Welcome to BIPA
Response to Letter to the Editor in Nation newspaper of April 27th, from Mary Antione of St. Lucia, suggesting BIPA should make specific suggestions about the action to be taken on the CLICO debacle, and do ‘more real work’ instead of just ‘dropping hints’. Of course we had to respond firmly to that!
By – JUNE FOWLER, Barbados Investors & Policyholders Alliance Inc.
The Barbados Investors & Policyholders Alliance (BIPA) would like to thank Mary Antoine of St Lucia for her constructive comments and suggestions in the DAILY Nation of April 26, which have been noted.
We would also like to reassure Ms Antoine that, far from dropping “hints”, BIPA is already working through the courts to achieve one of a number of its objectives on behalf of its policyholding members, and that a great deal of other “real work” is going on behind the scenes, as well as in the public domain.
BIPA continues to monitor closely the work being done by the judicial manager. Given the millions of dollars in fees already paid and the granting by the court of what amounts to a “blank cheque” for its continuing costs, BIPA fully anticipates and expects the judicial manager to present an all-encompassing resolution for the 25 000 Barbadians and thousands more Eastern Caribbean people who are disastrously affected by this debacle.
The alliance also expects the timely commencement of legal proceedings against any and all of CLICO’s officers and directors who are found to have broken the laws of the land and/or failed to perform their fiduciary duties.
In the meantime, BIPA eagerly awaits the announcement of details of the proposals by the Barbados Government presenting a solution to the CLICO situation, which has been promised by the Minister of Finance to be delivered in the next eight weeks.
If necessary, BIPA will challenge or counter the proposals on behalf of its members, but for the time being, does not seek to make specific proposals of its own, and trusts that the final proposals made resulting from the various judicial manager’s reports will be inclusive of and satisfactory to all policyholders.
By Patrick Hoyos | Sun, March 18, 2012 – 9:38 AM
I understand there is some interim report of a forensic nature on CLICO. I repeat I have never seen it. I saw reference to its contents made in a local newspaper. I never trust the contents of that newspaper. – Prime Minister Freundel Stuart speaking last Wednesday during the Estimates Debate in the House of Assembly.
Having thus declared himself uninformed about the state of the forensic investigation into CLICO International Life insurance company (CIL), the Prime Minister went on to plead for somebody to show him the report. As far as he is concerned, the only place anybody is talking about some forensic audit is in a newspaper which he does not trust and presumably does not read.
When I heard Mr Stuart taking this tack on Wednesday afternoon, I nearly drove off the road. Here you have a Prime Minister proclaiming ignorance about possibly the most earth-shattering report prepared by an independent investigator on the most significant financial collapse ever to take place in Barbados, not to mention the rest of the region.
The road that led to the preparation of the Deloitte forensic audit was paved by the administration Mr Stuart himself leads, after two years of vacillation by his predecessor. In March 2010, 14 months after the Trinidad and Tobago government had to go in and rescue CL Financial and ten months after the Barbados Government entered into a similar memorandum of understanding with CLICO Holdings Barbados Ltd (CHBL), then Prime Minister David Thompson issued a warning to policy and annuity holders in the same House of Assembly.
He said that unless a way was found to restructure CIL, which involved its getting a substantial haircut, the whole thing might have to be placed under judicial management. This actually became the recommendation of the Oversight Committee in its memorandum to the Cabinet in mid-2010.
The Democratic Labour Party administration took ten months to emerge from its CLICO-induced stupor to actually act on Mr William Layne’s recommendation that a judicial manager be appointed, doing so in April 2011, six months after the death of Mr Thompson.
So how can a Prime Minister, whose administration had taken the fateful decision to put CIL into the hands of the High Court so that the equivalent of a receiver could be appointed, now be so out of the loop that he himself is not abreast of the latest events? That is, the contents of the forensic report?
Late last month, the judicial manager Deloitte Consulting Inc. said in a Press release that a recommendation which it made was “accepted by the court for the Financial Services Commission (FSC) of Barbados to initiate, with the assistance of the appropriate Government agencies, further investigations into the significant transactions identified in the forensic report and pursue any required criminal and/or civil legal actions”.
According to Deloitte, a main goal of the audit was to investigate the “amounts due from related companies” which totalled Bds$370 million at the date of appointment of the judicial manager. It said: “The forensic team was able to identify substantially all of the intercompany balances during the course of the audit.”
But it noted that “access to documentation, held by related entities which are not subject to judicial management, would be necessary to establish the validity of certain transactions”.
Remember, only CIL was put into judicial management, not its parent company CHBL, for which the audit said it acted as banker. That is presumably why the other Government agencies have been brought into the loop.
Mr Stuart, surely one could reasonably infer from that statement that the FSC would have by now received a copy of the forensic audit, not to mention whichever other Government agencies would have the power to investigate those “significant transactions” in order to “pursue any required criminal and/or civil legal actions”.
