CL Financial bailout – Paying the Devil

paying the devilToday is the 30th of January 2014: five years since the State bailout of CL Financial was announced to a shocked nation and region. It is necessary to mark this moment in time with solid facts and stern meditation.

The Carnival season is upon us, so J’ouvert is near the front of my thoughts. J’ouvert is simple, yet tremendous, because of the experience of passing from night into daylight and of course those around you becoming clearer as the light overcomes the darkness. For me, the defining feature of Jouvert is the terrifying portrayals of ‘Devil mas‘ in its various forms – ugly and dirty, covered with mud, oil or paint; real noisy, beating pitch-oil tins and such; forceful, in demanding payment from you before you could pass. You have to pay the Devil to go away. Pay the Devil, so he could leave without dirtying you up.

The vast amount of detail which has emerged in the last five years, means that I can only focus on one key aspect of the CL Financial bailout scandal.

My main theme is that vast amounts of Public Money have been committed to repay the debts of CL Financial, while the chiefs who directed and controlled that conglomerate seem free to come and go as they please. Or, in the case of Duprey, who refused to testify at the Colman Commission, to go and refuse to come. Once again, Trinis in the running for some awards for innovation and so on, with Duprey being the world’s first ‘Penniless Philanthropist‘.

How much Public Money has been spent on this exercise? How much of that Public Money will the State recover? That is my focus.

When the Memorandum of Understanding was signed on 30th January 2009, it was on the basis that CL Financial assets would be sold to recover the Public Money being advanced, which was estimated to be about $5Bn.

Winston Dookeran’s first budget speech on 8th September 2010 was a critical turning-point, as it appeared to me that he was attempting to stem the flow of Public Money out of the Treasury. Dookeran made a case which was based on the huge and unprecedented liabilities facing the State at pg 9 –

“…The total funding provided as at May 2010 by the Government and the Central Bank, excluding indemnities and guarantees to First Citizens Bank amounted to approximately $7.3 billion. As of June 2010, CLICO and British American combined total liabilities were approximately $23.8 billion but total assets were $16.6 billion…” .

Immediately, in protest at Dookeran’s attempt to limit the cost to our Treasury, there were several ‘Policyholders’ and Depositors’ groups‘ formed. The word ‘Depositors’ was soon omitted when it was realised that it would not suit their purposes.

With Dookeran isolated and the government under mounting pressure from these new protest groups, there were new laws drafted to stifle the protestors’ legal options. At this point, we had the historic address to Parliament by the PM on 1st October 2010 – historic because even with the required majority of votes to pass the intended new laws, the PM chose to explain and persuade the public. The bailout was extended to Hindu Credit Union and the Commission of Enquiry was announced to find the causes of the collapse of the CL Financial group and HCU.

Most notable was the PM’s outrage at the mystery of the bailout – at pgs 25-26

“…The $5 Billion has been spent—we are advised—to repay matured  EFPA policies in an ad hoc and unstructured manner where payment arrangements were entered into based on levels of funds invested. What criteria did you use to repay investors? Whom did you choose to pay? How were they chosen? These questions need to be answered. Because if it is today after the $7.3 Billion, all these EFPA people, the policy group and so on, they are out there, where is their money? Where is their money? Did you have a priority listing of who should be paid? Why did you go—and you are now crying crocodile tears about trade unions, credit unions, the poor man and the small man—why did you not pay them first? Why did you not pay them first? Where did that $7 Billion go? We need those answers, Mr. Speaker. We deserve those answers. The taxpayers need to know. Because when a parent  has to buy school books and bags to send his/her children to school but they have to pay tax out of the little money, they need to know where that money has gone…Where, how and why; we need to know…”

In September 2011 Parliament approved a new law authorising the State to borrow an additional $10.7 Billion to fund the bailout.

Winston Dookeran’s affidavit of 3rd April 2012 specifies that $24 Billion of Public Money is committed to the bailout, at paras 21 & 22…

Para 21         (a)      $5.0Bn already provided to CLICO;
                (b)      $7.0Bn paid to holders of the EFPA and
Para 22                  $12.0Bn estimated as further funding to be advanced.

Recent estimates have now risen to ‘$25b and counting‘ according to the Sunday Express report of 4th May 2013. Given the shock with which the estimated bailout cost of $5 Billion was received a mere five years ago, it is sobering that $25 Billion can now be bandied-about by Public Officials in this fashion.

Will our money ever be repaid? If so, how and when?

Now and again, official statements are made to assure the public that the matter is being resolved and the CL Financial Shareholders Agreement is extended for this reason or that. There is an appearance of diligence and purpose, but there are also other statements which we must consider.

Finance Minister Howai is recorded in Hansard of 30th January 2013, speaking about the CL Financial bailout – at pgs 16-17

“…Mr. President, we shall never recover all the funds that have been put into the group, but our focus is to try and maximize what we can and to reduce the borrowing that we need to do…”.

Even more concerning is that there has been secretive disposal of assets of the CL Financial group – to cite one example, Valpark Shopping Plaza was recently sold to Courts, without any public advertisement.

All the while, the State is mounting strong resistance to my lawsuit to force publication of the details of this bailout. The secrecy is inimical to the wider public interest, which is being sacrificed for the comfort and benefit of the ruthless few.

Every single established mechanism for oversight, transparency and accountability in public affairs has been sidelined in this sordid CL Financial scandal. Integrity in Public Life Act – nothing. Audited Accounts – not available. Freedom of Information Act – legally disputed. Briefing to Parliament – exempted.

Ask yourself – “Would you trust a public official with $1M to spend if there were no requirement for them to account properly?” If not, why should we trust any public official or institution with the authority to spend 24,000 million dollars with no oversight or accounting.

Hence my title – we really Paying the Devil.

cl-bailout-timeline

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