Painful blow to Caricom
VINCENTIAN PRIME MINISTER Dr Ralph Gonsalves believes the CLICO/British American Insurance Company (BAICO) fiasco has the ability to “wreck CARICOM”.
His Antiguan counterpart Baldwin Spencer describes it as the worst thing to hit his country since the Allen Stanford debacle unfolded in 2009.
The two Eastern Caribbean leaders were reacting to the published findings of the CLICO International Life (CIL) forensic audit report, which Gonsalves readily admits “does not make for good reading”.
Neither prime minister has received a personal copy of the 39-page report but they are equally troubled by what they have been able to glean so far from THE NATION newspaper’s publication of the shocking findings of the Deloitte Canada-led audit.
In separate interviews with the SUNDAY SUN, they expressed strong concern for the plight of thousands of policyholders and investors affected across the region while insisting that justice must be done.
Both leaders also declared – unlike some of their other regional colleagues – that they had no personal relationship with former CLICO executive chairman Leroy Parris.
The audit report has called into question the use of CIL’s funds by the Parris-led management team. But more important for Gonsalves is the impact of the company’s decision-making on the region.
“Justice must be done,” he insisted. “I mean we are not talking here about $1 million, $2 million, we are talking in the case of the Eastern Caribbean Currency Union (ECCU) of in the region of EC$2 billion (US$800 million) in liabilities in CLICO Trinidad, CLICO Barbados and also British American.”
Put another way, Gonsalves said, the total exposure amounted to 16 per cent GDP for ECCU countries. It also translated, he added, into “serious damage to a lot of people’s lives” and “a new species of poverty” known as “gentile poverty” that has enveloped this region as a consequence of the insurance debacle.
The Vincentian leader therefore wants to know “if countries, for instance Trinidad, in the case of CLICO Trinidad and British American and Barbados, in the caseof CLICO Barbados, don’t come up to the plate and address this matter efficaciously, where are we going in CARICOM”?
It is a concern about which he has already written to new CARICOM Secretary General Irwin La Rocque and which he believes should be discussed before the July summit of heads of government.
Spencer described the entire situation as “most unfortunate”, saying it needed to be resolved soonest.
“A lot of people are hurting,” he said. “Some them, all their savings, whatever they had, they went for this thing in a big way, and not only individuals but businesses, state corporations with trust funds that were placed at the disposal of the CLICO conglomerate.”
In the case of Antigua and Barbuda, he said “some EC$300 million (US$111 million has been tied up in this entire fiasco”.
“We have had a double whammy because we not only had Stanford to contend with but we had CLICO and BAICO to contend with literally at the same time.”
Nonetheless, he was somewhat surprised to learn that the Antigua Commercial Bank was named in the forensic report. This is with respect to payments made by CIL to different associates and related companies of former executive chairman Leroy Parris.
Chief among those associates was late Prime Minister David Thompson, but Spencer made it clear that he and Parris were not friends.
“The goodly gentleman (Parris) I think I only met on one or two occasions fairly briefly,” he said.
Gonsalves also declared that his relationship with Parris, who is currentlyat the centre of the ongoing CIL investigation, was strictly business.
“I don’t have that close relationship with Mr Parris. I mean I have known him but he is not my pal. Certainly, he is not my enemy, he is somebody who has held an important position and work was done with CLICO Barbados, CLICO International, but Parris is not my pal,” he added.
One of the recurring themes of the judicial manager’s report was that CLICO was used as a “cash cow” for its Trinidad parent company. The way they put it was that CIL operated as if it were the parent company’s personal bank.
This does not come as a surprise to Gonsalves who pointed out that a similar blueprint was used by CL Financial to take funds out of BAICO.
Both subsidiaries were literally brought to their knees and continue to suffer major aftershocks following the collapse of CL Financial in 2009.
However, Gonsalves noted that in the case of BAICO, the regional judicial manager had already launched civil proceedings in the Florida courts against the company and several top officials, including former CL Financial head honcho Lawrence Duprey.
The legal suit stems from the famous Green Island transaction, which involved the purchase of 6 000 acres of land in Osceola County in the largest investment done by BAICO Trinidad Limited.
While he waits patiently to see what action would be taken in Barbados, Gonsalves is not totally in support of liquidation, since based on current assets the judicial manager is saying “we get 60 cents out of the dollar”.
“I want more than that,” he said, adding that “those who have caused pain to individuals, pain and suffering and put the financial system at risk, must pay”.
In fact, he said, “if the authorities amass the evidence to proceed with criminal proceedings against any individual or groups of individuals, so be it”
However, Gonsalves noted that by no stretch of the imagination was the gruelling three-year debacle near its end
“This is going to be a long, drawn-out drama and a lot of reputations are going to be sullied in the process and a lot justifiably,” the Vincentian Prime Minister said.
When pressed, he refused to elaborate.