Dear Editor,
Dr. Ashni Singh, Senior Minister of Finance last week tabled in the National Assembly the annual reports and accounts of the National Insurance Scheme for the years 2008 and 2009, late to extremely late under the law but quite normal for this Minister.
Business Page in this coming Sunday Stabroek will place these reports under the microscope but for now there is one egregious matter which I think deserves the widest exposure and that is risk to the Scheme of losing $5.8 billion invested by the NIS in the failed CLICO Life and General Insurance Co (S.A.) Limited. At December 31, 2009 the NIS had invested in CLICO’s so-called annuities the sum of $5.748 billion, in addition to $90 million of income earned but not yet received from CLICO. The reality is that because of this reckless and possibly unlawful investment by the board in a Jagdeo-favoured company, 20% or $1 of every $5 of the accumulated fund of workers’ contributions in NIS is now at grave risk, earning nothing in income. The board and its auditors TSD Lal & Co. do not seem particularly concerned.
Perhaps the board and the auditors, which by an unfortunate coincidence are/were also the auditors of CLICO, did not consider the investment bad or doubtful. TSD Lal & Co refers unambiguously in their audit report to a guarantee by the government of the NIS’s investment in CLICO and directs the reader to Note 22 in which the directors too, refer to a guarantee, but in looser language but which appears to have escaped notice by the auditors. The further information provided in note 22 does not by a long stretch provide any evidence of a guarantee but rather proof of a clear conflict of interest between Roger Luncheon, M.D. Chairman of the NIS Board and his position as Head of the Presidential Secretariat, a conflict that would put any careful auditor to great care and, in the circumstances of CLICO to extreme notice. Instead, the auditors and the Board were so impressed and reassured by a mix of quasi-legal/accounting “Luncheonese” that they accepted the following as constituting a guarantee.
“The Chairman of the National Insurance Scheme who is also the Head of the Presidential Secretariat at the Office of the President made the following representation in a letter dated 10th. August 2009:
“The Board of the National Insurance Scheme wishes to advise that it has noted the undertakings made by the President concerning the recovery of NIS investments in CLICO. The Board is also mindful of the unanimous Parliamentary Resolution guaranteeing state support for recovery (emphasis mine) by NIS of its investments in CLICO. As such, the Board has the utmost confidence that the undertaking would be honoured and the investments of NIS in CLICO will be recovered.”
Had the Board not included long-serving and experienced directors like Maurice Solomon FCCA and Paul Cheong, a top director of the Beharry Group, I would have said that it was a case of Luncheon taking the workers of Guyana for a $5.8 billion dollar ride. That he managed to take others along with him is a feat that only a Luncheon would contrive and succeed with.
Other than in note 22 – not Catch 22 – the directors did not even bother to refer to its CLICO exposure in their annual report. A serious Minister of Finance should have referred the report and its undated transmittal letter back to the Board for major revision. Dr. Singh accepted it.
If the investment is not recovered in the very near future, it will be drastically discounted (reduced) by the actuaries in the periodic evaluation on the viability of the Scheme due later this year, with the workers as contributors, bearing the cost. And if it is “recovered” from the public purse, the workers will still bear the cost, this time as taxpayers. In either case, that would leave President Jagdeo, Ms. Gita Singh-Knight of CLICO, Drs. Luncheon and Singh, the entire board of the NIS and its auditors, with varying quantities of red ink indelibly oozing from their hands, without having to bear any other responsibility for the consequences.
Yours faithfully,
Christopher Ram
