St Vincent bank faces lawsuit over CLICO collapse

• St Vincent bank faces lawsuit over CLICO collapse

Prime Minister of St Vincent and the Grenadines Dr Ralph Gonsalves says legal action will be taken against a local commercial bank as the fallout continues from the financial problems of the Trinidad-based CL Financial Group.

Gonsalves told parliament that the bank, which he did not name, is being sued in relation to the British American Insurance Company Limited (BAICO), which, like the Colonial Life Insurance Company (CLICO), are members of the CL Financial Group in Port-of-Spain.

He said the suit is being brought as members of a technical committee managing the assets of the failed company also consider "certain kinds of legal action in Trinidad and possibly elsewhere".

BAICO has since been placed under judicial management, and the possible legal action in Trinidad relates to the regional elements of BAICO, but Gonsalves said that there were issues specific to St Vincent and the Grenadines.

BAICO's judicial manager, Brian Glasgow, and Supervisor of Insurance Morris Edwards have, therefore, given instructions for the bank to be sued.

Gonsalves did not name the bank but said it was not the Bank of SVG, formerly the National Commercial Bank.

He said Vincentian policyholders would benefit from any monies recovered.

The bank, Gonsalves explained, agreed in 1996 to act as trustee of certain BAICO assets. This was to satisfy the statutory requirements in relation to the statutory fund.

Gonsalves said that as part of its duties, the bank was to report to the register of insurers all assets it held in trust for BAICO St Vincent; safely keep the BAICO assets held, and monitor and update records on the release and renewal of the assets.

Gonsalves told lawmakers that when the unravelling of BAICO's parent company CLICO began in early 2009, the bank told the Insurance Supervisor in Kingstown that BAICO assets, to be held in trust, was EC$140,547,665.57 (US$38.7 million) for fulfilment of BAICO statutory-fund obligations.

Gonsalves, a lawyer, said that legal opinion suggests several possible causes of action, including breach of statutory duty, breach of fiduciary duties, misrepresentation, and negligence for negligent misstatements.

"It has turned out that what has been held out to have been held in trust by this commercial bank ... that the response has been such to occasion the need for the legal action," the prime minister said.

Gonsalves spoke of transactions in the United States in which monies from BAICO were used to close deals worth hundreds of millions of dollars.

"The story goes on, but I am only giving you the gravamen of what our judicial manager has unearthed. There may well be other subject matters for the cause of action against these persons, but there is this one," he said.

Meantime, insurance companies will be invited to bid for BAICO's traditional life business in the next two weeks.

An EC$5 million (US$1.85 million) medical fund has been established for BAICO health insurance claims, said Gonsalves, and the governments of the Eastern Caribbean Currency Union are funding the traditional life insurance component at EC$38 million (US$14.07 million) to take care of 22,000 policyholders, including 4,100 Vincentians.

- CMC