‘Any evidence of possible fraud or insider trading will lead to prosecution’ – a government spokesman
THE report of the probe into the financial status of CLICO (Guyana) insurance firm is due out next week and any evidence of possible fraud or insider trading will lead to prosecution, a government spokesman has maintained.

Commissioner of Insurance and judicial manager, Ms. Maria van Beek, is to submit her report to the High Court on the findings of the probe which began after the court on February 25 granted a judicial management order over CLICO Guyana.

At a press conference after the inquiry began, President Bharrat Jagdeo warned that if information provided to the government by CLICO Guyana on the financial state of the company turns out to be wrong and there is evidence of fraud or possible insider trading, those responsible will face the consequences, including prosecution.

The spokesman said this government position still stands.

Slamming continuing clear distortions from Opposition parties about crisis-hit CLICO Guyana last week, Mr. Jagdeo also announced that he favours liquidating the firm and restated assurances of a government guarantee on investments by policy holders of the company.

He pointed out that CLICO Guyana last week secured an injunction against the Trinidad-based parent company, CL Financial, and some of its subsidiaries from receiving payments from Guyana.

He noted too that the Chinese bauxite company BOSAI, operating in Linden, has a US$15M loan from a CL subsidiary which has been transferred to First Citizens bank in Trinidad and Tobago.

According to the President, with the inter-related nature of the companies and the guarantees CL Financial had issued to both Guyana and CLICO Bahamas, the US$15M receivables from BOSAI should go towards settling some of the liabilities that CLICO Guyana has.

CLICO Guyana is trying to recover about US$34M invested with CLICO Bahamas which has also been hit by the global financial crisis.

“If we were to succeed in securing those resources, our exposure will be cut significantly”, the President said.

He also indicated that the disposal of some of the firm’s local assets may go to pay back most of the small policyholders, and this will allow the larger policyholders to remain with CLICO Guyana.

With the guarantee already given, the government may discuss with these policyholders the possibility of returning their investment over a period and how much they can earn on the return from their money, he said.

“It will still be like a form of investment that they have,” he added.

The President was also surprised that the small Alliance For Change (AFC) party and the main Opposition People’s National Congress Reform (PNC/R), which endorsed the government’s CLICO Guyana guarantee in the National Assembly, have asked where the money will come from.

“The money has to come from the Treasury but we will do so in such a fashion that it could be US$34M phased out over a 10-year period so it does not become a burden on the Treasury- and that is if we do not get back anything and we are taking steps to get back some of the money from abroad,” the President explained.

“It’s not a big liability which the Treasury cannot handle. In fact we can handle that and still continue to spend significantly, without cutting our spending this year,” he said.

Van Beek last month noted that as Judicial Manager, she is expected to report back to the court with her recommendation regarding the future of the company. The financial investigation, she said, “is not a quick process, nor an easy one.”

She said an important up-to-date assessment of the company’s financial status is underway with the help of the Nizam Ali and Company accounting firm and its actuary, Prescience Insurance Consultants and Actuaries based in Toronto, Canada.

“While these investigations are being conducted it is important that I seek to operate the company in a manner that will maintain its viability and maximize its ability to meet its obligations to policyholders and creditors,” she said.

She signalled too that other options are available to winding up the company but said this will depend on the current investigation of the financial state of the firm.

The CLICO debacle began on January 30 when the Government of Trinidad and Tobago, through its Central Bank, was forced to bail out four of the subsidiaries of the CL Financial Group. On February 24, Bahamian Prime Minister, Hubert Ingraham, who is also the Minister of Finance, was granted a winding up order over the operations of CLICO Bahamas.

Immediately following the actions of the Bahamian authorities, the Government of Guyana, through the Commissioner of Insurance, was granted a judicial management order over CLICO Guyana by the courts on February 25.

On March 2, the Supervisor of Insurance in Belize, Alma Gomez obtained a judicial management order on the operation of CLICO Belize, and on March 6, the Cayman Islands Monetary Authority, ordered CLICO Cayman to cease issuing new policies with investment components and refrain from accepting new premiums on existing policies with investment features.

Some analysts feel the conclusions of any investigation will put significant blame squarely on the shoulders of the management of CLICO Guyana.

One observer argued that as an insurance company operating under the Insurance Act 1998, CLICO Guyana management should have known and followed the rules.

He suggested that an outcome of any investigation will be how much influence the management of the CL Financial Group in Trinidad had on the actions of its local counterparts here.

He noted that the Commissioner of Insurance has been trying to get CLICO Guyana to return their investment in CLICO Bahamas since 2007 when they had established their statutory fund, and despite giving her assurances that they would do that, the company never did.

In addition, he said, the President had requested information from the insurance companies last year when there were problems in the U.S. financial markets about their international exposure.

CLICO Guyana assured the government that it was not exposed but this turned out to be not true. (GINA)