Ramesh Lawrence Maharaj SC has written to the Registrar of the High Court asking “who authorised a gag order” on documents filed on behalf of former chief magistrate Marcia Ayers-Caesar against...
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HIDDEN AGENDA IN CLICO LIQUIDATION?
On June 11 the Government filed a petition in the High Court seeking to wind up CL Financial because of its alleged inability to pay its over $15 billion debt owed to the Government. To recap—In January 2009 the PNM Government entered into an MOU with CL Financial, the essence of which was that the Government would bail out Clico, British American Insurance (Bat) and Clico Investment Bank (CIB), in exchange for which Government would be given control of CL Financial in order to liquidate assets owned by it to repay the debt.
The bailout was to be effected by (controversially) putting taxpayers’ funds into Clico, Bat, CMMB and CIB, so that policyholders and depositors would be protected. Because of Clico’s importance in the financial sector and the risk to the financial system if it went under, Clico was placed under the control of the Central Bank via section 44D of the Central Bank Act, but always subject to the directions of the Finance Minister, himself part of Cabinet and the Government.
This action is somewhat surprising as CL Financial owns shares in several companies locally and globally, and the Government of the day must have known that there were many profitable companies owned by CL Financial and the sales of just some, not all of them would have satisfied any debt incurred in bailing out Clico, etc.
In fact, it is a widely held view that while Clico, Bat and CIB were in a perilous state, if the MOU was faithfully and properly managed and implemented the debt could have been satisfied and thereafter CL Financial, a slightly smaller behemoth than what it was previously, would take back the reins of power and continue to be a local, regional and global force.
The Government must realise it is important for the economy, indeed critical, that CL Financial continues to operate. Of course, the debt must be repaid, or at least satisfactory arrangements put in place to repay it (which appear to have been offered by CL Financial by its PricewaterhouseCoopers’ designed “Project Rebirth” proposal).
When President Reagan bailed out Chrysler and President Obama bailed out General Motors, the American government did not take control of those companies, but they ensured that the debts were paid back, which they were.
It seems our governments had different ideas, as the Manning PNM government, the PP government, and the present PNM Government, each whilst in power, used the opportunity to put their people as chairmen of and on the boards of CL Financial, Angostura, etc, and hire consultants, advisers, and scores of others, who were all paid huge fees and allowances. Why were proceeds from sales of assets used to enrich a select few and not to pay off debt owed to the Government as was the intention of the MOU and the several successive shareholders’ agreements that kept the Government of the day in charge?
But the obscene behaviour didn’t end there. There were stories of government appointees allegedly helping themselves to assets like luxury apartments at below market value prices. And in the PP government’s case, proceeds from the sales of assets were also used to plug its budget deficits so that it could continue to spree. It was not in the interest of friends of the government who were appointed to the various board to get on with the task of quickly securing the repayment of the debt when such a good time was being had.
That being said, it appears the turning point that precipitated the move to wind up CL Financial seems to be the special meeting of shareholders carded for July 26 at which CL Financial was almost bound to take back control from the Government, there having been no further extension of the shareholders’ agreement keeping the Government in charge.
If an order is made to wind up CL Financial a liquidator will be appointed who will be allowed to go further than the original bailout plan by selling off everything that CL Financial has, not just what is required to repay taxpayers. Government policy has moved from what originally appeared to be bail out (but with CL Financial ultimately to get back control and to continue) to simply shutting it down forever.
Further, when one considers that Home Construction Ltd is the largest private landowner in the country, that Angostura is the king of rum and makes its famous global brand of bitters, that Clico is a significant shareholder in Republic Bank—our biggest bank (by assets) and the most profitable—and that valuable real estate in Tobago is owned by CL Financial, the feeling is bound to arise that there is something more here than meets the eye.
Was it always the intention of both the PNM and PP to take advantage of the opportunity created by the perilous state of Clico, Bat and CIB to enrich cronies? Is it the intention now to further enrich cronies and give them control of lucrative companies and ownership of valuable real estate by way of fire sales in the liquidation? And was it from the beginning the PNM’s intention, now to be realised, to destroy “the enemy?” There must be a better way in the national interest to manage the way out of the financial difficulties that the CL Financial conglomerate found itself in. That, not the shutdown of CL Financial, should be the focus of any government.