The trinidad Guardian / At the very end of the notes to the 2016 year-end audited financial accounts of beleaguered insurance giant Clico lies note 37. It reads: “To facilitate the implementation of the Resolution Plan, in January 2017, the Company was directed by the Central Bank of Trinidad and Tobago to take the necessary steps to effect the transfer of its 100% shareholdings in Occidental Investments Limited and Oceanic Properties Limited to the state enterprise Buccoo Limited. This transfer agreement was completed on March 2017.”
In effect, this note says that Clico’s 100 per cent interest in Occidental Investments Ltd and Oceanic Properties Ltd, more commonly known as the No Man’s Land ocean property in Tobago, and carried on Clico’s balance sheet at a value of roughly $187 million, is now owned by the Government of T&T.
One of the concerns arising out of this transfer, according to chairman of the Clico Policyholders Group Peter Permell, is the fact that the Minister of Finance by virtue of the powers under Section 44D of the Central Bank Act can give general or specific instructions to the Central Bank in this particular transaction.
Permell said: “What is troubling is the fact that the note is silent on the price at which the transfer took place and there was no indication in the note to the accounts of whether there was a gain or loss on the transaction. What that suggests is that this prime piece of real estate was transferred at the carrying value as opposed to the fair market value. According to the Project Rebirth report prepared by PricewaterhouseCoppers (PwC), the fair market value of the property is estimated at circa $867 million. This represents a substantial difference in value of $680 million.”
The process of selling and/or transferring Clico’s assets requires oversight by the Central Bank for accountability and transparency, statutory independent valuations in accordance with Section 44D of the Central Bank Act and consultation with the Minister of Finance under Section 44F (5) of the said act.”
According to Permell, the deficit in 2016 came down from roughly $1.2 billion in 2015 to $910 million in 2016 and had this transfer been done at fair market value, “the $910 million deficit shown on Clico’s balance sheet, causing it to appear technically insolvent, would have been reduced by a further $680 million, moving the company even closer to solvency.”
He said this transaction was a glaring example that if all the assets on Clico’s balance sheet are revalued at their current market value, this would totally eliminate the apparent insolvency position of the company that now exists. Permell said what was equally troubling is the manner in which the transaction was carried out.
“Based on the manner in which the transaction appears to have been done, it conceals the $680 million worth of value that the Government actually received from Clico and conversely a loss of value to the company and by extension policyholders.”
Permell is also questioning why this transaction has not yet been disclosed by the Government to the taxpayers of T&T.
He said: “The note clearly states that the transaction had been completed since March 2017 and we are now in July (some four months later). And as far as I am aware, to date, the public has not heard anything about this. I am therefore now calling on the Minister of Finance for full disclosure on the particulars of this transaction.”
For the year ended December 2016, Clico recorded an after-tax profit of $447.3 million. This represents a 50 per cent decline from its 2015 figure when the company registered $894.3 million in profit after tax.
Finance Minister Colm Imbert, responding to a text message from the Sunday Guardian on the matter last night, said, “Reports on the monetisation of Clico’s assets and repayment of the money spent by the Government of the Republic of T&T are laid in the Parliament and in court at regular intervals. There are strict court ordered procedures for disposal or transfer of Clico’s assets to repay the Government.”
He said any transfer or sale of assets that take place in an intervening period is recorded in the next report that is laid in Parliament and in the court. This is done at regular intervals.
Imbert further directed the Sunday Guardian to the Clico Resolution Plan, which was announced by the Central Bank in March 2015.
Central Bank’s Clico Resolution Plan was developed to repay all creditors and policyholders and to ultimately facilitate the transfer of Clico’s traditional insurance portfolio to a suitable buyer by ensuring that enough appropriate assets are put aside.
Clico Resolution Plan that you need to remember:
1. Government, as the single largest creditor of Clico, will receive $4 billion in 2015, and the balance of around $3 billion in lieu of cash upon the transfer of three Clico assets, Angostura Holdings Ltd, CL World Brands Ltd and Home Construction Ltd.
2. The 1500 non-assenting STIPs policyholders will receive 85 per cent of their claim or about 950 million dollars in three months, and the remaining balance after the sale of Methanol Holdings International Ltd.
3. Creditors outside of the Statutory Fund such as non-Government mutual fundholders and non-residential Short Term Investment Products policyholders will be paid following the sale of Clico’s RBL shares and other assets.
4. The policyholders who accepted Government’s offer of bonds and shares in the Clico Investment Fund will be no worse off.
5. The claims of British American Insurance Company Trinidad Ltd (Bat) policyholders will also be settled.