Home' Trinidad and Tobago Guardian : August 28th 2014 Contents AUGUST 2014 • WEEK FOUR www.guardian.co.tt BUSINESS GUARDIAN
COMMENTARY | BG3
Chief editor-business: ANTHONY WILSON
Editing and design: NATASHA SAIDWAN
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In the near future---perhaps as early as
next month---the arbitration tribunal
sitting in London will deliver its decision
on the issue of the price of Methanol
Holdings (Trinidad) Ltd and its Oman-
based sister company.
The decision of the arbitration tribunal is
the basis for the final resolution of the CL
Financial debacle that first reared its head on
January 30 2009 because the outcome of the
valuation of the methanol companies has a
bearing on the overall picture.
As I have been told on a number of occa-
sions, no decision can be made on the final
resolution of the CL Financial matter until
that London valuation has been received.
The most recent extension of the share-
holders' agreement between CL Financial and
the Government, the seventh, took place in
July, due to ongoing arbitration of MHTL and
MIHL and their importance to the overall set-
tlement. The seventh extension will go until
Dec 31, 2014 or three months from the delivery
of the Tribunal's final award whichever is later.
The arbitration tribunal will place a value
on CL Financial's most significant asset, but
elsewhere other parts of the empire-that-
Lawrence-Duprey-built are being valued.
CL Financial's second most valuable asset
is Republic Bank. To a large extent, whether
some or all of CL Financial's stake in Republic
Bank will have to be sold depends on how
much money the Government can raise from
the sale of the methanol companies.
But as the bank's chief executive, David
Dulal-Whiteway noted in a November 2010
interview with BN Americas: "Down the road,
we recognise that Republic will have to be sold
and those shares will have to be liquidated to
deal with CL Financial's indebtedness. In all
our meetings so far, both this government and
the last have basically said that Republic runs
a good ship and there's no need to interfere.
Therefore, it's not a frontline item for them.
They have other things to deal with at CL
Financial, before they can consider a liquidation
of (our) shares."
An American consultancy firm named Tow-
ers Watson is conducting an actuarial valuation
on Clico's traditional portfolio of insurance,
which is expected to be finished by the end
At US$3 billion, the CL Financial (CLF)
bailout is the largest in the region's history
and there are few who would argue that the
expenditure of that sum was necessary, given
the size and importance of the CL Financial
empire, and in particular its subsidiary Clico.
But soon the issue of the new shareholders'
agreement between CL Financial and the Gov-
ernment will be before Cabinet and it will be
up to the ministers of government to decide
who gets what and who has to wait.
That decision will have significant political,
financial and legal implications for the rest of
government's term of office and it is possible
that the outcome of the Cabinet's deliberations
on the CL Financial matter will reverberate
through the country for the next decade.
There is no doubt in my mind---as someone
who has followed this issue from its inception
and has used this space to write extensively
on it---that if the Cabinet makes the right
decision, its legacy as a wise and discerning
group would be assured as the T&T economy
will go from strength to strength.
On the other hand, if they make the wrong
decision, the country could be tied up in years
of litigation, from multiple sources, which
could reimpose the dark clouds over the econ-
omy that have recently started to recede.
All the country asks of the Cabinet is that
when the time comes to make the decision
that they listen to all sides of the issue, conduct
their own due diligence examination of the
points raised and then apply their intellect to
the decision-making process in a balanced
and judicious manner.
The first thing the Cabinet should do is
identify what is the national interest in the
resolution of this CLF matter.
I still maintain that the national interest is
• Ensure that taxpayers are fully repaid from
the sale of CLF assets alongside the other
creditors of CLF. If CLF has $33.1 billion in
assets, the well established practice with insol-
vent companies is that the assets are sold and
all creditors are paid before any value goes to
the shareholders of the company;
• Identify which of CLF's third-party lia-
bilities are actual and which can be defined
as contingent and ensure that money is set
aside to ensure that all contigent liabilities are
paid off as and when they become due.
It seems to me that the following third-
party liabilities are contingent and should be
treated as such: $1.73 billion owed to non-
accepting EFPAs; $2.16 billion owed to holders
of Investment Note Certificates; $320 million
owed to non-accepting mutual funds. These
three liabilities, equalling $4.2 billion, are
dependent on the outcome of appeals of High
• If $4.2 billion is taken away from the $16.3
billion owed to third party liabilities, that figure
is reduced to $12.1 billion. This leaves $19.3
billion left to pay off taxpayers and CLF with
the responsibility of settling the contingent
liabilities from the $1.6 billion in assets that
It would seem to me to be in everyone's
interest---including the Cabinet's, which is
likely to preside over a country that is on an
election footing for the next year---that every-
one who is owed money by CL Financial gets
as much of what they are owed as possible.
Are we close to 'down the road'?
"Down the road, we recognise that
Republic will have to be sold and
those shares will have to be liqui-
dated to deal with CL Financial's
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