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PORT OF SPAIN — A criminal investigation against former CLICO executives and several corporate entities aligned to the collapsed insurance giant has begun.
The investigation is being conducted by a special team of police officers, comprising members of the Anti-Corruption Investigations Bureau and the Fraud Squad.
The criminal probe, which began late last week, was announced last night in a press release issued by Director of Public Prosecutions, Roger Gaspard.
The Express learned that the probe has been undertaken based on the content of a voluminous report submitted by the Central Bank to the Office of the DPP.
It was disclosed on October 17 by Attorney General Anand Ramlogan in the senate that the Central Bank had spent $305.5 million in legal fees between October 2007 and July 2012, for investigations relating to the collapse of CL Financial Ltd group of companies, which involved an international team of forensic experts to track multi-million dollar transactions in several jurisdictions.
The Central Bank probe took place even as the Kamla Persad-Bissessar administration appointed a Commission of Enquiry, chaired by Sir Anthony Colman, to probe the same issue in November 2010.
Colman has expressed his frustration during the enquiry on several occasions relating to the nonappearance of key witnesses who the enquiry feels can help unravel the complex financial dealings which led to the collapse of the insurance giant and the subsequent close to $20 billion bailout by the State.
The terms of reference of the Commission of Enquiry include looking into the causes, reasons, and circumstances leading to the deterioration of the financial conditions at CLICO, CLICO Investment Bank Ltd, British American Insurance Company (Trinidad) Ltd and Caribbean Money Market Brokers and the Hindu Credit Union which threatened the interest of depositors, investors, policyholders, creditors and shareholders and the circumstances, factors, causes and reasons leading to the January 2009 intervention by the Government for the rehabilitation of the companies.
The Central Bank, using its regulatory powers under Section 44 D of the Central Bank Act, hired Canadian forensic investigator Robert Lindquist to assist in unravelling the web of transactions between directors of CL Financial group of companies which led to the collapse of the multibillion dollar company.
Gaspard also issued a stern warning to media houses last night to cease publication of “anything which might jeopardise, hinder or otherwise prejudice the investigation or any possible proceedings which might result from it”.
He warned that such infractions “may amount to a contempt of court”.
Commenting on the DPP’s warning last night, a senior attorney said it may be impossible for the media to comply with such a warning since the commission of enquiry was being held in public where the details of the conduct of former CL Financial directors were being revealed.
The commission of enquiry resumes on December 3, nine days before the January 2009 Memorandum of Agreement signed by the Government and CLICO executives expires. (Express)
Officials representing thousands of policyholders and investors owed millions of dollars by CLICO and British American Insurance has welcomed the Financial Services Commission proposed increased surveillance of insurance companies.
The Barbados Investors and Policyholders’ Alliance has a message for the FSC, however: enforce it or forget it. That was BIPA’s reaction to a Barbados TODAY article, which detailed a series of legislative changes and new guidelines as part of the FSC’s increased regulation of life and general insurance companies.
In a consultation paper on the matter, the regulator’s Director of Insurance and Pensions, Randy Graham, said the proposals were intended to “improve the prudential regulation of the insurance industry in Barbados”, a statement BIPA was happy to hear.
But the organisation cautioned that without the adequate supervision and enforcement of regulations and legislation, such measures would be “pointless”.
“There are already substantial provisions within the Companies Act and the Insurance Act which, had they been enforced in a timely manner by the regulatory bodies and others in office, would have minimised, if not completely prevented the CLICO and BAICO debacle,” BIPA Chairperson, June Fowler said.
She said the result was that 35,000 policyholders now “find themselves abandoned by a system that has completely failed them”.
Fowler also expected additional breaches of existing legislation and regulations to “come to light as a result of the legal proceedings currently being initiated by BIPA”.
“You can issue guidelines and regulate and legislate until the end of time, but unless the authorities commit to strict supervision and enforcement without favour, tightening the supervisory framework just won’t make any difference,” she said.
BIPA officials think the new FSC proposals “arise out of a complete lack of confidence in the insurance sector as a direct result of the failure of the CLICO Judicial Manager to come up with a timely and satisfactory solution to the fiasco, and the continuing empty reassurances and vague promises made by the current government”.
Today, the organisation also commended the Trinidad and Tobago Central Bank “for recognising the likely criminality involved in the operations and subsequent collapse of the CL Financial Ltd group of companies and seeing fit to substantiate its suspicions by mobilising an international team of forensic experts and producing a ‘voluminous’ report”.
