The exposure of NIS to Clico (Guyana) is a far more important problem than an erroneous blog
Posted By Stabroek staff On March 2, 2009 @ 5:08 am In Letters | 4 Comments
Permit me to respond to your news report, ‘Rumors of GBTI bail-out false,’ (February 28), in which it was reported that the police became involved in an investigation of a Guyanese-run blog, ‘Living Guyana,’ for allowing an “erroneous” post related to a run being made on the GBTI by depositors in the wake of the CLICO fiasco.
First, as a regular reader of items on that blog, I have to admit there are some posts that definitely raised my eyebrows and also my ire, but I have since come to realize the blog is living up to its creed of antagonizing the status quo, by engaging in harsh criticism of local media operatives, politicians (government and opposition) and just about any public figure in and out of Guyana. On a few occasions it has managed to scoop the real news before the three major dailies, so it has developed an audience that seeks ‘table or bar talk’ information.
I thought the post about GBTI was plausible given the prevailing circumstances that generated a great degree of concern among investors and depositors. I subsequently read where the blog owners offered a mea culpa and retracted the offending post, but instead of accepting the mea culpa the authorities are looking for blood by ‘siccing’ the police on the owners to determine who authored the offending article.
This brings me to my third and most important point: the authorities. Are the authorities using this blog’s alleged offence as a deliberate distraction from their own failure in a much bigger and more serious problem, which is the safety of $6B of Guyanese money? NIS money is Guyanese money, not government money! That’s what Guyanese paid from their blood, sweat and tears for future eventualities! This, to me, is worse than any erroneous report of a raid being done by depositors at any local bank in the wake of CLICO/NIS!
In your Friday, February 27 edition, there was a news article, ‘President defends handling of CLICO crisis,’ and it exposed the President, the Commissioner of Insurance and the CEO of CLICO as being irresponsible in dealing with the CLICO crisis long before its volcanic-like eruption that spewed ashes of doubt and anger across the country.
For example, according to the President, CLICO (Guyana) had invested $6.9 billion (US$34 million) in CLICO (Bahamas) which represented 53 per cent of the firm’s assets, and while the firm should not have had such a substantial portion of its investment overseas, the company persisted with this practice despite “instructions from the Commissioner to the company over a year ago and more recently to reduce this exposure.”
The auditors, Deloitte and Touche had noted in the 2007 accounts that the Guyana company was also in breach of Section 55 of the Insurance Act which required that it invest 85% of its statutory fund locally. So how long ago did the President know about this pending explosion? And since CLICO was in breach of Section 55 of the Insurance Act since 2007, where are the penalties against CLICO to force it to correct this financial incongruity since 2007?
When the global meltdown started last September, the President also boldly assured Guyanese investors/depositors that his government had a ‘firewall’ in place to shield the local financial sector from the effects of the meltdown. To suggest he had a ‘firewall’ would imply he had called in and spoken to leading members of the local financial sector, so there is a bigger problem with his claim of having a ‘firewall’ that failed to protect $6B belonging to Guyanese in the NIS than any erroneous report on a blog of Guyanese raiding GBTI.
Another point of interest in your February 27 article relates to a February 5 press conference where the head of state was asked about CLICO (Guyana) and he gave the assurance that his government was monitoring the situation closely and that their interests were protected. Given what has since obtained, wasn’t the President making an erroneous statement on his ‘firewall’ claim?
That press conference followed the spectacular takeover by the Trinidad Central Bank of parts of the CL Financial Group on January 30, in which CLICO (Guyana) declared that same day that it was solid and its statutory fund was in good standing. In fact, CLICO (Guyana) released a statement in which it wished “to make it clear that developments in Port of Spain, Trinidad involving CL Financial Limited have no financial impact on CLlCO (Guyana). CLlCO (Guyana) is a separate entity within the CL Financial Group, and none of its assets are intertwined with CLlCO [Trinidad] or CLlCO lnvestment Bank.”
Given what has since obtained, wasn’t the CEO of CLICO (Guyana) making an erroneous or misleading statement by advertently or inadvertently omitting mention of CLICO (Bahamas) which was where the real problem rested for Guyanese private investors (and the NIS especially which had $6B invested)? And the authorities have the temerity to make noise about going after a blog for making an erroneous report?
And where was Guyana’s Commissioner of Insurance Maria van Beek in the midst of all of this? How can she be absolved of culpability?
But what has to be even more disturbing, Editor, is the President’s callous response to a question about the huge loss which could potentially be suffered by the NIS in this matter. According to your newspaper, “When quizzed [Thursday] about the funds that the NIS had invested in CLICO (Guyana) , Jagdeo said that the National Insurance Scheme is an independent body that covers workers from all over Guyana and that the government had no authority to influence where such entities made investments. He explained that if the NIS were to lose its investment of $6 billion, the government will not be bound to provide the lost sum of money. He explained that the NIS will have to raise funds by raising its rates or other means to make up this amount.”
The NIS is an independent body and the government had no authority to influence where such entities made investments, yet the government took NIS money to help finance the Berbice Bridge? Worse, the President is sending a clear signal that his government is blameless in this mess and those contributors who sacrificed over the decades to the coffers of the NIS might possibly face increased rates to help recoup the NIS loss!
I wish I could say this particular remark attributed to the President was erroneous, but the least I could say is that the President appears to be totally oblivious of the plight of pensioners and others who rely on the NIS for better services. Instead of going after a blog, the authorities should be worried about the huge blot on their record as ‘safe-keepers’ of the people’s finances!