Clico: Tales of woe and falsehoods

Ministers bombarded the media and the public with tales of woe at Clico.

Ponzi scheme said one.

Another said the assets if sold would barely return 10 cents on the dollar to policyholders and other creditors. A picture was painted of a company in dire straits with no prospects of recovery.

The only hope for suffering policyholders was to accept the Government’s “haircut” which the ministers claimed to be infinitely better than holding on to your policy.

In fact, if you did not accept their offer you had to find the money to take the government to court to have any hope of getting what was contractually yours.

All of this was done while the government steadfastly refused to release any financial information about the state of the company, even going to court to deny it to policyholders and others.

Within a few years, however, it became clear the picture painted by the ministers was not just false but the diametric opposite of the truth.

There was more than enough money to fully pay policyholders’ contracts but the government chose to spend over $2 billion on consultants and finance charges instead.

Even the Governor of the Central Bank eventually conceded that Clico’s Statutory Fund was in surplus and that policyholders should be paid in full.

The Minister of Finance at the time also promised on record that all policyholders would be fully recompensed. It has not happened.

It is now abundantly clear that taxpayers, policyholders and creditors were all duped by the government of the day.

Policyholders should have been paid in full and the taxpayer should have been repaid a long time ago. But then the consultants and financial institutions would not have been able to share the more than $2 billion that came their way. And government appointees would no longer have access to Clico’s valuable assets that they so derided in the past. If the courts had forced the disclosure of financial data, the story would have had a happy ending a long time ago. Did we learn anything? The Government now cries that CL Financial is insolvent and cannot pay its debts.

No audited accounts are offered. The sky will fall in if we don’t allow it to shut down the company and sell off what it likes to whom it likes at whatever price it likes.

Its record of asset sales without publication of independent valuations does not inspire confidence.

Sounds familiar? In the first round it was the consultants and financial institutions than benefited. Whose bread is about to be lavishly buttered this time around? I am staggered that the courts should allow such drastic action based on nothing more than a claim of insolvency without a demand for audited statements.

We have a government that was openly saying a few months ago that it did not know what the correct figures were.

How could such a drastic action be allowed on an unproven statement of insolvency? Here we go again destroying both private and public value on the basis of scaremongering unsupported by audited statements without demand for financial data from the courts.

We still do not even have audited statements as at 2009, the commencement of the rescue.

I have a series of questions and observations on that and the growth of the insolvency under government stewardship that I will address subsequently.

Is the Government really saying to the court and the public that it has been running an insolvent company for eight years? And when did Parliament approve expenditure of public money on CL Financial?

DAVID WALKER via email