Kaieteur News news item, Sunday 29 March 2009
http://www.kaieteurnews.com/2009/03/29/law-dictates-penalties-for-misuse-of-
public-funds/
Law dictates penalties for misuse of public funds
A Minister or
official shall not in any manner misuse, misapply, or improperly dispose of
public moneys, according to the Fiscal Management and Accountability Act of
2003.
As it relates to the penalty for the Minister who misuses, misapplies, or
improperly disposes of public monies the FMA specifically spells out the
penalties that should be incurred.
According to the FMA, if a loss of public monies should occur and, at the
time of that loss, a Minister or official has caused or contributed to that
loss through misconduct or through deliberate or serious disregard of
reasonable standards of care, that Minister or official shall be personally
liable to the Government for the amount of the loss; where the misconduct or
disregard of the person is not the sole cause of the loss referred to in
subsection, the person shall be liable to pay only so much of the loss as is
just and equitable having regard to the person's share of the responsibility
for the loss, if a loss of public monies should occur and, at the time of
that loss, a Minister or official had nominal custody of such moneys.
Over the past few weeks there has been significant debate as to the
decisions taken by some officials such as Chairman of the Board of Directors
Dr Roger Luncheon as it relates to the investment of some $6B in Colonial
Life Insurance Company (CLICO) Guyana.
The issue was more recently raised at the People's National Congress
Reform's first general council meeting for this year. It was pointed out
that the People's Progressive Party had mismanaged the economy and had
failed to take prudent measures to prevent the collapse of CLICO and ensure
the long-term viability of the National Insurance Scheme (NIS).
The primary factor of the current economic circumstances in Guyana was
deemed to be high unemployment and the rising cost of living.
As a result of the $6.9B investment in Colonial Life Insurance Company
(CLICO) Guyana, the National Insurance Scheme is losing close to $1M per
day, according to financial analyst and economist, Christopher Ram, who in
an invited comment told this newspaper that this was the case given that the
income stream relevant to the principal investment is no longer operational.
Mr. Ram said that the crisis in which the company has found itself in, is
having a ripple effect on the financial sector and as such the President
should refrain from reserving the CLICO Guyana issue to a mere three per
cent of the financial sector.
The economists drew reference to the fact that relevant directors, including
the Commissioner of Insurance and the Minister of Finance, violated their
fiduciary responsibilities and were in breach of the Fiscal Management and
Accountability Act.
They should be dealt with according to the provisions of the law, he said.
The economist also questioned the failure of NIS to retain the services of
an actuary to determine the true status of the entity given that a
significant amount of its status is impaired.
This is in light of the fact that as of December 31, 2007 the expenditure of
NIS far outweighed its contributions.
According to the 2007 Annual Report for the National Insurance Scheme, the
viability of the scheme is dependent on its investment returns given that
its expenditure is greater than its income from contributions.
The audited report states that for 2007 its total contributions were some
$8.06 billion whilst the total expenditure was some $8.57 billion, a
difference of $516.4 million.
The figures indicate that without the returns on investment of some $1.5
billion the company would be operating at a huge deficit.
Sunday, March 29, 2009
Tuesday, March 17, 2009
Roger Khan pleads guilty …may serve 15 years for 3 charges
Roger Khan pleads guilty …may serve 15 years for 3 charges
Posted By Stabroek staff On March 17, 2009 @ 5:19 am In Local News | 37 Comments
http://www.stabroeknews.com/2009/news/local/03/17/roger-khan-pleads-guilty/
In a shocking twist, Guyanese businessman Shaheed Roger Khan yesterday pleaded guilty to all pending charges against him in the US, including drug trafficking and witness tampering and is likely to serve 15 years behind bars.
Stabroek News understands that Khan appeared in the New York Eastern District Court before Justice Dora L Irizarry at 5 pm yesterday and pleaded guilty to indictments in three criminal matters: narcotics trafficking, obstruction of justice and a separate gun running charge. It is unclear if the plea was accepted.
Shaheed Roger Khan [1]
Shaheed Roger Khan
In a letter to the presiding judges in the New York courts, US State Attorney Benton Campbell indicated that the prosecution and the defence had come to an agreement for Khan to receive a 15-year sentence when he pleads guilty to all charges.
Benton indicated the agreement in the event that the judges considered consolidating all three matters for Khan to plead guilty in one court. To this end, the US attorney for the District of Vermont agreed to transfer the weapons charge to the New York district, where the narcotics trafficking and obstruction of justice matters are being heard. “While the defendant consents to consolidation, and the parties believe that it may facilitate the resolution of these matters, the government takes no position on the issue and we leave it to the discretion of Your Honours,” Benton said in the letter. He added that under the Federal Rules of Criminal Procedure “…the government has agreed to a sentence of principally 15 years imprisonment in order to resolve all three matters.” Under the Federal Rules, the court would be bound by the sentence request once it accepts the plea agreement.
Robert Simels
Robert Simels
The latest twist in the saga comes less than two weeks before the scheduled start of Khan’s trial on the drug charges, for which he could have been sentenced to life in prison.
Khan was captured in 2006 when he fled to neighbouring Suriname after local police went after him. He was nabbed during a cocaine bust along with his bodyguards and thrown into jail in that country. He was later arrested in Trinidad while en route to Guyana, and taken to the US where he has been in jail since.
Prior to fleeing to Suriname and in response to police searches of his various properties and a wanted bulletin being issued for him, Khan had placed newspaper advertisements in the Guyana Chronicle and the Kaieteur News stating that he was involved in crime fighting in Guyana and had worked closely with local and US law enforcement officials.
Since being imprisoned, Khan and the prosecution have made some explosive statements about the inner workings of his criminal enterprise and other matters in Guyana. Khan’s former lawyer, Robert Simels, who, along with his assistant, Arianne Irving, is now his co-defendant in the witness-tampering charge, had stated that US government investigators had learnt that Khan received permission from the Guyana government to purchase surveillance equipment capable of intercepting and tracing telephone calls made from landline or cellular phones. The software is reportedly only sold to governments.
Only last week, US officials had indicated that the same equipment, which was originally seized from Khan at Good Hope in 2003, was recovered from Simels’s New York law offices. Guyana’s President Bharrat Jagdeo, however, has since said that Commissioner of Police Henry Greene has assured him that the equipment is in the possession of the local police.
David Clarke
Meanwhile, one of the witnesses Khan, Simels and Irving had been charged with attempting to “eliminate and neutralize,” retired Guyana Defence Force (GDF) major David Clarke, who is himself sitting in a US jail on drug charges, was to have testified on how he conspired with Khan to traffic in narcotics. Clarke was said to be the main witness in the drug trial, as he was the only witness who could have testified that he spoke to and met Khan during the period he trafficked in narcotics.
Khan for his part had long since attempted to distance himself from Clarke, against whom he made “assorted accusations” at a meeting in March 2006 with US officials at the Ocean View International Hotel. He had sought to provide “evidence” that Clarke and others had worked in concert with February 2002 prison escapee Shawn Brown, who was later wanted for a series of high-profile murders, kidnappings and robberies.
Khan had alleged that during Clarke’s tenure at the head of ‘Operation Tourniquet’–a joint army/police operation to arrest the wave of criminal activity emanating from Buxton after the jail break–was in league with Brown, who was responsible for kidnapping former US embassy officer Stephen Lesniak in April 2003.
In a transcript of a conversation between Simels and a confidential US government source, who was responsible for Simels and the others being charged with witness tampering, it was revealed that Khan had at least one meeting with a government minister in the presence of the source.
Guilt was strong
Khan is charged with conspiring to import cocaine into the US over a five-year period from January 2001 to March 2006. The US government said that he was the leader of a cocaine trafficking organisation based in Georgetown. It also asserted that he was able to import huge amounts of cocaine into Guyana, and then oversee exportation to the US and elsewhere. The US government had charged that a significant amount of the cocaine distributed by Khan went to the Eastern District of New York for further distribution. As an example, it cited a Guyanese drug trafficking organisation based in Queens, New York, which it said was supplied by Khan. The Queens organisation was said to have distributed hundreds of kilos of cocaine in a two-month period during the spring of 2003.
Initially, after he was arrested in 2006, Khan through his then lawyer Simels, had applied for bail but US State Attorney Roslynn Mauskopf in submissions had maintained that evidence of Khan’s guilt was strong and that his history in the United States suggested that he could easily flee to Guyana. In response, Khan’s lawyers had submitted that they could have obtained a statement from the Guyana government that it would bar Khan from returning to the country.
According to Mauskopf, Khan had resided in the US and committed crimes in both Maryland and Vermont. On January 6, 1992 he was convicted in Montgomery County of breaking and entering and theft. While he was on probation for that offence, he was arrested in Burlington, Vermont for receiving and possessing three firearms while being a convicted felon. He was subsequently indicted and was released on bail in November 1993. He promised to obey all conditions of his release but fled to Guyana in 1994 in order to avoid prosecution and as a result there is an outstanding warrant for him, for violating the conditions of his partial release and an outstanding warrant in Rockville, Maryland for violating the conditions of his probation.
