Fri | May 25, 2018

PMs say CLICO debacle could threaten CARICOM

Published:Wednesday | February 29, 2012 | 12:00 AM
Dr Ralph Gonsalves, prime minister of St Vincent & the Grenadines. - File

The financial problems plaguing the Trinidad-based Colonial Life Insurance Company (CLICO) and its sister company, British American Insurance Company, could "wreck" the regional integration movement, St Vincent and the Grenadines Prime Minister Dr Ralph Gonsalves has said.

The Barbados Nation newspaper said that Gonsalves and his Antigua and Barbuda counterpart have been responding to the CLICO International Life (CIL) forensic audit report published by the newspaper over the weekend.

For his part, Prime Minister Baldwin Spencer has described the situation as the worst thing to hit his country since the Allen Stanford debacle unfolded in 2009.

Stanford, a Texan billionaire, is now before a United States court facing charges related to a multibillion-dollar Ponzi scheme allegedly carried out using his Antigua Investment Bank.

He has pleaded not guilty to the changes.

The paper said that while the two Caribbean Community leaders have not been seen a copy of the Deloitte Canada-led audit, they are equally troubled by what they have been able to glean from the published report in the newspaper.

The two leaders have expressed strong concern for the plight of thousands of policyholders and investors affected across the region while insisting that justice must be done.

Both leaders also declared that they had no personal relationship with former CLICO executive chairman Leroy Parris.

CIL's funds questioned

The audit report has called into question the use of CIL's funds by the Barbados-based Parris-led management team, with Gonsalves expressing concern of the impact of the company's decision-making on the region.

"Justice must be done. I mean we are not talking here about one million, two million, we are talking in the case of the Eastern Caribbean Currency Union (ECCU) of in the region of EC$2 billion (US$800 million) in liabilities in CLICO Trinidad, CLICO Barbados and also British American."

He said put another way, the total exposure amounted to 16 per cent GDP for ECCU countries, and that it also translated into "serious damage to a lot of people's lives" and "a new species of poverty" known as "gentile poverty" that has enveloped this region as a consequence of the insurance debacle.

Gonsalves said he therefore wants to know "if countries, for instance Trinidad, in the case of CLICO Trinidad and British American and Barbados, in the case of CLICO Barbados, don't come up to the plate and address this matter efficaciously, where are we going in CARICOM?"

It is a concern about which he has already written to new CARICOM Secretary General Irwin La Rocque and which he believes should be discussed before the July summit of regional leaders.

Prime Minister Spencer has described the entire situation as "most unfortunate", saying it needed to be resolved soonest.

"A lot of people are hurting. Some (had) all their savings, whatever they had, they went for this thing in a big way, and not only individuals but businesses, state corporations with trust funds that were placed at the disposal of the CLICO conglomerate."

In the case of Antigua & Barbuda, he said "some EC$300 million (US$111 million) has been tied up in this entire fiasco.

"We have had a double whammy because we not only had Stanford to contend with but we had CLICO and BAICO to contend with literally at the same time," he said, noting that he was somewhat surprised to learn that the Antigua Commercial Bank was named in the forensic report.

The bank was named with respect to payments made by CIL to different associates.

One of the recurring themes of the judicial manager's report was that CLICO was used as a 'cash cow' for its Trinidad parent company. The way they put it was that CIL operated as if it were the parent company's personal bank.

This does not come as a surprise to Gonsalves, who pointed out that a similar blueprint was used by CL Financial to take funds out of British American.

However, Gonsalves noted that in the case of BAICO, the regional judicial manager had already launched civil proceedings in the Florida courts against the company and several top officials, including former CL Financial chairman Lawrence Duprey.

The legal suit stems from the famous Green Island transaction, which involved the purchase of 6,000 acres of land in Osceola County in the largest investment done by BAICO Trinidad Limited.

While he waits patiently to see what action would be taken in Barbados, Gonsalves is not totally in support of liquidation, since based on current assets the judicial manager is saying "we get 60 cents out of the dollar".

"I want more than that," he said, adding that "those who have caused pain to individuals, pain and suffering and put the financial system at risk, must pay".

"If the authorities amass the evidence to proceed with criminal proceedings against any individual or groups of individuals, so be it.

"This is going to be a long-drawn-out drama and a lot of reputations are going to be sullied in the process and a lot justifiably," Gonsalves told the newspaper without elaborating.