An­tho­ny Wil­son

Cli­co, the in­sur­ance com­pa­ny that the Gov­ern­ment saved from col­lapse four years ago, record­ed a 2012 af­ter-tax prof­it of close to $3.8 bil­lion, which was more than five times greater than the $702 mil­lion it de­clared in 2011.Cli­co de­clared prof­its of $6.2 bil­lion from its in­vest­ing ac­tiv­i­ties for the fi­nan­cial year, which eclipsed the $2.2 bil­lion loss from in­sur­ance ac­tiv­i­ties.

The most sig­nif­i­cant con­trib­u­tor to Cli­co's in­vest­ment prof­its was the $3.8 bil­lion gain the com­pa­ny booked on the dis­pos­al of some 40 mil­lion Re­pub­lic Bank shares in No­vem­ber 2012. Those bank shares, which were then worth about $4.3 bil­lion, con­sti­tut­ed 84 per cent of the un­der­ly­ing in­vest­ment in the Cli­co In­vest­ment Fund–which con­vert­ed the 11 to 20-year ze­ro-coupon bonds in­to units in the CIF.

But while the in­sur­ance com­pa­ny, which was once T&T's largest and most pow­er­ful, is gen­er­at­ing prof­its, the KP­MG-con­duct­ed au­dit in­di­cates that Cli­co had a neg­a­tive net worth of $6.5 bil­lion. This means that the com­pa­ny's li­a­bil­i­ties, which were record­ed at $29 bil­lion, dwarfed its as­sets, which were val­ued at $22.4 bil­lion at the end of 2012.

The fi­nan­cial state­ment re­veals that "the com­pa­ny's board, to­geth­er with the Cen­tral Bank and the Gov­ern­ment are work­ing to elim­i­nate the cur­rent cap­i­tal ef­fi­cien­cy where the com­pa­ny has ex­cess li­a­bil­i­ties to as­sets."

Cli­co's li­a­bil­i­ties of $29 bil­lion in­clude about $16 bil­lion in tax­pay­ers' mon­ey, com­pris­ing $4.9 bil­lion in pref­er­ence shares and close to $11 bil­lion in Ex­ec­u­tive Flex­i­ble Pre­mi­um An­nu­ities (EF­PA's) that Cli­co pol­i­cy­hold­ers have ced­ed to the State in ex­change for cash, ze­ro-coupon bonds and units in the Cli­co In­vest­ment Fund.

Fol­low­ing the in­sur­ance com­pa­ny's dra­mat­ic col­lapse, which was an­nounced at a news con­fer­ence at the Cen­tral Bank on Jan­u­ary 30, 2009, the Gov­ern­ment pumped $5 bil­lion in­to Cli­co by ac­quir­ing $4.99 bil­lion in pref­er­ence shares and $7.24 mil­lion in or­di­nary shares.That trans­ac­tion re­sult­ed in Gov­ern­ment own­ing 49 per cent of the share cap­i­tal of the com­pa­ny, leav­ing Cli­co's par­ent, the Lawrence Duprey-found­ed CL Fi­nan­cial, with 51 per cent.

In 2009, Gov­ern­ment was ad­vised not to ac­quire more than 49 per cent of Cli­co, be­cause to have done so would have trig­gered the pre-emp­tion rights claus­es in the Methanol Hold­ings (Trinidad) Ltd (MHTL) share­hold­ers' agree­ment. In an in­ter­est­ing turn of events, Cli­co's 2012 fi­nan­cial state­ment re­veals of­fi­cial­ly, for the first time, the out­come of the ar­bi­tra­tion mat­ter brought by the mi­nor­i­ty MHTL share­hold­ers, Con­sol­i­dat­ed En­er­gy Ltd, who are the claimants.

Ac­cord­ing to the fi­nan­cials: "The tri­bunal is­sued a par­tial award on March 28, 2013, dis­miss­ing all the claimants' claims with the ex­cep­tion of cer­tain of its op­pres­sion claims.

"On No­vem­ber 18, 2013, the tri­bunal con­clud­ed that the re­lief and rem­e­dy for this op­pres­sion is the sale of the 56.53 per cent share­hold­ing held by the com­pa­ny in MHTL to the claimants with­in a rea­son­able time.

"As such, the claimants and re­spon­dents (Cli­co, CL Fi­nan­cial and MHTL) were in­struct­ed to ne­go­ti­ate and agree terms of sale by Jan­u­ary 31, 2014.

"If no agree­ment is reached and no ex­ten­sion is re­quest­ed, the tri­bunal re­served the right (at that time) to set the price for the sale (fol­low­ing sub­mis­sions by the var­i­ous par­ties) based on up­dat­ed mar­ket val­u­a­tions as at Jan­u­ary 31, 2014."

The Guardian was told yes­ter­day that the two par­ties to the ar­bi­tra­tion have not reached agree­ment on the price of MHTL and the tri­bunal is now in the process of hir­ing an in­de­pen­dent firm of petro­chem­i­cal val­u­a­tors.

Cli­co's 56.53 per cent stake in MHTL and its Oman-based sis­ter com­pa­ny are to­geth­er val­ued at $5.57 bil­lion in the 2012 ac­counts, about ten per cent less than the $6.1 bil­lion the in­sur­er's stake in the com­pa­nies was val­ued at in 2011.

Cli­co's au­dit­ed fi­nan­cial re­sults for 2012 were pub­lished on its Web site yes­ter­day, af­ter the com­pa­ny's board, which is chaired by for­mer Min­is­ter of Fi­nance Ger­ald Yet­ming, ap­proved the fi­nan­cials for is­sue on Jan­u­ary 29.