Home' Trinidad and Tobago Guardian : June 11th 2015 Contents JUNE 2015 • WEEK TWO www.guardian.co.tt BUSINESS GUARDIAN
COMMENTARY | BG3
Chief editor-business: ANTHONY WILSON
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At the news conference
at the Central Bank on
January 30, 2009, then
governor of the Central
Bank, Ewart Williams,
said the collapse of
Clico and Clico Invest-
ment Bank was due to
three factors. These factors comprised very high
leveraging of the group s assets, financing high-
risk, illiquid investments with high interest rate
premiums and "the payout of excessive relat-
ed-party transactions which carry significant
In a letter to the then Minister of Finance,
Karen Tesheira, on January 22, 2009, in which
he outlined a proposed approach to the
Clico/CIB issue, Williams wrote: "Given the
high level of related-party transactions, Clico s
balance sheet is affected by the operations of
an extensive web of companies that come under
the CL Financial holding company...We also
plan to send a letter immediately to Clico asking
them to desist from any related-party trans-
In his witness statement before the Colman
Commission of Enquiry, Williams had said that
the official data showed that CL Financial was
an extremely strong and profitable conglomerate
and that Clico was the centrepiece of the group.
But it was clear that the group had major vul-
nerabilities "the most notable being the excessive
amount of related-party transactions."
From Day 1 of the Clico crisis, Williams, who
was the man in charge of bringing this sys-
temically important ship to safe shores, identified
related-party transactions as being one of the
reasons for the collapse of the insurance com-
As a result of that knowledge, the Central
Bank in February or March 2009 instructed
that, in the event of the resolution of the Clico
matter, payments would not be made to related
More than six years after that clear and unam-
biguous policy was put in place, the current
steward of the Clico resolution, Governor Jwala
Rambarran, caused a statement to be made on
June 3, which said: "Under the terms of Gov-
ernment's bailout of Clico in 2009 and 2011,
related parties which included directors and
officers of Clico were not to be paid with
public funds, on the principle that these parties
may have contributed to the financial collapse
of the institution.
"The decision to withhold payment from
these former directors and officers of Clico,
who are policyholders, resulted in them
remaining creditors on the books of Clico.
"Clico, by law, has to treat with all classes
of creditors as part of its resolution strategy.
"Under the 2015 Clico Resolution Plan,
Clico is making payments to its policyholders
and creditors entirely from the proceeds of
the sale of its assets.
"These payments are being made from
the monetization of Clico's MHTL shares and
the eventual sale of other Clico assets.
"Unlike Government's bailout, the 2015
Clico Resolution Plan is not funded by Gov-
ernment. No Government funds are being
used to make payments to creditors and
policyholders of Clico including related parties,
under the Clico Resolution Plan."
It seems to me that what the current Gov-
ernor is saying is that because the 2015 Res-
olution Plan is being funded by the sale of
Clico s assets---unlike the previous resolutions,
which were to be funded by public funds---
there is no need to adhere to the principle that
related parties, who may have contributed to
the financial collapse of the institution, should
not be paid.
In other words, in his June 3 statement, the
current Governor of the Central Bank was argu-
ing that because Clico s assets are being divested
to pay its creditors---as was always envisaged
in the January 30, 2009 Memorandum of
Understanding---the insurance company s direc-
tors can be paid.
In my respectful view---and using language
that is as diplomatic as my upbringing allows---
that is fools logic.
The principle that someone should not profit
from their wrongdoing is deeply enshrined in
Christian philosophy and is the underlying
premise of the aphorism that if you do the
crime, you have to be prepared to do the time.
How does the fact that Clico s creditors are
not being paid with public funds change, in
any way, the principle that parties who may
have contributed to the financial collapse of an
institution should not be paid as part of the
financial resolution of that institution?
What is the difference between the three CL
Financial executives---Duprey, Monteil and
Sakal---against whom the State has brought a
case of Fraud on the Public and other CL Finan-
cial executives whose stewardship of Clico and
other companies in the group was questioned
during the Colman Commission of Enquiry?
The fact is that a case has been brought
against Duprey, Monteil and Sakal and a case
may be brought against Clico directors based
on testimony and evidence given during the
Commission of Enquiry.
On the issue of the potential impact of the
Commission of Enquiry, I can do no better than
to quote the Guardian editorial of June 5: "It
would appear to be shortsighted, reckless and
naive for the Central Bank to pay Clico direc-
tors and officers before they have been
"cleared" by the Commission of
Inquiry...unless there is cogent and compelling
evidence that a particular director or senior
officer did not participate in wrongdoing.
"Why would the Central Bank even consider
paying directors and senior officers without
"While the Central Bank argues that there
would be no legal basis on which Clico may
now withhold payment to them as policy-
holders/creditors,' how would it look if Clico
directors or officers collected millions under
the Central Bank's Clico resolution and were
shortly after named in the Colman report or
were issued with Salmon letters?
"By all means, the Central Bank must
ensure that all of Clico's creditors are paid
from the divestment of the company's assets,
but clearly some creditors must be made to
wait longer than others."
The fact that no one in the Central Bank or
in Clico thought it fit to raise a redflag with
regard to the payments to Clico directors
BEFORE the Commission of Enquiry submits
its report is simply unbelievable."
If the Central Bank were changing the Ewart
Williams principle that related parties should
not be paid because they "may have contributed
to the financial collapse of the institution,"
why didn t they change it to this: "Related
parties will be paid, but only AFTER they have
been cleared by the Commission of Enquiry
and only after all other creditors have been
All the Central Bank would have had to do
would have been to make public the fact that
a sum of money---from the $950 million that
represents 85 per cent of the monies owed to
some 1,500 non-assenting holders of short-
term investment products---would be carved
out and placed in an interest-generating escrow
account for those Clico directors and senior
Then, if those creditors and senior officers
are cleared by the Commission of Inquiry and
all other creditors have been paid, the proceeds
of the escrow account could be made available
As it stands, there are two Clico directors
who have received their monies in the insurance
company in full who are likely to be named
in Sir Antony s report.
What happens to Justice in this country if
Sir Antony refers the conduct of these two
directors to the DPP?
And why has the Central Bank arranged the
Clico resolution so that directors of the failed
financial institution get back their investments
in it BEFORE the Government---which is rep-
resentative of the 1.3 million residents and
nationals of this country---and other creditors
have been paid in full?
Is that fair?
Is that right?
Why does fools'
logic prevail in T&T?
Former governor of the Central Bank,
Governor of the Central Bank,
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