Category: Letters to the editor

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Advice by the Clico liquidator for continued payment of premiums is legally questionable

In Business Page of October 3rd, 2010 I expressed the hope that those who were entrusted with powers and duties for the liquidation of Clico would ensure full compliance with the laws. For the several hundreds of persons who have so far received their cheques, the law and its processes are not important. But spare a thought for all the others who are in limbo, uncertain of their fate and funds and getting information from Mr. Lawrence Williams, the Court-appointed liquidator, that conflicts with commitments given by President Jagdeo. Let us remember that those in limbo include the NIS which is owed about six billion dollars by Clico and for which one way or the other we the taxpayers will have to bear the cost.

So far the liquidation has gone according to the script written by the President, a script that sets out a process and scheme of preference not consistent with the law. During the time, I have received many complaints and copies of correspondence and policies from persons who were told that because their policies did not have any cash surrender value they have nothing to get. There is merit in that. But what I find most uninformed, irrational and unlawful is what appears to be a circular-type letter sent by Mr. Williams to one policy holder earlier this month.

In the letter Mr. Williams identified eight types of policies sold by the company and encouraged the holders of those policies “to continue payment of premiums to avoid losing contracted benefits.” Whatever might be his intentions – and I know him well enough to know that these are well-meaning – what he is trying to do is legally questionable, unnecessary and unlikely to benefit policyholders.

The principal duty of the liquidator is to call in the assets and ascertain and pay off the liabilities of the entity. He can only carry on any business with the approval of the court.

Of the eight types of policies at least two are not susceptible to cash surrender value so his advice to pay premiums on those is ill-conceived. It would be silly for the holder of one of these policies to put further money into Clico. Find another insurance company and get another policy.

And for those policies that are so susceptible, there is no reason why any negotiations for the sale of a portfolio of policies to another insurance company – the rationale for his “encouragement” – cannot include policies that have already earned cash surrender value and those that have not. Why is he encouraging people to gamble on whether or not the belated efforts will succeed? Insurance is about covering risks, not taking a gamble.

But once again the Office of the Commissioner of Insurance that should be looking after the interest of the policy-holders and advising on technical issues has allowed itself to become a bystander.

The acting Commissioner Ms. Tracy Gibson now has taken up office at Clico, apparently appointed by Mr. Williams, along with Mr. Maurice Solomon, to carry out the liquidation on his behalf. Might I add that under section 375 of the Companies Act, Mr. Williams needed the permission of the court to make those appointments.

Unlawful action and poor supervision have played no small part in the substantial losses the country, its taxpayers and policyholders have suffered from the Clico fallout. Even if the Office of the Commissioner of Insurance makes the doubtful assumption that its obligations with respect to Clico ended with the appointment of a liquidator, the office holder should not abandon policy holders and become associated with actions that can bring the Office into question.

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Dr Singh’s appointment as acting Prime Minister was unconstitutional

Article 101 of the Constitution was this month tested when Dr. Ashni Singh, an unelected Member of the National Assembly, was sworn in to act as Prime Minister. The Article states that “The President shall appoint an elected member of the National Assembly to be Prime Minister of Guyana…”

The press was convinced that Singh could not be appointed but the Office of the President (OP) ruled that “the appointment was well considered and is within the ambit of the constitution of Guyana.” No explanation was offered and one must therefore make assumptions about the logic of the ruling. Is it that OP considers that since Dr. Singh’s appointment was an acting one, the Constitutional limitation does not apply? If that logic is applicable, which I doubt, then it should also apply to corresponding constitutional powers in which case an acting President could not have appointed Singh. The Office of the President cannot have it both ways.

And let us take a very practical example. Let us apply this logic to the Audit Office and specifically the position of the Auditor General. Section 8 of the Audit Act 2004 provides that “The salary, superannuation, benefits and other conditions of service of the Auditor General shall be the same as those of the Chief Justice.”

Since the holder Mr. Deodat Sharma is not qualified to hold the substantive position as Auditor General and is therefore only acting in the position, would either Dr. Luncheon or Mr. Sharma tell us if he is entitled to and avails himself of the benefits of section 8 of the Audit Act including a tax-free salary?

My view is that the acting President does have the power to make the appointment but only of someone qualified under the Constitution, which clearly rules out Dr. Singh. And that only a properly qualified person – which would rule out Sharma – could act as Auditor General and enjoy the benefits of the law.

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The New Guyana Company has not filed annual returns for nearly two decades

Today I had a conversation that I cannot help but link to two telephone calls I made yesterday. If in fact today’s conversation is linked to my calls yesterday, then we have the frightening possibility of illegal wire-tapping of telephone calls made by law-abiding citizens.

