Five years after the Government took charge of the CL Financial Group in a massive bailout that's cost the taxpayers of T&T an estimated $20 billion so far, there is no clear path forward for the company that once sat at the core of that financial empire, the insurance company Clico.Founded in 1936 and led for decades by its founder, Cyril Lucius Duprey, Clico won its place in a class- and colour-conscious corporate landscape through force of will and a scrupulous adherence to the promises it made.
While most financial institutions are based on trust, an insurance company demands uncommon levels of trust and clear demonstrations of honesty in meeting its financial commitments or the enterprise collapses quickly.People invest relatively small sums of money over long stretches of time as both insurer and insured bet that incidents that draw on the company's financial resources will be far less than the cash received.
For that reason, CL Duprey ran a tight and perhaps excessively parsimonious ship. As a man of colour in a business that offered him few peers, he demanded that the company be cautious in its investments and spending.When Lawrence Duprey took charge of the company in 1987, he found a company flush with cash and began unprecedented investment and growth, catapulting Clico from being the sedate occupant of a quiet and stately office building on St Vincent Street into a regional financial powerhouse.
Mr Duprey (the second) bought financial institutions, invested heavily in Republic Bank and Angostura and spent big on the downstream natural gas industry.It's those assets that Lawrence Duprey bought that must now be sold to ensure that the taxpayers of T&T recover most, if not all, of the $20 billion that the Government pumped into Clico and its associated companies.
The final and binding award by the arbitration tribunal of US$1.175 billion ($7.5 billion) for the 56.53 per cent of Methanol Holdings (Trinidad) Ltd (MHTL) owned by Clico is certainly less than the Government was counting on, but it gives a degree of certainty to a major piece of this Clico puzzle.
The other pieces of the puzzle include Clico's traditional insurance portfolio, the holdings by Clico and its parent CL Financial in Republic Bank, Angostura and CL World Brands and all of the group's other assets, which include significant property investments.The first question that Mr Howai needs to answer is whether the group's non-MHTL assets can generate up to $12.5 billion, which will ensure that the taxpayers of this country come out of this affair as close to whole as possible.
The second question he needs to answer is whether the Government can convince the shareholders of CL Financial that the interests of T&T's taxpayers should be placed above the interests of the shareholders with regard to the distribution of funds from the sale of assets.In all of this, the Minister of Finance would do well to be as transparent as he possibly can in providing the taxpayers of T&T with a full accounting of this government's stewardship of this issue.
Once the issues surrounding the offer to MHTL's minority shareholders have been settled, Mr Howai ought to make a comprehensive statement in Parliament, outlining what has transpired in terms of the management and sale of CL Financial's assets, the current financial position of the group and the prospects of taxpayers recovering the estimated $20 billion.