It would appear that the Finance Minister, Winston Dookeran, has become enamoured of Prime Minister Kamla Persad-Bissessar's favourite phrase. Speaking at the wind-up of the debates in Parliament last week on the Purchase of Certain Rights and Validation Bill 2011 and the Central Bank (Amendment) Act, both of which were meant to deal with the CLICO issue, Mr Dookeran, after declaring in a burst of self-adulation, that "What we have devised cannot be surpassed anywhere else in the world,'' went on to state that he would now "move on to moving this country forward".
I could certainly appreciate Mr Dookeran's anxiety to "move on" from the CLICO mess which, to be fair, he inherited from the PNM, but his handling of which has not demonstrated any particular financial astuteness on his part and which he finally resolved by a piece of legislation which effectively deprived a group on CLICO investors of their right to legal redress.
I certainly hold no brief for the CLICO investors, specifically the EFPA group. In my view the solution sets an exceedingly unfortunate precedent of having the taxpayers reimburse private investors whose investments have gone belly-up. But now that he has settled his touching concern for these investors, it would be good if Mr Dookeran, before he moves on, would turn his attention to addressing the concerns of the ordinary citizens who are footing the bill by answering certain questions.
The very first question is what is the total cost of settling this CLICO imbroglio going to be to the treasury and, by extension, to the taxpayers? The initial injection made by the former administration is said to be $5 billion. Mr Dookeran has stated that his solution would cost the taxpayers $500 million per year for the next ten years. He has also stated that to date the Government has paid 9,815 depositors with investments of less than $75,000 some $301 million and had paid through the "compassionate window" some $94 million to 455 cases for urgent relief.
That adds up to a total of some $10.5 billion. Is this the final figure? What other possible charges are to be expected? Does his solution include the almost $2 billion worth of investments in Clico held by state enterprises such as the National Gas Company and the National Insurance Board? And, most important of all, how does he propose to recuperate all such sums for the taxpayer?
In this regard it should be noted that the initial $5 billion injection into the company was made in exchange for a 49 per cent equity stake in Clico. Clico's viable assets included its shareholding in Republic Bank Limited (RBL), which shareholding would have constituted a major source for the recuperation of taxpayers' funds. Now that the RBL shares have been deposited in trust in NEL 2, and access to the units of NEL 2 is specifically confined to the EFPA bondholders, does this effectively alienate from the taxpayers a major source of the recuperation of their money?
Mr Dookeran also knows that solving the problems of the EFPA investors cannot possibly be considered to be the total answer to dealing with the Clico issue. While the problem of the investors was certainly a big stumbling block, Mr Dookeran now has to tell the population what is the plan for the entire company. How will it be restructured to ensure future viability, and what are the Government's longer term intentions with respect to maintaining its involvement in the business or divesting itself therefrom?
Beyond the issue of CLICO but arising from it, Mr Dookeran and the Government now have the opportunity and the responsibility to clearly enunciate their philosophy and policy with regard to similar situations arising in the future. Policy has to be articulated and implemented first with respect to oversight and regulation of financial institutions and business corporations generally.
A large part of the blame for the Clico fiasco has to be attributed to the failure of the Central Bank to exercise due diligence in its oversight role. The present Governor of the Central Bank has always argued that then existing legislation was inadequate to the task of proper oversight and investigation. To some extent that may be so but it cannot excuse the Bank's failure to deal expeditiously and firmly with Clico's dereliction with regard to payments to the statutory reserves. How do we prevent such egregious failures in the future?
There have been amendments made to the financial regulations legislation. The government must ensure that these are adequate and seek to close all possible loopholes, particularly in an environment where there are so many huge "Group" corporations which include financial institutions and where inter-company transactions are not always open to public scrutiny.
But even in the most regulated of environments the possibility of financial meltdowns and business failures cannot be completely avoided. So that Government philosophy and policy must also go beyond oversight and articulate a position on what is the role and responsibility of the Government (taxpayers) in seeking to salvage any company (and its investors) from financial distress. Such a policy position would help the country from being sucked again into a black hole of financial toxicity such as Clico turned out to be.
In the circumstances Mr Dookeran should not consider himself to be finished with Clico. There is much still to be said and many questions to be answered. Mr Dookeran owes it to the country to deal with these before he finally "moves on".
Finally I have to note my concern that neither our current Minister of Finance nor our previous Minister of Finance had the presence of mind to recognise what former Senator Patrick Watson described as a "ponzi scheme" before investing their own money. It leaves one to wonder how many "Brooklyn bridges" they may have bought with taxpayers' money?
• Mr Harris has been for many years a writer and commentator on politics and society in Trinidad and the wider Caribbean. He is a
long-standing member of the Tapia House Group and works as a human