MPs puzzle over NIB’s $156m investment in Clico bank

The procedure and protocols of the National Insurance Board (NIB) were brought into question yesterday, when the organisation was again asked to justify why some $156 million was invested in the now defunct Clico Investment Bank rather in “safer” entities. The issue was raised during yesterday’s Public Accounts Committee sitting held in Parliament.

It re-examined the audited financial statements of the NIB for the year  ended June 30, 2009. Sport Minister Anil Roberts questioned the “procedures and thought processes” of the organisation in investing such a huge sum into a company which was not viewed as viable. “When we look at this figure, what was the rationale and thought process to put $156 million in CIB, that did not have a great track record?

“We have, in local terms, Republic Bank, we have RBC, I could understand the First Citizens (Bank), we have Scotiabank—we have other banks that are far safer, less risky. When the goal was to mitigate risk, what was the rationale of putting $156 million into CIB, which did not have a history of security, strength and solid as a rock in Trinidad and Tobago?” Roberts asked. He noted that NIB, at that time, only invested $76 million in the Unit Trust Corporation, which he described as a safer and more secure bet.

Roberts said when the question was asked on the previous occasion it was not addressed. Deputy chairman Sylvester Ramquar, however, could not respond, only saying, “We would have to get back to you.” Apparently irritated, the committee’s chairman, MP Colm Imbert, promptly  indicated that this was the second time the question was being posed.

“We asked this question the last time, so this is now the second time we are asking the same question. “Could we please get the answer this time? If you say you don’t have it, then can you get it within two weeks?” Imbert inquired. Citing from the report, he noted a pie chart which indicated investments of 26 percent in equities, 11 per cent in overseas investment, 23 per cent in government securities and 20 per cent in corporate bonds.

“How did these various sectoral investments perform? The equities perform better than the government securities or worse than the overseas investment? “What are these oversees investments?” Imbert asked. The NIB’s executive director Lorna Charles said around 2007, tenders went out for fund managers, who, when hired, were given the responsibility of managing funds with a specific type of return.

“The return has been very good. We have been out-performing the market, perhaps because of the time we went in, so we didn’t really experience the kind of losses that people experienced in 2008 on the overseas market, even though it has been relatively volatile,” Charles said.

On the performance of the local equities when compared to the foreign investments and government securities, she said both corporate and government bonds “did well overall.” However, Charles admitted that the local investments did not perform as well, adding, “there was some turbulence on the local entity market.”

The NIB was also taken to task by Attorney General Anand Ramlogan, who called on it to increase its public awareness programmes as many people were not aware that contributions had been increased in January this year.