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The Clico issue may be going nowhere

Jan 28, 2010 Editorial

The Clico Guyana issue seems not to be going anywhere. On the one hand the government, through President Bharrat Jagdeo, says that if it has its way, it would pay some of the affected depositors, at least 2,000 of them.
It says that before it could do so, Clico Guyana has to be wound up and assets disposed of to ensure that all the money is in hand to satisfy every depositor, insured person and those who for other reasons have money with the company.
People representing the company on instructions from CL Financial in Trinidad, say that nothing should be done to wind up the company because Clico Guyana is not bankrupt nor is it without financial resources.
And indeed the company is paying the salaries of its employees who have been responsible for managing the affairs of Clico Guyana, not least among them, Mrs Gita Singh-Knight, who has been heading the company.
The genesis of the Clico debacle is rooted in Clico Guyana extending its foreign investment portfolio beyond allowable limits.
Pretty soon, on the instruction of the Commissioner of Insurance, it sought to recover the money.
This never happened and the problems began. Clico Guyana stood to lose US$33 million—money that it had deposited overseas on the pretext of investing with CL Financial which in turn was investing heavily in real estate.
Had there not been a global financial collapse investors in Clico might not have been any wiser and things would have continued along their merry way.
But that was not to be and Guyanese but for the intervention of President Jagdeo, would have lost millions of dollars which many cannot afford.
Trinidad took control of the Clico arm of CL Financial and has so far made US$15 million available to help cover some of the loss. But this is hardly enough to repay all the depositors and investors.
It is here that things become clouded. Lawyers for the insurance company say that there is nothing stopping President Jagdeo from making the promised payments.
And indeed, there is nothing to stop him except that he will be honouring all the liabilities of the insurance company without any recourse to being repaid by the company.
And if in the end the court rules against winding up the company then there is nothing to prevent the owners walking away with a hefty profit.
But right now, whatever is contemplated by the government is stalled in the courts. There is a constitutional motion that seeks to determine that the move toward judicial management was wrong, that the move to wind up the company was unlawful and without legal basis.
But the problem remains; what is the situation with those who want their money, knowing that they had saved for a rainy day.
Those who insist that Clico Guyana should continue as it did before the introduction of the judicial manager would say that the people would not have accessed their money, that they would have been prepared to allow the money to remain with the company to fashion a nest egg.
The difference is that the money would have been earning interest. As things stand now, the money is depreciating daily given inflation and the movement of the local currency which has not appreciated in a very long time.
So the legal wrangle continues with no end in sight given the pace at which matters are disposed of in the courts. And after the first leg there will be an appeal.
Some depositors and investors may die before they can access their money and those who are representing the company in the courts may simply believe that a few may suffer for the greater good of the majority.

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