“BIPA finds itself wondering why similar action has never been taken here in Barbados by our own Central Bank, whether independently, or as a result of the recommendation of the Financial Services Commission, the Government entity responsible for oversight of the Insurance industry as well as of Deloitte, the Judicial Manager of CLICO,” BIPA said in statement on the matter.
“The alliance would further be interested to know the extent of cooperation afforded by Barbados to the international team of forensic experts appointed in Trinidad in their efforts to track multi-million dollar transactions ‘in several jurisdictions’.
BIPA finds it inexplicable that the alliance itself, which is merely an advocate for the 35,000 policyholders in Barbados devastated by this debacle, seems to be the only body in Barbados pursuing such criminal proceedings,” it added. (SC)
by Shawn Cumberbatch
Barbados’ insurance regulators are moving to ensure they do not have to deal with another CLICO-type debacle anytime soon.
It means operating a life or general insurance company will become tougher and more expensive.
As authorities struggle to resolve the CLICO crisis and that of its sister company British American Insurance, Barbados TODAY investigations revealed that the Financial Services Commission is proposing the introduction of seven new guidelines to govern the conduct of insurers.
But added to these new provisions related to assets and valuation, corporate governance, international controls and risk management, market conduct, related party transactions and statutory reporting, life and general insurance companies doing business here will likely be faced with millions of dollars more in capital requirements to reduce the chance of clients being hurt when these organisations go belly up.
This would be done through amendments to the Insurance and Exempt Insurance Acts, a move which the FSC is now pushing. Sources close to the FSC said local insurance industry representatives had up to yesterday to say how they felt about the changes, and reports suggested several of them “were not happy”.
Some of the key changes being pushed by the FSC included increasing the minimum share capital requirements from the current $3 million to $5 million for a life or general insurance company, from $5 million to $7 million for a comprehensive company and from $1 million to $3 million for companies limited to writing motor vehicle or industrial life insurance business.
Additionally, the FSC is pushing for these same companies to be mandated to deposit millions of dollars more with it as the supervisory agency.
As it currently stands, life insurance companies are required to deposit $1 million and general insurers between $250,000 and $1 million based on their written net premiums, but the regulatory agency is recommending that this be increased to $5 million for life insurers and $2 million for general insurers.
And in what is believed to be a direct response to the CLICO collapse here, the FSC is also proposing an additional section to the Insurance Act stipulating that on the winding up of an insurance company, all of is monies and securities would be held as statutory funds and used by the liquidator to play local policies “in the first instance”.
The planned changes do not end there, however, as the regulator wants to introduce a new statutory fund to cover “other classes” of general insurance now not required to establish them.
While long term insurance policyholder liabilities and motor vehicle insurance policyholder liabilities are now required to have a statutory fund, the FSC wants this extended to include accident and sickness, liability,, marine, aviation and transport insurance.Barbados TODAY was provided with a consultation paper authored by the FSC’s Director of Insurance and Pensions Randy Graham, who gave the rationale for the proposed guidelines and legislative changes.
He said the overall aim was to “improve the prudential regulation of the insurance industry in Barbados”. The official disclosed that his agency had completed a “full review” of Barbados’ current regulatory framework for the non bank sector, and had “concluded that its prudential supervisory framework for insurance companies, which incorporates essential elements of the International Association of Insurance Supervisors, is sound”.
But Graham also said the FSC believed the framework “needs enhancement and modernisation so as to meet the unique needs of participants in, and risks inherent to, Barbados’ insurance market”.
“More specifically, some elements of macro prudential monitoring that are material in this modern and dynamic insurance market are not present in the current legislation, and the Commission found it necessary to upgrade so as it be in concurrence with the market trends,” he said.
“In consideration of measures to strengthen the sectors’ ability to withstand future shocks, the Commission has identified the monitoring of reinsurance adequacy and effectiveness, the monitoring of internal corporate governance and related party transactions in non-public entities, and the standardisation of assets not publicly traded as areas that presented particular challenges for the stakeholders and the regulation of the industry.
“Given the limited regulatory references to these issues in the Insurance Act CAP.310, the commission has developed a series of guidelines to ensure that the regulatory tools needed to monitor these issues are present in our Barbados’ regulatory framework. The guidelines are being issued under the authority of Section 53 of the Financial Services Commission Act 2010- 21, and the guidelines take the force of law. All licensed, where applicable, will be expected to follow the guidelines,” he stated.
