Latest update March 22nd, 2023 12:59 AM
Jul 31, 2016 News
After considering several options, Cabinet has finally decided to consider absorbing the cost of $5.2B which the National Insurance Scheme (NIS) lost some years ago into the Colonial Life Insurance Company (CLICO) Limited.
This is according to Finance Minister, Winston Jordan.
The economist said that central government would have to service that bad debt since there is very little hope of getting back the money via other means.
Jordan said that the sad reality is that any legal avenues in the CLICO situation might very well turn out to be a long drawn-out process, as Guyana is not even on the radar when it comes to the settlement process in the Caribbean as yet.
“So Government is going to have to step up to the plate and find another way of recouping the losses for NIS in this regard. Government gave a commitment in this regard, and it will have to make good on its promise to find a resolution on getting back the money.
“And this is yet another mess that we inherited from the past administration that we are saddled with fixing with money that could have been put to better use,” the Minister expressed.
Jordan noted that NIS is beset with a number of problems. He said that the $5.2 billion that remains caught in the CLICO debacle represents more than 20 percent of its assets that is not earning income.
He said that actuaries have projected that the Scheme is in trouble and something has to be done urgently to address the problem. He recalled that in the National Assembly, there was the passage of Resolution No. 82 of 2009 “calling upon the Government to take all possible actions to secure the investments made in CLICO (Guyana) by the NIS on behalf of contributors and beneficiaries of the Scheme to prevent any consequential loss in benefits to them.”
The Finance Minister said that sadly, the PPP/C Government did nothing on that Resolution, resulting in a persistent deterioration in the Scheme’s financial position.
He reminded that a new Board of Directors has been appointed and it has been charged the responsibility to come up with solutions to address the underlying problems of the Scheme.
The Finance Minister said, too, that the National Insurance Scheme has faced several challenges over the years, such as the lack of compliance by both employers and employees, combined with unprofitable investments.
Jordan maintained that Government intends to examine options for the expedient repayment of $5.24 billion owed by CLICO.
To this end, the Finance Minister said that the Government will start discussions on the modality of an arrangement that will see NIS recovering this money over the long term.
Additionally, he said that the management of NIS will work diligently to ensure greater compliance through the enforcement of the laws. This year, the Finance Minister stated that management will be targeting delinquent businesses and employers, in order to recover the $1.3 billion in arrears owed to the Scheme.
He said that the NIS will also be examining an appropriate investment policy to guide its investments to ensure that future investments are profitable.
It was on January 2, 1994, that CLICO International Life Insurance Limited opened its doors, taking over the life insurance operations in Barbados and the Eastern Caribbean of Colonial Life Insurance Company (Trinidad) Limited. CLICO served the Caribbean for over 60 years. Its mission was to become the company of choice among life insurance buyers in Barbados and the Eastern Caribbean.
At the helm was Leroy Parris, former chairman of CLICO Holdings Barbados Ltd., which included services such as CLICO International Life Insurance Ltd. With 60 years of service under its belt, the company became one of the largest local conglomerates in the region, encompassing over 65 companies in 32 countries worldwide, with total assets exceeding US$100 billion.
By the turn of the century, rumblings of fraud and money laundering at CLICO were felt.
By 2005, there was talk of naive and greedy managers. There was talk of failure of government, regulators and auditors; of incompetence and failures at every level and at the highest levels within the company; and finally, fear and talk of CLICO needing taxpayers’ bailout.
Understanding the situation from his bird’s-eye view within the company, the Chairman decided to protect his interest and before the mess hit the fan, CLICO was presumably being looted.
By 2007 to 2008, there was no hiding the fact that CLICO was limping financially as well as its branches in other Caribbean territories, including Guyana.
CLICO Guyana had approximately $6.9B invested in the Regional Insurance Company.
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