EDITORIAL: Forensic enquiry a must!
The Oversight Committee appointed by Government to report on the activities of the collapsed CLICO International Life (CIL) recommended, inter alia, that a forensic audit of the company be conducted. Today the SUNDAY SUN supports that call and asks that such an audit be carried out as a matter of the greatest urgency.
The dramatic fall of the regional conglomerate CL Financial, CIL’s parent in Trinidad and Tobago, and its associated companies, has occasioned tremendous public anxiety and collective discomfort to members of the public, not only in Trinidad and Tobago and Barbados, but also throughout the region.
In early 2009, when the news broke from Trinidad of the parent company’s collapse, the public was given the impression that the local companies were well managed and that there were independent of Trinidad with their own board of directors.
It has now emerged that there are structural cracks in some parts of the architecture of the local companies.
In short, it is now clear that the promises and obligations made by CIL to investors in the Executive Flexible Premium Annuities portfolio estimated at $507 million cannot be met as they fall due, and Government financial support is now required to mitigate the fallout.
Yet, whatever else happens, some pertinent questions must be placed on the table:
Since CIL’s operations in Barbados were regulated by the Office of the Supervisor of Insurance, was there a failure of the regulatory process?
Did CIL breach any of the requirements of the protective mechanisms stipulated in the Insurance Act and Regulations? If it did, what sanctions were applied to bring the regulated CLICO companies into compliance with the Insurance Act?
Was the appropriate minister with responsibility for such matters informed by the Office of the Supervisor of Insurance of any breaches of the regulatory framework by the CLICO operations in Barbados?
Were any of the directors of the local CIL operations also directors of the parent company CL Financial in Trinidad?
Were any of the directors of the local CIL operations aware of the problems facing the parent company and, if they were so aware, were any provisions put in place to protect the local companies and its investors in respect of any inter-company transactions with the parent company?
How were the proceeds of the EPA invested?
Were “departments, boards or any such entities” ever publicly told that the Office of the Supervisor of Insurance had ordered CIL that its EFPA annuity policy should not be issued to them, but only to “individuals/natural persons”?
There will be other questions to be asked in due course, but there is an obvious and widespread public interest in an urgent and transparent examination of what went wrong in the Barbados end of the CIL operations.
Large sums of money – in the hundreds of millions of dollars – raised from the public have found their way into the coffers of the Barbadian operations of the Clico International Life Insurance Limited on the strength of contractual promises made by the company, which cannot now meet its commitments as they fall due.
Now, other large sums of taxpayers’ money and a possible increase in the public debt of this country will have to be generated to mitigate the hardship being caused to thousands of folk who put their trust in the company and the regulatory process mandated by law.
Alas, that trust has been shown to have been misplaced, and we cannot go forward as though this is only a little local difficulty. Mismanagement of a company which touches and concerns the public interest, if that is shown to have taken place at any time or anywhere, qualifies for even greater coercive action.
At this stage, neither we nor the public know what transpired within and without the walls of CIL. A forensic enquiry would provide the first light to illuminate the path towards scrutinising this matter in the public interest.
DISCLOSURE: The Nation Group is the holder of annuity policies in Clico International Life Insurance Limited. Further, it is a matter of public record that Colonial Life Insurance Co. (Trinidad) Limited is a shareholder in our parent company, One Caribbean Media Limited (OCM). This disclosure is made in the interest of transparency. The Nation wishes to assure its readers that the above will in no way inhibit its commitment to the time honoured principles of journalistic integrity.