ON REFLECTION – Between a rock and a hard place
STILL IN THE THROES of a global economic crisis and financial meltdown, Barbados is haunted by the woes of two private sector entities, one out of commission and the other not yet functioning, which are demanding money from the Government – and are very likely to get it.
The first is CLICO International Life (CIL) Insurance Co. Ltd., which is about to undergo a forensic audit by Deloitte Canada. The judicial manager, Deloitte Consulting Inc., has expressed its preference for the option of a new insurance company to be set up, funded by the governments of Barbados and the Eastern Caribbean to the tune of between $56 million and $152 million.
Such funding, the judicial manager predicts, would ensure that more than a million policyholders across the region get back most or all of their investment.
The other entity is Four Seasons Resorts and Private Residences, which now needs an additional $270 million to complete the luxury hotel, and is seeking a third of that amount from local and regional investors, including Government’s highly-pressured National Insurance Scheme (NIS).
In either case, the Government, though somewhat negligent in the CIL matter, is between a rock and a hard place.
While this administration should rightly sympathise with the almost 20 000 CIL policyholders in this land, how fair is it for anyone to ask the Government to clean up the CLICO mess?
Why should this or any Eastern Caribbean government think of putting a dime into bailing out a company whose forensic audit was triggered by the judicial manager’s discovery that CIL was “unable to provide documentation to support approximately $350 million of the assets recorded on its balance sheet”?
In addition, there is the possibility of Deloitte identifying other assets still to be accounted for.
Is this merely the tip of the CIL iceberg? I ask rhetorically.
Yet, as I said, Government funding is likely to be provided to set up the new company proposed by Deloitte Consulting Inc. despite this country’s high fiscal deficit, the slowdown across traded and non-traded sectors, and other obligations and debts which also run into hundreds of millions.
But there is no other feasible choice.
Four Seasons, meanwhile, will soon get a $180 million fillip through a credit facility led by the Washington-based Inter-American Development Bank and co-arranged with ANSA Merchant Bank of Trinidad.
But the worrying news is that the project’s developer, Paradise Beach Ltd, needs another $90 million and is seeking part of it from the NIS – Government’s safety net for Barbadians who are either temporarily or permanently incapable of working.
This $90 million request is enough to anger the most patient among us. The proverbial last straw has to be the intention of dipping into a national insurance scheme whose resources are already painfully stretched.
As Government borrows monthly to pay public servants’ salaries and other bills, we can only wonder how much will be left in the NIS after a “fraction” of this $90 million is taken out.
Certainly, the NIS has previously pumped money into the Hilton, Barbados National Bank, and the Light & Power Company Limited among others, but those were times of plenty.
Ideally, any Barbadian would want Barbados to realize the success of Four Seasons – the largest luxury hotel project in the Caribbean. And we would want to see it completed by 2014 after several stops and starts, to have over 1 600 people employed, and some $200 million in foreign exchange coming into the country from tourism yearly.
But these are not times of plenty! And if all the above doesn’t pan out, will there be enough left for me in the National Insurance Scheme if I live to retire? Nothing in life is guaranteed, I admit, but this smacks of recklessness.
Having said that, however, I know the money will be provided for Four Seasons as Government, more than likely, sees the $90 million injection as a tiny fraction of what has already been spent.
It would be easy to say let CIL and Four Seasons, especially the former, clean their own mess, but the policyholders, who include pensioners, those on the threshold of retirement, and the physically challenged, deserve better than 40 cents to the dollar if CIL is liquidated.
And as for Four Seasons, the project has come too far to stop now that it’s basically two-thirds of the way home.