Witness tampering
Khan’s troubles deepened last year when he, Simels and Irving were hauled before the courts and charged with conspiracy to tamper with witnesses relating to the drug trial. Simels was accused of making an alleged US$1,000 payout and having discussions about “eliminating and neutralizing” witnesses. He and his assistant allegedly had numerous discussions with a US government informant, to locate certain individuals close to the case and to get them to rescind statements, not testify against Khan, and or even to be eliminated.
In her affidavit to support the charges against Khan, Simels and Irving, Special Agent of the Drug Enforcement Administration (DEA) Cassandra Jackson said that during Khan’s drug trial the government would seek to establish that he was the leader of a “violent drug trafficking organisation [the Khan organisation] that was based in Georgetown, Guyana, from at least 2001 until his arrest in 2006.” She had said that Khan and his co-conspirators obtained large quantities of cocaine, and then imported the cocaine into the Eastern District of New York and other places for further distribution. “Khan was ultimately able to control the cocaine industry in Guyana, in large part, because he was backed by a paramilitary squad that would murder, threaten, and intimidate others at Khan’s directive. Khan’s enforcers committed violent acts and murders on Khan’s orders that were directly in furtherance of Khan’s drug trafficking conspiracy,” Jackson had said. She said the paramilitary squad was referred to as the ‘Phantom Squad’.
These same accusations had last year led Justice Irizarry to rule in favour of an anonymous jury for the drug trial. The judge was of the opinion that the dangerousness of Khan, as alleged by the prosecution, was a fact worth considering since according to one of the government’s confidential sources the ‘Phantom Squad’ Khan was associated with was responsible for “at least 200 extra-judicial killings” in Guyana from 2002 to 2006.
While Khan was not charged with crimes considered violent in nature, his involvement with and leadership of a criminal organisation indicated his propensity for violence, the judge had pointed out. In making her ruling, the judge said there was evidence of Khan’s willingness to tamper with the judicial process since he admitted that in 1993 he successfully evaded federal prosecution in Vermont for possession of a firearm by a convicted felon by absconding to Guyana while on bail. That action, the judge said, indicated his ability to tamper with the judicial process in the US.
Execution-style killings down
The US Government had also accused Khan of murdering boxing coach Donald Alison, who was gunned down outside his Agricola home and Dave Persaud who was shot and killed outside the then Palm Court Restaurant and Bar on Main Street. Khan denied the charges, stating Alison had been supplying the Buxton criminals with guns and that national cyclist, Tyrone Hamilton, knew who had killed Persaud.
In Guyana, the police appeared to have accepted that Khan was responsible for the execution-style killings. In November 2007, Crime Chief Seelall Persaud claimed that since Khan’s capture, execution-style killings in Guyana dropped considerably from 43 in 2006 to 12 in 2007.
Persaud said Khan had a group of men who worked with him while he was here, but since he had been locked up the men had all gone in different directions. “We believe that Mr Khan was involved in narcotics trafficking and since his arrest we have seen a fragmentation of his gang instead of them being one place they are all over the place,” Persaud had declared. When asked why–since the police knew Khan operated a gang and had men–the force had not gone after them, Persaud said charges were laid against individuals based on evidence. He had said the police were still conducting investigations on Khan’s men.
Prior to being arrested, one of Khan’s associates had told this newspaper that the businessman never got involved in actual operations. The associate, who had asked not to be named, said the drug accused used his own bodyguards and a network of armed informants–the ‘Phantom Squad’–made up of mainly ex-convicts and ex-policemen.
Khan had boasted that when Lesniak was kidnapped and taken to Buxton he had met operatives from the American Embassy here on a daily basis and provided them with information and hard evidence that led to the issuance of an arrest warrant for escapee Brown, who was thought to have masterminded the abduction. Brown was later cornered in a house a few days after and shot dead by the police.
Stabroek News was told that Khan employed ex-convicts and policemen, paid them and had them gather intelligence on the whereabouts of the five escapees Browne, Troy Dick, Andrew Douglas, Dale Moore and Mark Fraser. The quintet had made a bloody escape from the Camp Street Prison on February 23, 2002. Their escape was the catalyst for a wave of crime that the country had never before experienced. During this period some 21 policemen were shot dead and numerous civilians murdered. This period also saw scores of policemen leaving the job, while confidence in the force was at an all-time low.
Posted By Stabroek staff On March 17, 2009 @ 5:19 am In Local News | 37 Comments
http://www.stabroeknews.com/2009/news/local/03/17/roger-khan-pleads-guilty/
In a shocking twist, Guyanese businessman Shaheed Roger Khan yesterday pleaded guilty to all pending charges against him in the US, including drug trafficking and witness tampering and is likely to serve 15 years behind bars.
Stabroek News understands that Khan appeared in the New York Eastern District Court before Justice Dora L Irizarry at 5 pm yesterday and pleaded guilty to indictments in three criminal matters: narcotics trafficking, obstruction of justice and a separate gun running charge. It is unclear if the plea was accepted.
Shaheed Roger Khan [1]
Shaheed Roger Khan
In a letter to the presiding judges in the New York courts, US State Attorney Benton Campbell indicated that the prosecution and the defence had come to an agreement for Khan to receive a 15-year sentence when he pleads guilty to all charges.
Benton indicated the agreement in the event that the judges considered consolidating all three matters for Khan to plead guilty in one court. To this end, the US attorney for the District of Vermont agreed to transfer the weapons charge to the New York district, where the narcotics trafficking and obstruction of justice matters are being heard. “While the defendant consents to consolidation, and the parties believe that it may facilitate the resolution of these matters, the government takes no position on the issue and we leave it to the discretion of Your Honours,” Benton said in the letter. He added that under the Federal Rules of Criminal Procedure “…the government has agreed to a sentence of principally 15 years imprisonment in order to resolve all three matters.” Under the Federal Rules, the court would be bound by the sentence request once it accepts the plea agreement.
Robert Simels
Robert Simels
The latest twist in the saga comes less than two weeks before the scheduled start of Khan’s trial on the drug charges, for which he could have been sentenced to life in prison.
Khan was captured in 2006 when he fled to neighbouring Suriname after local police went after him. He was nabbed during a cocaine bust along with his bodyguards and thrown into jail in that country. He was later arrested in Trinidad while en route to Guyana, and taken to the US where he has been in jail since.
Prior to fleeing to Suriname and in response to police searches of his various properties and a wanted bulletin being issued for him, Khan had placed newspaper advertisements in the Guyana Chronicle and the Kaieteur News stating that he was involved in crime fighting in Guyana and had worked closely with local and US law enforcement officials.
Since being imprisoned, Khan and the prosecution have made some explosive statements about the inner workings of his criminal enterprise and other matters in Guyana. Khan’s former lawyer, Robert Simels, who, along with his assistant, Arianne Irving, is now his co-defendant in the witness-tampering charge, had stated that US government investigators had learnt that Khan received permission from the Guyana government to purchase surveillance equipment capable of intercepting and tracing telephone calls made from landline or cellular phones. The software is reportedly only sold to governments.
Only last week, US officials had indicated that the same equipment, which was originally seized from Khan at Good Hope in 2003, was recovered from Simels’s New York law offices. Guyana’s President Bharrat Jagdeo, however, has since said that Commissioner of Police Henry Greene has assured him that the equipment is in the possession of the local police.
David Clarke
Meanwhile, one of the witnesses Khan, Simels and Irving had been charged with attempting to “eliminate and neutralize,” retired Guyana Defence Force (GDF) major David Clarke, who is himself sitting in a US jail on drug charges, was to have testified on how he conspired with Khan to traffic in narcotics. Clarke was said to be the main witness in the drug trial, as he was the only witness who could have testified that he spoke to and met Khan during the period he trafficked in narcotics.
Khan for his part had long since attempted to distance himself from Clarke, against whom he made “assorted accusations” at a meeting in March 2006 with US officials at the Ocean View International Hotel. He had sought to provide “evidence” that Clarke and others had worked in concert with February 2002 prison escapee Shawn Brown, who was later wanted for a series of high-profile murders, kidnappings and robberies.
Khan had alleged that during Clarke’s tenure at the head of ‘Operation Tourniquet’–a joint army/police operation to arrest the wave of criminal activity emanating from Buxton after the jail break–was in league with Brown, who was responsible for kidnapping former US embassy officer Stephen Lesniak in April 2003.
In a transcript of a conversation between Simels and a confidential US government source, who was responsible for Simels and the others being charged with witness tampering, it was revealed that Khan had at least one meeting with a government minister in the presence of the source.
Guilt was strong
Khan is charged with conspiring to import cocaine into the US over a five-year period from January 2001 to March 2006. The US government said that he was the leader of a cocaine trafficking organisation based in Georgetown. It also asserted that he was able to import huge amounts of cocaine into Guyana, and then oversee exportation to the US and elsewhere. The US government had charged that a significant amount of the cocaine distributed by Khan went to the Eastern District of New York for further distribution. As an example, it cited a Guyanese drug trafficking organisation based in Queens, New York, which it said was supplied by Khan. The Queens organisation was said to have distributed hundreds of kilos of cocaine in a two-month period during the spring of 2003.
