Today at the National Cultural Centre President Jagdeo will tell policyholders of Clico Guyana about his administration’s arrangements for them to recover the billions of dollars squandered by the failed insurance giant. This follows swiftly on the ruling last week by Ian Chang CJ (ag) that the company be liquidated.
The Chief Justice ruled that the Bank of Guyana be the liquidator. But President Jagdeo had promised that no policyholder would lose out on their investment, and he may be meeting them to say how the government will back his guarantee. That is the extent to which the government can go without frustrating the ruling of the court. In fact the President should be meeting with the Bank of Guyana in its capacity of liquidator and it is the liquidator that should be meeting with the policyholders.
The migration from judicial management to liquidation – two distinct insolvency regimes – involves a number of technical issues including the basis on which principles and statutory provisions of the former could be transplanted into the latter. But the President finds it irresistible to interfere and to try to benefit from the mess to which his administration made no small contribution. It would be the classic case of deus ex machina.
While the collapse of the company cannot be divorced from the demise of its Trinidadian parent, the directors of which are probably equally culpable, the taxpayers of this country will bear a huge cost as a result of the illegal transmission of US$34 million the local company shipped out to its sister company, Clico (Bahamas). It is one of the most costly corporate crimes ever to have been committed against the people of this country and in keeping with the principles of relevant law, it is the directors of the company including Ms Gita Singh-Knight and Mr Ramalho, who should be held culpable. And on top of this, all this took place while we boasted about the quality of the Insurance Act and the supervision by the Office of the Commissioner of Insurance.
We understand that Director Ramalho and his wife surrendered their policies to the tune of $45 million even as the Clico ship was fast sinking. He has denied receiving any money but the question remains whether he acted based on inside information.
As at February 28, 2009, the Guyana company had some $600 million in cash and other liquid assets – much lower than the $1.5 billion it received from the sale to the NBS of investments in the Berbice River Bridge Company Inc. Unfortunately the court did not comment on any person or persons who might have benefited from insider information by cashing in on their policies or those who might have colluded with them. My understanding is that several powerful persons with political connections would have been on the list of beneficiaries and that high political functionaries may have had a hand in the prioritization of the payments. In effect they were paid improperly in advance while the policyholders who will turn up at the National Cultural Centre this afternoon may be told they have to wait years for full, nominal recovery.
The court must have been aware that there had been a concerted cover-up of vital information. With the greatest of respect, I believe it missed a great opportunity to assert the rule of law, by not offering some comment on the selection of persons by CEO Ms Gita Singh-Knight for preferential payment when she must have known that collapse was imminent.
CLICO represents one of the worst acts of corporate misfeasance ever committed in this country. Yet, some of the people whose hands drip with culpability will probably be there this afternoon.
The question is whether today will simply be the end of this sordid affair or should we not follow the call by Government Senator Patrick Watson to the authorities in Trinidad and Tobago that those persons in CLICO in Trinidad responsible for milking thousands of unsuspecting investors of their money should be ‘jailed.’
Hopefully, policyholders will be allowed and will have the courage to ask President Jagdeo some challenging questions. Let us not forget that billions of dollars belonging to the NIS is involved, putting at risk the pensions of workers. It would be a sad day for Guyana and corporate governance would be rendered meaningless if today’s meeting closes the book on this affair.
The advertisement for the meeting mentions that only policyholders will be admitted and that persons would have to provide proof of identification. It is therefore likely that the press will be barred from the meeting.
The court has dealt with one aspect of this matter. A full and thorough investigation is now required to identify all who contributed to this expensive mess. The money to pay the policyholders belongs to the taxpayers. They should join the call.