Report From Commission Of Inquiry Into CLICO Handed Over To T&T President

PORT OF SPAIN, Trinidad and Tobago, June 23, (CMC) – The report from the Commission of Enquiry, appointed to probe the failure of regional insurance conglomerate, Colonial Life Insurance Company (CLICO), by the end of this month, was handed over to President Anthony Carmona, yesterday, by secretary of the Commission, Judith Gonzalez.

In presenting the report, Gonzalez said the findings were “fundamentally deficient” and was starkly shown up by the autocratic style of the management of CLICO and the CLF Group generally, by its business model, which is found to be seriously flawed; and by the cavalier manner it treated attempts by the Inspector of Financial Institutions to deploy such limited regulatory control tools, as were then available and ignored, to a large extent, the recommendations as to management of PricewaterhouseCoopers (PWC), the corporate auditors of the CLF Group and of CLICO,” she said.

On the need to reform the Commission of Enquiry Act, in relation to witness compellability, the report noted that although a commissioner was empowered as a High Court judge, to order a witness to appear to give evidence, “failure to comply does not amount to an offence analogous to contempt of court, which can be punished by the judge. Instead, the available sanction for breach of such an order involves prosecution in a Magistrate’s Court.

“The maximum sentence upon conviction is a fine of TT$2,000 dollars (One TT dollar =US$0.16 cents) a punishment of practically no deterrent effect.”

It said the Commission was denied the benefit of hearing evidence from four key witnesses involved in the management of the CLF Group, “whose evidence would have been highly material to its findings.”

Sir Anthony Colman, the sole commissioner of the enquiry and who was absent for the presentation of the report, due to medical reasons, was commissioned under the past People’s Partnership cabinet in November 2010 to probe and ascertain the reasons for the failure of CL Financial, CL Investment Bank, British American (T’dad) Ltd, Caribbean Money Market Brokers Ltd (CMMB) and the Hindu Credit Union Co-operative Society Ltd.

Proceedings began in March 2011 and ended in May 2013. It involved five million pages of documents and 77 lawyers.

In the report, Colman referred to the captains of CLICO and HCU, in seeking to identify the one characteristic, which linked the collapse of HCU with that of CLICO and its associated companies.

“It was repeatedly claimed that the one motive that drove both Harry Harnarine and Lawrence Duprey to ever bigger deals was ‘vision.’ Yet, in spite of all the warnings received from the Central Bank and the auditors, they went on, like Icarus, only to be destroyed by the sun of their own vision,” the commissioner said.

He added it was not the appropriate time to comment on the report’s findings, with regard to responsibility for the CLF Group collapse, or on the mechanism of failure, which caused the government to intervene in such large measure.

Colman also admitted, the enquiry into the CLICO companies did not provide an answer to all the questions raised in part of his terms of reference.

“To deal fully and sufficiently with those questions the commission would have had to investigate and review a mass of evidence requiring complex accounting analysis, together with political decisions made after the key events, which this enquiry has been concerned to investigate.

“In order to minimise the delay in finalisation of the report, the commission has adopted a cut-off date in June 2009, when the Shareholders’ Agreement was entered into.

“This commission had to accommodate not one enquiry but two (HCU, Clico)… the problem for investors, depositors and policy holders has been that the joining together of both enquiries has seriously prolonged completion of the reports on both,” he said.

He noted one feature which significantly prolonged the time taken to finalise the CLICO Report, was the issuing of “Salmon letters” to those vulnerable to adverse criticism in the report.

Meanwhile, the United Policyholders Group (UPG), CLICO Stakeholders Alliance and Lawrence Duprey’s spokesman, Claudius Dacon, have all called for the Sir Colman report to be revealed.

The UPG did so, on Tuesday, in calling on CLICO and British American policyholders and other stakeholders to gather in front of Parliament today, at 1.30 pm, with placards to protest lack of action by the Finance Minister and the Central Bank in settling matters over the last year.

The group also staged a protest outside Central Bank last week.