Initially, after he was arrested in 2006, Khan through his then lawyer Simels, had applied for bail but US State Attorney Roslynn Mauskopf in submissions had maintained that evidence of Khan’s guilt was strong and that his history in the United States suggested that he could easily flee to Guyana. In response, Khan’s lawyers had submitted that they could have obtained a statement from the Guyana government that it would bar Khan from returning to the country.
According to Mauskopf, Khan had resided in the US and committed crimes in both Maryland and Vermont. On January 6, 1992 he was convicted in Montgomery County of breaking and entering and theft. While he was on probation for that offence, he was arrested in Burlington, Vermont for receiving and possessing three firearms while being a convicted felon. He was subsequently indicted and was released on bail in November 1993. He promised to obey all conditions of his release but fled to Guyana in 1994 in order to avoid prosecution and as a result there is an outstanding warrant for him, for violating the conditions of his partial release and an outstanding warrant in Rockville, Maryland for violating the conditions of his probation.
Witness tampering
Khan’s troubles deepened last year when he, Simels and Irving were hauled before the courts and charged with conspiracy to tamper with witnesses relating to the drug trial. Simels was accused of making an alleged US$1,000 payout and having discussions about “eliminating and neutralizing” witnesses. He and his assistant allegedly had numerous discussions with a US government informant, to locate certain individuals close to the case and to get them to rescind statements, not testify against Khan, and or even to be eliminated.
In her affidavit to support the charges against Khan, Simels and Irving, Special Agent of the Drug Enforcement Administration (DEA) Cassandra Jackson said that during Khan’s drug trial the government would seek to establish that he was the leader of a “violent drug trafficking organisation [the Khan organisation] that was based in Georgetown, Guyana, from at least 2001 until his arrest in 2006.” She had said that Khan and his co-conspirators obtained large quantities of cocaine, and then imported the cocaine into the Eastern District of New York and other places for further distribution. “Khan was ultimately able to control the cocaine industry in Guyana, in large part, because he was backed by a paramilitary squad that would murder, threaten, and intimidate others at Khan’s directive. Khan’s enforcers committed violent acts and murders on Khan’s orders that were directly in furtherance of Khan’s drug trafficking conspiracy,” Jackson had said. She said the paramilitary squad was referred to as the ‘Phantom Squad’.
These same accusations had last year led Justice Irizarry to rule in favour of an anonymous jury for the drug trial. The judge was of the opinion that the dangerousness of Khan, as alleged by the prosecution, was a fact worth considering since according to one of the government’s confidential sources the ‘Phantom Squad’ Khan was associated with was responsible for “at least 200 extra-judicial killings” in Guyana from 2002 to 2006.
While Khan was not charged with crimes considered violent in nature, his involvement with and leadership of a criminal organisation indicated his propensity for violence, the judge had pointed out. In making her ruling, the judge said there was evidence of Khan’s willingness to tamper with the judicial process since he admitted that in 1993 he successfully evaded federal prosecution in Vermont for possession of a firearm by a convicted felon by absconding to Guyana while on bail. That action, the judge said, indicated his ability to tamper with the judicial process in the US.
Execution-style killings down
The US Government had also accused Khan of murdering boxing coach Donald Alison, who was gunned down outside his Agricola home and Dave Persaud who was shot and killed outside the then Palm Court Restaurant and Bar on Main Street. Khan denied the charges, stating Alison had been supplying the Buxton criminals with guns and that national cyclist, Tyrone Hamilton, knew who had killed Persaud.
In Guyana, the police appeared to have accepted that Khan was responsible for the execution-style killings. In November 2007, Crime Chief Seelall Persaud claimed that since Khan’s capture, execution-style killings in Guyana dropped considerably from 43 in 2006 to 12 in 2007.
Persaud said Khan had a group of men who worked with him while he was here, but since he had been locked up the men had all gone in different directions. “We believe that Mr Khan was involved in narcotics trafficking and since his arrest we have seen a fragmentation of his gang instead of them being one place they are all over the place,” Persaud had declared. When asked why–since the police knew Khan operated a gang and had men–the force had not gone after them, Persaud said charges were laid against individuals based on evidence. He had said the police were still conducting investigations on Khan’s men.
Prior to being arrested, one of Khan’s associates had told this newspaper that the businessman never got involved in actual operations. The associate, who had asked not to be named, said the drug accused used his own bodyguards and a network of armed informants–the ‘Phantom Squad’–made up of mainly ex-convicts and ex-policemen.
Khan had boasted that when Lesniak was kidnapped and taken to Buxton he had met operatives from the American Embassy here on a daily basis and provided them with information and hard evidence that led to the issuance of an arrest warrant for escapee Brown, who was thought to have masterminded the abduction. Brown was later cornered in a house a few days after and shot dead by the police.
Stabroek News was told that Khan employed ex-convicts and policemen, paid them and had them gather intelligence on the whereabouts of the five escapees Browne, Troy Dick, Andrew Douglas, Dale Moore and Mark Fraser. The quintet had made a bloody escape from the Camp Street Prison on February 23, 2002. Their escape was the catalyst for a wave of crime that the country had never before experienced. During this period some 21 policemen were shot dead and numerous civilians murdered. This period also saw scores of policemen leaving the job, while confidence in the force was at an all-time low.
Monday, March 16, 2009
Information which was challenged in column came from Insurance Commissioner’s office
Information which was challenged in column came from Insurance Commissioner’s office
Posted By Stabroek staff On March 15, 2009 @ 5:01 am In Letters | 7 Comments
Dear Editor,
The tone of the March 3 letter of Commissioner of Insurance Maria Van Beek seems to suggest that she is reacting to the pressure from several quarters over her supervision of Clico. To accuse sections of the victims of the worst insurance failure in the country under her watch of making “reckless, uninformed and irresponsible pronouncements” (GINA release published March 1) might seem to indicate that Ms Van Beek is reluctant to acknowledge the scale of the problem or the extent of public concerns about potential personal and national losses of billions of dollars. Even if the government gives a complete bailout of Clico it is we the taxpayers who will pay it, while those who contributed to the crisis lecture us on how much they have done to protect us.
A number of persons have suggested to me that I should respond to the three issues she challenged me on: 1) the statutory fund/assets; 2) her reason for the approach to the court for a winding up of Clico; and 3) the name of the company, Clico.
1. I never claim to be an expert on insurance, accounting or indeed on any subject. However Ms Van Beek can rest assured that the provisions of the Insurance Act, including the difference between statutory assets and the statutory fund, would not escape any practising accountant. It is Ms Van Beek who has some explaining to do for apparently missing the assertion in Clico’s 2007 financial statements that the company had a “statutory fund” of $46 million and not the $9B she says it should be! As the expert and regulator of the sector, Ms Van Beek should tell the public what steps she took to have such an error in the audited financial statements rectified in a timely manner.
2. Ms Van Beek claims that I accused her of saying that it was Clico’s business model and investment strategy from which its problem stemmed. I did not invent that. Ms Van Beek said so in paragraph 10 of her affidavit. Ms Van Beek has insisted that it was the decision by The Bahamas authority to liquidate their Clico that triggered her move to the courts. It is not that decision which imperilled Clico Guyana’s investments.
Those unlawful and injudicious investments were impaired long before the move by The Bahamas authorities and required action, not excuse. But no, she waited until the property market in the US had collapsed taking with it huge amounts of Clico’s funds and then waited even further and longer on the Bahamian authorities.
3. Ms Van Beek writes that I wrote from an uninformed position concerning the name of the company. In her very affidavit she also refers to the company as SA!
In other words, everything Ms Van Beek accuses me of came out of her office.
Finally let me say that I welcome the press statement made by Ms Van Beek on the state of the company and note that she has taken several of the steps I advocated some weeks ago, including calling in the debts and guarantees of the related parties and giving specific advice to policyholders about the state of their insurance coverage. However she continues to repeat the vague promise she “attributes” to President Jagdeo that “no policyholder in Clico (Guyana) will lose their money.”
By now she should have sought written confirmation from the Minister of Finance to whom she reports, and not the President, of the precise nature and scope of the guarantee which in my view has to have parliamentary approval. Perhaps Stabroek News can clarify their report that Ms Van Beek “re-emphasised the assurances given by President Bharrat Jagdeo and Finance Minister Dr Ashni Singh, that no one with investments in the company will lose their money.” That goes well beyond policyholders and was not contained in the statement issued to the press. It would however naturally raise the hopes of investors including the NIS. It would be painful if that assurance turns out to be false.
Yours faithfully,
Christopher Ram
7 Comments (Open | Close)
7 Comments To "Information which was challenged in column came from Insurance Commissioner’s office"
#1 Comment By colin2nice On March 15, 2009 @ 8:21 am
Thanks Mr. Ram for keeping them on their toes.
