Gonsalves threatens to sue commercial bank over failed insurance company
ST VINCENT Prime Minister Dr Ralph Gonsalves says his administration is considering suing a commercial bank as it seeks to recapture investments by citizens and local companies hit by the collapse of the Trinidad-based British American Insurance Company (BAICO).
Gonsalves told Parliament the Registrar of Insurance has already instructed lawyers to go forward with the lawsuit against the commercial bank "which had held out that it was in a fiduciary position in relation to certain assets" from the failed entity.
Gonsalves did not name the commercial bank but said the claim for EC$140 million (US$56 million) was not against the Bank of St Vincent and the Grenadines, of which the state is a major shareholder.
"It had taken a while for the statement of claim to be settled. I was advised on Friday that very shortly that statement of claim will be filed, a pre-action letter has already been sent," he told lawmakers.
Gonsalves noted that judicial managers of the failed BAICO have sued several individuals in Miami in relation to US$75 million (US$27.8 million) arising from the Green Bay Property transaction.
16% of GDP in liabilities
He said that while the Troubled Asset Relief Programme in the United States was one per cent of that country's gross domestic product "the meltdown for British American-CLICO amounts to liabilities of close to 16 per cent of our GDP".
"If we had a one per cent GDP problem, it would have been difficult but not a challenge to the extent that this one is. And again, I ask for persons to have patience with us. This is a deeply involved issue and there are many twist and turns," he said.
Some some local entities have invested as much as EC$13 million (US$4.8 million) in the failed enterprises, Gonsalves told Parliament.
"And I appreciate that many persons, especially those who have had their annuities, are suffering, finding it very difficult because of the meltdown of British American-CLICO," he said.
"Mr Speaker, I use sometimes that you can't get words more powerful in our Caribbean - Colonial Life, the word 'colonial'; British-American - when you have those three combining, and if you put a dash of something else along to it - I don't want to say what that dash is - they are very powerful words; can lead you to buy anything so," Gonsalves said.
The prime minister told legislators that 18,700 people, or two-thirds of BAICO's policyholders in the Eastern Caribbean Currency Union, are to benefit from the capitalisation and sale of the traditional insurance business.
In giving a breakdown, Gonsalves said the figure includes 3,515 Vincentian policyholders; 4,725 Grenadians; 3,960 Kittitians; 3,321 St Lucians; 1,706 Antiguans; 954 Dominicans; 368 Anguillans, and 127 Montserratians.
Gonsalves said that "a significant number" of the 2,700 policies across the ECCU "would have elapsed because of the uncertainties" surrounding the companies.
"So it is only fair that we seek to have the resources available to say to those persons ... 'If you pay up your outstanding premiums and interest for that particular period, a new entity is buying so that you would not have lost', I suspect that individuals would decide as to how they would do it," he said.
Gonsalves added that it would be difficult to find out which policies have lapsed because of uncertainty.