A total of $4.2 billion, including $3 billion from Caricom’s Petroleum Fund, was used to pay the first batch of Clico (Guyana) customers who were refunded, a source within the Finance Ministry has said.
The remaining $1.2 billion consisted of the $600 million that Vaitarna Holdings Private Inc (VHPI) paid to the government to acquire a repossessed forestry concession, while the remaining $600 million was from Clico (Guyana)’s own resources, the source said.
It was only when pressed recently by the media that the government disclosed its deal with VHPI and that the $600 million was used to pay affected Clico customers. The deal between the government and VHPI was formalized in September last year, just days before President Bharrat Jagdeo met affected Clico customers.
VHPI was able to acquire the 345,961-hectare concession for which Caribbean Resources Limited (CRL) had held a Timber Sales Agreement (TSA). CRL is indebted to Clico (Guyana).
At that meeting, the President said the government would make available a total of $3.6 billion which would be used in addition to Clico (Guyana)’s $600 million cash resources. At the time, Jagdeo had said that of the $3.6 billion the administration was making available, $3 billion was from the Petroleum Fund. President Bharrat Jagdeo had lobbied for money from the fund to help to meet expenses associated with the collapse of Clico (Guyana) back in April 2009. However, the President did not mention anything about the $600 million that came from the VHPI deal, during his meeting with the Clico customers.
The President had explained how the $600 million of Clico (Guyana)’s money was to be used. He said $100 million was to be used to meet the expenses of the company until wind-up and the remaining $500 million would be earmarked to ensure that the liabilities associated with the long-term insurance business were “adequately backed”.
Regarding the other $3.6 billion, Jagdeo said this money would have been used to finance payout to policyholders under the company’s other classes of business. $2.7 billion was to be used to pay in full, all holders of investment annuity policies and other insurance liabilities not in dispute, but this was subject to a maximum limit of $30 million per policy holder.
Jagdeo also said that the government hoped to realize a further $8.5 billion through the book value sale of assets, and legal action against Bosai, Caribbean Resources Limited (CRL) and Clico (Bahamas). According to him, this money would be used to pay the remaining 39 policyholders as well as the other liabilities to government agencies such the National Insurance Scheme (NIS), GuyOil and Guyana Forestry Commission.
Stabroek News was unable to ascertain how many customers have been paid to date. Attempts to contact Clico liquidator Lawrence Williams and senior employee Tracy Gibson were unsuccessful. Finance Minister Dr Ashni Singh was also unavailable for comment when this newspaper contacted him on this issue.
Clico (Guyana) had invested $6.9 billion (US$34 million) in Clico (Bahamas) which represented 53% of the local company’s assets. Although this investment was liquid on paper, subsequent investigations revealed that this sum was tied up in real estate investments that Clico (Bahamas) had in Florida through subsidiaries. When Clico (Bahamas) was ordered liquidated on February 24 last year, the local company was subsequently placed under judicial management. After a review of the company’s affairs, the then judicial manager Maria van Beek recommended that the company be wound up but this was subsequently challenged by directors.