How broken is our administrative system that every Government agency connected with crime and punishment in this country now seems to be cooperating in pursuing leads from the forensic audit into whether there might have been any wrongdoing in the disposition of CIL money, which should have been there for its policy and annuity holders, yet the Prime Minister has still not seen a copy of said activity-triggering report?
The forensic report did not appear in the pages of THE NATION from out of the blue, Mr Stuart.
It is a circulating, finger-pointing document that has put your own political administration in a stranglehold. The court has put it in the hands of law and regulatory enforcement and the possible outcomes (at least in one’s imaginings) are frightening.
Yet, by your own admission, you still have not read it. You remain out of the loop.
But it shouldn’t be too hard to get a copy. I humbly suggest you do so, and read it. You may weep.
• Pat Hoyos is a publisher and business writer.
FOR IMMEDIATE RELEASE
ECCU GOVERNMENTS UPDATE:
BRITISH-AMERICAN INSURANCE COMPANY (BAICO)
CLICO INTERNATIONAL LIFE INSURANCE COMPANY (CIL)]
On October 21, 2011, the ECCU Governments through the communiqué of the Monetary Council provided an update on the implementation of the BAICO restructuring strategy.
This release provides the first update for 2012 on progress in respect of BAICO and CIL matters.
1. BRITISH-AMERICAN INSURANCE COMPANY
Progress of the sale of BAICO’s Traditional Insurance Business
We expect that the process for the sale of the traditional insurance business of BAICO in the ECCU will be completed well before the end of this year.
A number of bidders are currently participating in the sale process, and we anticipate that a bidder will be selected and formal documentation entered into around the end of the first quarter of 2012.
Once final documentation is agreed with the purchaser, the process of obtaining approvals of the transfers throughout the ECCU and in The Bahamas will commence. This is the final phase of the process of selling BAICO’s traditional business.
Assisting BAICO’s non-traditional policyholders
The ECCU Governments have continued work necessary to identify how it will be possible to provide assistance to BAICO’s policyholders in the ECCU who have non-traditional policies, such as Executive Flexible Premium Annuities (EFPA), and who will thus not have their policies participate in the sale of BAICO’s traditional business. These policyholders include individuals, as well as important institutions within the ECCU, such as banks and credit unions.
Funding is still being sought from the Government of Trinidad and Tobago in order to provide financial support to these policyholders.
Litigation by BAICO
Litigation is continuing in Trinidad and Tobago by BAICO against CL Financial for the recovery of a US$49.5 million debt owed by CL Financial to BAICO.
Importantly, BAICO has also commenced litigation in the United States by filing a complaint against BAICO’s former directors for alleged breach of their fiduciary duties by entering into a series of speculative real estate investments in the United States which caused harm to BAICO including rendering it insolvent. The complaint also includes claims against other parties connected with the real estate transaction. Some of the former directors being sued include Lawrence Duprey and Brian Brancker.
ECCU/BAICO Health Insurance Support Fund (“Fund”)
As planned, the Fund, established by the ECCU Governments to meet BAICO’s obligations to claimants under Health Insurance policies, closed for applications on December 31, 2011 after over seven months of operation.
The Fund has received over 1,300 Applications for assistance, and is ultimately expected to pay out in excess of EC$3 million to health insurance policyholders.
2. CLICO INTERNATIONAL LIFE INSURANCE COMPANY (CIL)
On April 14, 2011, Deloitte Consulting Ltd. (“Deloitte”) was appointed as Judicial Manager of CIL’s head office operations in Barbados. Deloitte has also been appointed as Judicial Manager of CIL’s branches in Grenada, St. Vincent, Dominica, Antigua and Anguilla. Richard Surage of PKF was appointed as Judicial Manager of CIL’s St. Lucia branch and Omax Gardner also of PKF was appointed as Judicial Manager of CIL’s St. Kitts & Nevis branch.
By press release dated January 27, 2012, the Judicial Manager of CLICO International Life Insurance Limited reported that the first stage of the investor identification process for the Company is now well underway.
The release said that the objective of this process is to identify an investor with depth of management and the financial capacity necessary to provide greater confidence to policyholders and regulators as it relates to the viability of any new entity which may emerge from the existing operations of CIL.
During this first stage, several expressions of interest in CIL were received from local, regional and international investors and it is expected that other expressions would be forthcoming. The Judicial Manager will seek to conclude negotiations with one of the interested parties within the next five to six months, subject to necessary Court and regulatory approvals.
A recommended course of action based on the results of the concluded forensic audit, will be made by the Judicial Manager during its next update to the High Court of Barbados in February 2012.
The ECCU Governments continue to work steadfastly to identify solutions for individuals and institutions affected by the BAICO and CLICO situation. We wish to reiterate our appreciation to the citizens of the region for their patience as this work progresses.
We will continue to provide updates as developments occur.
The Governments of the Eastern Caribbean Currency Union
February 10, 2012