NADALEEN SINGH

The Gov­ern­ment has one week to de­cide on the pro­pos­als pre­sent­ed last week by the Cli­co Pol­i­cy­hold­ers Group (CPG) to re­solve the is­sue con­cern­ing Cli­co in­vestors. The dead­line was giv­en at a CPG meet­ing with pol­i­cy­hold­ers at Wood­ford Square, Port-of-Spain, yes­ter­day. Prem Be­har­ry, a mem­ber of CPG, up­dat­ed in­vestors on the sit­u­a­tion, af­ter five re­cent meet­ings with the in­ter-min­is­te­r­i­al team head­ed by Min­is­ter Vas­ant Bharath. Be­har­ry and CPG deputy chair­man Pe­ter Per­me­ll out­lined the two pro­pos­als which CPG has made to the Bharath team. Per­me­ll said he had spo­ken with Bharath who was over­seas last week. But he said the group did not know the out­come of the sit­u­a­tion yet. "We do not know when an an­nounce­ment will be made and I've said on your be­half that is un­ac­cept­able," he said.

"We can't wait an­oth­er month–peo­ples' bills are pil­ing up and we need to have this re­solved very quick­ly...the ball is now in Gov­ern­ment's court." At the end of the meet­ing, pol­i­cy­hold­ers, by a show of hands, man­dat­ed the one week dead­line to be con­veyed to the Gov­ern­ment. Speak­ing about CPG's pro­pos­als, Be­har­ry said CPG hired a New York-based firm, Ryan ALM Inc to make rec­om­men­da­tions on the is­sue. He said a third rec­om­men­da­tion which went to the Gov­ern­ment in­volved a lo­cal fi­nancier. He said CPG be­lieved that par­ty pre­sent­ed a pro­pos­al al­so. "Ryan ALM are say­ing they would take US$600 mil­lion and would con­vert it to the best debt in­stru­ment in the world which is US Trea­sury Bills," Be­har­ry said.

"The Ryan ALM group is say­ing, with­in three months if they are en­gaged, they would be able to sell those bonds and get in cash of US$1.8 bil­lion which is equal to the debt of TT$10.5 bil­lion–that mon­ey would be used to pay all the pol­i­cy­hold­ers." Be­har­ry warned that there were al­so risks. He said math­e­mat­i­cal­ly, T&T would have to car­ry the debt of US$1.8 bil­lion on its books. He, how­ev­er, not­ed the Gov­ern­ment's con­cern about in­creas­ing T&T's debt to GDP ra­tio.

He said the US pro­pos­al would on­ly work in an en­vi­ron­ment where in­ter­est rates in the US were on the rise. Per­me­ll, out­lin­ing an­oth­er as­pect of CPG's pro­pos­al, said the group "cat­e­gor­i­cal­ly re­jects" the Gov­ern­ment's de­ci­sion not to con­sid­er the cap­i­talised in­ter­est.

"We are say­ing cap­i­talised in­ter­est must form part of the li­a­bil­i­ties to the pol­i­cy­hold­ers and we are not ne­go­ti­at­ing that," he said. The group's sec­ond sug­ges­tion is that cred­it unions and trade unions should be paid 100 per cent of the amount due to them re­gard­less of their size of prin­ci­pal, plus cap­i­talised in­ter­est be­cause their in­vest­ments are small. The third pro­pos­al in­cludes an im­me­di­ate pay­ment of 40 per cent. "You should be paid 40 per cent up front and the bal­ance should be paid by Gov­ern­ment of T&T bonds," Per­me­ll said. "There is a fan­cy name called prin­ci­pal pro­tect­ed amor­tised notes, which we are sug­gest­ing are go­ing to be paid on a quar­ter­ly ba­sis over the next five to sev­en years, be­tween four to four point five per cent in­ter­est." He said af­ter the pro­posed 40 per cent has been paid out, the re­main­ing would be giv­en in amor­tised bonds over the five to sev­en year pe­ri­od.

"You're prob­a­bly go­ing to get 50 per cent in five-year bonds and an­oth­er 50 per cent in sev­en-year bonds," he said. "The five-year bonds will car­ry a rate of four per cent and the sev­en-year bonds will car­ry a rate of four and a half per cent." Per­me­ll said there was a mar­ket for bonds, and if any­one want­ed im­me­di­ate cash they could liq­ui­date their bonds and con­vert it to cash. The plan is for the in­ter­est on the bonds to be paid on a quar­ter­ly ba­sis. Re­gard­ing in­vest­ments over $75,000 such as for cor­po­ra­tions, he said: "The State could wait, cor­po­ra­tions could wait–but we can't wait. We are say­ing in or­der to as­sist with the whole cash flow sit­u­a­tion, let them take their mon­ey at the end of the sev­en-year pe­ri­od by a 'bul­let' pay­ment."

The next sug­ges­tion is that the bonds must be trans­ferrable so if the own­er of the bond dies, it can be be­queathed. Per­me­ll said in­ter­est pay­ments, which were stopped on Sep­tem­ber 9, should be re­sumed at the sug­gest­ed mar­ket rate of five per cent. If the Gov­ern­ment re­sorts to the sale of the (Cli­co) as­sets, Per­me­ll said: "While we are be­ing rea­son­able and we have de­cid­ed to wait five to sev­en years to get the bal­ance of our mon­ey, if dur­ing that pe­ri­od those as­sets ap­pre­ci­ate in val­ue, and they are sold for an amount in ex­cess of their book val­ue, any gain on that sale should be shared with the pol­i­cy­hold­ers.

"We have sug­gest­ed a ra­tio of 49:51 per cent, where the Gov­ern­ment gets 49 per cent and the pol­i­cy­hold­ers 51 per cent," he said. He said lit­i­ga­tion is a last re­sort. But if it be­comes nec­es­sary, ac­tion would be tak­en. Per­me­ll who called on Cen­tral Bank Gov­er­nor Ewart Williams to make a state­ment on the is­sue, threat­ened to call for Williams' res­ig­na­tion. Say­ing the Gov­er­nor was open to li­a­bil­i­ty and lit­i­ga­tion on the is­sue, Per­me­ll said Williams could no longer re­main silent. He in­sist­ed that what­ev­er Gov­ern­ment was in pow­er–"whether PP, COP, TOP, UNC" – it would have to im­ple­ment th strat­e­gy the for­mer ad­min­is­tra­tion ini­ti­at­ed.