Sunday, February 18, 2018

40% NOW

Angry CLICO investors reject Govt offer, call for Dookeran's head


in the square: CLICO policyholders during yesterday's meeting at Woodford Square, Port of Spain. —Photo: ISHMAEL SALANDY

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Members of the CLICO Policyholders Group want Government to pay them an immediate 40 per cent on their deposits, with a promise to pay the balance quarterly over a five- to seven-year period at four to four and a half per cent interest.

The proposal is one of two that deputy chairman for the group Peter Permell said they delivered to Government's technical team, headed by Minister of Food Production Vasant Bharath, and which is now before Cabinet for consideration.

"The 'Dookeran plan' of zero interest over 20 years is off the table," Permell said yesterday at a meeting of policyholders at Woodford Square, Port of Spain.

"The policyholders with a principal balance plus capital interest exceeding $75,000 should be paid 40 per cent of the outstanding liability immediately and the balance by Government of Trinidad and Tobago bonds amortised on a quarterly basis over the next five to seven years between four to four and a half per cent interest on this money."

He was referring to the original proposal by Finance Minister Winston Dookeran to pay an initial $75,000 to all depositors and an amortisation of the balance over a 20-year period at zero per cent interest to those with larger deposits.

"We not accepting any $75,000," he said.

Permell said the counter-proposal, revealed for the first time yesterday, called for those depositors with up to $75,000 investment, credit unions and trade unions be paid 100 per cent, since they represented the "small people" who pooled their money to make up the investments. This proposal was specifically tailored for the Executive Flexible Preferred Annuity (EFPA) and mutual fund policyholders, and did not include Clico Investment Bank (CIB), the Government, State enterprises or private corporations, he said.

Permell said a "warranty" should be placed on the bonds that would allow them to cash in on any profits from the sale of the CL Financial assets. The profit, he said would be shared at 51:49 per cent ratio, with the policyholders retaining the majority over the Government, which he described as "more than reasonable". He said the proposal included an "as soon as possible" cut-off date.

He said the depositors were already owed two months of interest and to ensure that the arrears payments do not "pile up", he suggested a cut-off date of October 31.

"The Government should also pay some sort of interest on that arrears at the market rate, which is about five per cent. The onus is now on them to implement payment immediately," he said.

Permell said it was also suggested that an external "macco" be put on the CL Financial's board to seek the group's interest during any liquidation, to ensure they were not taken advantage of.

The second, but less popular proposal, outlined yesterday by executive member Prem Beharry, is to give the US$600 million the Government has earmarked to pay the investors to Ryan ALM (Asset Liabilities Management), an asset management company out of the US. Beharry said Ryan ALM would be charged with investing that money to ensure the most profitable pay-outs and turn over the cash within a 20-year period.

"They will take the US$600 million and convert it into US treasury bills, which are triple A-rated and gives a fairly aggressive returns," Beharry told the gathering.

"It sounds like a very good proposal and promises a lot. They will increase the asset, while keeping the liability fixed, the liability is $10.5 billion."

He said Ryan ALM will manage the money so that during the course of 20 years the value of assets will be equal to $1.8 billion. He said Ryan ALM proposed that within three months it could sell the bonds and get US$1.8 billion to pay all the policyholders.

"This plan, though, leaves the country to carry a US$1.8 billion debt on its books, which reduces our credit worthiness," Beharry said.

The group, after five meetings with the Government-appointed technical team, submitted the two proposals to Cabinet last week. Permell said although it was unconfirmed, he was informed that the issue of settling the group's finances was on the agenda at Cabinet's meeting last Thursday. He said, however, that Cabinet was waiting for Bharath to return to the country to be informed of which proposal was accepted.

However, in a telephone interview after the meeting, Bharath said as far as he was aware, the CL Financial issue was not discussed at the Cabinet meeting on Thursday. Bharath, who only returned home on Saturday, said he would speak to the Prime Minister on the issue "shortly".

"They made the proposals, now it is up the Prime Minister and Cabinet to make a decision," Bharath said.