In the wake of the current recession that started in September 2008 in the United States and triggered devastating tsunami-like economic waves across the globe, the US government rushed in with emergency financial assistance to many US companies deemed ‘too big to fail.’ Among them was investment giant, Goldman Sachs, which received US$10B in October 2008. This week Tuesday, America’s legislative branch of government, the US Congress, placed several Goldman Sachs top honchos in the hot seat to answer questions about the investment giant’s deceptive practice that cost investors US$1B; the same amount that one of the firm’s top executives (John Paulson) responsible for those investments wound up ‘earning.’ Was it sheer coincidence that the figures matched?
The US Securities and Exchange Commission, for one, does not think so, and based on that commission’s findings, the US Congress got involved in what turned out to be a widely covered and publicly televised question and answer session to get to the bottom of the firm’s possible culpability in engineering such a huge loss to investors. We have not seen the end of this ugly spectacle, but it is a spectacle that I was hoping Guyanese at home were privy to, because if there is at least one useful lesson here, it is that the element of public accountability stood out, thanks to the executive and legislative branches of government that recognized the interest of the people is always paramount.
I don’t know what the chances are now that Clico (Guyana) is under Bank of Guyana supervision, but I can only hope, in the interest of full accountability and transparency, that it is not too late for a public hearing to benefit Guyanese depositors who lost money in the Clico (Guyana) debacle early last year, and also to restore public confidence in government.
Unlike Goldman Sachs’ upsetting shenanigans, of which the US government apparently knew nothing, the Clico (Guyana) debacle of violating the Insurance Act forbidding investing in excess of 15% of its local funds overseas was fully known to the Guyana government long before the firm’s collapse. And instead of the government-run Insurance Commissioner’s office penalizing Clico in accordance with punitive measures provided for in the Insurance Act, the illegal practice continued until the firm collapsed and lost US$34M of depositors’ money.
The Guyana government’s knowledge of Clico’s violation of the Insurance Act may be the primary reason why the President, and not the CEO of Clico (Guyana), became the principal spokesman on the debacle. In January 2009, he assured depositors Clico was fine and so were their deposits. A few days later, Clico (Guyana) collapsed, and eventually the government used its parliamentary majority to place the firm under the Bank of Guyana. But despite all of this, there is still no reason why there shouldn’t be a public hearing. The President is adamant about this case being closed.
As I adverted to above, the US government pumped billions into Goldman Sachs in October 2008 to save it, yet, in the wake of current revelations of deceptive practices by the firm, the US government is not taking steps to take over the company. All that that government wants is for the firm to publicly account for its obviously deceptive practices.
In Guyana, ironically, instead of bailing out Clico with a loan to the tune of US$34M, even if to keep the firm alive as a renamed local entity, the Guyana President publicly committed his government to make available the same amount of money to cover Clico (Guyana) depositors’ claims, even as the firm looked to wrap up operations. And so one now has every reason to ask whether the Guyana government’s failure to bail out (keep alive through a loan) Clico (Guyana), and also to avoid a public hearing, do not constitute an attempt to cover-up the exact nature of Clico’s illegal practices.
I don’t know what the statutes of limitations are in Guyana, but I most certainly hope it is not too late for Guyanese depositors who lost money in the Clico (Guyana) debacle to consider mounting a civil lawsuit against Clico (Guyana) and the Guyana government to have a public hearing to determine the exact dealings of the local insurance firm that resulted in the loss of US$34M. And I say this because I was heartened by a Stabroek News story, ‘Government sued over failure to pay lottery money into Consolidated Fund,’ (April 25), in which political activist, Mr Desmond Trotman, is taking the government to court for its failure to pay monies obtained from the Guyana Lottery Company into the Consolidated Fund; and for also engaging in the ongoing practice of disbursing portions of the money, which disbursement is illegal without parliamentary approval. But what does it tell us when the office responsible for this ongoing illegal practice is the Office of the President?
If Clico (Guyana) depositors haven’t done so as yet but are thinking seriously of mounting a legal challenge against government and Clico (Guyana), here’s some inspiration: Last Monday, Reuters reported that Goldman Sachs and its CEO were hit with a shareholder lawsuit claiming they hid details about a risky transaction, making materially false and misleading statements about a collateralized debt obligation tied to ‘subprime’ mortgages that regulators say (the firm) created and marketed, though it was designed to lose money, and that it all resulted in civil fraud charges and a plummet in stock price. It’s time Guyanese know their constitutional and legal rights and make optimum use of them.
Editor, we all – concerned Guyanese at home and abroad and private media houses – have a collective responsibility to help keep the government and its leaders’ feet to the fire of transparency and accountability, lest we, by our deafening silence, be held liable by future generations for enabling and abetting what is happening in government. We must never allow international awards and recognitions for the President or constant reportage of his efforts to rake in millions for his LCDS to deceive us into overlooking the blatant acts of corruption in government. May the Desmond Trotmans of Guyana please take their place and stand up for transparency and accountability in government, or else money will keep coming in and ending up in the wrong hands/pockets, and government won’t feel it needs to publicly account for its actions or inactions.