(Trinidad Express) Govern-ment’s decision to pay Clico depositors, whose principal balances exceed $75,000, through a government IOU, amortised over 20 years at zero interest, is illegal, contravening section 44D of the Central Bank Act, Chapter 79:02, as amended by the Central Bank Amendment Act, 2009, which grants the Central Bank sole authority over Clico.
A group of Clico policyholders through the law firm of Ramesh Lawrence Maharaj and Company, has informed the Central Bank that it views the recent policy decision announced by Finance Minister Winston Dookeran, as “ineffective law.“
In a letter dated September 23 and addressed to Central Bank Governor, Ewart Williams, the Clico Policy-holders Protection Associa-tion said it will not accept government’s decision regarding the payment of Clico depositors.
“We have advised policyholders that the ‘decision’ announced by the Govern-ment through the Minister of Finance is a decision that neither he nor the government is legally competent to make and that it is ineffective in law,” RLM and Company stated in the letter to Williams.
“It contravenes the procedural requirements of both constitutional and public law.
“Accordingly, we call upon you to confirm that no decision has yet been made on this matter by the Central Bank and that the Central Bank will not abide by, or implement, or in any countenance this ‘decision’ by the Government and/or the Minister of Finance.
“We ask that you respond affirmatively within seven days of receipt of this letter by fax. Your refusal to respond will be taken to amount to a failure to confirm as requested and surrender by the Central Bank to the government and/or the Minister of Finance of its functions and powers under the Act.”
The letter states that the government’s “decision” was made without consultation with policyholders, who stand to bear “huge losses.“
“The policy of the Government if implemented would result in the deprivation of property to the policy holders since monies owned by individuals constitute pro-perty for the purpose of Section 4 (a) of the Constitu-tion of the Republic of Trinidad and Tobago,” the letter continues.
“That Section of the Constitution guarantees the right of an individual to the enjoyment of his property and to the right not to be deprived thereof except by due process of law. The Government in the circumstances of the facts relating to Clico policyholders could not have lawfully altered the existing policy which related to the protection of their property rights and interests without adhering to the principles of due process of law.
“The policyholders were not informed of any proposed change of policy and were not given an opportunity to comment upon the proposed change of policy.”
The letter pointed out that the act was amended after the Memorandum of Understanding between CL Financial and the government, so that the Central Bank could, if necessary, exercise the special emergency powers conferred by the act.
The Central Bank exercised those powers, the letter stated, on February 13, 2009. This placed Clico under the control of the Central Bank and no one else. Among the powers exercised by the Central Bank was the power to “take all steps it considers necessary to protect the interests and preserve the rights of policyholders and creditors of Clico.”
“The Minister of Finance or the Government cannot exercise a power which he or it does not have,” the letter further stated.
“Parliament has given the Central Bank sole authority in this matter. If the Central Bank finds that the central government cannot or is not willing to provide funding to meet the deficit in the Statutory Fund, then the Central Bank, deprived of this promised funding, has an obligation to find alternative means of protecting the policyholders (eg, the liquidation of certain Clico assets.”)
The letter goes on to state that should the Central bank succumb to allowing Dookeran or the government control of the Clico situation, it would be “abdicating its statutory responsibility” and “bowing to dictation from an external party and surrendering its statutory powers and statutory discretion.“
Such a decision would be contrary to the principles of public law and would be struck down by the courts, the letter said.
“It contravenes the procedural requirements of both constitutional and public law,” the firm stated.
