The Clico investors and their wish

Sep 11, 2010 Editorial

The local Clico debacle appears to be over, at least for now. Chief Justice Ian Chang has ruled that the entity should be wound up and that the Bank of Guyana should be the liquidators. His decision highlighted a number of things that had been wrong all along but which the investors in Clico had no knowledge.
By its own admission before the Chief Justice, Clico stated that it had been conducting illegal activities—that it had been acting illegally in contravention of the Financial Institutions Act. At best one would have expected that there would have been some investigation into this claim.
It is not too late for this course of action. Indeed, in other societies there would have been criminal prosecutions since the company was dealing with money entrusted to it by people who were responding to appeals by the company.
To her credit, the Commissioner of Insurance moved with alacrity when she realised that the company was in dire straits. She noted the collapse of the Clico empire and she realised that Guyana was not going to escape it. The end result was that she moved to the courts to have the assets frozen.
In the wake of that action, President Bharrat Jagdeo announced that no investor would lose his money that the government has undertaken to cover any shortfall should the assets of the company fail to cover the liabilities. There were skeptics, given that on numerous cases the government would give commitments only to renege.
The government had earlier moved to secure all Clico assets so that the local depositors could have been paid their monies. For example, a Trinidad company had loaned the Russian bauxite company a sum of money. Government moved to prevent any repayment and to have that loan sum remain in Guyana.
There were other assets owned by Clico’s parent company that the government tried its utmost to secure. However, the courts found that such moves were outside the pale of the law. The bottom line was that the government wanted to be in a position to ensure that local depositors did not suffer any loss.
Amidst all this, Clico insisted on its right to continue. It had already admitted to transferring US$34 million without lawful authority. That money exceeded the amount of liability that could be transferred but Clico insisted that it should be business as usual.
A lawyer who has been representing the insurance company now says that the way is clear for the President of the country to honour commitment he might have given to the people of the country. Many people had their life’s savings in that company and others had relied on Clico to help them through nay medical crisis.
Within recent weeks, scores of people raised their voices in concern over their inability to meet obligations that they had cornered through the entreaties of the insurance company. President Jagdeo must now relieve the people of their suffering.
The businessmen who might have put their money to secure the high interest promised by Clico would not mind investing in Guyana if at this time there is simply not enough money to allow the government to satisfy each investor.
We know that there was a public pronouncement that the government was prepared to offer bonds to the very large Clico investors so that they could be assured of their money. In the interim they would be investing in the economy and receive interest on their investment.
President Jagdeo has also been able to garner US$15 million from Trinidad toward the Clico payments.
What happens now is going to put smiles on the faces of people because the economic conditions are such that people want every cent that they could lay their hands on.
But why did the matter take so long to come to a conclusion? In the first instance there was a ruling but the confusion that prevails in the court allowed lower judges to challenge the order of a higher judge. This is most unnatural and unheard of in any part of the world.
It took a year for this confusion to be resolved but investors can now breathe a huge sigh.

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