Carl­ton Reis

I have heard and read a num­ber of re­views of the bud­get over the past few days. I even par­tic­i­pat­ed in one. How­ev­er, I have to con­fess that I missed per­haps the most stun­ning pas­sage in the speech. I might ex­cuse my­self on the ba­sis that it came at the very end of five me­an­der­ing hours. I should note that it has al­so not got­ten much at­ten­tion from oth­er an­a­lysts and com­men­ta­tors. That is re­mark­able as it refers to the pos­si­bil­i­ty of $13 bil­lion of in­come for the gov­ern­ment that ap­par­ent­ly no­body was aware of apart from Min­is­ter Im­bert.

Here is the state­ment of the Min­is­ter of Fi­nance and my com­ments will fol­low:

“The sale of the Gov­ern­ment’s 49 per­cent share­hold­ing in the Colo­nial Life In­sur­ance Com­pa­ny (Cli­co). Cli­co is no longer con­sid­ered to be of strate­gic im­por­tance to the Gov­ern­ment and its di­vest­ment will earn sev­er­al bil­lion dol­lars in rev­enue for the Gov­ern­ment, to see us through the fi­nan­cial dif­fi­cul­ties of the next few years.

“In this re­gard, I have not­ed a false nar­ra­tive cir­cu­lat­ing that the Gov­ern­ment has been re­paid all that it is due for the 2009/2010 Cli­co bailout. This is en­tire­ly un­true, since the Cli­co bailout in­volved not on­ly the in­sur­ance com­pa­ny, but it al­so in­volved the bailout of CL Fi­nan­cial and its sub­sidiaries, as well as com­pa­nies like Cli­co In­vest­ment Bank, British Amer­i­can In­sur­ance and so on. Far from be­ing ful­ly re­paid, the Gov­ern­ment is still owed over at least a fur­ther $13 bil­lion in tax­pay­ers’ funds in­ject­ed in­to CL Fi­nan­cial and the oth­er re­lat­ed com­pa­nies.”

I was in­ti­mate­ly in­volved in the bailout and in ad­vis­ing pol­i­cy­hold­ers on the way for­ward. I am very clear in my rec­ol­lec­tion that the bailout was done un­der Sec­tion 44 of the Cen­tral Bank Act and with the clear ob­jec­tive of pro­tect­ing the tens of thou­sands of pol­i­cy­hold­ers.

By my un­der­stand­ing the bailout cov­ered on­ly the fi­nan­cial in­sti­tu­tions iden­ti­fied at the out­set, be­ing in­sti­tu­tions un­der the reg­u­la­to­ry con­trol of the Cen­tral Bank. I do not re­call a sin­gle in­stance when ei­ther the Cen­tral Bank or the Min­istry of Fi­nance in­di­cat­ed that CL Fi­nan­cial was be­ing res­cued.

In point of fact, we the pub­lic were ex­plic­it­ly told that gov­ern­ment was tak­ing con­trol of CL Fi­nan­cial so as to pro­tect its as­sets which were the se­cu­ri­ty un­der­pin­ning the res­cue. The Min­is­ter is now telling us that CL Fi­nan­cial was al­so in dis­tress and far from be­ing the se­cu­ri­ty un­der­ly­ing the loans, CL Fi­nan­cial was al­so be­ing bailed out. If this is true a num­ber of deeply trou­bling ques­tions spring to mind im­me­di­ate­ly:

• Were we, the pub­lic, mis­led about the na­ture of the bailout and the re­cip­i­ents of pub­lic sup­port?

• Was CL Fi­nan­cial sol­vent in 2009 when the orig­i­nal agree­ment was signed?

• If no, why were we not told?

• Un­der what au­thor­i­ty did gov­ern­ment bailout a non-fi­nan­cial con­glom­er­ate?

• When was the pub­lic in­formed of this mas­sive $13 bil­lion bailout?

• Has the ex­pen­di­ture on the bailout ap­peared in any pub­lic sec­tor bud­gets or an­nu­al re­ports?

• Has this claim ap­peared in any CL Fi­nan­cial ac­counts and at what val­ue?

• Is the Min­is­ter say­ing that the gov­ern­ment is ex­pect­ing a pay­ment of 13 bil­lion dol­lars?

• What im­pact does that have on our bud­gets this year and over the next few years?

I view this mat­ter as deeply trou­bling and wor­thy of ex­pla­na­tion. We’re look­ing at a $13 bil­lion mat­ter af­ter all.

Should we re­al­ly ex­pect to re­ceive that sum and when will it show in our bud­gets as in­flows?

I will be speak­ing and writ­ing about this in the days ahead and I sin­cere­ly hope that the mat­ter is prop­er­ly ven­ti­lat­ed by the Min­is­ter dur­ing de­bates. I al­so think its im­por­tance should spur a broad­er de­bate from econ­o­mists, ac­coun­tants and the le­gal fra­ter­ni­ty in the first in­stance but in­clud­ing as wide a sec­tion of our pop­u­lace as pos­si­ble.

Carl­ton Reis was once one of Cli­co’s top sales­men and man­aged the in­sur­ance com­pa­ny’s Point Fortin agency from 2003 to 2009. His com­pa­ny, Reis Fi­nan­cial Ser­vices, con­trols 58 per cent of the vot­ing rights of CL Fi­nan­cial. He owns Dal­co, First Cap­i­tal Man­age­ment and is the largest share­hold­er of the CL Duprey Trust. Those three com­pa­nies are share­hold­ers of CL Fi­nan­cial. He told the Busi­ness Guardian that he be­came the sin­gle largest share­hold­er of the CL Duprey Trust by ac­quir­ing some com­pa­nies from Lawrence Duprey. In 2017, Min­is­ter of Fi­nance, Colm Im­bert, ap­plied to the High Court to have CL Fi­nan­cial placed in liq­ui­da­tion. Joint liq­uida­tors were ap­point­ed in 2018. CL Fi­nan­cial owns 51 per cent of Cli­co, while cor­po­ra­tion sole owns 49 per cent.