#2 Comment By Andy On March 15, 2009 @ 9:56 am
We thank Christopher Ram for his outstanding crystallization of the issues that only a man of his knowledge and expetrise can do. He is correct in keeping the focus on van Beek’s culpability in the CLICO (Gy)’s fiasco, because I understand - and Ram can verify it - there are clauses in the Insurance Act that stipulate insurance companies in violation of the Act must be fined GY$1M instantly and GY$100k a day for as long as the violation continues. If the Insurance Commissioner made CLICO (Gy) aware since 2007 of its violation by investing in excess of 15% of its local funds overseas, then where are the fines against CLICO (Gy)?
Second, the assurances by the President, Finance Minister and Insurance Commissioner that claims will be honored are not guaranteed, for the President previously made assurances that investors/depositors interests were protected, then there came the GY$6.9B loss! Why should anyone believe the government anymore? And even if the government backs claims, it likely will be dipping into taxpayers funds, which means the people of Guyana will be paying twice for the government’s failure!
#3 Comment By Christopher Ram On March 15, 2009 @ 3:12 pm
Note by Christopher Ram
Under S 19 of the Insurance Act the breach of any direction or requirement by the Commissioner constitutes an offence for as long as the offence continues.
In the case of a company, the company is liable. But if the offence has been proved to have been committed with the consent or connivance of or facilitated by the neglect of any director, principal officer, or other officer or actuary or auditor of the company, then that person is also liable.
The Commissioner of Insurance is required to appoint a Special Prosecutor for the case.
The fine for a company is $1 M plus $100,000 for each day the offence continues. In the case of the individuals mentioned in the preceding paragraph the fine is $100,000 or 3 years and $10,000 for each day after conviction.
The fines and imprisonment are maximum.
The appointment of a Judicial Manager or Liquidator does not affect the prosecution of the company/person(s) once the action is brought within 3 years after the offence has been committed. I believe there is authority for the proposition that continuing offences relate not to the first day of the offence but to the last date on which the offence continued.
#4 Comment By Brendan Samaroo On March 15, 2009 @ 3:16 pm
Chris Ram is in a different league than those in the government.
You would think if this government was serious about running a tight ship they would have more chris ram’s in the government running things.
But ahhhh Mr. Home Economics himself does not like free thinkers. It is about control freakism.
#5 Comment By Andy On March 16, 2009 @ 12:05 am
Thanks Chris! Now you should seriously consider writing a column on the punitive aspect of this saga that Van Beek overlooked in her handling of Clico (Gy), because not only was Clico (Gy) in violation, but so was its CEO! And how can we talk about fining Clico (Gy) and its CEO, which are yet to happen, but no action is taken against the Insurance Commissioner for her inaction in not upholding the law she is sworn to uphold?
In fact, how can goverment allow the Insurance Comissioner to now become Judicial Manager of the same firm that experienced a major loss under her regulation?
Isn’t this the height of arrogance and or ignorance?
#6 Comment By Prospector On March 16, 2009 @ 10:39 am
What Ram does not spell at clearly (as he only points out the facts that support his arguments after all) is that the appointment of a special prosecutor means that the case has to tried in Court - the ‘offence must be proved to have been committed’ S 19(2).
The average Court case takes six years to hear in Guyana. So perhaps in 2015 the fines will be paid.
#7 Comment By Prospector On March 16, 2009 @ 10:44 am
Andy
1) The Court appoints the Judicial Manager not the Government. As far as I know the Petition filed with the Court does not even mention the Government of Guyana and it was filed with a private lawyer not the Attonery General’s chambers.
2) S 69 (2) of the Act states ‘The Court shall appoint the Commissioner as Judicial Manager’
What nobody seems to realise is that even if the Commissioner had filed in 2007 against CLICO the matter would still be before the Courts, and the outcome would have been exactly the same.
Article printed from Stabroek News: http://www.stabroeknews.com
URL to article: http://www.stabroeknews.com/2009/letters/03/15/information-which-was-challenged-in-column-came-from-insurance-commissioner%e2%80%99s-office/
Posted By Stabroek staff On March 15, 2009 @ 5:01 am In Letters | 7 Comments
Dear Editor,
The tone of the March 3 letter of Commissioner of Insurance Maria Van Beek seems to suggest that she is reacting to the pressure from several quarters over her supervision of Clico. To accuse sections of the victims of the worst insurance failure in the country under her watch of making “reckless, uninformed and irresponsible pronouncements” (GINA release published March 1) might seem to indicate that Ms Van Beek is reluctant to acknowledge the scale of the problem or the extent of public concerns about potential personal and national losses of billions of dollars. Even if the government gives a complete bailout of Clico it is we the taxpayers who will pay it, while those who contributed to the crisis lecture us on how much they have done to protect us.
A number of persons have suggested to me that I should respond to the three issues she challenged me on: 1) the statutory fund/assets; 2) her reason for the approach to the court for a winding up of Clico; and 3) the name of the company, Clico.
1. I never claim to be an expert on insurance, accounting or indeed on any subject. However Ms Van Beek can rest assured that the provisions of the Insurance Act, including the difference between statutory assets and the statutory fund, would not escape any practising accountant. It is Ms Van Beek who has some explaining to do for apparently missing the assertion in Clico’s 2007 financial statements that the company had a “statutory fund” of $46 million and not the $9B she says it should be! As the expert and regulator of the sector, Ms Van Beek should tell the public what steps she took to have such an error in the audited financial statements rectified in a timely manner.
2. Ms Van Beek claims that I accused her of saying that it was Clico’s business model and investment strategy from which its problem stemmed. I did not invent that. Ms Van Beek said so in paragraph 10 of her affidavit. Ms Van Beek has insisted that it was the decision by The Bahamas authority to liquidate their Clico that triggered her move to the courts. It is not that decision which imperilled Clico Guyana’s investments.
Those unlawful and injudicious investments were impaired long before the move by The Bahamas authorities and required action, not excuse. But no, she waited until the property market in the US had collapsed taking with it huge amounts of Clico’s funds and then waited even further and longer on the Bahamian authorities.
3. Ms Van Beek writes that I wrote from an uninformed position concerning the name of the company. In her very affidavit she also refers to the company as SA!
In other words, everything Ms Van Beek accuses me of came out of her office.
Finally let me say that I welcome the press statement made by Ms Van Beek on the state of the company and note that she has taken several of the steps I advocated some weeks ago, including calling in the debts and guarantees of the related parties and giving specific advice to policyholders about the state of their insurance coverage. However she continues to repeat the vague promise she “attributes” to President Jagdeo that “no policyholder in Clico (Guyana) will lose their money.”
By now she should have sought written confirmation from the Minister of Finance to whom she reports, and not the President, of the precise nature and scope of the guarantee which in my view has to have parliamentary approval. Perhaps Stabroek News can clarify their report that Ms Van Beek “re-emphasised the assurances given by President Bharrat Jagdeo and Finance Minister Dr Ashni Singh, that no one with investments in the company will lose their money.” That goes well beyond policyholders and was not contained in the statement issued to the press. It would however naturally raise the hopes of investors including the NIS. It would be painful if that assurance turns out to be false.
Yours faithfully,
Christopher Ram
7 Comments (Open | Close)
7 Comments To "Information which was challenged in column came from Insurance Commissioner’s office"
#1 Comment By colin2nice On March 15, 2009 @ 8:21 am
Thanks Mr. Ram for keeping them on their toes.
#2 Comment By Andy On March 15, 2009 @ 9:56 am
We thank Christopher Ram for his outstanding crystallization of the issues that only a man of his knowledge and expetrise can do. He is correct in keeping the focus on van Beek’s culpability in the CLICO (Gy)’s fiasco, because I understand - and Ram can verify it - there are clauses in the Insurance Act that stipulate insurance companies in violation of the Act must be fined GY$1M instantly and GY$100k a day for as long as the violation continues. If the Insurance Commissioner made CLICO (Gy) aware since 2007 of its violation by investing in excess of 15% of its local funds overseas, then where are the fines against CLICO (Gy)?
Second, the assurances by the President, Finance Minister and Insurance Commissioner that claims will be honored are not guaranteed, for the President previously made assurances that investors/depositors interests were protected, then there came the GY$6.9B loss! Why should anyone believe the government anymore? And even if the government backs claims, it likely will be dipping into taxpayers funds, which means the people of Guyana will be paying twice for the government’s failure!
#3 Comment By Christopher Ram On March 15, 2009 @ 3:12 pm
Note by Christopher Ram
Under S 19 of the Insurance Act the breach of any direction or requirement by the Commissioner constitutes an offence for as long as the offence continues.
In the case of a company, the company is liable. But if the offence has been proved to have been committed with the consent or connivance of or facilitated by the neglect of any director, principal officer, or other officer or actuary or auditor of the company, then that person is also liable.
The Commissioner of Insurance is required to appoint a Special Prosecutor for the case.
The fine for a company is $1 M plus $100,000 for each day the offence continues. In the case of the individuals mentioned in the preceding paragraph the fine is $100,000 or 3 years and $10,000 for each day after conviction.
