Home' Trinidad and Tobago Guardian : January 19th 2017 Contents JANUARY 19 • 2017 guardian.co.tt BUSINESS GUARDIAN
VIEW | BG3
BG VIEW ANTHONY WILSON
Chief editor business
Editing and design
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Are we close to
a Clico resolution?
LONDON: The January 15 arti-
cle in the Sunday Express out-
lining proposals in a report by
relating to the final resolution
of the collapse of the CL Finan-
cial empire made for interesting reading and
is deserving of comment from someone who
has followed this issue for almost exactly eight
Here in brief are some thoughts:
In my view, the commissioning of PwC
to do the report is interesting, given
the many questions that were asked
of the firm during the Colman Commission
of Inquiry into the collapse of CL Financial
and its financial subsidiaries: Clico, British
American, Clico Investment Bank and CMMB.
If the Colman report did not clear PwC
unequivocally of all of the insinuations sur-
rounding its audit practices of the CL Financial
empire, it seems to me that the commissioning
of the professional advisory firm to do this job
may have been a mistake.
If there was no other local firm that had the
expertise to do the job, then the government
should have gone abroad to find the expertise
as previous administrations have done in the
past on this issue with the hiring of Tower-
sWatson in 2014 to do a valuation of Clico's
balance sheet and the commissioning of Credit
Suisse/Milliman in 2010 to provide advice on
The valuation of the 430 acres of
land at the Golden Grove Estate in
Tobago at $867 million (US$128 mil-
lion) means that each acre of that property is
worth $2 million. Is land that requires a new
CEC (certificate of environmental clearance)
really worth $2 million an acre?
There was a reference in the PwC plan
that in order to advance the interests
of all stakeholders, "all reasonable
steps should be taken to secure the "block"
sale of the 50 per cent Republic Bank Ltd (RBL)
shares that are collectively held by Clico, CIB
and the Clico Investment Fund (CIF) to secure
the premium that would arise from such a sale."
It was reported that the sale of the Republic
Bank shares by Clico, CIB and the Clico Invest-
ment Fund is expected to earn $1.992 billion.
Now, the bank has 162.3 million shares out-
standing and the stock last traded at $108.43 a
share. This means that 100 per cent of Republic
Bank is worth $17.6 billion and 50 per cent of
the bank is worth $8.8 billion at the current
market price not $1.99 billion.
It should also be noted that if there is to be
a block sale of 50 per cent of Republic Bank,
the buyer would have control of the country's
largest bank and the government would have to
pay off the unitholders of the Clico Investment
Fund. Both of these issues may take some time
and negotiation to be finessed.
The proposal made by PwC seems
to suggest that the government is
owed $19.34 billion and that it will
receive $13.99 billion from the restructuring
of Clico within 150 days.
While there is no reason to quibble with the
numbers, the suggestion in the article that CL
Financial shareholders, including its largest
single shareholder Lawrence Duprey, could
regain control of the holding company and
its subsidiaries plan in 150 days is, literally,
That is because it is beyond belief that a pro-
fessional advisory firm would advise that the
Government should exit CL Financial in 150
days after the payment of 72 per cent of what
is owed to the government (which is really the
taxpayers of T&T).
I believe I am correct in arguing that the
convention in the workout of these kinds
of bailout situations is that the government
retains control of the entity into which state
funds have been poured UNTIL the debt to the
government has been extinguished.
On what basis would the government be
giving up control to the CL Financial share-
holders, who include Lawrence Duprey, when
that entity still owes the taxpayers and people
of T&T over $5 billion?
Is such an arrangement wise, even with
the tightest and best-crafted deben-
tures over the fixed and floating as-
sets of the CL Financial subsidiaries?
If a restructured Clico can generate
$12.17 billion in cash and $1.82 bil-
lion in real estate in 150 days, then surely those
same assets can be leveraged to borrow the
$5.35 billion that would be needed to complete
the payoff of $19.34 billion to the taxpayers
and people of T&T.
I have argued on a number of occasions that
the idea of the government retaining some kind
of long-term interest in CL Financial, while
the company pays off the balance of monies
owed to the taxpayers and people of T&T over
a period of time, is a sub-optimal suggestion.
I made that argument in that space in 2016
on several occasions and also in 2013 when
the idea was first raised by a team of advisers
that included EY Caribbean's Colin Soo Ping
Chow and former permanent secretary in the
Ministry of Finance, Alison Lewis, who is a
director on the boards of Republic Bank and
TCL, two publicly listed companies.
I want to make one thing very clear: given
the available information, it is not being argued
that the extended-payment proposal is a bad
idea. It is an idea that is fraught with risks of a
poorly drafted final document, which can be
exploited by clever lawyers for their clients'
And given the fact that it would provide the
government with over $12 billion in cash and
access to the property on which it is proposed
that the Sandals and Beaches hotels should
be built in Tobago, it is obvious that the PwC
plan would go a long way to solving the coun-
try's fiscal problems and pave the way for the
execution of Prime Minister Keith Rowley's
dream of enhanced long-term development
for Tobago, his birthplace.
There is merit in closing off this issue after
close to eight years.
But there is even greater merit in ensuring
that the final resolution of this long-standing
thorn in the body politic of T&T is closed off
with a one-time, final payment of all of CL
Financial's debt to the taxpayers of T&T and the
return of what's left of the group to its owners.
And what would be ideal is if Minister of
Finance, Colm Imbert, makes public the PwC
advice and opens the issue up to a short na-
tional debate on what would be the best way
to resolve this issue.
Whichever way Cabinet decides to go, it is
imperative that it takes a decision quickly after
a comprehensive discussion of the merits and
demerits of this matter. In other words, this
ought not to be a situation in which the Cabinet
fails to make a decision because one or two
ministers object to a small part of the overall
proposal or work at the pace of molasses being
poured uphill, as a recent Sunday Guardian
editorial put it.
If, as Prime Minister Rowley put it earlier
this month, 2017 is going to be a year of deliv-
ery for the current administration, there are
few deliverables bigger or more important
to the future welfare of T&T than the Clico
The author is a shareholder of Angostura
Holdings Ltd, which is owned by Clico and
CL Financial and is likely to form part of
the final resolution of this issue.
DR KEITH ROWLEY
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