Asha Javeed

In 2007, In­dar Chan­ic­ka sold his house in Cana­da and re­turned to T&T. He had come back to care for his moth­er. Chan­ic­ka, 34, had US$145,000 to in­vest. He sought ad­vice from a man­ag­er at a lead­ing com­mer­cial bank. He was told he could in­vest in one of the bank's mon­ey mar­ket funds. Al­ter­na­tive­ly, the bank's man­ag­er sug­gest­ed that if he want­ed a high­er in­ter­est rate, he should in­vest in Cli­co, but he'd be locked in for two years. Chan­ic­ka, a fa­ther of one, opt­ed for Cli­co. He said every­thing went well un­til the col­lapse of Cli­co.

"At that point, we con­tin­ued to re­ceive in­ter­est pay­ments. The Gov­ern­ment at that time made a guar­an­tee that all Cli­co in­vestors will get back all of their mon­ey and will re­ceive one per cent in­ter­est from the time their pol­i­cy ma­tured un­til they were ac­tu­al­ly paid out," he told the Busi­ness Guardian. When his pol­i­cy ma­tured in 2009, Chan­ic­ka was in­formed there was a wait­ing list to be paid. How­ev­er, if he con­vert­ed his US dol­lar in­vest­ment in­to T&T cur­ren­cy, he would re­ceive pay­ment faster, giv­en the short­age of US cur­ren­cy in the mar­ket at the time. He con­vert­ed his in­vest­ment and ac­cept­ed Cli­co's pay­ment plan. Chan­ic­ka was due to re­ceive his first pay­ment at the end of Au­gust. He had al­ready bud­get­ed for it. When he called Cli­co's of­fice last Fri­day, he was told that all pay­ment sched­ules were now null and void and were await­ing fur­ther in­struc­tions from the Min­is­ter of Fi­nance.

"We were re­al­ly de­pend­ing on this mon­ey. Now, in­stead we will get back $75,000 and the rest in 20 years. Who knows what will hap­pen in 20 years? We re­al­ly need this mon­ey now. I un­der­stand this is not the Gov­ern­ment's fault and it is a fi­nan­cial bur­den. "How­ev­er, this was a guar­an­tee that was giv­en to the peo­ple that in­vest­ed in Cli­co by the PNM Gov­ern­ment. Does that mean the promise of any Gov­ern­ment means noth­ing, cause an­oth­er one will just come in and change things? So what can we ex­pect will hap­pen over the 20-year pe­ri­od while we are wait­ing to get our mon­ey? An­oth­er Gov­ern­ment can then come in­to pow­er and say we not go­ing to pay you for 100 years or you are not go­ing to get any mon­ey at all?"

"We worked re­al­ly hard for this. And again I un­der­stand this is not the Gov­ern­ment's fault. But why not just liq­ui­date all of Cli­co's as­sets, give the in­vestors their 70 cents on a dol­lar, ac­cord­ing to Dr (Kei­th) Row­ley, right away and the Gov­ern­ment can save all of their 'out of pock­et' mon­ey they were go­ing to pay out. Why are they try­ing to keep Cli­co alive? And if they re­al­ly want to keep Cli­co afloat, then they should pay out all of the in­vestors right away and have Cli­co pay back the mon­ey over a 20-year pe­ri­od. It is just not mak­ing sense to me." While Chan­ic­ka was able to speak to his Cli­co agent to un­der­stand his fi­nan­cial po­si­tion, 61-year-old Gee­ta Per­sad from Moody Stew­art Street in San Fer­nan­do said her agent has not re­turned her calls. Per­sad's been hit a dou­ble blow by two of T&T's fi­nan­cial in­sti­tu­tions.

For five years, she had in­vest­ed her life's sav­ings in­to the Hin­du Cred­it Union (HCU). Per­sad said she was for­tu­nate to get her mon­ey out of HCU be­fore it went bank­rupt. She was ad­vised to in­vest her $500,000 in­to Cli­co for two years to earn eight per cent in­ter­est. When news of the com­pa­ny's fi­nan­cial trou­bles broke, she was ad­vised by her agent to leave the mon­ey as it was safe. Her pol­i­cy ma­tured on Sep­tem­ber 1 and she was ready to cash it in, but her agent was out of the coun­try. On Sep­tem­ber 8, Fi­nance Min­is­ter Win­ston Dook­er­an an­nounced in the bud­get his strat­e­gy for Cli­co de­pos­i­tors.

