Central bank willing to disclose CLICO report findings to enquiry

The Central Bank of Trinidad and Tobago says it will cooperate with the commission of enquiry into the failure of the Colonial Life Insurance Company (CLICO).

In a newspaper advertisement, the CBTT said that it has taken noted of media reports and comments over the last few days regarding its role in the inquiry.

"The bank wishes to assure the public that it is committed to cooperating with the commission of enquiry and has every intention of being open and transparent in this matter," the CBTT said, adding that it is providing the commission "with significant amounts of information in its possession" covering several years of the CLICO, British American Insurance Company crisis.

The CBTT said that since it exercised its emergency powers in January 2009 to assume control of CLICO, CLICO Investment Bank and British American, it has taken "all steps it considered necessary to protect the interests and preserve the rights of their depositors, policy holders and creditors".

Noting that it welcomes the establishment of the commission, the CBTT repeated the statement by the sole commissioner Sir Anthony Colman, that while the enquiry will make findings and recommendations, it cannot order compensation, even if it finds that financial loss has been due to the fault of particular individuals, companies, firms or government bodies.

It said that financial recovery for the depositors and policyholders "can therefore only come from civil proceedings, which the bank and its legal team have been actively preparing."

"The bank has a duty not to make any disclosures that would jeopardise those proceedings and, by extension, possibly affect depositors and policy holders getting justice from the courts."

But the CBTT said that it has carefully considered whether, in order to assist the commission, it can nevertheless release any of the reports without doing undue damage to the policyholders and depositors' interests in the civil proceedings.

It said that its legal team has agreed that the CBTT can disclose the reports it commissioned from the accounting firm, Ernst & Young, adding "it has done so, subject to the finalisation by the commission of enquiry of a confidentiality protocol".

CBTT said that it has received firm legal advice from leading counsel that it could not release the other reports since that would jeopardise the planned civil litigation.

"The bank wishes to reassure the public that it is firmly committed to assisting the commission of enquiry and will work closely with the commission of enquiry to ensure that the public interest is well served while taking steps to balance its obligation to protect the interest of the depositors, policy holders and creditors of CLICO, CIB and BAIC," the central bank said.

The CLICO enquiry will examine the circumstances, factors, causes and reasons leading to the January 2009 intervention by the Trinidad and Tobago government of then Prime Minister Patrick Manning for the rehabilitation of CLICO, CLICO Investment Bank, British American and Caribbean Money Market Brokers Limited.

The sole commissioner will also examine the legal and fiscal bases which informed the decision of the Manning government in January, 2009 to inject billions of dollars in those companies as well as "what policies, procedures and processes were used in the distribution of this capital or funding".

The terms of reference for the commission also allows for examining the "effectiveness or suitability of the accounting and auditing firms, the institutional, regulatory and statutory bodies with oversight responsibilities", including the central bank.

CLICO's collapse followed the financial problems facing its parent company, the Trinidad-based regional conglomerate group, CL Financial.

Under the bailout plan for CLICO, the Kamla Persad-Bissessar government has started paying out an initial partial payment of a maximum of TT$75,000 (US$12,500) to depositors in the short-term investment and mutual funds and those whose principal balances exceed TT$75,000 will be paid through a Government IOU amortised over 20 years at zero interest.

Meanwhile, the Policy Holders Group has confirmed that it has filed a motion in the court asking that CLICO be wound up.

"It will be interesting to see what type of defence the government comes with," said spokesman Peter Permell following a meeting of the group in Port-of-Spain on Sunday.

The only other option open to the government, Permell said, is to settle with the policyholders.

- CMC