Latest update March 19th, 2024 12:59 AM
Dec 12, 2018 News
By Abena Rockcliffe-Campbell
The National Insurance Scheme (NIS) is still reeling from a number of bad investments it made under the rule of the People’s Progressive Party/Civic administration. In fact, if the scheme were to count its losses from just one of those investments—in CLICO Guyana—that count would go well beyond $7B.
This is highlighted in the report of an audit ordered by the APNU+AFC government. The audit report has not been made public. However, this newspaper has been able to secure excerpts.
There seems to be only a few viable options to help cushion the blow NIS has taken. These options were also outlined in the report.
The report states that the balance owed to NIS by CLICO Guyana, according to the Scheme’s financial statements, is $5,148,710,367 at December 32, 2014. On February 26, 2009, in response to a petition by the Commissioner of Insurance, the High Court of Guyana issued an order placing CLICO (Guyana) under juridical management pursuant to the provision of the Insurance Act 1998, until further order of the Court.
Auditors further noted that on March 2009, Ms. Doreen Nelson, General Manager (AG) wrote to Ms. Maria Van Bleek, Judical Manager of CLICO Guyana and Commissioner of Insurance, requesting that priority be given to NIS to recover the value of its investment in CLICO which was $5,647,782,551 at the time.
However, neither the former Commissioner nor the subsequent commissioner responded.
It was reported that Ms. Nelson pointed out in the letter that the repayment of these investments is essential for the continuing operations of NIS as a viable entity.
Further, auditors pointed out that subsequently, the Ninth Parliament of Guyana, through Resolution No.82 passed on March 12, 2009, reflects that the Government will undertake to take all possible actions to secure the investments made in CLICO (Guyana) by the NIS on behalf its contributors and beneficiaries to prevent any consequential loss in benefits to them.
However, that resolution, the auditors noted, did not address key issues such as the repayment period, the method of repayment, returns on the investments from the time CLICO went under liquidation, etc.
The Scheme has not received any return on the investment since 2009. The funds were invested to earn returns at a rate of 6.25 %per annum. Auditors noted that at this rate, the scheme is losing $321,794,000 annually and to date, the accumulate loss is $1,930,766, or over $2B if the unpaid interest is included with the principles when computing interest.
Auditors noted that in 2011, the title to a property owned by CLICO deemed to be valued at $600M was transferred to NIS. The property used to be the head office of the Guyana Sugar Corporation (GuySuCo) on Camp Street, Georgetown, now being rented by the Guyana Revenue Authority from the scheme for $5M per month.
Auditors said that NIS should seek the government’s commitment to honour its undertaking in accordance with Resolution No82. “Alternatively, they can pay the scheme the interest consistent with the original investment until the amount is repaid.”
Also, Auditors recommended that a realty valuator should be engaged to determine whether the former GuySuCo property is worth the $600M it transferred to the scheme in view of the ongoing disquiet amongst employees about the fungus in the building.
There was also a recommendation to review the rent paid to determine whether it is fair considering the size and location of the building.
The option to sell the building—if the scheme can recover more than the transfer price and the rent cannot be increased—was also presented.
Auditors also recommended that it be determined whether the Commissioner of Insurance acted in the best interest of investors in particular the scheme.
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