The calls were about the New Guyana Company Limited, the publishers of the Mirror newspaper. I am aware that my mother, of whose estate I am the executor, was a modest investor in the company which was launched some time in the 1950s or ’60s. Indeed,according to ancient records in the Companies Registry, her name, Mrs Jankie Ram, is recorded on Folio 859 of the company’s share register, the same folio on which appears the name of my late brother Ivan Ram.

My examination of these public records was revealing. The New Guyana Company Limited has not been filing any annual returns for close to two decades, and from all appearances has not been holding any annual general meetings, as I am sure my mother would have notified me. To make matters worse, under the Securities Industry Act 1998, the New Guyana Company Limited is a public company with stringent reporting obligations. I can also say that I saw no evidence that the company was continued under the Companies Act 1991 although that may reflect deficiencies in record-keeping rather than non-compliance.

These point to a form of serious corporate fraud on the investors in the company and a disregard of the companies and securities laws of the country. As executor of my mother’s estate, I am consulting with legal counsel on options to restore and protect the rights of what may turn out to be approximately two thousand investors and to ensure that our laws are observed.

On the wider issue of wire-tapping, it is would seem that politically connected persons who might have an interest in concealing the malfeasances of the company might have intercepted my telephone conversation.

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Cents were abolished by statute

I no longer believe that Mr Rajendra Rampersaud is engaging in a coherent, sensible discussion. He writes a letter (‘Ram’s analysis in relation to the exchange rate was flawed’ SN, October 27) in which he refers to “fifty Guyana cents.” I pointed out that “cents” as part of Guyana’s currency had been abolished by statute (‘Business Page statement derived from Bank of Guyana report’ SN, October 29). Obviously forgetting or not understanding my point, he then volunteered the information that the Bank of Guyana had long before 1998 withdrawn cents by way of a circular! (‘Exchange rate movements cited by Mr Ram were taken into consideration under the Real Exchange Effective Rate’ SN, November 1)

I must therefore withdraw from further engagement with Mr Rampersaud who thinks others’ “conclusions are based on superficial feelings and political spin in total disregard for fundamentals.” I am not interested in his brand of fundamentals.

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Business Page statement derived from Bank of Guyana report

Mr Rajendra Rampersaud’s letter in Stabroek News, of October 27, 2010, ‘Ram’s analysis in relation to the exchange rate was flawed’ refers.

Citing data from the 2009 and 2010 half-year reports of the Bank of Guyana where Mr Rampersaud works, I wrote in last Sunday’s Business Page that the “exchange rate of the Guyana Dollar to its US counterpart depreciated by 0.25 per cent compared with an appreciation of 0.37 per cent at end-June 2009.” That came from their reports; it was not spun by me. And a single sentence that states that it is incorrect to measure a floating Guyana Dollar against only one other currency is hardly a harp – musical or otherwise – or self-serving – to whom or what I haven’t a clue.

I find it interesting that a country whose exchange rate management was practically dictated by the IMF for nearly twenty years is significant and unique enough to develop the concept of a “home grown, official” exchange rate. Mr Rampersaud should identify the experts in the Bank of Guyana and their reasons for deciding that the decades-old methodologies established by international financial institutions, central bankers and academics are inappropriate to Guyana. To use Mr Rampersaud’s word properly, both the IMF’s assessment and his reliance on it are a classic case of “self-serving.”

The statement in Business Page to which Mr Rampersaud refers, derives its support and basis from the June 2010 Bank of Guyana report, Table 9.2 (b) which shows that over the period December 2000 to June 2010 the Guyana Dollar depreciated against the US Dollar from $184.75 to $203.75 or 10.3%. In turn, over the period December 2001 to April 2010, the dates for which the Bank of Guyana provided figures, the US Dollar depreciated against the Canadian Dollar by 36.5%; the Euro by 33.8% and the Pound Sterling by 5.4% (Table 9.5). I can understand why Mr Rampersaud would wish to avoid such realities. What I cannot understand is why he would consider such statistics and analyses necessary in a newspaper column dealing with national accounts.

Let me put it another way. Based on the selling rates by Guyana’s leading commercial banks, at December 31, 2000, it took G$120.63 to buy one Canadian Dollar. Today it requires $191.27. That is a 58.6% change. At December 31, 2000, it took G$267.28 to buy one pound Sterling. Today, that will cost $298.57, a downswing of 11.7%. At December 31, 2000, it took G$185.65 to buy one US Dollar. Today, that requires $203.70, some 9.75% more, proving the point that the US Dollar has lost against those three major currencies. For the average Guyanese buying Canadian Dollars, official exchange rate stability is a mirage.

Finally, it may seem a small point, but as an economist with the central bank, Mr Rampersaud should know that the Bank of Guyana Act abolished cents since 1998. He should know as well that professionals and technocrats do the public a great disservice by being careless, incorrect or recklessly disregarding accuracy.