NIS invests $6B in Clico - Luncheon

NIS invests $6B in Clico – Luncheon

Feb 21, 2009 News

An estimated $6B (US$30 million) of the National Insurance Scheme (NIS) Fund is invested in the operations of Clico (Guyana), but the Scheme is not worried about the security of the funds, Cabinet Secretary and re-elected Chairman of the NIS, Dr Roger Luncheon, said yesterday.

Dr Roger Luncheon

Speculation about the local operations of the insurance giant set in when the Trinidad Government, through its Central Bank, moved to acquire the operations of Clico (Trinidad) and the Clico Investment Bank, both of which belonged to the CL Financial Group.

However, Clico (Guyana) said that it is a separate entity within the CL Financial Group, and none of its assets is intertwined with Clico (Trinidad) and Clico Investment Bank.

Dr Luncheon indicated that there was nothing to dispute that the funds invested in Clico by the NIS and other agencies were safe.

Clico (Trinidad) and Clico Investment Bank had been strapped for cash and when the bank began to face an unusually high level of withdrawal requests, putting a strain on its available liquid resources, the Central Bank moved in to protect the interest of policyholders.

“The principal objectives are to ensure that resources are available to meet withdrawals of third-party CIB depositors and Clico policy holders, and to protect the funds of the depositors and policy holders and, in so doing, maintain confidence in Clico,” T&T Central Bank Governor Ewart Williams said.

After the takeover, Clico (Guyana) said developments in Port of Spain, Trinidad, involving CL Financial Limited had no financial impact on the local entity.

“The facts are that Clico lnvestment Bank (CIB) has been sold to Trinidad and Tobago’s First Citizens Bank Limited, and the Government of Trinidad and Tobago will provide the liquidity to support any strain on the insurance company, Clico (Trinidad) backed by assets of CL Financial Limited,” the local Clico office stated.

“Clico (Guyana) remains solid with a statutory fund that is in good standing,” the CEO Geeta Singh-Knight said.

Clico (Guyana) is one of the principal investors in the recently commissioned Berbice Bridge.

The Guyana Association of Bankers agreed with developments in Trinidad, and said the local financial sector was insulated from liquidity issues affecting financial institutions in any foreign jurisdictions.

“In fact, the level of liquidity in the local banking system remains very high, as evident from reporting by the Bank of Guyana, where at September 2008 the commercial banks held excess liquid assets of $29.6B, or 71.6 per cent above the required level.”

Given this fact, the bankers and depositors can feel very confident and assured that the stability and integrity of the local financial system is guaranteed.

The financial stability of the local banking system is equally guaranteed by appropriate regulations and supervisory oversight based on a risk management framework, the Guyanese bankers stated.

After the announcement of the Clico bailout in Trinidad, Minister of Finance Dr. Ashni Singh met with Clico (Guyana) CEO Geeta Singh-Knight and the Commissioner of Insurance Mrs. Maria van Beek.

The CEO assured the Minister that these developments do not affect the operations of Clico (Guyana), which is also a wholly owned subsidiary of CL Financial.

Meanwhile, Dr Luncheon has been re-appointed to serve as Chairman of the Board of the NIS. He had resigned but was asked by President Bharrat Jagdeo to stay on until a new board was appointed.

With the constitution of the new board, Luncheon said he was reappointed to serve as Chairman at a time when the Scheme continues an investigation into fraud in the Pensions Department.

Dr Luncheon said the fact that the sacked employees were not charged does not mean that they are free from being charged, and this will be determined as the investigation continues.

The investigation is being handled by the internal audit team and the Fraud Squad of the Guyana Police Force.