WHERE IS IT COMING FROM?

Mar 19, 2009 Features / Columnists, Peeping Tom

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Suppose, I, Peeping Tom decided to open a business but the money I had was insufficient to finance the operations. Suppose, also, that in order to obtain this money, I borrowed from Uncle Adam.
Now suppose after a while the business runs into problems and racks up debts, which could not be paid. Suppose Uncle Adam said that he wanted back his money but the company could not find the money to pay him, since all that was left of the business was some of the machinery in which it had invested. In short, the company does not have any cash to pay Uncle Adam.
Suppose in lieu of payment of his debts, Uncle Adam decided that the only way he could recover his investment would be to keep the machinery which was in the business.
Up comes Uncle Freddie and he decides that he would buy the machinery, not from Uncle Adam, but from Peeper which means that he is putting monies in the hands of me, the original investor.
Now why would Uncle Freddie, knowing that the business is going bust, wish to put money in the hands of the investor? He says that he is simply buying the machinery since it is worth buying. But why would Uncle Freddie wish to buy the machinery?
Now, this little make-believe scenario resembles what is taking place with CLICO (Guyana). The company took monies from a lot of people and entities, including the National Insurance Scheme, which was invested in the Bahamas and which is now, because of the problems facing the CL Financial Group, impaired.
So, CLICO (Guyana) has problems and the persons from whom it borrowed are clamouring for their money.  Up comes the New Building Society which through the purchase of bonds of CLICO (Guyana) in the Berbice River Bridge then provides critical funds to CLICO, which allows CLICO to pay some of its debtors.
Uncle Adam still has a problem because he still does not have his money while other debtors are paid. Up comes the government, which announces that Uncle Adam and all other persons owed monies do not have to worry, the government will secure their payment.
However, the company is not taking in new business. All that is happening is that it is verifying to whom it owes money. So where will the money come from to pay Uncle Adam?
The government says that it will sell off some of the policies of the company. But that is not an income-generating measure. All this does is ensure that those with policies and pension plans can continue to have their policies in force.
What about Uncle Adam and his investment in the company? Where will the money come from to pay him? Uncle Freddie’s money is no longer there. This has been used to pay off other debts. So where is the money going to come from to pay Uncle Adam.
I hope that it is not coming from you, the taxpayer. It was not you who told Uncle Adam to go and put his money into any business. So, Uncle Adam should not expect that your hard-earned tax payer money should be used to pay for the gamble he took in investing in the company.
The Government of Guyana is yet to answer the question as to where the money will come from to secure the guarantee that it has given to all policyholders.
In the National Assembly, the Finance Minister sounded optimistic. He announced that the government was calling in the guarantees made on the investments made by CLICO in the Bahamas and in some other companies.
The Finance Minister said that once these are met it should minimize the risks of the invested funds.
That sounds good…on paper. The reality, however, is different.
Those guarantees that are being called in are only as good as that by which they are backed and from what we are told a great deal of CL Financial’s investments have been sunk in real estate in Florida and the bottom has fallen out of that market.
I do not know how soon, if at all, we will see any of that money since there are creditors lining up for payment. I am betting that Roger Khan will probably be released before we see much of that money.
And therefore the question remains, where is the government going to find the cash to guarantee the interests of all policyholders.
Knowing how this government operates, I would not be surprised if they themselves do not know the answer to that question. Reports suggest that the accounts of CLICO for 2008 are now being examined and assessed and it is after this exercise is completed, a true picture of the liabilities of CLICO (Guyana) and its mismatch with its assets would be known.
Yet, the Government of Guyana, without waiting for the 2008 accounts to be finalized, has gone ahead and said it would guarantee the monies of all investors in CLICO.
I wonder why? Is it that they love Uncle Adam so much that they do not wish to see him go broke?

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