Former attorney general Ramesh Lawrence Maharaj says the entire Cabinet could be the subject of a police investigation if it is proven that pressure has been applied on National Security Minister G
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Deadline: End of June
In last week’s Sunday BG, Finance Minister Larry Howai, speaking about Clico, appeared to have stunned the nation when he said: “At this stage, no decision has been made, but we have signalled that based on our own evaluation, and subject to the determination of the actuarial review, we are actively considering the sale of the (traditional) portfolio. “We have also advised the staff that we are considering the sale of the portfolio.”
In quick succession on Monday, Mr Howai’s comments attracted the attention of both the trade union representing Clico employees and the Governor of the Central Bank of T&T. The Clico branch president, Roxanne Cuffy, described the comment that the employees had been advised that the Government was “considering the sale of the portfolio” as “completely untrue.”
Governor Jwala Rambarran, in a statement, insisted that the “Central Bank is in control of Clico, pursuant to Section 44D of the Central Bank Act” and that the institution “is the only entity empowered to restructure the business or undertakings of Clico, in accordance with the provisions of the act.”
Mr Rambarran also confirmed the sale of Clico’s traditional insurance portfolio, stating: “As part of the resolution strategy for Clico, the Central Bank proposes to transfer Clico’s traditional insurance portfolio for value to an acquiring insurance company that is well capitalised, has a proven track record and the capacity to honour all obligations to policyholders.
“In order to achieve this objective, the act requires the Central Bank to have a market price for Clico’s traditional portfolio determined by an independent valuation company. An independent actuarial firm has, therefore, been engaged to value Clico’s traditional business for this purpose and the exercise is still in progress.
“Subsequently, the Central Bank will conduct the process for the sale and transfer of Clico’s traditional insurance portfolio on a transparent, open-market basis. The bank has neither engaged with any prospective buyers nor made any decision on the structure of the portfolio transfer.”
While the Minister of Finance stated, in the interview, that the Government was “actively considering” the sale of Clico’s traditional insurance portfolio, such a sale had been signalled almost a year ago in a seven-page letter of intent, addressed to Vishnu Dhanpaul, the permanent secretary in the Ministry of Finance, and signed by Marlon Holder, the managing director of CL Financial.
The letter of intent—dated July 4, 2013—was described in the accompanying July 9 Cabinet Note as providing a “foundation on which the new shareholders’ agreement is to be drafted.”
It was also described as being a “true reflection of the outcome of negotiations between the Government and USL to date” and was meant to be “duly execute(d) by the Ministry of Finance. USL is the United Shareholders Ltd, a subsidiary of CL Financial, which was authorised at an extraordinary general meeting on May 14, 2012, to “represent, negotiate and execute any documentation for and on behalf of the shareholders of CL Financial.
In the letter of intent, CL Financial proposed—and the Government was on the verge of accepting—that the group’s shareholdings in certain assets should be sold to settle the debt owed to the Government, which the group estimated at $18.33 billion:
• Shares in Methanol Holdings (Trinidad) Ltd—to be disposed of entirely
• Shares in Methanol Holdings (International) Ltd—to be disposed of entirely
• Shares (some 52 per cent) in Republic Bank Ltd—to be disposed of entirely
• Shares in Angostura Holdings Ltd—CLF to keep at least 51 per cent ownership interest
• Shares in CL World Brands—CLF to keep at least 51 per cent ownership interest
• Shares in Home Construction Ltd—CLF to keep at least 51 per cent ownership interest
In addition, according to the letter of intent, CLF proposed that Clico and British American’s traditional insurance business be divested.
Of Clico, the document states: “CLF proposes the following with respect to Clico:
• Certain assets and insurance-related liabilities forming the traditional insurance business of Clico be divested for commercial value; this value to be determined by a valuator to be mutually agreed upon by CLF and Government, in consultation with the Central Bank as managers of Clico;
• Payment of all third-party liabilities first and then payment of the Government debt, including amounts owed to Government in respect of STIPs (short-term insurance products) capital injection and dividends on preference shares;
• The assets remaining in Clico after the above transactions will remain in Clico, which will then revert to being a wholly owned subsidiary of CLF.”
Although CL Financial proposed that the shares in Republic Bank should be sold in their entirety to repay the Government, the group—which was founded by its former executive chairman Lawrence Duprey, who is still is largest single shareholder—said it was of the view that “it suffered a loss as a result of the manner in which the Republic Bank shares were sold. In the circumstances, CLF proposes that subject to the determination of the merits of its claim, any such loss be treated as a credit for the benefit of CLF in the discharge of the Government debt.”
At the Angostura Holdings annual meeting on Monday, CL Financial chairman Gerald Yetming—who is also the chairman of Angostura—disclosed that the lawyers for CL Financial and the Government were drafting the new shareholders’ agreement in time for the end of June.
By the end of June, the arbitration tribunal in the Methanol Holdings matter, which is sitting in London, is due to decide on the price that the minority shareholders should pay for the methanol producer—56.53 per cent owned by Clico. The minority shareholders are led by the Switzerland-based project engineers, Proman. The actuaries, Towers Watson, are due to complete their valuation of Clico by the end of June.
Some 403 Clico agents and employees were told in separate meetings last week by the insurance company’s CEO, Carolyn John, that Clico would stop issuing new business immediately and that their service at Clico was being concluded by the end of June, sources told the Sunday BG. The end of June is 36 days away.