(Trinidad Express) Insurance giant CLICO never failed.
This according to former corporate secretary of the company Geoffrey Leid as he took the witness stand in the Commission of Enquiry into the collapse of CL Financial and the Hindu Credit Union (HCU) at the Winsure Building, Richmond Street in Port of Spain yesterday.
Leid was being cross-examined by British QC Peter Carter when he made the statement.
Carter: Mr Leid, as you know, this enquiry is set up in part to try and identify what caused CLICO to fail because, as you know, it did fail and was and has been unable to pay its policyholders.
Leid: Are you asking me if it failed?
Carter: Yes.
Leid: Well, I do not agree with that.
Carter: Has it paid its policyholders the sums to which they are entitled?
Leid: At this point in time?
Carter: Yes.
Leid: No.
Carter: Well, then, to that extent, it has failed its policyholders.
Leid: Well, that’s why we entered into the MOU (memorandum of understanding), so that policyholders would be paid.
Leid said the board of CLICO was doing everything in its power to protect policyholders despite not having a “fiduciary” or “legal” obligation to them.
Carter: Unlike an ordinary commercial entity where the obligations of the corporate secretary and the directors are to the board and then to the shareholders, this being an insurance company, you realise, as a matter of law, you owed an obligation to the stakeholders?
Leid: I do not agree with that. Not as a matter of law.
Carter: What do you say the relationship was between the board of CLICO, as a matter of structure of law, and the policyholders. Was there any relationship between them? Any obligation towards them?
Leid: There was an obligation to policyholders—were, in fact…it is not a fiduciary obligation, but there is an obligation.
Carter: What kind of obligation was it?
Leid: An obligation that policyholders were duly paid when their policy is due.
Carter: And an obligation that their interests are not adversely affected by negligent, reckless or dishonest conduct?
Leid: Absolutely.
Leid said the CLICO board of directors were prepared to take significant steps to ensure the company’s safety.
“The first step was to rationalise what assets would be available throughout the group. We identified Home Construction Ltd as the main target, based on the fact that it had a very large land bank,” Leid said.
Leid said the “land bank” was scheduled to be restructured to meet CLICO’s statutory fund deficits and liquidity woes.
Leid said the CLICO board of directors also approached parent company CL Financial for repayment on a TT$1.3 billion dollar debenture, and that is when the company went to the State for a “liquidity facility”.
“From a board point of view, we were always under the impression that we had liquidity, until six weeks prior to the State’s intervention,” Leid said.
“We had on our books TT$4 billion in CIB (CLICO Investment Bank), in cash, on our last management account, October 2008,” Leid said.
Leid said CLICO’s former chief financial officer Karen Gardier and the insurance company’s former chief marketing officer Ian Garcia were responsible for the running of CLICO.
Leid described former CL executive chairman Lawrence Duprey as “quite open and never autocratic”.
Michael Anthony Fifi, former chief executive officer (CEO) of HCL, who was expected to testify in this evidence hearing, will take the witness stand in the September session.
Former president of CIB Richard Trotman and CIB’s executive vice-president Mala Ghandi will also take the stand in that session.
Trotman is being represented by Senior Counsel Pamela Elder while Ghandi is finding a legal representative.
