The proposed settlement by the judicial manager, Deloitte Consulting Ltd to resolve the problematic Clico International Life Insurance Ltd (CIL) matter has been met with a predictable disapproval by The Barbados Investors and Policyholders Alliance (BIPA). The recommendation to settle “is to float a bond whose proceeds would be used to acquire qualifying assets that would be transferred to the buyer of the insurer’s traditional business as well as fund the partial payment and restructuring of the EFPA portfolio.” For the proposal to work the governments of Barbados and Trinidad are expected to back the bond which amounts to close to BBD400 million. Those affected countries in the Eastern Caribbean (Antigua, Anguilla, Montserrat, St Vincent, Grenada and Dominica) would have to commit to the deal “by committing their state agencies to invest directly in the bond issue.” Most of the islands in which CIL operates are highly indebted.” – see T&T Guardian Article.
BIPA in response has expressed the concern that any deal must “include(s) full reimbursement of the dozens of people whose policies have already matured”. According to them “of BIPA’s 385 members, 46 have policies that have reached maturity – 39 of them being Executive Flexible Premium Annuities (EFPAs) and the other seven in Flexible Premium Annuities (FPAs).” If BIPA maintains its position the CLICO matter is destined to be hogtied by bottomless complex and legal considerations. There is every likelihood that the only parties who will come out the winners in this matter will be the lawyers and the judicial manager. A few months ago a report was posted to show that Deloitte’s fee had reached $7.2 million.
From the start of the CLICO Mess BU suggested that besides being turned into a political football, the parlous state of regional economies makes it difficult, if not impossible, for CLICO policyholders to be 100% indemnified. This is a case where there will be losers. Where will our impoverish governments get the money from to bailout CLICO policyholders? If the governments go ahead and bow to political considerations how will the international financial and rating agencies react? The harsh reality is that CLICO policyholders will have to take a haircut. The longer it plays out will determine how low the cut.
The lack of a strong local and regional regulatory framework, the willingness of regulators to be intimidated by the political directorate, combined with greedy and corrupt politicians, have made the mess we find ourselves. While incumbent governments have the job of resolving the matter, the problems created by CLICO did not begin in 2008. BU finds it amusing that BIPA continues to fight a losing battle to become a legal party to the matter which we all know is under the supervision of the Court. A reality is that opposition politics dictates that the government be blamed for the pace at which settlement is taking place. A downside to the matter being placed under judicial management is that all parties affected have to march to the beat of the Court. It is no secret our court system is labouring under some serious shortcomings which have likely impinged this matter. The level of political diatribe and emotional invective imparted to the CLICO Matter has guaranteed that in the minds of all concerned, whatever the settlement, many will be left battered and bruised when the final curtail is drawn far into the future.
A look at the complexity of CLICO’s Empire begs the question how did our governments and regulatory bodies fail to robustly regulate the company? Based on the findings so far of the CLICO Commission of Inquiry in Trinidad, Duprey managed the conglomerate like Miss Alleyne’s rum shop. Sadly the problem of CLICO manifested in all of the jurisdictions in which it operated exposed two deficiencies – a poor regional regulatory system for monitoring pan Caribbean companies and the influence politicians have on an already weak system of governance fuelled by greed.