The fines and imprisonment are maximum.
The appointment of a Judicial Manager or Liquidator does not affect the prosecution of the company/person(s) once the action is brought within 3 years after the offence has been committed. I believe there is authority for the proposition that continuing offences relate not to the first day of the offence but to the last date on which the offence continued.
#4 Comment By Brendan Samaroo On March 15, 2009 @ 3:16 pm
Chris Ram is in a different league than those in the government.
You would think if this government was serious about running a tight ship they would have more chris ram’s in the government running things.
But ahhhh Mr. Home Economics himself does not like free thinkers. It is about control freakism.
#5 Comment By Andy On March 16, 2009 @ 12:05 am
Thanks Chris! Now you should seriously consider writing a column on the punitive aspect of this saga that Van Beek overlooked in her handling of Clico (Gy), because not only was Clico (Gy) in violation, but so was its CEO! And how can we talk about fining Clico (Gy) and its CEO, which are yet to happen, but no action is taken against the Insurance Commissioner for her inaction in not upholding the law she is sworn to uphold?
In fact, how can goverment allow the Insurance Comissioner to now become Judicial Manager of the same firm that experienced a major loss under her regulation?
Isn’t this the height of arrogance and or ignorance?
#6 Comment By Prospector On March 16, 2009 @ 10:39 am
What Ram does not spell at clearly (as he only points out the facts that support his arguments after all) is that the appointment of a special prosecutor means that the case has to tried in Court - the ‘offence must be proved to have been committed’ S 19(2).
The average Court case takes six years to hear in Guyana. So perhaps in 2015 the fines will be paid.
#7 Comment By Prospector On March 16, 2009 @ 10:44 am
Andy
1) The Court appoints the Judicial Manager not the Government. As far as I know the Petition filed with the Court does not even mention the Government of Guyana and it was filed with a private lawyer not the Attonery General’s chambers.
2) S 69 (2) of the Act states ‘The Court shall appoint the Commissioner as Judicial Manager’
What nobody seems to realise is that even if the Commissioner had filed in 2007 against CLICO the matter would still be before the Courts, and the outcome would have been exactly the same.
Article printed from Stabroek News: http://www.stabroeknews.com
URL to article: http://www.stabroeknews.com/2009/letters/03/15/information-which-was-challenged-in-column-came-from-insurance-commissioner%e2%80%99s-office/
Wednesday, March 11, 2009
Fighting corruption requires institutional reform not polygraph tests
Fighting corruption requires institutional reform not polygraph tests
Posted By Stabroek staff On March 11, 2009 @ 5:02 am In Letters | 2 Comments
Dear Editor,
I am amused that the President and certain agencies are promoting polygraph testing as a panacea for combating corruption in the public sector. As far as I am aware, the polygraph test remains mainly an investigative tool, and should be viewed primarily as that. Identifying whether an official is right for the job is one thing; resolving the wider problem of corruption via the polygraph seems less of an attainable goal.
Corruption arises from institutional attributes of the state and societal attitudes toward formal political processes. Institutional attributes that encourage corruption include the wide authority of the state, which offers significant opportunities for corruption; minimal accountability, which reduces the cost of corrupt behaviour; and perverse incentives in government procurement and contracting, which induce self-serving rather than public-serving behaviour. Societal attitudes fostering corruption include allegiance to personal loyalties over objective rules, the low legitimacy of government, and the dominance of a political party or ruling elite over political and economic processes.
The possible responses to these underlying causes of corruption in Guyana include institutional reforms to limit authority, improve accountability, and realign incentives, as well as societal reforms to change attitudes and mobilize political will for sustained anti-corruption interventions.
A strategy must be tailored to fit the particular circumstances of this country; the government needs to design a strategy that requires assessing the level, forms, and causes of corruption for Guyana as a whole and for specific government institutions. In particular, strategy formulation requires taking a hard look at the level of political will for anti-corruption reform in government and civil society. Corruption in state agencies does not exist in isolation.
To some extent, it is a manifestation of the prevailing ethical standards in the public sector. If ruling politicians and senior civil servants, who are supposed to uphold integrity in the public sector, are seen to be corrupt, if public office is generally viewed as an asset to be exploited for personal benefit, if public servants have no compunction about flaunting ill-gotten wealth, it becomes very difficult for officers to remain immune to the lure of illicit enrichment.
Opportunities for reform must stem from reformist tendencies within the government, public outrage over scandals or an opposition movement.
The government currently provides little or no opening to work in anti-corruption, and as such, civil society must take the lead and focus on societal measures to increase awareness of the problem and develop a constituency for reform.
The real issue which needs to be addressed, however, is the environment within Guyana which permits public officials to stray so far from their mission in the first instance.
It starts at the top. If people in the society or within the public sector don’t have confidence in or respect for the politicians or executives managing the government, it’s going to be reflected within the ministries and agencies. I should hasten to add that these latest problems within the public sector became pervasive under the leadership of the current administration.
I would therefore encourage the government to seriously consider aligning the anti-corruption agenda to national initiatives such as a national anti-corruption policy as an explicit national integrity agenda that would emerge with commitment to succeed shared jointly by civil society, the business community and the government.
Yours faithfully,
K. Bonnett
2 Comments (Open | Close)
2 Comments To "Fighting corruption requires institutional reform not polygraph tests"
#1 Comment By critik On March 11, 2009 @ 8:09 am
To suggest structural reform is like asking this gov’t to carry water in a basket since they will very well heed the call by appointing a committee headed by one of their own to reform.I really would support polygraph tests over any other option if every Minister and the GRA boss himself would take the same.
We are beginning to see communism at its ’stupidest’ with Jagdeo now providing ’school boy’ excuse in the form of organisation size being a premise for the polygraph applicability.
Your weaknesses are becoming too glaring now El Presidente.You’re running out of explanations.
Something’s wrong with the propaganda machinery.
#2 Comment By amen-ra On March 11, 2009 @ 9:13 am
I agree, polygraps testing can’t root out corruption, and it’s inaccurate.
Article printed from Stabroek News: http://www.stabroeknews.com
URL to article: http://www.stabroeknews.com/2009/letters/03/11/fighting-corruption-requires-institutional-reform-not-polygraph-tests/
Posted By Stabroek staff On March 11, 2009 @ 5:02 am In Letters | 2 Comments
Dear Editor,
I am amused that the President and certain agencies are promoting polygraph testing as a panacea for combating corruption in the public sector. As far as I am aware, the polygraph test remains mainly an investigative tool, and should be viewed primarily as that. Identifying whether an official is right for the job is one thing; resolving the wider problem of corruption via the polygraph seems less of an attainable goal.
Corruption arises from institutional attributes of the state and societal attitudes toward formal political processes. Institutional attributes that encourage corruption include the wide authority of the state, which offers significant opportunities for corruption; minimal accountability, which reduces the cost of corrupt behaviour; and perverse incentives in government procurement and contracting, which induce self-serving rather than public-serving behaviour. Societal attitudes fostering corruption include allegiance to personal loyalties over objective rules, the low legitimacy of government, and the dominance of a political party or ruling elite over political and economic processes.
The possible responses to these underlying causes of corruption in Guyana include institutional reforms to limit authority, improve accountability, and realign incentives, as well as societal reforms to change attitudes and mobilize political will for sustained anti-corruption interventions.
A strategy must be tailored to fit the particular circumstances of this country; the government needs to design a strategy that requires assessing the level, forms, and causes of corruption for Guyana as a whole and for specific government institutions. In particular, strategy formulation requires taking a hard look at the level of political will for anti-corruption reform in government and civil society. Corruption in state agencies does not exist in isolation.
To some extent, it is a manifestation of the prevailing ethical standards in the public sector. If ruling politicians and senior civil servants, who are supposed to uphold integrity in the public sector, are seen to be corrupt, if public office is generally viewed as an asset to be exploited for personal benefit, if public servants have no compunction about flaunting ill-gotten wealth, it becomes very difficult for officers to remain immune to the lure of illicit enrichment.
Opportunities for reform must stem from reformist tendencies within the government, public outrage over scandals or an opposition movement.
The government currently provides little or no opening to work in anti-corruption, and as such, civil society must take the lead and focus on societal measures to increase awareness of the problem and develop a constituency for reform.
The real issue which needs to be addressed, however, is the environment within Guyana which permits public officials to stray so far from their mission in the first instance.
It starts at the top. If people in the society or within the public sector don’t have confidence in or respect for the politicians or executives managing the government, it’s going to be reflected within the ministries and agencies. I should hasten to add that these latest problems within the public sector became pervasive under the leadership of the current administration.
I would therefore encourage the government to seriously consider aligning the anti-corruption agenda to national initiatives such as a national anti-corruption policy as an explicit national integrity agenda that would emerge with commitment to succeed shared jointly by civil society, the business community and the government.