Per­sad said she's been dealt a bad blow. "I am a wid­ow. That was the mon­ey to care for me un­til I close my eyes. I am not pleased and I am hold­ing out to see what will be done. This can't be the best so­lu­tion," she said. Per­sad ac­knowl­edged that her dis­ad­van­tage is her age. If she has to wait 20 years to get all her mon­ey, Per­sad will be 81. Like most re­tirees and pen­sion­ers who in­vest­ed in Cli­co and de­pend on their in­vest­ments for their sur­vival, Per­sad is wor­ried. In 20 years, Nigel Ramdeen, says the val­ue of his in­vest­ment will be lost. Ramdeen, a for­mer Ca­roni (1975) Ltd em­ploy­ee, says when he col­lect­ed his sep­a­ra­tion pack­age from the now de­funct sug­ar­cane com­pa­ny, he sank all his mon­ey in­to Cli­co.

He said the Gov­ern­ment had in­vit­ed fi­nan­cial in­sti­tu­tions to make a pitch to the farm­ers on where to in­vest their mon­ey. He said Cli­co, the Agri­cul­tur­al De­vel­op­ment Bank and the Unit Trust Cor­po­ra­tion had made pro­pos­als to the sug­ar work­ers. Most had opt­ed to in­vest in­to Cli­co. "I have $5 mil­lion in­vest­ed in Cli­co; $75,000 can't do any­thing. From what I hear, fi­nan­cial in­sti­tu­tions on­ly will­ing to pay half of the val­ue of a bond, so I've al­ready lost half of my mon­ey," he said. "If the Gov­ern­ment had doubts about Cli­co, why would they in­vite them to speak with Ca­roni work­ers about their prod­ucts? Some­body has to ac­cept re­spon­si­bil­i­ty. If not the Gov­ern­ment, then the Cen­tral Bank, which has over­sight for fi­nan­cial in­sti­tu­tions," he said.

Cen­tral Bank

Dis­grun­tled de­pos­i­tors are try­ing to un­der­stand how they've gone from hav­ing a guar­an­tee on their in­vest­ments to los­ing so much of it. Agents and de­pos­i­tors are cast­ing blame on the Cen­tral Bank. Cen­tral Bank Gov­er­nor Ewart Williams ac­knowl­edged that it is on pub­lic record that the Gov­ern­ment did give those guar­an­tees to avoid the con­ta­gion risks to the fi­nan­cial sec­tor in Jan­u­ary 2009. He ex­plained that once the gov­ern­ment of day had de­cid­ed on its pol­i­cy to pro­tect de­pos­i­tors, the Cen­tral Bank went out and af­firmed this mes­sage. In this sce­nario, Williams ex­plained, the Cen­tral Bank act­ed as an im­ple­men­tor.

Fol­low­ing the Fi­nance Min­is­ter's new pol­i­cy to deal with Cli­co de­pos­i­tors dur­ing his bud­get pre­sen­ta­tion, Williams said the Cen­tral Bank is now wait­ing for fi­nal­i­sa­tion of a new pol­i­cy which it will im­ple­ment. Again, the Cen­tral Bank would act as im­ple­men­tor. He dis­missed the charge that Cli­co's Ex­ec­u­tive Flex­i­ble Pre­mi­um An­nu­ity (EF­PA) prod­uct was ap­proved by the Cen­tral Bank. Williams said it was ap­proved in 2003 by the Su­per­vi­sor of In­sur­ance. When Cli­co came un­der the radar of the Cen­tral Bank in 2004, Williams said the prod­uct's fea­si­bil­i­ty was ques­tioned. "In every coun­try, when­ev­er a bank fails, the reg­u­la­tor is to be blamed. It is the nat­ur­al po­si­tion to take. But there's blame to go around," he told the Busi­ness Guardian.

Cli­co's sys­temic risk

There are thou­sands of Cli­co de­pos­i­tors. In the last week, groups have been formed to ap­peal to the Gov­ern­ment to ho­n­our its promis­es. The cred­it unions in T&T have in­vest­ed more than $600 mil­lion in the failed in­sur­ance com­pa­ny. Trade unions have in­vest­ed in­to Cli­co. The Busi­ness Guardian un­der­stands that Gov­ern­ment agen­cies al­so have mon­ey in Cli­co. Dook­er­an had out­lined in his bud­get that the Peo­ple's Part­ner­ship so­lu­tion would pay off 40 per cent of the 25,000 in­vestors, in­clud­ing more than 140 cred­it unions and 15 trade unions.