"When experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it." Philosopher George Santayana's words should shoot like an arrow to the heart of the Ministry of Finance and the Central Bank.
The Clico debate
The Clico debate has been moving full throttle in the media, government, financial, and legal circles. The arguments centre on the binding nature of the previous Governments assurances of a bail our after the company collapsed in January 2009. The fuss centres around the "few" policyholders and investors with over $75,000.00 in Clico executive flexible premium annuity (EFPA) including wealthy millionaires, credit unions, the elderly, single mothers–those who put their eggs in one basket, and took the risk that comes with a spectacular interest. Clico's collapse feels personal because we were made to believe it belonged to "us." A 100 billion dollar company, hard proof that our Caribbean people had finally come into their own. The Wikipedia tab still reads like this:
"Founded as an insurance company, Colonial Life Insurance Company (Clico) by Cyril Duprey, it was expanded into a diversified company by his nephew, Lawrence Duprey. CL Financial is now one of the largest local conglomerates in the region, encompassing over 65 companies in 32 countries worldwide with total assets standing at roughly TT$100 billion."
For decades Lawrence Duprey seemed to provide heroism and leadership missing in our politicians. Twelve years ago, when Colin Powell visited here, I wrote about Duprey. "At a Clico awards function I heard Mr Lawrence Duprey speak for the first time. In those 20 minutes his mood shifted many times. He roared, smiled, rallied, got mad, encouraged and preached but never failed to be charismatic, to hold his audience. He pounded the message–that Clico was not just an insurance company; that its agents had a duty to the country to help people to help themselves. That saving will allow us to invest in ourselves, keep the profits at home. "It is your duty," he said, "to send the message out there– save brother save, own your homes. Save, so our country can use the money to invest, and create jobs, and help our people to help themselves.
The Hon Mervyn Assam who came on to the podium after him remarked that Duprey sounded like the Rev Jesse Jackson. My hope is that with his presence and his words,?Powell, this great American who knows about being "poor but rich in spirit" and "black and treated as a second class citizen" helps us to tap our own spirit so we can begin to dream our own dreams." This was written in March 1998. The US in dealing with its financial crises handled it by identifying the systemic problems, ensured that people took responsibility for them, and made an example of these people.?We need to do the same here. First, Clico's collapse was a failure of our regulators. This conglomerate, the largest in the Caribbean for obvious reasons needed to be looked at more closely than for example, the Hindu Credit Union.
Given the size of the company, the rumours of mismanagement, the persistently late submissions of accounts, and the potential effects of a collapse, should have set all alarm bells clanging especially to the Insurance Industry regulators at the Central Bank. While I am not suggesting that these regulators perform hara-kiri after the company imploded as abruptly as a child's balloon, we would have expected, in the following order, a Central Bank led investigation, a published report, a public apology, and plan to ensure that this does not happen again.?This took about a year in the USA. When is it going to happen here? We are still waiting for the Central Bank to act. Second, Clico's collapse appears to be failure of our accountants.
The firm, PricewaterhouseCoopers, and its senior accountants reportedly signed off on December 3rd 2009, on audits less than 45 days before the company crashed. Is this the case? If so, on what basis did they act as they did? In the USA, in a similar situation accountants were held legally liable prosecuted, held liable for the costs of the collapse and/or jailed. When will this investigation begin or conclude? We are still waiting for the Institute of Chartered Accountants of Trinidad and Tobago, the Central Bank and the Fraud Squad to act. Finally,?Clico's collapse was ultimately a failure of its management and its board of directors. Circumstantial and other evidence suggests at the very least, mismanagement and reckless decisions on the part of its senior management.
In retrospect, the manner of the Clico collapse appears similar to the case of jailed financier Allan Stanford's businesses based in the US and the Caribbean. In that case, Stanford and other senior managers are being prosecuted, and may be held liable for the costs of the collapse and/or jailed. In the US, such as in the cases of Stanford and Bernie Madoff (incarcerated former American stock broker and operator of what has been described as the largest Ponzi Scheme in history) when there is the possibility of prosecution for illegal acts on this scale, the government holds the passports of the persons involved pending investigations, so that they cannot flee the country. Here in Trinidad and Tobago we wonder why this has not happened to Clico's senior managers.
Unless action and responsibility are taken, examples made, regulations put in place we are doomed to forever talk but not act, repeating our mistakes again and again. Sadly, it appears once again, that "Massa day" is not "done." Once again we say "life is elsewhere," as yet another collapsed Caribbean dream sits in an apartment in Miami, refusing to acknowledge the shock, betrayal and misery of the very people he once exhorted to "help" themselves by saving in his establishment, is now saying "go away, I am sick."