February 6, 2009
CL Financial Group bail-out troubling

Vincentians and government entities have millions invested in the various subsidiaries of the Trinidad and Tobago-based conglomerate CL Financial Group, so news of the group’s financial trouble sent shivers through the financial spines of many.{{more}}

Not just Vincentians, but Barbadians, and people throughout the Eastern Caribbean.

Last weekend news broke that CL Financial Group, headquartered in Trinidad, was going to be bailed out by the Central Bank of Trinidad and Tobago to the tune of about $1 billion, after it became Trinidad and Tobago’s first casualties of the global financial crisis.

Subsidiary company CLICO Investment Bank (CIB) was facing liquidity problems, and CLICO was also in trouble, though not to the extent of CIB.

According to a Memorandum of Understanding (MOU) signed between the government of Trinidad and Tobago and the massive conglomerate, the government will provide funding to the company in exchange for collateral and an equity interest in one of it subsidiaries.

CL Financial Group solely owns CLICO Holdings Barbados Limited, which in turn operates CLICO International General Insurance and CLICO International Life Insurance here.

CL Financial Group also owns British American Insurance Company.

Last Monday, in a press conference, and the next day in Parliament, Prime Minister Gonsalves did his utmost to try to allay fears that the millions of dollars of investments by Vincentians in these

companies, including government agencies like the National Insurance Services (NIS) and the National Commercial Bank (NCB), were safe.

The NIS has a total of EC$38.6 million invested in CLICO Trinidad and a further EC$23 million invested in CLICO Barbados, a release from the Prime Minister’s office stated.

NCB SVG Ltd also has $13.3 invested in CLICO Trinidad, and so Dr Gonsalves said last Monday that his
government has taken notice and he has established the necessary contact in order to apprise himself of the situation.

The Prime Minister said that he has had conversations and verbal and written assurances from Governor of the Central Bank of Trinidad and Tobago, Ewart Williams, along with Trinidad’s Minister of Finance, Karen Nunez Tesheria. He also said he was given assurances by Prime Minister David Thompson of Barbados, and the Chairman of CLICO Holdings Barbados Limited, Leroy Parris.

As he urged Vincentians not to panic, Prime Minister Gonsalves intimated: “In all of this, I feel comforted by these several assurances.”

Meanwhile, the public relations vehicle was in full swing at CLICO Holdings, Barbados Holdings Limited.

In a press and investors conference, held upstairs the Golden Apple Restaurant, last Tuesday afternoon, Chairman of CLICO Barbados, Leroy Parris, did everything to ensure that it got across that despite being owned by CL Financial Group in Trinidad, the Barbados and Eastern Caribbean operation was totally independent of the parent company.

“I can stand right here in this building, under the roof, in all of these lights, and confirm to you, as a commitment that CL Financial in Trinidad cannot leverage on any assets in Barbados or the Eastern Caribbean.”

He blamed the media for blowing the situation out of proportion, and feeding the hysteria, by not being accurate in reporting the situation in Trinidad.

“The only reporting that CLICO Holdings in the Eastern Caribbean have to Trinidad is the end of the year financial that goes to CL Financials for consolidate purposes,” he affirmed.

“Don’t panic. Be calm. Your money don’t go to Trinidad. Your money don’t go to prop up any entity in Trinidad,” he added, noting that CLICO Barbados is worth $1.4 billion and has made a profit in each of its 25 years of existence.

“I want to remove the fear that Trinidad is going to come and take money out of St Vincent, Trinidad is going to come and take money out of Barbados,” he asserted.

SEARCHLIGHT has, however, ascertained that many investors are not persuaded that the companies were being completely transparent about the situation.

“I don’t understand how they could be all part of one company and say that if that company is going through a problem they can never be affected,” one investor told SEARCHLIGHT, following the CLICO Holdings Barbados Limited press conference.

At press time, the Trinidad Government was experiencing difficulty securing the three-fifths majority vote in Parliament to enable the bailout plan.

Needing 26 votes, the Patrick Manning administration has run into opposition from disgruntled government parliamentarian Keith Rowley, who is making several demands in exchange for his support of the Central Bank (amendment) Bill, which will make the bailout plan possible.