Yours faithfully,
K. Bonnett
2 Comments (Open | Close)
2 Comments To "Fighting corruption requires institutional reform not polygraph tests"
#1 Comment By critik On March 11, 2009 @ 8:09 am
To suggest structural reform is like asking this gov’t to carry water in a basket since they will very well heed the call by appointing a committee headed by one of their own to reform.I really would support polygraph tests over any other option if every Minister and the GRA boss himself would take the same.
We are beginning to see communism at its ’stupidest’ with Jagdeo now providing ’school boy’ excuse in the form of organisation size being a premise for the polygraph applicability.
Your weaknesses are becoming too glaring now El Presidente.You’re running out of explanations.
Something’s wrong with the propaganda machinery.
#2 Comment By amen-ra On March 11, 2009 @ 9:13 am
I agree, polygraps testing can’t root out corruption, and it’s inaccurate.
Article printed from Stabroek News: http://www.stabroeknews.com
URL to article: http://www.stabroeknews.com/2009/letters/03/11/fighting-corruption-requires-institutional-reform-not-polygraph-tests/
Tuesday, March 10, 2009
GRA condemns publication of draft tax review report
GRA condemns publication of draft tax review report
Guyana Chronicle, 10 March 2009
The Guyana Revenue Authority has deemed as irresponsible the publishing of a draft report on the tax system review
Following is a GRA statement on the matter:
It was recently observed that a reputable newspaper, for the purpose of sensationalism, published the contents of a draft report on the review of the tax system prepared under the Guyana Threshold Country Plan Implementation Project (GTCP/IP).
The Guyana Revenue Authority views such an approach as irresponsible and completely inconsistent with the practice of responsible journalism by knowledgeable professionals.
Draft reports should not be taken and published wholesale; rather they should be analysed since there is the likelihood of errors, especially where figures may be amplified. Further, given the date of the report, it would be good to note what progress was made since it was penned.
Attempts should have been made to find out from the Guyana Revenue Authority if steps were taken to strengthen enforcement and improve compliance since the draft was submitted.
Further, since the writer was unclear of Government’s response to the draft report, much care should have been taken in publishing it. It would appear that the intention was to have a field day and embarrass the Government and the GRA, and undermine revenue collection.
It gives a false impression of the GRA which can affect the organisation as well as the morale of the staff.
In conjunction with the publication of various aspects of the draft of the “Review of the tax system”, it must be noted that since the commencement of the project in January 2008, the GRA has made significant progress in moving toward a functional organisation.
Under the two-year project, which commenced on January 14, 2008, the GRA’s governing board and the Commissioner-General have already taken steps to improve the organisation’s efficiency in administration and tax collections.
The reforms started several years ago and was funded by several donor agencies, the latest being the Millennium Challenge Corporation. The GRA is receiving technical assistance to implement several tax reform measures aimed at improving the organisation’s effectiveness in revenue generation.
Guyana Chronicle, 10 March 2009
The Guyana Revenue Authority has deemed as irresponsible the publishing of a draft report on the tax system review
Following is a GRA statement on the matter:
It was recently observed that a reputable newspaper, for the purpose of sensationalism, published the contents of a draft report on the review of the tax system prepared under the Guyana Threshold Country Plan Implementation Project (GTCP/IP).
The Guyana Revenue Authority views such an approach as irresponsible and completely inconsistent with the practice of responsible journalism by knowledgeable professionals.
Draft reports should not be taken and published wholesale; rather they should be analysed since there is the likelihood of errors, especially where figures may be amplified. Further, given the date of the report, it would be good to note what progress was made since it was penned.
Attempts should have been made to find out from the Guyana Revenue Authority if steps were taken to strengthen enforcement and improve compliance since the draft was submitted.
Further, since the writer was unclear of Government’s response to the draft report, much care should have been taken in publishing it. It would appear that the intention was to have a field day and embarrass the Government and the GRA, and undermine revenue collection.
It gives a false impression of the GRA which can affect the organisation as well as the morale of the staff.
In conjunction with the publication of various aspects of the draft of the “Review of the tax system”, it must be noted that since the commencement of the project in January 2008, the GRA has made significant progress in moving toward a functional organisation.
Under the two-year project, which commenced on January 14, 2008, the GRA’s governing board and the Commissioner-General have already taken steps to improve the organisation’s efficiency in administration and tax collections.
The reforms started several years ago and was funded by several donor agencies, the latest being the Millennium Challenge Corporation. The GRA is receiving technical assistance to implement several tax reform measures aimed at improving the organisation’s effectiveness in revenue generation.
Sunday, March 8, 2009
Clico and the related crisis: Confusion continues
The Business Page
Posted By Christopher Ram On March 8, 2009 @ 5:12 am In Features, Sunday
Clico and the related crisis: Confusion continues
Introduction
It has been an incredibly hot week in Guyana. In fact so hot that the President who was directly or indirectly involved with every single financial decision made in the public sector for the past sixteen years decided it was just too hot and took off for a change of climate engagement. He asked his Finance Minister Dr Ashni Singh who has carried statutory responsibility for the operation of the Insurance Act and therefore supervision of Clico for more than two years as well as of the National Insurance Scheme, the biggest single potential loser in the Clico debacle, to make a statement to the National Assembly.
Clearly stung by the revelations of what may prove to be a major loss to the country there has been heightened activity by the government. Even as lower-level letter writers were at work, the government called into their corner big guns like Messrs Yesu Persaud and Clifford Reis for a panel discussion with the Minister of Finance. We heard again from the Bank of Guyana not on whether it has continued to track and assess “every bit of information being provided on the issue as it develops” but to “dispel the misrepresentations” by persons whom the Bank did not name. We heard as well from Ms Maria Van Beek, the Commissioner of Insurance/Judicial Manager of Clico, witnessed a press conference by the directors and management of Hand-in-Hand Trust, TV interviews with economist Ramon Gaskin and TUC President Gillian Burton and disturbing but not surprising fears expressed by insurance broker Mr Bishwa Panday and leaders of the teachers’ union. By the end of the week it was clear that there was little confidence in everything said by the government and the regulator in relation to Clico. Having done next to little so far, the Minister of Finance rather than the Judicial Manager is impressively rushing papers to The Bahamas to prove our debt. We all hope it is not too late.
Red herring
The Bank of Guyana and the big guns were called out mainly to speak about the strength of the banking system, as if that was the issue. There are currently many questions about the banking system but not about its strength. Yes, different persons in varying degrees and sometimes with varying justification question many things, such as the role of the non-bank cambios in the underground economy, the absence of any meaningful interest or effective efforts to stamp out money laundering, the interest rate policies and the conservative approach inherent in banking, and the increasingly troubling failure of the Bank of Guyana and the government to bring the New Building Society under the Financial Institutions Act. But the strength of the banking system has not been an issue to academics or depositors who place increasing sums with the sector, which must surely be a big test. Raising it was a pure red herring.
Experience has taught that the public is more sensible than it is given credit for. It knows that failures do not arise only in weak systems, with Globe Trust being a good case in point. It knows how toxic assets can contaminate good ones akin to Gresham’s law and money. It is concerned that the NBS has just invested some $1.5 B in the Berbice Bridge, hardly on the grounds of an investment but more as a bail-out using poor people’s money. It would still be sceptical about the optimism of the Board of HIHT to withstand a near billion dollar loss in Stanford and wonder whether the Bank of Guyana was too soft in allowing such a concentration of assets. None of these issues was raised by the moderator of the panel or by the Bank of Guyana. It is wrong to believe that because the public does not have access and opportunities it is voiceless or does not understand.
Revelation
Much of what was said by our men of learning had little impact. What really had the country and the Minister of Finance going was a statement by the Prime Minister of The Bahamas that “there appears to be no record available at this time” of Clico (Guyana)’s investment in Clico (Bahamas). That is contrary to everything accepted by all including the company’s auditors Deloitte and Touche and the Commissioner of Insurance. In fact the Minister of Finance confidently told the press that there was “a plethora of correspondence, including wire transfers of substantial amounts, dating as far back as 2004” supporting the investment.
I have looked at the 2006 and 2007 financial statements of Clico (Bahamas) and these seem to support the qualified statement by the PM. In the books of the Bahamian company, note 12 (2007) and note 10 (2006) show the following (in Bahamian dollars which is equivalent to US dollars):
12. Due to Related Parties 2007 2006 2005
Due from CL Financial Limited and subsidiaries - - 939,210
Due to CL Financial Limited and subsidiaries (212,723) (22,473,803) (56,250)
And note 22 (2007) shows that the figure of $212,723 at December 31, 2007 is made up of amounts owing to Barbados, Suriname and CL Financial Limited which is the parent company. Nothing is shown as owing to Guyana. Over the three years 2005-2007 the only year shown with a balance with Guyana is 2006 where the amount was stated at $275,317.
