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Jagdeo did assure 2000 policy holders
Globe Trust liquidation…
– Christopher Ram
By Gary Eleazar
President Bharrat Jagdeo during a recent press briefing told media operatives that he never gave a guarantee to the policy holders of Globe Trust and Investment Company Limited (GTICL). He even lambasted a Kaieteur News reporter for not researching his position and for using Christopher Ram as a credible source.
The research has been done and contrary to the President’s current position, on August 3, 2001 at a press briefing at Office of the President, Jagdeo offered “solace to the some 2,000 small depositors at the institution whose savings are in the vicinity of about $10,000 each.”
President Bharrat Jagdeo
“They are going to receive their back money”, the President had pledged, according to a Guyana Chronicle article written by senior reporter Wendella Davidson. His assurances were also carried in the Stabroek News of August 4, 2009.
According to Christopher Ram, the relevant legislation makes no special provision for persons with deposits in the $10,000 vicinity.
“Even with the experience of the Colonial Life Insurance Company Limited (CLICO) Guyana and GTICL, the President has failed to inform himself of the relevant provisions of the Financial Institutions Act,” said Ram in an invited comment.
Under the legislation, when a company is being liquidated there are four categories of payments listed as priorities before deposits up to an amount not exceeding one hundred thousand dollars.
He said that for the President to give that assurance he certainly could not have been referring to the Act.
Recently the liquidator of GTICL, Nizam Ali, said that the future of stakeholders at that company appears gloomy.
Ali has since moved to the courts in an attempt to recover some of the money loaned without adequate security, but the judicial system has been described as “ridiculously slow.”
The liquidator has managed to recover some $14M from debtors ever since the process of liquidation began. According to Ali, depositors’ investment in GTICL amounts to $800M. However, the book value of the loans is $70M, which means that a significant amount of the company’s assets are impaired and likely unrecoverable.
Of the 5,000 depositors, some 3,000 have deposits of $100,000 or less. This would mean that if there is a commitment to pay some of the depositors, it is unlikely that anyone would receive more than $100,000.
Ram also pointed out that the President’s assurance to the small policy holders was given after the Bank of Guyana had closed GTICL.
Last October, Nizam Ali and Sons, the same company that has been contracted to prepare a report on the CLICO (Guyana) accounts, was appointed Liquidator by Chief Justice Ian Chang.
The Chief Justice issued an order for the compulsory liquidation of Globe Trust following a High Court application by the Bank of Guyana (BOG).
The company came crashing down after issuing many unsecured loans and conducting other dubious practices.
BOG filed an application asking that an order be granted for the compulsory liquidation of GTICL as provided for under the Financial Institutions Act after an investment deal for the troubled institution failed to materialise.
It was the second such application—the first was filed in 2002 when numerous depositors attempted to intervene in the case. They moved to the courts accusing the Bank of Guyana of acting with indecent haste. The courts upheld their appeal.
Globe Trust began operating in April 1991 and was licensed in 1999 to conduct depository financial business with authority to engage in Trust business. However, in 2000 and again in 2001, a series of inspections by the BOG found the institution to be in breach of the Financial Institutions Act, and the BOG, with the intention to liquidate, seized the institution in September 2001.
Several attempts thereafter to attract an investor failed.
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