Ewart Williams. PHOTO: TONY HOWELL

Government may face problems in trying to recover the money being advanced in the bailout of T&T and the Caribbean’s largest conglomerate, CL Financial Limited according to Central Bank Governor, Ewart Williams. Williams said yesterday that CL Financial’s $100 billion assets are otherwise committed. He made the disclosure during an address to members of the South Trinidad Chamber of Industry and Commerce, during their luncheon at Cara Suites hotel, Claxton Bay. Williams said much of Clico’s assets are pledged in one way or another.

He said that because of a slump in real estate and methanol prices the Government would not be able to sell the conglomerate’s vast real estate holdings at present to recover the funds provided to CL Financial to relieve a liquidity problem. In a memorandum of understanding signed on January 31, 2009, Government, the Central Bank and CL Financial bossman, Lawrence Duprey, Government agreed to provide a bailout to CL Financial subsidiaries, Colonial Life Insurance Company Limited (Clico), British American Insurance Company Limited, Caribbean Money market Brokers Limited and Clico Investment Bank (CIB) which were experiencing liquidity problems. CIB was shut down.

In a subsequent press conference, Williams said initial investigations determined that there was a hole of at least $10 billion in the group’s finances. Williams said that Government would have to continue putting out cash for the next year or two, until the system is stabilised. Williams made the revelations in response to a question from the floor about whether the extent of the bailout would be a stumbling block to T&T’s economic recovery. He said the rationale behind the bailout was that the cost to taxpayers should be as limited as possible.

“And that rationale is based on the fact that Clico is supposed to be asset rich,” he said. “So, therefore, whilst the Government will put up the money up front, it would, over time, sell their assets in order to repay the Government. We hope that is so.” However, in the same breath he said, “The more we are looking into it, the more we are recognising the reality that much of Clico’s assets are pledged in one way or the other.” Williams said, “If you have an asset base of $100 billion, you must be able to find $10 billion to pay back the government.

“You must. That is what we are about. We are about ensuring that the implementation of the memorandum of understanding between Government and CL Financial is such that we have access to CL Financial’s prime assets in order to pay back the Government.” Williams said that for this year and next year, “Clearly the bulk of the resources would need to come from Government, because you certainly don’t want to go and sell real estate now because the market is down. “Certainly you don’t want to go and sell methanol assets now because methanol prices are down and therefore the strategy behind the bailout, is to try to stabalise the system as quickly as possible so that the calls on Government resources are minimised.” He said that if that strategy works, then the cash impact on the Government’s budget would be contained.