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posted 3 Feb 2017, 04:59 by Gerry Kangalee   [ updated 3 Feb 2017, 05:36 ]
Afra Raymond
David Walker
The following is an open letter dated 31st January 2017 to the Governor of the Central Bank co-authored by Afra Raymond and David Walker. It raises a number of troubling questions about the legal basis for actions being taken under the purported rescue of CLICO/CLF with the use of more than 20 billion dollars of our money.

Whether you agree/disagree with the positions taken by the authors of the letter the point is that you should endorse the call for answers from the Central Bank. The Governor is duty bound to share with the public his legal opinion on what are very troubling matters.

The authors are seeking support from individuals, organisations and collectives for the request that the governor of the Central Bank carry out his role as a “public servant” and disclose the information to which the people have an entitlement. After all, it is our money, isn’t it?

For further information contact d.walker@alcindorwalker.com.

We, the undersigned, have become very concerned about the direction of the “rescue” of CLICO et al after over eight years under the control of the Central Bank and the government.

Our principal concern is at the apparent regulatory forbearance being exhibited by the Central Bank in this matter. Our further concerns relate to the legality of the ongoing control and any untoward consequences arising from that; the inordinate delay in the return of billions of dollars to the taxpayer and the impact that must be having on economic decision making; and finally, the nature of some recent ministerial statements which appear to be at odds with the stated goals of the rescue as articulated in the Central Bank Act.

We respectfully ask for your guidance in addressing these concerns as follows:

Question 1:

The Central Bank has a duty to enforce its fit and proper regulations to ensure the stability of the financial system by disqualifying unfit and improper persons from acting as Directors, Officers, Actuaries and controlling Shareholders in Financial Institutions. Official statements surrounding the events in this large-scale failure of the CL Financial group and four of its Financial Institution subsidiaries – CLICO; British-American Insurance Company; Caribbean Money Market Brokers and Clico Investment Bank present a prima facie case that the then principals in those companies are no longer fit and proper to be Directors, Officers or controlling Shareholders.

The Central Bank issued a Press Release on 7th June 2011 to advise of its lawsuit against Lawrence Duprey, Andre Monteil and others, after certain forensic investigations. That Press Release was explicit in stating the Central Bank's position - “...the subordination of the interests of CLICO, its policyholders and mutual fund unit investors to the private interests of Mr. Duprey and Mr. Monteil and their companies; the lack of proper governance and serial mismanagement; improper dealing with CLICO’s assets and the funds of policyholders and mutual fund unitholders...”

Given that the Central Bank arrived at that position over five years ago, it is entirely unacceptable that no action seems to have been taken to have the responsible parties declared unfit under the fit and proper regulations. Is it the case that such action is still in progress or is it that the clear view as then articulated is no longer the official position? Either way, in the light of previous statements, what is the Central Bank’s current position on the matter?
Dr. Alvin St. Hilaire - Governor of the Central Bank
Question 2:

It is apparent from a reading of the Central Bank Act that the control exercised is not to be open-ended. Indeed Section 44G defines the conditions upon which such control shall be relinquished. That appears to be the only reasonable interpretation of the section which is copied below.

“44G. (1) Where the Bank has under section 44D assumed control of an institution, the Bank shall, subject to subsection (2) remain in control of, and may continue to carry on the business of that institution until such time as the Bank publishes in the Gazette and in such newspapers as it thinks appropriate a notification that it has ceased to be in control of the institution.

44G. (2) The Bank shall relinquish control and shall not continue to carry on the business of an institution where-

(a) the circumstances on the basis of which the Bank assumed control of the institution under Section 44D have ceased to exist;”

Our question is that given the removal of the risk of contagion and the stated solvency of the Statutory Fund, does the Act not now require demand that control be relinquished? Given that the former Governor of the Central Bank and other officers have made statements to the effect that the Statutory Fund is now in surplus and that the company is no longer in deficit is it not now mandatory that the Section 44 control be relinquished?

Question 3:

There are also conditions that must be met before the powers are to be exercised. Here is the extract.

“44D (2) The powers of the Bank under subsection (1) shall not be exercised unless the Bank is also of the opinion that the financial system of Trinidad and Tobago is in danger of disruption, substantial damage, injury or impairment as a result of the circumstances giving rise to the exercise of such powers.”
Image result for clicoOur question is whether the Bank is still of the opinion that the financial system of Trinidad and Tobago is in danger of disruption, substantial damage, injury or impairment as a result of the circumstances giving rise to the exercise of such powers? If not, do the immunities defined in section 44 still apply to the actions of the Bank and its appointees? Can they carry on dealing with the assets and operations of the institution with impunity?
Question 4:

The Central Bank Act suggests that actions undertaken during the rescue are to be guided by the interests of creditors and policyholders. These are the only two groups so mentioned. To quote the Act again “44D (1) (c) have power—

(i) to investigate the affairs of the institution concerned and any of its affiliated institutions and to appoint a person or persons for that purpose;

(ii) to such extent as it thinks fit, to assume control of and carry on the affairs of the institution and, if necessary, to take over the property and undertaking of the institution;

(iii) to take all steps it considers necessary to protect the interests, and to preserve the rights of depositors and creditors of the institution”.

Our question is whether the Central Bank and Minister are free to pursue other goals such as unrelated government objectives as their primary driver(s) in executing the rescue.

Question 5:

Following upon Question 4, was the acquisition of policyholder rights (The Resolution Plan) done under Section 44 powers, and if so how does that action “preserve the rights of depositors and creditors of the institution” as the Act seems to demand?

Question 6:

To whom does the decision as to the relinquishing of control of CLICO fall?

a) Central Bank
b) Minister of Finance
c) Both of the above
d) Some other individual(s) or agency(ies)?

Question 7:

Andre Monteil - fit and proper?
There is a fundamental contradiction between the position implied by official statements that the CL
Lawrence Duprey - fit and proper?
Financial principals are not fit and proper and the requirement that the Central Bank now relinquish control.

The question is therefore what are the proposals being considered to resolve this so that the companies are released from Central Bank control without the former principals regaining any positions as Directors, Officers or controlling Shareholders. It is our respectful view that this is an important aspect on which the public deserves a clear explanation so that we can be reasonably assured that there is no chance of those persons, against whom the Central Bank is litigating, re-entering our country’s financial system in any manner which could again jeopardise our collective security.

We trust that you will address these questions with the seriousness that they deserve and expect that your excellent legal team will provide their usual expert advice. Indeed, we expect that these questions must have been already addressed by you and your team in the course of managing the rescue of CLICO in conformity with the Central Bank Act and other relevant legislation.

David Walker - d.walker@alcindorwalker.com
Afra Raymond - afraraymond.net
Disclosure Today - https://www.disclosure.today/