The previous article set out my criticism of the CLF bailout situation in respect of the CARICOM claims and our nation’s treaty obligation to exercise non-discrimination in its policies. In that light I am sceptical of the position now being advanced by the CLF shareholders to highlight that group as being a black-controlled conglomerate. My scepticism was rooted in the apparent refusal or failure of either the CLF shareholders or the T&T State to accept responsibility to meet CARICOM claims arising from the 2009 collapse of CLF.
I am stating here what seem to be the four indispensable elements of an equitable settlement to this CLF bailout.
- Settlement of non-T&T claims arising from the collapse of CLF –
I have been reliably informed that the Policyholders in one OECS Member State have sent Pre-Action Protocol letters to the Government of the Republic of Trinidad and Tobago in pursuance of their CLF claim. This course of action followed after this OECS Member Government twice wrote to the Government of the Republic of Trinidad and Tobago without having the benefit of a response. Clearly wholly unsatisfactory in terms of international diplomacy, particularly in the context of Trinidad and Tobago as a leading CARICOM State, More Developed Country (MDC) and the other CARICOM State, as a Less Developed Country (LDC) in the context of the Revised Treaty of Chaguaramas (RTC). Should matters attendant to the question of fair and equitable treatment between CARICOM Members proceed to litigation they will be expected to be heard by the CCJ which is the Court of Record for disputes arising within the ambit of the Revised Treat of Chaguaramas. If this were to proceed to the CCJ, it would be yet another layer of litigation to be resolved at public expense before the issue can be settled. Consider also that other CARICOM members have not yet litigated so there is a clear and present danger that those states whose citizens’ claims have not been satisfied could join into the entire lawsuit.
- Full audits and all details of all payments must be published – As things stand we were told by the Minister of Finance in his Mid-Term Budget Review on 10 May 2017 that – “…the Government may be owed up to $27.7 billion by the CLF Group…”. Of course we have heard many different amounts stated by the various parties and public officials, but this is the highest estimate and the Minister of Finance must be considered as a reliable source. I have litigated and won in the High Court to have the details of the bailout published in the public interest, given the vast sum of Public Money at stake. The State has appealed that High Court ruling and the matter is set for hearing in January 2018. It is simply unacceptable for the State to be proceeding in this manner to suppress these important facts at a time of such great financial stress for our country.What is more, the substantive hearing of the High Court case in which the State has applied to have CLF liquidated is due for the early part of September 2017. It seems to me that the State will have a challenge to prove the insolvency of the group on two bases.
- Firstly, the group has been under the control of the State since January 2009, so why are there no audited accounts since that time? The last audited accounts for CLF were for the financial year ended 31st December 2007, at which time it was under the control of its original shareholders, so why has the accountability vanished?
- Secondly, if the CLF group is indeed insolvent, one has to ask at what point was that serious state of affairs reached? As far as I am aware it is illegal to trade while insolvent under our Companies Act, so this issue will be a serious one for the Court to consider.
- Interest on the debt – The T&T Treasury must receive some reasonable level of interest on this colossal debt. After all, the entire enterprise was founded on offering investors and policyholders extremely high levels of interest. Those persons who continue to claim that the CLF bailout is ‘just like Wall Street‘ are misleading to say the least. The companies bailed out by the US State were made to surrender shares and pay very high rates of interest. In the case of AIG, the rate of interest was 8.5% more than the then prevailing base rate of 3%. That’s right, AIG paid a punitive rate, almost four times the prevailing base rate. If CLF were charged the sort of interest rate they offered their investors, the company would likely be unable to repay its debts to the State, given the length of time this bailout has taken.;
- Fit and Proper guidelines must be applied to prevent the previous CLF chiefs from regaining control of the group – I am reliably informed that the Central Bank used its fit and proper powers recently within this CLF imbroglio, so it is now imperative that those powers be exercised to prevent the CLF chiefs from regaining control of the group.
The only equitable resolution to this years-long debacle is to ensure that the CLF bailout concludes in as seamless and as transparent a way as possible. Repaying the debt owed to the Caribbean claimants is an essential part of this process.
© 2017, Afra Raymond. All Rights Reserved.