CLICO liquidation: 2000 policy holders could have been paid by yearend-govt. official complains

Dec 25, 2009 News

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By Leonard Gildarie
Policyholders hoping for an early conclusion to the liquidation of the CLICO Guyana are facing another setback with the court on Wednesday ordering a temporary stay of proceedings after the company asked that Chief Justice (ag), Ian Chang, recuse himself from the case.
And a top government official, who asked not to be named, said that had government had its way, more than 2,000 policy holders would have been paid by this Christmas.
CLICO Guyana, through its lawyer, Roysdale Forde, on Wednesday, was granted the stay of proceedings by Justice Franklin Holder after a Writ of Summons and Ex-Parte Application was filed on last week Thursday. The matter comes up again on January 12.
According to the Notice of Motion, Justice Chang should recuse himself because of his “predisposition against the respondent” and possible bias.
The motion said that Chang abdicated his duties to convene a sitting of the Full Court to hear an application for a stay of proceedings from a decision given by him on November 19.
In the Affidavit of Support, Director of CLICO, Winston Ramalho, said that it was the Chief Justice who had ordered that the company be placed under judicial management in February.
The company claimed that “should there be no recusal by the Honorable Justice Ian Chang, S.C, and the court proceeds to order the winding up while this action is pending would result in a change of the status quo from state of Judicial Management to a state of Insolvency with severe and drastic consequences to the respondent.”
A top government official yesterday said that the CLICO Guyana situation could also be likened to the ongoing one with Globe Trust which after years is still held up with account holders awaiting their money.
In February, the Guyana government took steps to protect policy holders of CLICO Guyana, placing the running of the company under the watch of Maria Van Beek, Commissioner of Insurance, to act as the Judicial Manager.
President Bharrat Jagdeo had made the announcement at a news conference, which was also attended by Van Beek and Dr Ashni Singh, Minister of Finance.
“Through the Commissioner of Insurance, the government of Guyana approached the High Court and obtained an order placing CLICO Life and General Insurance Company South America Limited otherwise known as CLICO Guyana under judicial management.”
He stated that the legal move followed the financial market developments in parts of the Caribbean, and The Bahamas in particular.
That country’s Supreme Court had only a few days before that announcement granted a winding-up order and appointed a liquidator for CLICO Bahamas Limited.
A press release from the Office of the Registrar of Insurance Companies said that the order was issued on the application of the Finance Minister and was taken in order to protect the interest of the company’s policyholders.
The Bahamian government’s move followed the January 30 takeover of three subsidiaries of the CL Financial Group in Trinidad by the twin-island nation’s government.
The companies are Colonial Life Insurance Company (Trinidad) Ltd., CLICO Investment Bank Ltd and British American Insurance Company (Trinidad) Ltd.
On Thursday, Jagdeo revealed that his administration had sought updated information on CLICO Guyana’s exposure and discovered that this had been considerable, in particular to the Bahamian company; this, he said, flew in the face of instructions over a year ago from Van Beek and even more recently.
“Based on the information received, CLICO Guyana has $6.9 billion or approximately US$34 million invested in CLICO Bahamas, which represents 53 percent of the Guyana company’s total assets.
“Furthermore, CLICO Guyana has not been able to exchange its illiquid assets for more suitable investments despite repeated instructions by the government of Guyana to do so.”
The president had stated that although the investments held in CLICO Bahamas were liquid on paper, investigations revealed that the Bahamas company was exposed to real estate investments in Florida through related party transactions with other subsidiaries in the group.
Jagdeo added that a comprehensive assessment of the company’s finances will be obtained and greater protection would be offered to policyholders.
“Government intends to work towards recovering the sums outstanding from the Bahamas, and to protect the interests of all policyholders of CLICO Guyana. In this regard, policyholders will be contacted and provided with further information shortly.”
He acknowledged that there had been sizable claims on CLICO Guyana following the news from Trinidad, resulting in a liquidity strain on the entity.
According to Jagdeo, while the company has so far managed to meet its claims, it has been forced to dispose of some of its investments including its shares in the Berbice River Bridge, which amounts to some $2 billion. The New Building Society has since acquired those shares, Jagdeo revealed.
CLICO Guyana and CLICO Suriname, have made claims of US$34mn and US$15.5mn, respectively, against the Bahamas unit, although they were not its direct subsidiaries.

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