FINANCE Minister Winston Jordan today will sign a Debenture Agreement with the National Insurance Scheme (NIS) for an aggregated value of $5,641,431, 475.This sum is to assist the NIS to recover its investment in the Colonial Life Insurance Company (CLICO). The signing will take place at the Ministry of Finance boardroom. Back in August, Jordan had announced that the NIS would receive $5.6B from the Government of Guyana as compensation for the financial loss suffered as a result of an investment made in the now bankrupt Colonial Life Insurance Company (CLICO).
Jordan had disclosed during a media briefing that Cabinet consented to repay NIS through non-negotiable debenture certificates. The repayment would be made over a 20-year period at a fixed interest rate of 1.5 per cent per annum, the principal sum being four billion, eight hundred and eighty-two million, four hundred and forty-six thousand, one hundred and ninety-nine dollars ($4,882,446,199).
He said yearly payments are to begin from January 1, 2017, and at the end of the 20-year period, Government would have paid over five billion, six hundred and fifty-one million, four hundred and thirty-one thousand, four hundred and seventy-five dollars ($5,651,431,475) in terms of principal and interest. “It is the best that the Government can do at the moment, but it is substantially more than NIS would have had if this investment continues to be impaired,” Minister Jordan said.
The decision to repay NIS followed a motion by the People’s National Congress Reform (PNCR), when in opposition, to call upon the then People’s Progressive Party/Civic (PPP/C) government to take all steps necessary to guarantee that policyholders of CLICO Guyana would suffer no financial loss. That motion, moved by then Opposition Leader Robert Corbin and seconded by Winston Murray, sought to have Government give an unequivocal guarantee to all contributors and beneficiaries of the NIS that there would be no consequential loss in benefits to them as a result of CLICO’s bankruptcy; and that the Government, and not contributors, would take up the slack.
Resolution 82, passed by the National Assembly on March 12, 2009, called upon Government to take all necessary steps to ensure that there would be no financial loss to any policyholder or depositor of CLICO (Guyana); and to take all possible actions to secure the investments made in CLICO (Guyana) by the NIS on behalf of contributors and beneficiaries of the Scheme, to prevent any consequential loss in benefits to them. The National Assembly had endorsed the statement by the government of the day, guaranteeing the savings, pensions, investments, and insurance of all investors, depositors, policy holders and contributors of CLICO (Guyana).
The Finance Minister said NIS has been “impaired” as a result of the CLICO situation, and was finding it difficult to provide the beneficiaries with assistance. “NIS investments in CLICO are impaired, with extreme unlikelihood of getting back that money,” Jordan said, adding: “As a result of that impairment…not only NIS, but the beneficiaries in NIS are suffering terribly; because their ability to raise benefits will obviously be constrained by the fact that they don’t have this money, and this money cannot be put to earn additional monies for them.”
The NIS had invested more than $6B in CLICO (Guyana), and CLICO reportedly invested some US$34M in its Bahamian counterpart, which became liquidated. The liquidator of the CLICO (Bahamas) company said in 2010 that, based on a preliminary view of documentation, policies were not issued by CLICO Bahamas, and as such, premiums received from Guyana and Suriname were never paid to the Bahamian company.