ON REFLECTION: Truth will out, small doses or not
WHEN WILL WE as a country begin to call things as we really see them, as they really are, without fear or favour? Because we live in a small society, we often fear that the unadulterated truth will cause panic. But does giving the truth in small doses make it easier; and if it does, for whom?
Take for example the mind-boggling harm that the woes of Colonial life Insurance Company (CLICO), triggered by the collapse of its parent company CL Financial in Trinidad in 2009, is causing across the Caribbean.
And it will cause greater mayhem among policyholders and investors, of which Barbados alone accounts for about 40 000, as tough decisions are eventually made and the truth hits full blast – the worst possible truth being that no compensation may be given to those policyholders and investors who are about to retire, who are disabled, and who represent some of the most vulnerable citizens among us.
Yet the delay in preparing Barbadians for the inevitable is painful in its own way, and hope has been given where little exists, causing the vulnerable to live on promises and blind faith.
That is why the admission, by a commission of inquiry into CLICO’s collapse in Trinidad and Tobago, that compensation was highly unlikely is so instructive.
Two days ago the commission, looking into the collapse of two financial institutions in the neighbouring twin-island republic, began with its commissioner Sir Anthony Colman warning that he could not recommend any compensation for persons who had lost their investments.
“I do want it to be fully understood that whereas I do have the greatest sympathy for the many thousands of people whose pensions and investments have been exposed to destruction . . . that said, while the inquiry will make findings and recommendations, it cannot order compensation,” said Sir Anthony.
If such bluntness, punctuated by the strong imagery of “destruction”, comes easily for a dispassionate British Queen’s Counsel, it does not negate sympathy, empathy or fairness – and most importantly, it does not negate the truth.
In fact, it reinforces the truth.
I would like to see Barbadians, especially the aforementioned vulnerable policyholders and investors, recover something at the close of this awful chapter in our history; but some of the patterns are glaring evidence that this is yet another example of a regional financial institution collapsing as a result of massive negligence, with the ripple effect being the “destruction” of investments and, in many cases, the obliteration of the sole source of financial hope for thousands of ordinary folk.
In the matter of Trade Confirmers Barbados Ltd (TCBL) in the 1980s, there were classic examples of regulatory failure, characterized in TCBL’s case by incompetence and negligence, total ineptness from directors and management, coupled with the intention to mislead and an almost callous disregard for clients.
In the case of CLICO Barbados, the problem was compounded by heavy investment in illiquid real estate as well as severe cash flow problems; while in some neighbouring territories good corporate governance went through the window, and insurance laws were flouted with impunity.
So, what can CLICO tell a retiree in Barbados when the contagion from the collapse could manifest itself in losses totalling some $500 million, a loss larger than Trade Confirmers’ and one that could only exacerbate the $584 million “hole” – the fiscal deficit – which Government now faces and is the subject of the Estimates being debated in the House of Assembly today?
The day all hell broke loose in Trinidad – January 30, 2009 – we were told that CLICO (Barbados) was safe and sound, and that the collapse and bailout of CL Financial would have no effect on Barbados and the Eastern Caribbean.
We were also told that the local company was well run, its investments safe, and there was no need to panic.
Similar statements had been spouted from TCBL two decades before, to wit, that “the collapse of the Trinidad company would have no impact on Trade Confirmers (Barbados) Limited since the Barbados company was a local company and the majority of shares were held by Barbadians”, according to a subsequent report.
The domino effect of the CL Financial collapse started occurring in neighbouring territories days after January 30, 2009, but the truth was still coming in small doses.
Barbados was singing the “safe and sound” song even as Guyana placed CLICO (Guyana) under judicial management in February 2009, shortly after the Bahamas Supreme Court ordered the liquidation of CLICO (Bahamas).
And in March 2009, CLICO Belize also secured a judicial order, placing its company under the management of the country’s Supervisor of Insurance who assumed full control of CLICO’s statutory reserves.
Even after it was shown that the directors and management of CLICO Bahamas operated without proper corporate governance, without an understanding of the basic financial requirements of managing an insurance business, and without any acknowledgement of the insurance laws of The Bahamas or any other country in which the company had a licence to conduct business, the truth was still being given in small doses in Barbados.
But that is our culture: do not give the full extent of the damage until it is glaringly obvious, and even then, speak in hushed tones.
Former Leader of the Opposition Mia Mottley was ridiculed and “punished with laughter” when she brought a no-confidence motion to Parliament based on the same CLICO fiasco. No one is laughing now.
Former executive chairman of CLICO Holdings (Barbados), Leroy Parris, is unabashedly suing CLICO Holdings on claims that it breached his contract when it failed to pay him a $10 million gratuity payment by May 2008.
But even so, it had already paid him just over $3.5 million in January 2009 and four payments of $30 000 each last year; while ordinary policyholders and investors were asking for and being refused their money, and while Barbadians were querying the true status of CLICO Holdings and its local mortgage, life insurance and general insurance concerns.
What is therefore yet to come to light following the collapse of a conglomerate that was seen the safest in the Caribbean? Will we have another Monica Marville, who invested $120 000 in TCBL from a joint account with her 63-year-old stepmother and got a pittance in return; yet no one was ever prosecuted?
Will the depositors again be “the ultimate losers”? How many more 60-plus-year-olds will suffer as a result, not of the global recession, but of the greed of those who will walk away from this tragedy cushioned by handsome payouts and gratuities?
Whatever happens, as the immortal bard wrote, the truth will out.