Close to $6 billion dollars of National Insurance Scheme (NIS) funds are invested in Clico (Guyana) which the local company has assured is safe, an assurance which Head of the Presidential Secretariat Dr Roger Luncheon said government has had no reason to doubt.
But he said that revelations in Trinidad at its parent company, CL Financial and questions in the period that followed about the safety of funds invested with Clico (Guyana) have “provided some idea even if preliminary of how exposed Clico is to what is happening over there”. Clico (Guyana’s) 2007 accounts show several transactions with CL Financial subsidiaries including a large debt to Clico (Trinidad) which is one of the institutions that the Trinidad government has taken over. Clico (Trinidad) has a huge shortfall in its statutory fund and could potentially insist on immediate repayment by Clico (Guyana).
The NIS investment with Clico (Guyana) is around 17% of its actual holdings, which Luncheon, who is Chairman of the NIS board, described as “considerable”. However, he stated the figure of $6b needed to be rechecked for accuracy.
Luncheon told reporters that Clico (Guyana’s) statements regarding the safety of its investments have not gone unheeded “at least not by NIS”. Luncheon’s comments on the NIS investment in Clico came while he was responding to a question posed at his weekly post-Cabinet briefing yesterday.
In a press release last week Clico said “Clico (Guyana) is a separate entity. It is a wholly owned subsidiary of CL Financial. We wish to assure our policyholders that your annuities and pensions and other insurance policies are protected and as previously published, our statutory fund remains in good standing with an adequate solvency margin, which indicates a surplus in the fund”.
It said that the investment portfolio comprises short-term and long-term investments which continue to return favourable profits.
It added “As an insurance company, we are obligated by law, through the Insurance Act, to conduct an actuarial valuation which assesses the company’s liability to its policyholders. Based on the result of the valuation, the company must prove that there are sufficient assets to meet its obligation to its policyholders. These assets, some of which must be liquid, are placed in a Trust and cannot be accessed by Clico, unless it is approved by the Commissioner of Insurance”.
The statement added that the company will continue to ensure that all policyholders, stakeholders and the general public are kept apprised of “all developments”.
Meanwhile, the NIS board chairman also addressed questions surrounding the recent fraud within the pension department at NIS.
He confirmed that employees within the pension department have been interdicted from duty saying that they have been sent off in keeping with usual procedure when such investigations are being conducted.
The investigation is an ongoing one, Luncheon said, noting that the internal audit at NIS is receiving support from the fraud section of the Guyana Police Force. He said that the collaboration has provided the basis for identifying those individuals who might have had a role to play in the insurance scheme being defrauded.
According to Luncheon, charges will only be laid when there is sufficient evidence or at least evidence strong enough to get convictions, adding that there is the possibility of persons being reinstated.
Since his re-appointment to the NIS board there had been discussions about introducing polygraph testing at the NIS, Luncheon said. He said the board has already concurred with this proposal to have integrity testing in the investigations for those linked to the fraud.
There are allegations that the details of four dead pensioners were used to effect pension payments at NIS and that some $900,000 had been taken. According to reports the fraud started early last year and it involved the printing of pension voucher books for the four pensioners who had died in 2006.