The Director of Insurance and Pensions said the FSC was “seeking to create an environment where business decisions can be derived at in a rational, orderly and transparent manner, and one which avoids any unnecessary disturbance to markets and the interests of industry stakeholders”. email@example.com
By Peter Permell
LAST Friday, Deloitte Consulting Ltd (Barbados), the judicial manager of CLICO International Life Insurance Limited (CIL ) issued a statement indicating it had received sanction from the High Court of Barbados to pursue a restructuring plan for the company.
“The proposed plan,” it said, “will result in a write-down in value of all policyholders’ liabilities (traditional policies and EFPAs) to match the estimated value of the company’s net available assets . . . .
“The judicial manager reported that it had examined and explored several funding options with regional governments, including most recently the possibility of issuing of a bond backed by sovereign guarantees from Barbados and Eastern Caribbean governments.
“However, after further consultations with regional governments and potential investors, this option was deemed not to be viable, given current market conditions . . . . In view of these considerations the judicial manager believes that the proposed restructuring plan is the best option available for policyholders at this time.
“The judicial manager will now be seeking the support of regional regulators and other court-appointed judicial managers to implement the proposed restructuring plan . . . .”
The Clico Policyholders Group (CPG) is very disappointed, but not surprised, by this unfortunate turn of events with regard to our counterparts in Barbados as this is clearly your classic case of “Peter pays for Paul and Paul pays for all”.
There are some interesting parallels with what has happened in Barbados and what could have happened in Trinidad and Tobago – which, on reflection, we were only able to avoid because of the CPG’s robust and unyielding representation.
The Trinidad policyholders must never forget that we would have suffered the same fate as Barbados, with perhaps, at best between 50 and 60 cents on the dollar, had we not been able to “stridently persuade” the Government to change/upgrade its original offer of $75 000 and zero-coupon bonds over 20 years to include the soon to be launched Clico Investment Fund (NEL 2).
It is clear that these Barbados policyholders are the innocent victims, the sacrificial lambs now being hauled, kicking and screaming, to the slaughter on the altar.
We encourage our Bajan brothers and sisters not to give up the struggle, and remind them of the old maxim “the race is not given to the swift nor the battle to the strong but he who endures to the end”.
Oliver Jordan may have something to smile about, but 25,000 CLICO policyholders certainly don’t! BIPA is staggered by what can only be described as one of the most clandestine assaults in the recent history of Barbados on 12% of the country’s population. The so-called proposal, which was quietly filed on Friday 19th October and mysteriously slipped through the Court system and sanctioned within 7 days without consultation or discussion with stakeholders, would result in a substantial loss for all CLICO policyholders which is not only completely unacceptable, but also unconscionable in the extreme. BIPA cannot believe that after taking 18 months and charging millions of dollars, this ‘fire sale’ is all the Judicial Manager could come up with.
Article from page 6 – Barbados Today 26/10/12
Resolving the CLICO debacle appears to have gotten more difficult.
Deloitte Consulting Limited, the Judicial Manager for CLICO International Life Insurance LImited, announced today that the Barbados High Court had given it permission to restructure the company, which owes millions of dollars to 35,000 policyholders and investors.
The bad news for these individuals is that the plan to be pursued “will result in a write down in value of all policyholders’ liabilities”.
Additionally, after Barbados and other Eastern Caribbean Governments said no to the issuance of a bond to meet the cost of a CIL solution, finding the necessary funding has become a larger problem.
These latest developments came with a warning from Deloitte, which is represented by Oliver Jordan and Patrick Toppin, that “further delay in the implementation of a restructuring plan may lead to further loss of confidence by policyholders and likely reduction in premium income”.
“The judicial manager reported that it had examined and explored several funding options with regional governments,
including most recently the possibility of issuing of a bond backed by sovereign guarantees from Barbados and Eastern Caribbean governments,” today’s update from Deloitte stated.
“However, after further consultations with regional governments and potential investors, this option was deemed not to be viable
given current market conditions.”
The judicial manager also said that, in view of the financing challenges, it believed “the proposed restructuring plan is the best option available for policyholders at this time”.
“The judicial manager will now be seeking the support of regional regulators and other court-appointed judicial managers to implement the proposed restructuring plan. Further details on the implications for all policyholders will be provided as soon as possible,” it said.
“In addition, the judicial manager will continue to explore with the Barbados and Eastern Caribbean governments, any other possible source of funding that would improve recovery by CIL’s policyholders.”
