Nearly two and a half years ago CL Financial collapsed and had to be bailed out by the Central Bank of Trinidad & Tobago. This came as no great surprise to many in the regional commercial community who had anticipated this event for several years as the swashbuckling management style of the company was ill suited to that of an insurance company. Persistent shortfalls in statutory requirements and speculative investments were coupled with double counting assets and flouted insurance company regulations.
We in Barbados were assured by Prime Minister David Thompson that there was nothing to worry about and that the Barbados operations of the company were being soundly managed. Ms. Mia Mottley, then leader of the Opposition, was not convinced and in early 2009 called for the Barbados operations to be placed under judicial management to protect the clients of CLICO. The Government thought otherwise and continued to act as though there was nothing wrong as country after country in the region from the Bahamas to Guyana placed their local CLICO operation under judicial management.
Finally, two years later, the Barbados government had no other option but to place the company under judicial management. But even this act had no sense of urgency, and Prime Minister Stuart declared that Mr. Leroy Parris, the former CEO of the Barbadian CLICO’s operations, was one of his great friends.
In the interim, from May 2009 to June 2010, CLICO operated under the constraints of a memorandum of understanding with the government of Barbados. This MOU was strangely allowed to lapse thus exposing the customers of CLICO to further loss.
During this period of looming insolvency, and under a ban from the Supervisor of Insurance to issue any further insurance policies, it came to light that CLICO had continued to sell more than a thousand new policies until the ban was strictly enforced.
Now we see that the Central Bank of Trinidad & Tobago and CLICO have enough information to bring a civil action against Mr. Lawrence Duprey, the former chairman of CL Financial and Mr. Andre Monteil the former chairman of CLICO Investment Bank. The claims in the suit include “allegations of mismanagement of CLICO and misapplication and misappropriation of its income and assets to the detriment of its policy holders and mutual fund investors.” They also state that the forensic investigation is continuing and that further actions may be brought in light of any new evidence that maybe uncovered.
In Barbados, an interim report has been submitted to the court, and a final report is expected delivered to the court by the judicial manager within 60 days of the interim report. None of the information contained in the interim report is in the public domain but the several comments made by Mr. William Layne, the former Permanent Secretary of the Ministry of Finance and chairman of the oversight committee for CLICO during the period that it operated under the MOU, gives us little confidence for a positive outcome.
It is now clear that there is a need for a wider investigation on the nature of CL Financial’s operations and activities on a regional basis and its development of agents of influence at high levels in the society and the possible manipulation of the political process. Certainly the actions of the Government of Barbados in the CLICO affair do not meet the test of transparency.
This is not your run of the mill financial scandal but one with much wider implications on the quality of governance, the rule of law and the preservation of our democratic institutions in the region. The direct economic liabilities are enormous and are estimated to be between $300 million to $500 million but the cost to the fabric of our society may even be greater.
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