Transactions with Guyana over the same years are shown as follows:
2007 2006 2005
Sale (withdrawal) of insurance contracts (1,656,302) (15,114,138) 6,238,297
Payments received on behalf of related
parties for Guyana - 275,000 -
The Guyana books showed investments at 31 December 2007 in Clico Bahamas of $5.95B and accrued investment income of $329M. Can it be that the balance owed by the Bahamas company to the Guyana company is shown somewhere else in the accounts? That is possible, but given that the accounts are both audited and in both cases by the same auditing firm − but by different offices − it is hard to understand why the Minister chose the route of the plethora of documentation rather than having the Judicial Manager call in the auditors for an explanation, to be followed by the paperwork. After all, the auditors would respond quickly, bringing their audit working papers files, anxious to avoid the implications of what seems on the face of the financial statements to be a major discrepancy which routine audit procedures should have revealed. Yes the paperwork is necessary, but surely the persons who have given their stamp of approval on the accounts would be a good place to start.
Different strokes…
One of the very striking features of the still far-from-over saga is how the two countries have treated the matter at the regulatory and more so at the political level. The Prime Minister of The Bahamas made an early and clear statement to their Parliament on the whole issue including offering advice to affected persons. Our President has chosen to make several statements including one before he departed these shores repeating his assurances about meeting all valid claims against Clico. From reports of a meeting Mr Panday had with Ms Van Beek and the information conveyed to the teachers, it does not appear that Clico is relying on those assurances.
There is also some discrepancy about the timing of Mr Jagdeo’s contacts with his counterpart in The Bahamas with the latter saying that it was after the announcement of the move to liquidate the Bahamas company that President Jagdeo called him. But what is more significant is Mr Jagdeo’s revelation that he had proposed as (part) settlement of the debt by Clico (Bahamas) to Clico (Guyana) to take over the Florida real estate in which the Bahamian funds were invested through one of its subsidiaries. It is not clear whether his intention is that our politically-controlled Privatisation Unit would then sell the asset, but surely our President, who is never hesitant to pronounce on matters legal, ought to have realised that that was not possible as a potentially fraudulent preference. The suggestion by a columnist in another newspaper that our President say nothing further in this matter has a lot of merit and was reflected in the call by the Finance Minister to “ensure that the court appointed process is allowed time to exhaust all avenues to protect the assets of CLICO Guyana.” Regrettably there is too much at stake for the public to wait on the necessarily cautious and deliberate court process.
Huge costs
Liquidation costs are enormous and are a first call on the proceeds of any sale of company assets. Many of the assets of the Bahamas company are pledged to secure debts other than deposits, and we therefore need to prepare ourselves for a substantial loss by Clico (Guyana) of its investment in the Bahamian company, assuming that there is such an investment. This then raises the question about Mr Jagdeo’s assurances which the Commissioner of Insurance through GINA initially reaffirmed, ie that all polices held in CLICO (Guyana) will be protected. This of course, whatever form it takes, will have to come from the taxpayers.
The Commissioner as Judicial Manager has to act independently and professionally. She has been instructed by the court to return promptly to them with a plan and no court will accept such vague assurances as those given by President Jagdeo and later repeated by her. She should not be unmindful that medical service providers have refused to extend further credit to the company while holders of short-term policies are already looking elsewhere for their coverage. In repeating the President’s assurance about guarantee, Ms Van Beek will recognise that this cannot be open-ended. If we care about our constitution and the Fiscal Management and Accountability Act, any such guarantee has to be given by Parliament.
In this regard, it seems a fair assessment that the President has not been sufficiently informed of the liabilities which his assurances that “all claims” will be met are interpreted to guarantee. The motion submitted by the PNCR calls on the government to take all necessary steps “to guarantee the savings, pensions and investments of all CLICO (Guyana) investors including the National Insurance Scheme (NIS), depositors, policyholders and contributors.” That would cost the government billions of dollars even if Clico’s actual and contingent assets are taken over. In Trinidad and Tobago Mr Lawrence Duprey had to give up huge chunks of assets in exchange for the government’s assumption of liabilities. Assuming we take over the liabilities, what do we get in return and how? It seems that Clico (Guyana)’s main assets – other than the Bahamas investment, are the loan to Caribbean Resources Limited ($1B), shares in the Berbice Bridge Company with a book value of less than $80M and any remaining bonds in the Berbice Bridge Company.
Conclusion
The President in his typical style has threatened prosecution against the directors and management of Clico if fraud were found. The President may not be aware, as disclosed by Business Page of February 8, that there is only one Guyanese director who is also the CEO who less than ten weeks ago he lavishly praised and made a director of his revamped GuySuCo Board. We are now paying the price for our failure to take governance seriously, not only in what I have referred to as public interest companies but in all public and state-owned companies.
Next week I will continue looking at the implications of this debacle but for now, please if we are thinking of selling off any of the policies to other companies, remember that there will have to be actuarial valuations done. From what I have seen we have not even begun to deal with this problem.
Article printed from Stabroek News: http://www.stabroeknews.com
URL to article: http://www.stabroeknews.com/2009/features/03/08/the-business-page-2/
Posted By Christopher Ram On March 8, 2009 @ 5:12 am In Features, Sunday
Clico and the related crisis: Confusion continues
Introduction
It has been an incredibly hot week in Guyana. In fact so hot that the President who was directly or indirectly involved with every single financial decision made in the public sector for the past sixteen years decided it was just too hot and took off for a change of climate engagement. He asked his Finance Minister Dr Ashni Singh who has carried statutory responsibility for the operation of the Insurance Act and therefore supervision of Clico for more than two years as well as of the National Insurance Scheme, the biggest single potential loser in the Clico debacle, to make a statement to the National Assembly.
Clearly stung by the revelations of what may prove to be a major loss to the country there has been heightened activity by the government. Even as lower-level letter writers were at work, the government called into their corner big guns like Messrs Yesu Persaud and Clifford Reis for a panel discussion with the Minister of Finance. We heard again from the Bank of Guyana not on whether it has continued to track and assess “every bit of information being provided on the issue as it develops” but to “dispel the misrepresentations” by persons whom the Bank did not name. We heard as well from Ms Maria Van Beek, the Commissioner of Insurance/Judicial Manager of Clico, witnessed a press conference by the directors and management of Hand-in-Hand Trust, TV interviews with economist Ramon Gaskin and TUC President Gillian Burton and disturbing but not surprising fears expressed by insurance broker Mr Bishwa Panday and leaders of the teachers’ union. By the end of the week it was clear that there was little confidence in everything said by the government and the regulator in relation to Clico. Having done next to little so far, the Minister of Finance rather than the Judicial Manager is impressively rushing papers to The Bahamas to prove our debt. We all hope it is not too late.
Red herring
The Bank of Guyana and the big guns were called out mainly to speak about the strength of the banking system, as if that was the issue. There are currently many questions about the banking system but not about its strength. Yes, different persons in varying degrees and sometimes with varying justification question many things, such as the role of the non-bank cambios in the underground economy, the absence of any meaningful interest or effective efforts to stamp out money laundering, the interest rate policies and the conservative approach inherent in banking, and the increasingly troubling failure of the Bank of Guyana and the government to bring the New Building Society under the Financial Institutions Act. But the strength of the banking system has not been an issue to academics or depositors who place increasing sums with the sector, which must surely be a big test. Raising it was a pure red herring.
Experience has taught that the public is more sensible than it is given credit for. It knows that failures do not arise only in weak systems, with Globe Trust being a good case in point. It knows how toxic assets can contaminate good ones akin to Gresham’s law and money. It is concerned that the NBS has just invested some $1.5 B in the Berbice Bridge, hardly on the grounds of an investment but more as a bail-out using poor people’s money. It would still be sceptical about the optimism of the Board of HIHT to withstand a near billion dollar loss in Stanford and wonder whether the Bank of Guyana was too soft in allowing such a concentration of assets. None of these issues was raised by the moderator of the panel or by the Bank of Guyana. It is wrong to believe that because the public does not have access and opportunities it is voiceless or does not understand.
Revelation
Much of what was said by our men of learning had little impact. What really had the country and the Minister of Finance going was a statement by the Prime Minister of The Bahamas that “there appears to be no record available at this time” of Clico (Guyana)’s investment in Clico (Bahamas). That is contrary to everything accepted by all including the company’s auditors Deloitte and Touche and the Commissioner of Insurance. In fact the Minister of Finance confidently told the press that there was “a plethora of correspondence, including wire transfers of substantial amounts, dating as far back as 2004” supporting the investment.
I have looked at the 2006 and 2007 financial statements of Clico (Bahamas) and these seem to support the qualified statement by the PM. In the books of the Bahamian company, note 12 (2007) and note 10 (2006) show the following (in Bahamian dollars which is equivalent to US dollars):
12. Due to Related Parties 2007 2006 2005
Due from CL Financial Limited and subsidiaries - - 939,210
Due to CL Financial Limited and subsidiaries (212,723) (22,473,803) (56,250)
And note 22 (2007) shows that the figure of $212,723 at December 31, 2007 is made up of amounts owing to Barbados, Suriname and CL Financial Limited which is the parent company. Nothing is shown as owing to Guyana. Over the three years 2005-2007 the only year shown with a balance with Guyana is 2006 where the amount was stated at $275,317.
