History will remember the rise and fall in Guyana and the Caribbean of Clico, the insurance giant, as the US equivalent of Enron in the United States of America. The difference is that in the USA, those responsible were convicted and imprisoned. In Trinidad and Tobago, the former Central Bank Governor described the financial debacle which engulfed the Clico parent as a massive fraud on the people and the Central Bank took action to have persons charged for fraud.
In Guyana, no one has been held accountable, no doubt because the then President was part of the violations of the law that cost billions to the country’s Treasury, the workers’ National Insurance Scheme and the company’s policy holders. Five years after the collapse of the company, no one knows who were treated preferentially in having their monies returned to them when financial disaster seemed imminent. That information is secured closely among a handful of people while the persons who most suffered in the Clico fiasco have had to suffer in silence. Not least among them is the National Insurance Scheme that is still owed more than five billion dollars by the company.
Efforts to ascertain basic information about the management and financial affairs of the company leading up to its demise were seen as high treason. As is well known, this Firm’s Managing Partner was prevented by no less a person than the then President of Guyana from asking a question at a meeting of policy holders of the company. That meeting set in train a further pattern of conduct that violated the Insurance Act, the Companies Act and possibly the country’s criminal code. Perhaps because the process was led by the country’s President, the law was ignored. Or perhaps it is the impunity with which the Government operates. The truth or the law it seems was of no importance to policyholders or creditors faced with the possibility of a complete loss of their money. The saga has been well recorded in Business Page contributions by the Firm’s Managing Partner.
Sadly, we can report that the illegalities have continued even under a liquidation which by law must be supervised by the Court which ordered the appointment of a Liquidator. So concerned are we at the continuing improprieties by those engaged in the company’s liquidation that we have written to the Court pointing out the illegalities. We now share with the public the concerns we have raised in the appropriate forum. All section references are to the Companies Act, 1991.
Section 366(1) requires the involvement of the Official Receiver when the court has made a winding up order or appointed a provisional liquidator. Our understanding is that that Office has played no part in the process.
Section 366 (5) provides for a statement to be available to creditor or contributory. Apparently this was not done.
Section 367 providesthat a report must be done by the Official Receiver after receipt of the statement of the company’s affairs. Not done.
Section 370 requires the Official Receiver by virtue of his office to be liquidator during any vacancy. We are aware that during the period of the liquidation, the Liquidator has indeed been out of the country on numerous occasions.Apparently, in those circumstances, the Liquidator delegates his functions to some other person who may have some conflicting obligations.
Section 371 requires the Liquidator to give Official Receiver access to books and facilities for inspecting the books and documents of the company.Our understanding is that the Official Receiver has been left out of the entire process.
Section 375(1) (c) provides that the liquidator may with the sanction of the court or of the committee of inspection appoint an attorney-at-law or other agent to assist him in the performance of his duties. It seems that the Liquidator appointed an attorney-at-law as well as other persons in breach of this sub-section. The records show that more than one hundred million dollars have been paid for Legal and Professional Fees to unnamed persons between 2010 and 2013.
Section 375 (1) (d)provides that the liquidator may with the sanction of the court or of the committee of inspection pay any classes of creditors in full if the assets are remaining in his hands will suffice to pay in full the debts and liabilities of the company which rank for payment before, or equally with, the debts or claims of the first-mentioned creditors.Certain creditors were paid in full while others have lost or are likely to lose a portion of their claims.
Section 376 (1) provides for the exercise and control of the liquidator’s powers by resolutions of the creditors or contributories at a general meeting or by a committee of inspection. From the available evidence, the creditors or contributories were never afforded the opportunity to exercise any control over the liquidator.
Section 379 provides for half-yearly receipt and payment statements to be sent tothe Registrar accompanied by a statutory declaration.The public records indicate that over the period September 10, 2010 to March 2014, only two statements were ever submitted to the Registrar.
Section 379 (3)requires the Registrar to have the statements audited and for the submission of such vouchers and information as the Registrar may require and for the right of the Registrar to inspect any books or accounts kept by the Liquidator.This has not been done.
Section379 (4) provides that when the accounts have been audited, one copy thereof shall be filed and kept by the Registrar, and the other copy shall be delivered to the court for filing, and each copy shall be open to the inspection of any creditor or of any person interested. Because 379 (3) has not been complied with, there was nothing to file with the Court or be open to inspection by any person.
Section 380 provides for the exercise of control by the Registrar over the Liquidator.The Registrar has failed to “take cognisance of conduct of Liquidator”.
Guyana is the only Caribbean country affected by Clico that took not a single step to protect its integrity and reputation and the financial interest of the public. Ram & McRae can only wonder whether there is anyone who is interested in addressing the lawlessness that has happened so far or in preventing the further debasement of the laws.