Deloitte said the high court’s recent sanctioning of a restructuring plan “will result in a write down in value of all policyholders’ liabilities (traditional policies and Executive Flexible Premium Annuities) to match the estimated value of the company’s net available assets”.
“The restructured policyholder liabilities and all the assets of CIL will be transferred to a new company which will be separately governed and managed. All such activities will be subject to regulatory approval in Barbados and the Eastern Caribbean,” it added.
Officials also reported that the court had approved completion of the CIL Forensic Audit “with a focus on related party transactions and balances”.
Deloitte said “such further investigation will assist the JM in assessing the feasibility of possible additional recovery actions for the benefit of policyholders of CIL”. (SC)
BIPA’s response to the Court Approved Restructuring Plan for CLICO. Please note that in their rush to support BIPA, the Nation mistakenly published the wrong figures for the assets and liabilities of CLICO. According to the Judicial Managers’ Reports, as at March 31st 2012, the total CLICO International Life (CIL) liabilities were $837.4m and the “Fair Market Value” of the CIL assets at the same date were $441m. These figures include not only Barbados but also the regional countries affected.
GREAT NEWS FOR POLICYHOLDERS AND SUPPORTERS OF BIPA WHO ARE NOT YET MEMBERS!
You can now join and support BIPA as an “Associate Member” for a minimum donation of just $20 AND remain anonymous if you so wish. Read on…..
The ongoing CLICO and BAICO situation is without doubt the most disgraceful financial debacle Barbados has ever witnessed. For nearly four years now it has devastated the lives of 35,000 Barbadians, most of whom can least afford it, particularly the elderly.
The vast majority of those who entrusted their hard earned savings to CLICO and BAICO purchased traditional Life and Health Insurance policies and Annuities to protect themselves and their families in the future. Following the collapse of CLICO in Trinidad in January 2009, many wanted to take their money out, but the late Prime Minister repeatedly assured Barbadian policyholders that their money was safe, as did the current Prime Minister and Minister of Finance. Both have since assured policyholders that they will get their money back and yet the process has slowed almost to a standstill, with no updated communication to date from the belatedly appointed Judicial Manager, the Minister of Finance or the Prime Minister.
The Barbados Investors and Policy Holders Alliance (BIPA) is an advocacy group which was formed in April 2011 to pressure the Government to bring about timely restitution of everything that is owed to all 35,000 policyholders. It is a legitimate, registered, not for profit company with a full Board and by-laws and will shortly be submitting its first year’s accounts for audit.
Due to the continuing inertia of the Government and failure of the Judicial Manager to come up with a satisfactory resolution, BIPA has now voted to initiate legal action against the directors of CLICO, the auditors and the Supervisor of Insurance, all for failing in their fiduciary and/or statutory duties.
BIPA also has an active media campaign with radio and press advertisements keeping up the pressure on Government to bring this matter to a satisfactory and expeditious conclusion.
You will appreciate that all of this costs a great deal of money and whilst we are moving forward thanks to the loyalty of our paying members and the generosity of those who have made additional contributions, the Alliance would appreciate your help to continue its fight and finally bring agreeable closure to this appalling affair.
This initiative is to ask for your support in raising funds. If you are a policy holder in CLICO or BAICO, we encourage you to join as a Full Member and pay the annual subscription of $200.00. However, we appreciate that some people cannot afford as much as $200 and so we are also offering “Associate Membership” for a minimum donation of just $20. This level of membership will obviously carry some restrictions, but you will be able to attend meetings should you wish to do so, and be on our email circulation list sharing updated information and developments.
Of course, regardless of whether or not you are a policyholder, if you support our cause and are able to contribute $20, $200 or more, we would be most grateful. This is a cause that affects not only the 35,000 policyholders, but the country’s economy. As you can imagine, within days of the repayment of the hundreds of millions of dollars that is owed to policyholders, they will start spending on goods and services again, and saving with reputable institutions, putting that money straight back into the economy, thus saving jobs and boosting struggling businesses.
We also appreciate that there are those who wish to keep their affairs private and so BIPA is offering to accept contributions and membership with only an email address as a reference so that they can send you a receipt for your contribution and keep you in touch with developments should you wish them to do so.
Please contact June Fowler in complete confidence with your offer of support at whatever level at firstname.lastname@example.org, or give her a call on 230 1026 for more details on how to make your contribution or join as an Associate or Full Member.