Transactions with Guyana over the same years are shown as follows:
2007 2006 2005
Sale (withdrawal) of insurance contracts (1,656,302) (15,114,138) 6,238,297
Payments received on behalf of related
parties for Guyana - 275,000 -
The Guyana books showed investments at 31 December 2007 in Clico Bahamas of $5.95B and accrued investment income of $329M. Can it be that the balance owed by the Bahamas company to the Guyana company is shown somewhere else in the accounts? That is possible, but given that the accounts are both audited and in both cases by the same auditing firm − but by different offices − it is hard to understand why the Minister chose the route of the plethora of documentation rather than having the Judicial Manager call in the auditors for an explanation, to be followed by the paperwork. After all, the auditors would respond quickly, bringing their audit working papers files, anxious to avoid the implications of what seems on the face of the financial statements to be a major discrepancy which routine audit procedures should have revealed. Yes the paperwork is necessary, but surely the persons who have given their stamp of approval on the accounts would be a good place to start.
Different strokes…
One of the very striking features of the still far-from-over saga is how the two countries have treated the matter at the regulatory and more so at the political level. The Prime Minister of The Bahamas made an early and clear statement to their Parliament on the whole issue including offering advice to affected persons. Our President has chosen to make several statements including one before he departed these shores repeating his assurances about meeting all valid claims against Clico. From reports of a meeting Mr Panday had with Ms Van Beek and the information conveyed to the teachers, it does not appear that Clico is relying on those assurances.
There is also some discrepancy about the timing of Mr Jagdeo’s contacts with his counterpart in The Bahamas with the latter saying that it was after the announcement of the move to liquidate the Bahamas company that President Jagdeo called him. But what is more significant is Mr Jagdeo’s revelation that he had proposed as (part) settlement of the debt by Clico (Bahamas) to Clico (Guyana) to take over the Florida real estate in which the Bahamian funds were invested through one of its subsidiaries. It is not clear whether his intention is that our politically-controlled Privatisation Unit would then sell the asset, but surely our President, who is never hesitant to pronounce on matters legal, ought to have realised that that was not possible as a potentially fraudulent preference. The suggestion by a columnist in another newspaper that our President say nothing further in this matter has a lot of merit and was reflected in the call by the Finance Minister to “ensure that the court appointed process is allowed time to exhaust all avenues to protect the assets of CLICO Guyana.” Regrettably there is too much at stake for the public to wait on the necessarily cautious and deliberate court process.
Huge costs
Liquidation costs are enormous and are a first call on the proceeds of any sale of company assets. Many of the assets of the Bahamas company are pledged to secure debts other than deposits, and we therefore need to prepare ourselves for a substantial loss by Clico (Guyana) of its investment in the Bahamian company, assuming that there is such an investment. This then raises the question about Mr Jagdeo’s assurances which the Commissioner of Insurance through GINA initially reaffirmed, ie that all polices held in CLICO (Guyana) will be protected. This of course, whatever form it takes, will have to come from the taxpayers.
The Commissioner as Judicial Manager has to act independently and professionally. She has been instructed by the court to return promptly to them with a plan and no court will accept such vague assurances as those given by President Jagdeo and later repeated by her. She should not be unmindful that medical service providers have refused to extend further credit to the company while holders of short-term policies are already looking elsewhere for their coverage. In repeating the President’s assurance about guarantee, Ms Van Beek will recognise that this cannot be open-ended. If we care about our constitution and the Fiscal Management and Accountability Act, any such guarantee has to be given by Parliament.
In this regard, it seems a fair assessment that the President has not been sufficiently informed of the liabilities which his assurances that “all claims” will be met are interpreted to guarantee. The motion submitted by the PNCR calls on the government to take all necessary steps “to guarantee the savings, pensions and investments of all CLICO (Guyana) investors including the National Insurance Scheme (NIS), depositors, policyholders and contributors.” That would cost the government billions of dollars even if Clico’s actual and contingent assets are taken over. In Trinidad and Tobago Mr Lawrence Duprey had to give up huge chunks of assets in exchange for the government’s assumption of liabilities. Assuming we take over the liabilities, what do we get in return and how? It seems that Clico (Guyana)’s main assets – other than the Bahamas investment, are the loan to Caribbean Resources Limited ($1B), shares in the Berbice Bridge Company with a book value of less than $80M and any remaining bonds in the Berbice Bridge Company.
Conclusion
The President in his typical style has threatened prosecution against the directors and management of Clico if fraud were found. The President may not be aware, as disclosed by Business Page of February 8, that there is only one Guyanese director who is also the CEO who less than ten weeks ago he lavishly praised and made a director of his revamped GuySuCo Board. We are now paying the price for our failure to take governance seriously, not only in what I have referred to as public interest companies but in all public and state-owned companies.
Next week I will continue looking at the implications of this debacle but for now, please if we are thinking of selling off any of the policies to other companies, remember that there will have to be actuarial valuations done. From what I have seen we have not even begun to deal with this problem.
Article printed from Stabroek News: http://www.stabroeknews.com
URL to article: http://www.stabroeknews.com/2009/features/03/08/the-business-page-2/
Thursday, March 5, 2009
Ms Lowden has been misguided by her ‘sources’
Ms Lowden has been misguided by her ‘sources’
Posted By Stabroek staff On March 5, 2009 @ 5:05 am In Letters | 4 Comments
http://www.stabroeknews.com/2009/letters/03/05/ms-lowden-has-been-misguided-by-her-%e2%80%98sources%e2%80%99/
Dear Editor,
I refer to the editor’s note to my letter on March 4, 2009 of Stabroek News with the caption ‘Heritage Foundation did not use Ram and McRae as a “source” for the economic freedom index.’
I note the response from Mr Rakesh Latchana of Ram and McRae in which he claimed that Ram and McRae had no affiliation in the compilation of the Index of the Heritage Foundation and that they were never consulted by the Heritage Foundation and/or The Wall Street Journal.
However, my sources still claim that input was made by members of Ram and McRae.
I also would like to note that the aim of my letter originally titled ‘Our nation’s ranking’ was intended to demonstrate how inaccurate information inserted in international reports, can retard any nation’s development, using Guyana as an example. As such, it is unfair that international funding organizations use these flawed reports, since they do not represent a true reflection of Guyana’s economy.
Yours faithfully,
Marissa Lowden
Editor’s note
We sent a copy of this letter to Ram and McRae for any comments they might have wished to make and received the following response from Mr Rakesh Latchana:
“Thank you again for the opportunity to respond to the letter by Ms Marissa Lowden in which she stated that her ‘sources still claim that input was made by members of Ram & McRae.’ “Following receipt of her first letter, I sought confirmation from the Heritage Foundation and received the following note: “This is to confirm that at no point in our research for the 2009 Index of Economic Freedom did we consult Ram & McRae directly or use any materials from their website or elsewhere.”
“Ms Lowden therefore continues to be misguided by her ‘sources’ and I would respectfully suggest that she considers their reliability before using them again.
“It is also worthwhile to note that my sources claim that Ms Lowden is associated with the Office of the President and her letters therefore come as no surprise.
The firm currently has more pressing matters to attend to and we hope that you would publish this as our full and final response on this matter.”
Posted By Stabroek staff On March 5, 2009 @ 5:05 am In Letters | 4 Comments
http://www.stabroeknews.com/2009/letters/03/05/ms-lowden-has-been-misguided-by-her-%e2%80%98sources%e2%80%99/
Dear Editor,
I refer to the editor’s note to my letter on March 4, 2009 of Stabroek News with the caption ‘Heritage Foundation did not use Ram and McRae as a “source” for the economic freedom index.’
I note the response from Mr Rakesh Latchana of Ram and McRae in which he claimed that Ram and McRae had no affiliation in the compilation of the Index of the Heritage Foundation and that they were never consulted by the Heritage Foundation and/or The Wall Street Journal.
However, my sources still claim that input was made by members of Ram and McRae.
I also would like to note that the aim of my letter originally titled ‘Our nation’s ranking’ was intended to demonstrate how inaccurate information inserted in international reports, can retard any nation’s development, using Guyana as an example. As such, it is unfair that international funding organizations use these flawed reports, since they do not represent a true reflection of Guyana’s economy.
Yours faithfully,
Marissa Lowden
Editor’s note
We sent a copy of this letter to Ram and McRae for any comments they might have wished to make and received the following response from Mr Rakesh Latchana:
“Thank you again for the opportunity to respond to the letter by Ms Marissa Lowden in which she stated that her ‘sources still claim that input was made by members of Ram & McRae.’ “Following receipt of her first letter, I sought confirmation from the Heritage Foundation and received the following note: “This is to confirm that at no point in our research for the 2009 Index of Economic Freedom did we consult Ram & McRae directly or use any materials from their website or elsewhere.”
“Ms Lowden therefore continues to be misguided by her ‘sources’ and I would respectfully suggest that she considers their reliability before using them again.
“It is also worthwhile to note that my sources claim that Ms Lowden is associated with the Office of the President and her letters therefore come as no surprise.
The firm currently has more pressing matters to attend to and we hope that you would publish this as our full and final response on this matter.”
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