…questions need to be answered regarding TT$5 billion deficit
(Trinidad Express) Both the Colonial Life Insurance Company (CLICO) and the CLICO Investment Bank (CIB) are now the subjects of forensic audits.
The audits are taking place even as their parent company CL Financial continues to hold closed door meetings with Finance Minister Karen Nunez-Tesheira and Central Bank Governor Ewart Williams concerning the State’s initial TT$1 billion rescue of those companies and another subsidiary, British American.
Nunez-Tesheira made the disclosure during Thursday’s post-Cabinet news conference at the Diplomatic Centre, St Ann’s, as she said questions needed to be answered regarding CLICO’s TT$5 billion deficit in the Statutory Fund “at minimum” which does not include “the CIB assets which supposedly were worth TT$4 billion which, of course, we have since found out it is not worth TT$4 billion.”
She also said that a bond called the (CL Financial) CLF bond which “was supposedly worth TT$1.7 billion” was also proven to be worthless.
“Forensic audits are being done of both CLICO Investment Bank as well as the Colonial Life Insurance Company. Those forensic audits I believe are being undertaken I believe by KPMG Inter-national as well as Ernst & Young… Certainly the forensic audits will give us a much better indication of what caused CLICO Investment Bank to find itself in the situation that it found itself in as well as Colonial Life Insurance Company,” Nunez-Tesheira said.
She said that it is CL Financial under the January 30, Memorandum of Agreement (MOA) its executive chairman, Lawrence Duprey, signed with Nunez-Tesheira for the taxpayer bailout that must make its assets available to close “a Statutory Fund deficit which as you would well know is in breach of the insurance legislation.”
“Under the Insurance Act, I’m sure you know that the Statutory Fund, the assets and liabilities must be equal… Clearly for the fund to have reached in that situation it is more than worrisome that you could have a Statutory Fund which is really there to safeguard the investment of pensioners and policy holders to reach a deficit of TT$5 billion,” Nunez-Tesheira said.
She noted, however, that it is Williams who would have to determine if any action has to be taken against CLICO or CIB depending on the outcome of the audits since the Central Bank Governor is the regulator of the financial sector under the Financial Institutions Act.
Asked, however, if she had already concluded that CLICO and CIB had breached any law, Nunez-Tesheira said, “At this point in time I can’t form an opinion. I wouldn’t dare form an opinion.”