CL Financial bailout – a summary

 

This article summarises the total Public Money spent on this CL Financial bailout and also outlines some further concerns.

CLF BAILOUT PAYMENT SUMMARY

COST DETAIL	AMOUNT
CLICO	$15,833,458,958.00
CIB	$1,870,659,526.00
BAICO	$1,637,387,140.00
CMMB	$736,079,577.00
Interest & Finance	$5,802,921,235.96
Accountants	$15,212,319.62
Attorneys	$37,459,864.43
Bankers	$7,934,991.40
Stockbrokers	$6,624,173.58
Services & Supplies	$2,410,000.57
TOTAL	$25,950,147,786.56

Source – Correspondence with Finance Ministry PS

Various payment summaries and the CL Financial Management Accounts (unaudited) for 2015, 2016 and 2017 were provided thus far in response to my requests for information of 4th May 2018. Notwithstanding those details, the Ministry is yet to respond substantively to my requests, so I have instructed my attorneys to take the necessary steps to settle this request for information.

In January 2009, this bailout started with a $5.0 Billion estimated cost. In October 2010, we were told that $7.3 Billion had been spent and that a further $7.0 Billion was needed to pay all the claims – a total of $14.3 Billion. A compilation of the Ministry’s summary data, on which I am relying, show a total of $25.95 Billion in Public Money spent at this stage, taking no account of unsatisfied creditors.

What could possibly have accounted for this staggering increase in expenditure? 

That is why all the details of all the payments must be released, consistent with the Finance Ministry’s earlier release of all the EFPA payment details. There is a strong public interest in explaining just how the cost of this bailout has escalated in this alarming fashion.

The Ministry’s letter of 31st July 2018 also refused to provide details of the identities and sums paid to the various creditors and service providers on the basis of ‘the duty of confidence‘ (sic) and certain provisions of the Financial Institutions Act, as well as the ‘prevailing security climate‘ and the ‘risk of threats to…personal safety…‘. Good standards of Public Administration require that decisions are reasonable, consistent, transparent and in conformity with applicable laws. The Ministry decided, with the benefit of eminent Senior Counsel advice and after almost six years of litigation, to release to me the payment details to EFPA holders, totalling $10.823 Billion TTD paid to over 13,200 claimants. That release was tantamount to publishing those details and is recorded in the Consent Order entered in the Appeal Court on 24th January 2018 in P201 of 2015. The Ministry’s refusal to release further payment details in this same CLF bailout is therefore inconsistent with its previous stance and could well be deemed unreasonable by the High Court.

My original requests for information were for –

1. Professional Fees and Commissions – ‘payments made and due‘;
2. Interest and Financing Costs – ‘costs incurred‘;
3. CL Financial/CLICO/CIB/CMMB/BAICO – ‘details of creditors and
   payments‘;
4. Legal Fees – ‘sums paid to and/or due‘;
5. Other payments – ‘payments made or expenses incurred‘.

Thus far, only total payments for the various categories have been provided, with no other details provided or any statement as to amounts owing. I am now posing these queries to establish the true extent of the State’s liabilities in this CL Financial bailout, which is clearly a matter of great public interest in all the circumstances.

In addition to the material on which our exchanges have been thus far based, I have carefully considered the affidavit of PS in the Finance Ministry, Vishnu Dhanpaul, dated 11th July 2017 and filed in the Ministry’s case to have CL Financial liquidated (02536 of 2017).

• CLF

  At para 41, he referred to CLF’s debt to the Government of $39,575,000 USD together with interest of 6.5% from 1st January 2000 (sic?). Has that debt been paid? Is it recorded as being part of the BAICO payments?

  At para 45, he referred to prospective liabilities of $850,723,000 TTD owed by CLF to the Government. Have those been settled? If so, how are they recorded?

  At para 46, he listed significant asset disposals by CLF since the date of the 12th June 2009 Shareholders’ Agreement and assert that none of those sums have been credited to the Government (sic). Has the total sum of those monies been estimated? How are those monies being recovered?

• CIB

  Para 35 of that affidavit referred to the Statement of Affairs produced by CIB’s liquidator as at 16th October 2015 recording total assets of $6,162,298,235.17 and total liabilities of $10,069,373,427. Those figures disclose an insolvency of $3,907,075,191.83. At para 34 he refers to a judgment for $159,839,799.27 plus interest of approximately $51M (all in USD) obtained by CIB on 9th December 2015 against CLF (CV 2013-03732). That is a CIB asset, totalling over $210M USD, which is also a liability of CLF – does it form part of the Statement of Affairs referenced earlier? Assuming that the Statement of Affairs took account of that item, according to the Ministry’s letter of 31st July 2018, CIB claimants received $1,870,659,526, which is $2,036,415,665.83 less than the insolvency disclosed in the Statement of Affairs. Is it therefore that unsatisfied liabilities due to CIB claimants are in fact $2,036,415,665.83?

  Para 45 referred to prospective liabilities of $2,357,850,101 TTD owed by the Government in respect of CIB’s Investment Note Certificates (INC) and other liabilities. Have those been settled? If so, how are they recorded? Can those be reconciled with the immediately preceding position as derived from the Statement of Affairs and the related documents?

• Interest and Financing Costs

  Para 41 listed interest and financing costs to 30th April 2016 as $2,665,740,710. The Ministry’s letter of 17th August 2018 confirmed that those costs were $5,802,921,235.96, as at 30th June 2018, which means that an additional $3,137,180,525.96 was spent in those 26 months since the 30th April 2016. Monthly interest and finance costs between 30th January 2009 to 30th April 2016 were $30,640,697.82, but between 30th April 2016 and 30th June 2018, that monthly cost quadrupled to $120,660,789.46.

  The reasons for that sharp increase could only be established by publication of the details of the interest and financing costs. Who are the lenders earning $120M monthly? Were the lenders changed from those in the earlier period?

Suffice to say that all of these queries show exactly why we need to have all the details of all these considerable payments of Public Money in this CLF bailout.