyes, a former partner at Euroamérica, who was sanctioned for insider trading in 2010. Montaner later became involved again in the FIT Research case, prosecuted by former prosecutor Carlos Gajardo in 2015.

No sanction from the CMF was needed. In April 2023, Enjoy and Dreams announced they were suspending the merger process. The announcement came as a direct result of information provided to the National Economic Prosecutor’s Office (FNE) by an executive from the Marina del Sol group, an operator of casinos in Calama, Chillán, Talcahuano, and Osorno. This executive, protected under a leniency program, detailed a collusion scheme in the industry, allegedly orchestrated by Comber and Enjoy.

In April of this year, with his initial plan unraveling, Henry Comber resigned as chairman of Enjoy. The company stated that the reason was the untenable conflict of interest for the civil engineer, as he held the role of chairman of the casino holding company while also serving as chairman of the board of Euroamérica S.A., Enjoy’s main creditor in its ongoing reorganization process in Chilean courts.

Strangely, this conflict of interest had been apparent since Comber joined Enjoy in 2020 and was voted chairman of the board in 2022, which also highlights the weak and slow response of the CMF, one of the bodies responsible for ensuring public trust and transparency in financial markets. Additionally, Euroamérica, and particularly Comber, known for his aggressive negotiation style, have seen their professional reputation and market trust tarnished by these unclear actions that hover at the edge of legality.

The case of Henry Comber and the failed merger between Enjoy and Dreams highlights how corporate strategies designed to save companies, without adequate regulatory oversight, can become entangled in complex financial maneuvers that, lacking transparency, raise suspicions about their legality and erode trust in the markets. The ongoing investigations by the FNE and CMF underscore the need for strict regulatory control to ensure transparency in the markets and protect public trust, especially when sensitive financial interests, such as those of insurers and pensioners, are at stake.

See original article in Spanish: https://desenfoque.cl/2024/09/30/henry-comber-el-hombre-fuerte-de-euroamerica-que-investiga-la-fne-en-la-fallida-fusion-de-enjoy/

#HenryComber #CMF #SEC #FNE #Enjoy #Dreams #Casino #CuraumaCase #CasoCurauma


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