This column is about Clico Life and General Insurance Company (South American) Limited (Clico), a regional insurance giant whose Guyana subsidiary collapsed spectacularly when Mr. Ian Chang, Chief Justice appointed Mr. Lawrence Williams, Governor of the Bank of Guyana to liquidate the company. Since 2010 when Clico began to implode I have written forty-nine pages on the company – all of which are posted on my website chrisram.net. In those many pages I questioned the role of then President Jagdeo’s compulsive, misguided and irresponsible direction of the judicial management and subsequent liquidation of Clico.
I noted that his action exacerbated the colossal and unlawful serial acts of Clico’s CEO Ms. Gita Singh-Knight who shifted billions of dollars belonging to Guyanese policy holders in breach of the Insurance Act 1998 and in defiance of the then Commissioner of Insurance Ms. Maria van Beek. Unfortunately for Guyana, Ms. van Beek hardly distinguished herself with her indecision and failure to act against Ms. Singh-Knight whose immunity from prosecution under Jagdeo appears to have continued under his successor.
But let us go back a bit to what might seem to be the genesis of the collapse of the Guyana company. On January 30, 2009 the authorities in Trinidad and Tobago announced that they were taking over certain assets of CL Financial Limited including Colonial Life Insurance Company Limited, the parent company of the Guyana company Clico Life and General Insurance Company (S.A.) Limited. Further references to Clico and the company are to the Guyana company unless otherwise stated.
Prior to February 25, 2009 the company was unable to raise additional funds or liquidity from its parent or recoup US$34 million invested by its management in its Bahamian fellow-subsidiary which itself had been placed in judicial management. The company was facing a run and needed help. On an application by Ms. Maria van Beek she was appointed Judicial Manager by an order entered on February 26, 2009. Surprisingly, rather than insisting on an enquiry into Ms. Singh-Knight’s conduct, Ms. Van Beek appointed her as Assistant Manager challenging the old adage that wrong does not pay.
After technical arguments between Senior Counsel Mr. Ashton Chase for the Judicial Manager and Attorney-at-Law Mr. Roysdale Forde the Chief Justice appointed Mr. Lawrence Williams, the Governor of the Bank of Guyana as liquidator. In one earlier column I argued that had Mr. Williams in his capacity as the banking regulator moved against the company for taking deposits packaged as insurance, Guyana might have been saved billions.
I have enjoyed a cordial relationship with Mr. Lawrence Williams who I sincerely believe is doing a very good job at the Bank of Guyana. But no matter how charitable one wishes to be, it is hard not to rate his stewardship as liquidator of Clico with almost the same grades as one rates Jagdeo in relation to the company. He has acted unlawfully, delegated his powers and duties without any logic or justification, and overseen spending on a scale that may bear comparison with Ms. Singh-Knight’s reckless management of the company.
Incredibly Mr. Williams who as court appointed Liquidator has enormous but not unlimited powers has had Ms. Singh-Knight as one of his top lieutenants in the liquidation process. Ms. Singh-Knight may not be prominent in front of the camera but her influence has none the less been crucial. The word is that she has been paid a seven figure salary as part of a triumvirate to do the work that the Court empowered and ordered Mr. Williams to do. That is not only recklessness; it is madness; it is lawlessness.
And while all of that was going on the Chairman of the National Insurance Scheme who is also the Head of the Presidential Secretariat has misled the public into believing that the investments of NIS in CLICO would be recovered. I said then that 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.
Last Friday, after months of checking for the financial statement every liquidator is required to file with the Registrar of Companies, I finally came up with one such report which I am not suggesting that the report was prompted by my persistent enquiries. But before I go into the contents let us look at some of the statutory requirements and how the liquidator dealt with these.
The report itself states the Statement of Receipts and Payments was being submitted under section 379 (1) of the Companies Act. But let me quote that same section 379 (1). It says: “Every liquidator of a company which is being wound up by the court shall, at such times as may be prescribed but not less than twice in each year (emphasis mine) during this tenure of office, send to the Registrar an account of his receipts and payments as liquidator.”
The liquidator was appointed on September 10, 2010 and twice yearly reports should have been submitted for six months to March 2011, September 2011 and March 2012 with the next due at the end of this month. Let us assume that Mr. Williams does not know or is too busy to be informed about the requirements of the sections of the Act that affect his role as liquidator. Is it reasonable to believe that none of the triumvirate and their high-priced legal advisor was aware that the liquidator had been guilty of a continuing offence under the Act for more than five hundred days?
The triumvirate could not have missed that section 379 (2) requires the statement to be in duplicate and verified by an affidavit or a statutory declaration. Nothing in the records at the Registrar of Companies suggests that these requirements have been met. Nor does it end there. The Registrar must now cause the accounts to be audited, for which purpose the liquidator is required to furnish the Registrar with such vouchers and other information which the Registrar requires. When the accounts have been audited, the Registrar is required to keep one copy and to deliver one to the court for filing. Both copies are available for inspection by any creditor or interested person. We wait to see whether the Registrar, who was recently installed by the Attorney General and whose own appointment has not passed without raising some eyebrows, will do what the law and the public interest require.
The Registrar is also confronted with section 380 of the Companies Act which requires her to take such action she may think expedient if a liquidator does not faithfully perform his duties and duly observe all the requirements imposed on him by statute, rules, or otherwise with respect to the performance of his duties. A failure of more than five hundred days can hardly be considered faithful and is probably the first public test whether the Registrar will act as she is required to under the Companies Act.
Now let us turn to the contents of the statement which I saw for the first time two days ago. One would have expected that with Mr. Maurice Solomon as the financial and accounting agent to the liquidator, a highly professional prepared statement with such elementary omissions as proper heading, cross-referencing and some notes.
Source: Office of the Registrar of Companies: August 31, 2012
Next week I will undertake a detailed commentary on this statement and introduce an interesting document.