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Browne vents on CLICO


Kaymar Jordan

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HE WAS ONE of the early casualties of the CLICO debacle.
Long before there was even talk of an official forensic audit, Mariano Browne was unceremoniously terminated from Caribbean Commercial Bank (CCB).
He was even made to suffer the indignity of a subsequent lawsuit filed in the Supreme Court of Barbados in July 2004 by CCB’s new owner, RBTT Bank and its previous owner, CLICO Holdings Barbados Ltd (CHBL), for alleged breach of his fiduciary duty and the bank’s rules and procedures, among other things.
 However, while his former employers may have been the ones smiling then, the former president and chief executive officer of CCB is definitely more at ease now.
 In a candid interview with the SUNDAY SUN yesterday, Browne said it was clear to him that he was not well liked by his former boss Leroy Parris.
Browne also admitted to substantial election campaign contributions made to local political parties and said he felt “absolutely vindicated” by the findings of a recent forensic audit into CLICO International Life (CIL).
That report, while revealing shocking inter-company transactions between CIL and its two parents in Barbados and Trinidad, made only brief mention of CCB, which was sold in 2004 and the proceeds of its sale – $50.9 million – used to pay down inter-company debt.
However, other members of the local CLICO empire did not escape unscathed and Browne believes he knows precisely why.
He said while it may have come as a shock to members of the public that CIL acted like a “banker” for CLICO Holdings, it had long been understood by those within the company that CIL’s money was to be used to fund investments and operational expenses by the CHBL, which Browne said “was not operating on a sound financial footing”.
Browne said CCB, on account of strong management and Central Bank regulation, was largely insulated from this worrying internal practice, which he suggests was copied by CLICO executives straight out of Japa
“There were pressures, but we [management] resisted them.”
He added that while there was never the feeling that anyone was breathing down their necks, “there was always the implication that the bank [CCB] was doing its own thing and not toeing the corporate line.
“And the answer is: ‘that’s true’ and now you know why!” he quipped.
Browne, who left the company in January 2004, said it was quite clear to him that he was not one of Parris’ favourite people.
“I think the evidence is pretty clear on that. You could use the nice phraseology to say that my contract was terminated or you could say I was fired, but we had reached the stage where there was a fight, there was a direct fight, but all is well that ends well,” he told the SUNDAY SUN.
“At the end of the day, notwithstanding any kind of difficulties in the public domain, I think the corporate world  in Barbados and Barbados [the country] would now have an opportunity to see what the other side looks like,” he added.
Still, CCB has not been allowed to fully escape the wide black cloak of controversy that has befallen CLICO over the last decade. 
When asked to explain a group of corporate write-offs that occurred in 2003, Browne said these were 12/13-year-old balances, amounting to no more than $6 million. He also said their removal from CCB’s books took place in the full knowledge of the regulator.
Browne was then asked to explain a sizeable political contribution made to the Barbados Labour Party’s campaign in 2003 for which he said he was acting on a directive from head office.
“Directions may not have been in writing but we had directions, so we did in fact make political contributions out of cash, out of profit, not any inter-company transactions,” he said.
He made it clear that the ruling Democratic Labour Party had also benefited from political contributions. In fact, in keeping with the findings of the recent audit report, he said, “payments made by way of gratuity and so on through one attorney’s account, represent the closeness which existed between one political person [late Prime Minister David Thompson] and the [CLICO] group”.
 Still, Browne insisted that CCB was never really at risk or exposed in any way.
 The same, however, could not be said for its sister company CIL, which he said was crying out for regulation.
“The insurance company [CIL] is regulated, so how come the parent company and associated companies were allowed to build up balances due to the insurance company in such a high fashion?” asked Browne.
“I think we are talking about, what, $400 million? That is not small. One has to ask the question if they were submitting insurance accounts to the regulator, did the regulator question that? And if the regulator questioned it, what did the regulator do?
“And the third point that follows that is, did the regulator have any authority to make certain demands or performance requirements? If it didn’t, then the legislation ought to be changed to give it that power,” he said.
Browne also believes that CIL’s  directors and management should be called upon to explain any breaches of an order by the Supervisor of Insurance prohibiting it from selling insurance.
For him, it is one of the more “egregious” examples of regulatory failure.
“It is bad because the regulator exists to protect the public interest and if $400 million is due and we can’t recover it, what was happening all the time?
“I mean, surely, this is policyholders’ funds and at the end of the day, an insurance contract is said to be in the utmost good faith and there is a requirement both morally and legally for certain actions to be done by the management and by the directors
“If they fail in their duty, then by definition, the Supervisor must act.”
Browne, who was appointed as a junior minister of government in  Trinidad and Tobago after leaving CCB, said governments in the region also needed to give a full account of themselves.
“The regulator is in fact the de facto representative of the government and if, by definition, it has not done its work, then the failure has to be laid at the feet of government,” he argued.
Asked to explain why he did not personally seek to hold the company to account while he served in the Patrick Manning cabinet between December 2007 and May 2010, Browne said he found himself in a “difficult” position
“I had to walk the tightrope of saying what you felt as a professional and being viewed as looking for revenge, so in a sense, the position was too far gone.
“The point was that at some stage of the game, it had to be recognizedand dealt with.”
However, Browne believes enough time has been wasted over the past three years and he is anxious to have legal proceedings brought against those responsible.
 “It needs to be dealt with, if only to ensure that other group entities, other insurance companies that have grown sufficiently large and run cross border operations, understand that they have to be run in a certain way.”
 He argued that while there might not be sufficient provisions in the legislation to bring about arrests, there ought to be.
 “The regulator is the guardian and if the guardian fails, who guards the guards?”
 Browne also cautioned those who might perceive themselves to be “larger than life” that they needed not look too far in history to come grips with what might be their eventual fate.
“Enron was larger than life . . . . [Bernie] Ebbers and WorldCom, and what happened in all of them? The larger than life figures turned out to be colossus with feet of clay.
 “The law has to be respected by all. There are no exceptions to that,” Browne said.
 

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