(Trinidad Express) Interest rates for CLICO’s prime investment product, the Executive Flexible Premium Annuity (EFPA), got “out of hand”, Michael Carballo, the former group financial director of CL Financial, said yesterday.
Carballo said the interest rates for the EFPA were around 13 per cent, while the interest rate for loans at commercial banks were around nine per cent.
Carballo said in one instance he even saw the interest rate for one EFPA as high as 15 per cent.
The disparity between the interest rate for the investment and the loan interest rate caused several investors to take advantage of the situation, Carballo said.
“Our premium risk interest rate policy was flawed, whereby people were allowed to effectively take an easy opportunity to make a two, three, four per cent mark-up for themselves,” Carballo said.
Carballo made the statements while he was being cross-examined by Terrence Bharath, an attorney for the CLICO Policyholders Group, during the commission of enquiry into the collapse of CL Financial and the Hindu Credit Union (HCU) at the Winsure Building, Richmond Street, Port of Spain, yesterday.
“In 2007-2008, the financial sector in Trinidad and Tobago and even around the world, it was unheard of making returns of 13 per cent. Is not that so?” Bharath asked.
“It was definitely not what we would call a risk-free rate,” Carballo said.
Neal Bisnath, the attorney for CLICO, called the exorbitant interest rate payments of the EFPA a “lose-lose situation for CLICO”.
“CLICO was bound to collapse,” Bisnath said yesterday.
