(Trinidad Guardian) With their life savings at risk of being decimated by the Government’s plan for Clico, policyholders and depositors of the insurance company are mobilising to fight back. A group calling itself Clico Depositors Interest Group placed a full-page advertisement in this newspaper on Saturday while another depositor considered his legal options. Top life insurance agent Harold Sookhan, who was employed as the sales director of Clico for 11 years, is moving apace to bring T&T national George Bompas SC to fight the recent decision taken by Government. Another group, which includes a close colleague of Minister of Finance, Winston Dookeran, expressed deep concern at the People’s Partnership plans to pay Clico’s depositors in annual tranches, stating that this move will cause more than $8 billion in losses for them.
David Walker, of the recently formed Clico Policyholders Defence Group, said the $8 billion in losses the policyholders stand to suffer, were likely to be greater than the entire CL Financial deficit. Walker, the former chief organiser of the COP, called on Dookeran to give more precise details with regards to the assets and liabilities position of the collapsed financial institution. “Do bear in mind that the minister is asking policyholders to make a once and for all decision on a matter yet we struggle with the paucity of information available to us,” said Walker, an IT consultant. Walker co-authored the COP paper “The Current State of the Trinidad and Tobago Economy” with Indera Sagewan, Senator Mary King and Senator Patrick Watson, which was published just before the May 2010 election. He also authored an academic paper with Dookeran. The entire plan runs contrary to the specific guarantees given by Clico, the Central Bank and the Government, said Walker. Within hours of the budget being presented, Walker along with several others formed the organisation to seek the interest of the affected policyholders, who they feel were being treated unfairly. “This is unacceptable.”
On Saturday, Walker spoke about Finance Minister Winston Dookeran’s announcement of the Government’s plan to pay the Clico depositors $75,000 from its 2010/2011 budget. Depositors above $75,000 will be paid in equal amounts over a 20-year period. On Friday night, speaking as he wrapped up debate on the budget in the Lower House, Dookeran spoke about possible Clico ghost accounts. Dookeran said since CL Financial went belly up 18 months ago there had been great uncertainty about the company. He said there were three options the Government had looked at: liquidation; providing full funding of the assets shortfall or repayments based on contractual term. The last option was chosen. “Some 14,000 of these holders are already protected since they have under $75,000 in investments,” Dookeran announced.
Ghost accounts not plausible reason
Commenting on Dookeran’s three options presented, Walker asked: “Is the debt owed by CL Financial to the government as a result of the bailout included in liabilities as it should, and what is the basis for valuing the various assets held by companies in the group?” He said these are just some of the items of information needed by policyholders to enable them to properly evaluate all options. Walker said while there may be ghost accounts it could be that the liabilities are therefore lower than quoted making room for a more generous proposal to policyholders. “Why has it taken so long to recognise the possibility of “ghost accounts”? The existence of “ghost accounts” is not a plausible reason for denying interest payments to policyholders.”
Dookeran being ill-advised
In a telephone interview on Saturday, Sookhan argued that Dookeran did not have a clue about life insurance. “He is a brilliant economist but he’s being ill advised by the wrong people. The Government has to pay the policyholders now. That is the bottom line because Clico has its own assets. Policyholders have a right to bring up action against the Government,” said Sookhan who served as a top insurance salesman at Sagicor, formerly Barbados Mutal, for 20 years. Sookhan said when former CL Financial chairman Lawrence Duprey signed the MOU in January 2009, it gave the Government and the Central Bank the authority to sell the cash-strapped company for the benefit of its policyholders. Sookhan said every cent policyholders have in a life insurance company is guaranteed by a statutory fund, held by the Central Bank.
Taking the bull by its horns
Sookhan drew reference to a Stabroek News article on September 16 where 11,290 of Clico’s policyholders in Guyana, who were affected by the company’s collapse were promised a full payoff by President Bharrat Jagdeo to the tune of GUY$3.6 billion. Jagdeo said that the liquidation process would involve the assets of the company being put up for sale. The liquidator, Jagdeo said would be in charge of the process and added that he hoped the process would see the assets being purchased for at least their book value. The government has already received GUY$3 billion (US$15 million) from Caricom’s Petroleum Fund to offset expenses related to the company. Should the assets not get favourable bids, Jagdeo said that government may consider purchasing some of the properties.
“Bharrat is finding the money to pay the policy holders first and will then deal with those responsible after,” said Sookhan. “For a poor country like Guyana they have taken the bull by its horns.” Sookhan said while economist Dr Patrick Watson described the plan as a ponzi scheme, he begged to differ.
Sookhan said every insurance plan that an agent sells must be approved by the government and regulators.
A slap in the face
Peter Permell financial consultant and Minority Shareholders Rights advocate said he was pleased to hear that a technical team had been set up to hold discussions with the credit union sector with respect to the Clico bail-out plan but Dookeran must not only stop there. “He must also extend this kind of dialogue to the thousands of EFPA policyholders who are also going to experience severe unintended financial consequences and hardship as a result.” Permell said many people he had spoken to described the Government’s move as the proverbial “slap in the face” or “stab in the back.” “Several people indicated that the quality of life that they enjoyed before the May 24 General elections is either going to be seriously downgraded or completely disappear. Moreso, Permell said, “They are in total disbelief that someone like Dookeran who they say they have such high regard for could be so callous and uncaring.” Efforts to reach Dookeran on Saturday night proved futile.
