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Guyana freezes US$15M Bosai loan due to CL Financial

Mar 31, 2009 News

CLICO (Guyana)’s judicial manager has secured a temporary restraining order against First Citizens Bank Limited of Trinidad and Tobago from collecting US$15 million from Bosai. Chief Justice Ian Chang made the order last week.
Bosai had secured a loan of US$18 million from Caribbean Investment Bank (CIB), a subsidiary of CL Financial, to conduct its investment in Guyana. CIB, which later became First Citizens Bank Limited, had made the loan and over time, received US$3 million by way of repayment from Bosai.
The Judicial Manager, having secured control of the assets of CLICO (Guyana) and recognizing that the local company was linked to the Trinidad Bank, decided that since CL Financial owed Guyana through investments made to CLICO (Bahamas), by
CLICO (Guyana), it would seek to freeze any payments to be made out of Guyana.
CLICO (Guyana) had transferred US$36 million to CLICO (Bahamas).
When the latter collapsed, Guyana was forced to retain lawyers to help recover its money, which represented some 53 per cent of the assets of CLICO (Guyana).
CLICO (Guyana), on instructions from the Commissioner of Insurance, has asked CLICO (Bahamas) to demand its investment, which, up until the collapse in February, had been earning interest at the rate of some seven per cent.
However, CLICO (Bahamas) could not repay Guyana. Its problems began when it could not even pay a claim for US$1.2 million to a claimant in Turks and Caicos. Almost immediately, the Bahamas Government took control of its assets in a move to protect the interest of the people there.
No sooner had this been done that Guyana seized the assets of CLICO (Guyana).
The money loaned to Bosai represents a significant portion of Guyana’s investment to the subsidiaries of the Trinidad Company. The repayment would have been done through
CLICO (Guyana) on guarantees made by the Trinidad Company.
By moving to the courts to restrain Bosai from making payments to the Trinidad-based bank, Guyana is hoping to recover almost half of the money invested in CLICO (Bahamas). This, coupled with the assets of CLICO (Guyana), would go a long way toward repaying the local investors whose money is currently on hold pending a thorough investigation by the Commissioner of Insurance and the auditors recruited to investigate the state of affairs of CLICO (Guyana).
The aim is to seek a trade-off between Guyana and the Trinidad subsidiaries of CL Financial, which is currently managed by the Trinidad Government. Bosai would pay this money to the Guyana Government instead of to First Citizens Bank Limited.

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