Dear Editor,
Regardless of how one feels about the Clico mess in the Caribbean, and I have no financial interest in it, the governments of Guyana and Trinidad must be applauded for addressing the issue head on in finding a solution to what is an intractable problem. In Guyana, the government has agreed to reimburse investors fully and has started to do so with much satisfaction on the part of the policyholders. Guyanese investors are lucky because Trinis have to wait for 20 years for reimbursement.
In Trinidad, the government will give an initial payment of TT$75K to each policyholder and pay the remainder over 20 years in equal instalments. My investigation found policyholders who invested staggering amounts like TT$300M, $250M, $80M, $30M and $25M. One person invested US$6M. These people complain that they cannot afford to wait 20 years for their money. But government is not responsible for their losses.
People took risks investing in Clico, not learning anything from the warnings of Trinidad’s Minister Trevor Sudama and Attorney General Ramesh Maharaj in 1999 and 2001 about the insolvency of Clico. The investors took a risk and ‘bust.’ By the law of capitalism, they should accept their losses. Many people feel it is not fair for taxpayers to refund money invested in a bad company. But the issue isn’t so easy.
It is not all the investors’ fault in putting their hard-earned money into Clico, which was paying higher returns than banks. The Trinidad government and its regulating agencies also have to share the blame for not monitoring the financial activities of Clico, as required by law, to protect the peoples’ money. Thus, the TT government is partly responsible for the mess.
The preceding (PNM) government publicly committed to repaying Clico investors but the terms, amounts (limitations), and conditions were never specified. Some funds were set aside last year for the repayment of investors and some of them got back their money. But a quarter million policyholders are still owed large sums of money and it would be unfair to let them sink while some, through connections with certain offices, got back their money. This is where government must accept responsibility.
While initially adopting a tough stance on the offer, take it or leave it, Kamla’s government has softened its position saying it is willing to listen to policyholders for alternative proposals. The PM wants to find a solution to the mess and minimize policyholders losses. But it would be unreasonable for the policyholders to expect government to repay the full amount owed them immediately especially considering that the debt exceeds TT$19 billion. Trinidad is running a deficit of $7 billion in its current budget. But asking policyholders to wait twenty years without interest is also a very long time. Government should consider shortening the period of time in which policyholders will recoup their investment. A compromise is needed.
The governments of TT and Guyana should launch investigations to find out how and why the company became bankrupt and how similar problems at other companies can be averted. Kamla has proceeded wisely in setting up a commission of inquiry into Clico and appointing a cabinet sub-committee to meet with policyholders to work out an acceptable solution to the mess. President Jagdeo has also promised an investigation into what went wrong at Clico. That would be the way to go.
Yours faithfully
Vishnu Bisram
