Fourteen years ago today, shockwaves reverberated throughout the Caribbean when the Trinidadian government announced that it was bailing out the CLICO parent company and some of its subsidiaries. CLICO Trinidad was then put under administration and it was only on December 1st last year that the Trinidad Central Bank relinquished control. CLICO has repaid TT$14.8 billion in principal and TT$2.47 billion in interest, totalling TTS 17.27 billion. CLICO, therefore, owes the State TT$1.068 billion, including additional interest. CLICO Trinidad is now set to renew its insurance and other operations in full once it secures the relevant licence.
The 2007-8 global financial crisis was seen as contributing to the debilitating liquidity crisis that gripped the parent company, CL Financial in the run up to the January 30, 2009 bailout announcement in Port of Spain but there were also stark regulatory failures in many areas.
Guyana was not spared the pain from the seismic upheaval. Regulatory failures were also in evidence pertaining to the Office of the Commissioner Insurance then ensconced in the Ministry of Finance but which functions were thereafter transferred under the Bank of Guyana.
In the days after the bailout announcement in Trinidad, CLICO (Guyana) sought to assure the Guyanese public that it was walled off from the earth-shaking instability in Port of Spain.
In a terse statement issued on January 30, 2009 after the news out of Port of Spain roiled the business sector here, CLICO (Guyana) said it “wishes to make it clear that developments in Port of Spain, Trinidad involving CL Financial Limited have no financial impact on CLlCO Guyana. CLlCO Guyana is a separate entity within the CL Financial Group, and none of its assets are intertwined with CLlCO [TRINIDAD] or CLlCO lnvestment Bank. “The facts are that CLlCO lnvestment Bank (CIB) has been sold to Trinidad and Tobago’s First Citizens Bank Limited, and the Government of Trinidad and Tobago will provide the liquidity to support any strain on the insurance company, CLlCO Trinidad backed by assets of CL Financial Limited.
“CLlCO Guyana remains solid with a statutory fund that is in good standing”, the statement said. In a subsequent press release, the company said “CLICO (Guyana) is a separate entity. It is a wholly owned subsidiary of CL Financial. We wish to assure our policyholders that your annuities and pensions and other insurance policies are protected and as previously published, our statutory fund remains in good standing with an adequate solvency margin, which indicates a surplus in the fund”.
Those assurances were worthless, misleading and scandalous. It would later be learnt that CLICO (Guyana) had transferred US$34m of its monies to its Bahamas sister company which had then invested in Florida real estate which went bust. CLICO (Bahamas), as was the eventual fate of its Guyana sister company was liquidated. Guyanese who took out insurance with CLICO (Guyana) and investors in their investment instruments had therefore lost everything. Among them was the National Insurance Scheme (NIS) which, in its increasing financial stress, could ill afford such loss.
There isn’t much heard about CLICO(Guyana) these days as it doesn’t redound to the credit of the PPP/C which was at the helm of government at the time. However, there is unfinished business. The besieged taxpayers of this country were the ones who were called upon to bail out the NIS to the tune of $5.4b.
On September 16, 2016, the then APNU+AFC government solemnised a debenture agreement with the NIS for an aggregated value of $5,641,431.
This agreement signed by then Finance Minister Winston Jordan will see the scheme recovering the sum over a 20-year period. It was in keeping with Parliamentary Resolution 82 of 2009, which had called on the then PPP/C government to take “all possible actions to secure the investments made in CLICO (Guyana) by the NIS on behalf of contributors and beneficiaries of the Scheme to prevent any consequential loss in benefits to them.”
At the time of CLICO’s collapse, its liability to the NIS was $5,482,446,199.00 for thirteen Executive Flexible Premium Annuity (EFPA) Policies which matured over the period 2009 to 2012. The Camp Street CLICO Building, which now houses the GRA, was transferred to the NIS at a value of $600 million, thereby reducing the reconciled amount to $4,882,446,199.
The then Finance Minister explained that the debentures represented government’s attempts to as close as possible provide the Scheme with the sums it had invested in CLICO. He, however, said that it was a sad day for Guyanese taxpayers since they would be forced to bear the burden of the payments over the next 20 years.
“Imagine what those monies could have done in other areas be they wages or infrastructure programmes?” he asked.
The Ministry of Finance had also noted then that the previous PPP/C government had committed $3.6 billion received from the Caricom Petroleum Stabilisation Fund to finance the payout to holders of investment annuity policies and other insurance liabilities not in dispute, subject to a maximum limit of $30 million per policyholder with additional funds needed to meet outstanding balances to policyholders being raised through the sale of the company’s fixed and moveable assets and monies recovered from its debtors.
“To date, policyholders have been paid a total of $6,749,340,831. Approximately $5.9 billion remains due and outstanding to policyholders, i.e. policyholders with balances in excess of $30 million, government and related parties,” the ministry had said then.
It was further explained that the company was in the process of paying policyholders classified as Organisations, Related Parties and the Guyana Forestry Commission (GFC) in excess of $185 million. Of that sum, the GFC was to receive $78 million as part of a debt exceeding $239 million.
Governor of the Bank of Guyana, Gobind Ganga, who was the liquidator of CLICO (Guyana), noted then at the signing that steps were being taken to sell off the remaining assets and recover monies owed to CLICO through the courts and other processes so that outstanding balances owed to policyholders could be paid.
“We are hoping to have enough assets to pay all debts, we are hoping that by way of sale we will have something by 2020 to fully pay all holders with the exception NIS,” Mr Ganga had said, while explaining that the NIS might receive payments from out of court settlements.
Now that CLICO (Trinidad) is no longer under the control of the Central Bank and even though the prospects are slim, Guyana should pursue whether there is a prospect of any recoveries of monies and it would be appropriate to hear from Finance Minister Singh and Mr Ganga who are in the positions that they held in 2009.
Just this month, Bahamians who were victims of the CLICO (Bahamas) collapse made an impassioned appeal to their Government not to forget their continuing plight with an estimated US$35m still outstanding. The government of Antigua also continues to press Port of Spain for solutions for its citizens. Guyana should do the same.
