EDITORIAL - CLICO saga bigger than Parris
Sat, March 26, 2011 - 12:00 AM
TWO EVENTS in the ongoing CLICO saga came to light on Wednesday this week.
Locally, Leroy Parris, the face of the beleaguered company for decades here, resigned with immediate effect from the board of management of all CLICO subsidiaries in Barbados and the Eastern Caribbean.
And in Trinidad and Tobago, the Ministry of Finance announced that government had to date made TT$33 million (BDS$10.393 million) in payments to 1 053 who had invested in the high-interest bearing Executive Flexible Premium Annuity (EFPA) financial instruments offered by the company with contracts valued at TT$75 000 (BDS$23 622.05) or less.
This payment comes seven months after the Guyana government spent US$17.4 million (BDS$34.8 million) to fund a largely successful resolution of the CLICO issue.
According to news reports there, US$13 million (BDS$26 million) of the US$17.4 million was used to pay 4 366 policyholders of EFPAs and other insurance clients who had invested less than US$150 000 (BDS$300 000). The sum of US$4.4 million (BDS$8.8 million) was used to pay off 39 large policyholders.
So in real terms, Parris’ decision to step down means little in the overall scheme of things to local policyholders and investors!
For sure, it does not help the hundreds of local people who invested their hard-earned cash in the once mighty insurance giant get any closer to recovering their funds.
And it does not speed up the process to get the company under judicial management through which specific legal steps can be taken to safeguard the rights of the investors and policyholders.
The only thing Parris’ resignation would have done was to signal to policyholders the end of an era and, we hope, the beginning of a new dawn. That is, his leaving removes him from any seeming influence over actions relating to the company in the future.
Whether he was pushed or he jumped, doesn’t matter either. What matters is the big picture in Barbados. That is, the petition for the appointment of a judicial manager for CLICO International Life Insurance which was filed on Thursday, March 17. That matter is scheduled to be heard on May 2.
Getting someone in charge to oversee the operations of CLICO here has taken on more significance now that the governments of both Guyana and Trinidad and Tobago have made some headway in assisting investors get their money back; and this is even though in the latter’s case the discriminatory move to only deal with those who invested TT$75 000 or less could lead to a legal challenge from those policyholders who invested larger sums.
Barbadians would be understandably anxious. If reports are accurate, the EFPAs account for the bulk of the estimated $500 million individuals and companies invested, many of which are due to mature next year.
Where will the Barbados Government find the funds in these turbulent economic times to ensure “that people get their principal investments in CLICO”, as Prime Minister Freundel Stuart declared last Wednesday?
Will the Government pursue a discriminatory approach like Trinidad by paying the smaller investors every cent and leaving the bigger ones, including companies, stranded because of what Senator Darcy Boyce called moral hazard?
We persist in asking these questions because they are relevant to what the future holds on this issue for local policyholders and investors, and the economy at large. Yet they have not been answered by Government despite their unswerving public commitment and assurances to local investors since the collapse of CL Financial, CLICO’s parent company, in January 2009.
It is shameful these clouds of doubts still linger when other governments have been seeking to address this issue head-on.
The time has long passed for Government to stop the talk and put effective measures in place so that local investors can get their monies back as promised.
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