WHILE admitting that a legitimate expectation was created in CLICO policyholders that their Executive Flexible Premium Annuities (EFPA) would be repaid in full, Queen's Counsel Allan Newman said yesterday Government had good reason for not fulfilling that expectation.
"The country simply could not afford it," Newman said.
Newman was addressing Justice Joan Charles on the third and final day of the judicial review matter in which the CLICO United Policyholders Group are challenging Government's plan to repay policyholders their money without interest over a period of 20 years.
The matter was heard in the High Court at the Hall of Justice in Port of Spain.
Newman, who, along with Senior Counsel Russell Martineau, is representing the State, submitted yesterday that the test to be adopted by the Court would be to determine if the actions of the government amounted to an abuse of power.
He said when the previous administration announced, following the collapse of CLICO in early 2009, that policyholders' investments in CLICO would be safe and, if there was any deficit in the company's statutory fund, that Government would make up the deficit, the gravity of the situation was still not clear.
"There was a gradual appreciation of the problem which arose. It was an evolving situation. It was much bigger than originally thought."
Newman said former finance minister Winston Dookeran, after assuming office in 2010, was of the view that a $5 billion injection into CLICO would have been sufficient to avert a crisis but quickly realised that much more money was needed. Government, he said, has pumped approximately $19 billion into the failed insurance company and the figure is still climbing.
"On the evidence, there was sufficient public interest to override whatever legitimate expectation which the policyholders had. Taxpayers could not afford. The country could not afford."
Newman said Government expenditure would have been cut and citizens may have had to pay higher taxes if every policyholder was paid the full value of their EFPA.
Charles has reserved judgement for a date to be fixed.
Also appearing with Newman and Martineau are attorneys Kelvin Ramkissoon and Kerry-Ann Oliverie while the policyholders are being represented by Queen's Counsel Peter Knox, Senior Counsel Ramesh Lawrence Maharaj, Vijaya Maharaj and Nyala Badal.