“…The official also pointed out that no interest was ever charged on the amount of money that was loaned to the CLF group…”
—Quote from an anonymous ‘Government official’ in this newspaper on 21 July 2017.
A bold-faced snatch-and-grab is now being attempted and our total vigilance is now required. According to the ‘Occupy Wall Street’ protestors I saw at Zuccotti Park in 2012 –
‘If you are not Outraged, You haven’t been paying attention!’
Last week I spoke to the epic legal mangle which was about to engulf us all in relation to the CL Financial bailout fiasco. It is important to know that it does not matter if you had an investment in CLF or were a shareholder. It does not matter at all. This issue is so huge that every citizen has skin in the game. That includes the unborn ones and those CARICOM citizens who are not citizens of T&T.
The battle for the control of CLF unfolded rapidly last week with the shareholders attempting to regain control of the troubled group by carding a Special General Meeting to appoint two Directors to the Board. The State’s preliminary application to the Court to appoint two Liquidators was defeated on Wednesday 19 July 2017. Justice Kevin Ramcharan (one of the newest batch of High Court judges) ruled, after a seven-hour hearing, against the State’s submissions that the effect of the proposed Board appointments would be to endanger the Public Money spent thus far on this immense bailout.
The lead attorney for Lawrence Duprey and his cohort is former AG, Ramesh Lawrence Maharaj SC, who was to my memory the first public official to sound the alarm as to the insolvency at CLICO in 2001. Maharaj was referring to the 1997 Report of the Supervisor of Insurance which stated that CLICO was ‘technically insolvent’. His alarming disclosure was taken up by Trevor Sudama (who was also a UNC MP at that time) and Camille Robinson-Regis (who was a PNM MP, then in Opposition). That warning and his unforgettable quip, when asked who he was speaking about – ‘I do-pray, I do-pray‘ – led to his dismissal as AG. History is truly rich in irony.
Under the terms of the CLF Shareholders’ Agreement, which was first signed on 12 June 2009, the State had the right to appoint four Directors to the CLF Board. That was the majority, given that the Board was specified to comprise seven members. The purpose of that Agreement was to manage the bailout process and ensure repayment of the Public Money being spent to pay the group’s debts.
We are told that the Agreement was renewed 17 times in the eight-year period of this bailout and that it expired in late 2016, with the CLF shareholders reportedly refusing to sign any further renewals. That refusal has set the stage for this epic legal showdown with the shareholders now attempting to regain a majority on the Board and the State applying to the Court to have the group put into liquidation.
It seems, from the press reports, that about $7.5 Billion of the total cost of $23 Billion has been repaid, reportedly from the sale of Methanol Holdings Trinidad Ltd’s shares. Which leaves over $15 Billion owing to the State and that is the subject of this bitter contest.
A real question to my mind is ‘Why was there no progress in the preceding eight years to liquidate other CLF assets so that the debt could have been far less at this stage?‘
The cost of this bailout has exploded from the 2009 estimates of $5 Billion to the Finance Minister’s 10 May 2017 estimate of $27.7 Billion. All of this while an estimated 15,000 T&T policyholders have not collected their money. CARICOM citizens who lost their investments in the CLF group have also not been repaid. On 2 November 2009, the governments of the Eastern Caribbean Currency Union issued a formal statement identifying the insolvency of British American Insurance Company as $775 Million EC Dollars, which would equate to over $2 Billion T&T Dollars. The ECCU estimated that if a liquidation option were adopted, the policyholders and investors would receive only ten cents on every dollar. Please note that the ECCU does not include Barbados or Guyana and there were huge losses in both those countries. We have seen recent reports on the T&T government’s pledge to pay $100 Million USD to meet CARICOM claims from the CLF collapse, with only $50 Million USD paid thus far.
Given this background, another critical question is simply ‘Who were the persons who were paid-off in the course of this bailout?’
The Special General Meeting is scheduled for Tuesday 25 July 2017, the day before this column appears, with the State attempting to have its appeal against Justice Ramcharan’s ruling heard on or before that date.
The State’s Winding-up petition is also carded for hearing at the High Court on Tuesday 25 July 2017, the same day as the Special General Meeting, and that is itself a serious battle. I found it hard to appreciate the reports on Justice Ramcharan’s oral ruling. It seems that he took the position that the State did not provide any evidence that the enlarged CLF Board would not repay its debt to the State. What mystified me was his reported statement –
“…In fact, the evidence suggests that they (the shareholders) are intent in (sic) repaying their creditors…”
On the one hand, the State adduced no evidence, but on the other hand the evidence ‘suggests’ the shareholders want to repay. I would not buy a used car from the CLF chiefs. The same persons who are now refusing to renew the Shareholders’ Agreement, which would ensure that the State retains control of CLF until it is repaid, were able to persuade the Court of their intent to repay. Well I tell you.
Riding in the background of all this is the failure or refusal of the Central Bank to apply its own fit and proper guideline to the CLF chiefs. Until and unless that is done, we are in for a grim fight, with vast sums of Public Money in jeopardy.