I know all the people who wanted quick money, who were entranced by the lure of the attractive interest rate. I know them; I have all of the names!
– Prime Minister Freundel Stuart, Estimates Debate, March 2015.
THE PRIME MINISTER’S promise to read out the names of the individuals who collectively purchased $100 million in EFPAs could make for quite a long session of Parliament.
MPs should bring pillows and blankets.
There are thousands of policyholders – a lot of them retired people and pensioners – who put a big chunk of their life savings into CLICO annuities.
But the PM was not done yet. He took a turn in the judicial manager, talking about the “dizzying millions” that have had to be paid out. Had they not been appointed, he suggested, “we would have made a little more progress in this matter”.
Really. As if the Government had that option. CLICO International, it turned out, was liability rich and asset poor, and operating outside the law. But Stuart reserves his ire for the policyholders, who are just sticking up for their rights, and the judicial manager, who disclosed not only that the emperor had no clothes, but where they went.
Just to recap, on January 30, 2009, it was announced that the Trinidad and Tobago government would “bail out” CL Financial, and by May it was clear that the Barbados Government had to protect its affected citizens from going down with the ship, as the T&T largesse did not extend this far.
Despite a public statement from Mr Leroy Parris that the two companies were not connected and that things could be worked out at this end with a little more time, an oversight committee was appointed in May 2009.
By August 2009, CLICO International Life had been prohibited from writing new business by the Supervisor of Insurance on the grounds that the company had not complied with the provisions of the Insurance Act Cap 310 re the Statutory Fund, and also because it had not submitted its audited accounts for the year 2008, in contravention of said legislation.
After vacillating for months, in March 2010 the then Prime Minister, David Thompson, warned policy and annuity holders that if they didn’t agree to accept some reductions in their benefits and investments, CIL might have to be placed under judicial management. The oversight committee came to said conclusion in its memorandum to the Cabinet in mid-2010.
But Stuart conveniently continues to assert it could all have been worked out, as long as CLICO’s policy and annuity holders took whatever deal was imposed on them. Imagine, the gall of people trying to get what they had signed up for in the first place!
When the judicial manager went through the CLICO group’s finances, the numbers confirmed that there was a $300 million gap between what CLICO had in assets (half a billion dollars) and liabilities ($800 million).
Several plans were put forward by the judicial manager, and one was finally approved by Stuart’s Government. Under that plan, which the court has also approved, Barbados will have to issue around $350 million in bonds to give the new CLICO entity, now called NLICO, enough viable assets so that it can be sold off.
The individual policyholders would get their full principal transferred into ten-year annuities at a two per cent interest rate, but the corporate and government purchasers of EFPAs would only get shares in property trusts.
Very complicated, I know.
I know someone else who might also think it really complicated. After completing his egregious attack on the suffering policyholders and the diligent judicial manager, while offering no word on when his Government would actually do something to help, the Prime Minister changed the subject completely.
He announced he was setting up a republic.
Pat Hoyos is a journalist and publisher specialising in business.
