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Monday, February 24, 2025

Doomed to repeat mistakes again & again?

by

20101010

"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."


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