Apr 02, 2014 News
– details still shrouded in secrecy
The negative effects of Guyana’s handling of the collapse of the Colonial Life Insurance Company (CLICO) and its subsequent impact on the National Insurance Scheme (NIS) are continuing to be felt some five years later.
In its take of the National Budget 2014, chartered accountants, Ram and McRae, made it clear that the collapse remains very relevant to Guyanese.
One of the biggest impacts for Guyana is the fact that the National Insurance Scheme (NIS) had almost $6B (US$30M) invested in CLICO Bahamas, a sister company of the insurance group.
With CLICO Bahamas in winding-up proceedings, it is still unclear whether Guyana will ever get back that money.
Government has remained largely silent on this investment with criticism still lingering over the manner in which the money was invested in the first place.
This year, Government has plugged $226M into NIS to help fund studies that will help in charting its future, more than the $100M-plus allocated last year.
The Opposition, too, is concerned and has reportedly has intentions to even ask for more funding to ensure the scheme remains viable.
NIS is worrying Government, with falling contributions resulting in 2013 being the first year in its history that expenditure was in excess of its revenue.
Government has said that NIS has about $30B invested in, among other places, the Berbice River Bridge.
However, the fund is looking at raising its revenues and increase collections on the long term.
According to Ram and McRae in its analysis, “Focus on Guyana’s National Budget 2014″, history will remember the rise and fall in Guyana and the Caribbean of CLICO, the insurance giant, as the US equivalent of Enron.
At the end of 2012, the active population of employed contributors for NIS numbered 117,219 while the active population of the self-employed was only 8,791.
“The difference is that in the USA, those responsible were convicted and imprisoned,” the report released this week and published on Ram and McRae’s website stated.
The audit firm pointed out that in neighbouring Trinidad and Tobago, the former Central Bank Governor described the financial debacle which engulfed the CLICO parent as a massive fraud on the people. The Central Bank took action to have persons charged for fraud.
“In Guyana, no one has been held accountable, no doubt because the then President was part of the violations of the law that cost billions to the country’s Treasury, the workers’ National Insurance Scheme and the company’s policy holders.”
Ram and McRae said that five years after the collapse of the company, no one knows who were treated preferentially in having their monies returned to them when financial disaster seemed imminent.
“That information is secured closely among a handful of people while the persons who most suffered in the CLICO fiasco have had to suffer in silence. Not least among them is the National Insurance Scheme that is still owed more than five billion dollars by the company.”
Efforts to ascertain basic information about the management and financial affairs of the company leading up to its demise were seen as high treason.
It has been reported and speculated that as news of the CLICO group collapse started to gain momentum, a number of persons, mainly businesses, were able to pull out their investments, pointing to a possibility that insiders’ knowledge may have been involved.
Ram and McRae, through its Managing Partner, Christopher Ram, said it was prevented by no less a person than the then President of Guyana, Bharrat Jagdeo, from asking a question at a meeting of policy holders of the company.
“That meeting set in train a further pattern of conduct that violated the Insurance Act, the Companies Act and possibly the country’s criminal code. Perhaps because the process was led by the country’s President, the law was ignored. Or perhaps it is the impunity with which the Government operates. The truth or the law it seems was of no importance to policyholders or creditors faced with the possibility of a complete loss of their money.”
The Ram and McRae report said illegalities have continued even under a liquidation which by law must be supervised by the Court which ordered the appointment of a Liquidator.
“Guyana is the only Caribbean country affected by CLICO that took not a single step to protect its integrity and reputation and the financial interest of the public. Ram & McRae can only wonder whether there is anyone who is interested in addressing the lawlessness that has happened so far or in preventing the further debasement of the laws.”
One of the main principals in the CLICO debacle was initially transferred as a senior personnel at the Berbice River Bridge, a project that the insurance giant had also invested in, before its collapse.
AUBREY NORTON FRIGHTEN RENEGOTIATION AND RING-FENCING
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