LONDON: The January 15 article in the Sunday Express outlining proposals in a report by PricewaterhouseCoopers (PwC) relating to the final resolution of the collapse of the CL Financial empire made for interesting reading and is deserving of comment from someone who has followed this issue for almost exactly eight years now.
Here in brief are some thoughts:
 
1. In my view, the commissioning of PwC to do the report is interesting, given the many questions that were asked of the firm during the Colman Commission of Inquiry into the collapse of CL Financial and its financial subsidiaries: Clico, British American, Clico Investment Bank and CMMB.
If the Colman report did not clear PwC unequivocally of all of the insinuations surrounding its audit practices of the CL Financial empire, it seems to me that the commissioning of the professional advisory firm to do this job may have been a mistake.
If there was no other local firm that had the expertise to do the job, then the government should have gone abroad to find the expertise as previous administrations have done in the past on this issue with the hiring of TowersWatson in 2014 to do a valuation of Clico's balance sheet and the commissioning of Credit Suisse/Milliman in 2010 to provide advice on the resolution.
 
2. The valuation of the 430 acres of land at the Golden Grove Estate in Tobago at $867 million (US$128 million) means that each acre of that property is worth $2 million. Is land that requires a new CEC (certificate of environmental clearance) really worth $2 million an acre?
 
3. There was a reference in the PwC plan that in order to advance the interests of all stakeholders, "all reasonable steps should be taken to secure the "block" sale of the 50 per cent Republic Bank Ltd (RBL) shares that are collectively held by Clico, CIB and the Clico Investment Fund (CIF) to secure the premium that would arise from such a sale."
It was reported that the sale of the Republic Bank shares by Clico, CIB and the Clico Investment Fund is expected to earn $1.992 billion. Now, the bank has 162.3 million shares outstanding and the stock last traded at $108.43 a share. This means that 100 per cent of Republic Bank is worth $17.6 billion and 50 per cent of the bank is worth $8.8 billion at the current market price not $1.99 billion.
It should also be noted that if there is to be a block sale of 50 per cent of Republic Bank, the buyer would have control of the country's largest bank and the government would have to pay off the unitholders of the Clico Investment Fund. Both of these issues may take some time and negotiation to be finessed.
 
4. The proposal made by PwC seems to suggest that the government is owed $19.34 billion and that it will receive $13.99 billion from the restructuring of Clico within 150 days.
While there is no reason to quibble with the numbers, the suggestion in the article that CL Financial shareholders, including its largest single shareholder Lawrence Duprey, could regain control of the holding company and its subsidiaries plan in 150 days is, literally, unbelievable.
That is because it is beyond belief that a professional advisory firm would advise that the Government should exit CL Financial in 150 days after the payment of 72 per cent of what is owed to the government (which is really the taxpayers of T&T).
I believe I am correct in arguing that the convention in the workout of these kinds of bailout situations is that the government retains control of the entity into which state funds have been poured UNTIL the debt to the government has been extinguished.
On what basis would the government be giving up control to the CL Financial shareholders, who include Lawrence Duprey, when that entity still owes the taxpayers and people of T&T over $5 billion?
 
Is such an arrangement wise, even with the tightest and best-crafted debentures over the fixed and floating assets of the CL Financial subsidiaries?
If a restructured Clico can generate $12.17 billion in cash and $1.82 billion in real estate in 150 days, then surely those same assets can be leveraged to borrow the $5.35 billion that would be needed to complete the payoff of $19.34 billion to the taxpayers and people of T&T.
I have argued on a number of occasions that the idea of the government retaining some kind of long-term interest in CL Financial, while the company pays off the balance of monies owed to the taxpayers and people of T&T over a period of time, is a sub-optimal suggestion.
I made that argument in that space in 2016 on several occasions and also in 2013 when the idea was first raised by a team of advisers that included EY Caribbean's Colin Soo Ping Chow and former permanent secretary in the Ministry of Finance, Alison Lewis, who is a director on the boards of Republic Bank and TCL, two publicly listed companies.
I want to make one thing very clear: given the available information, it is not being argued that the extended-payment proposal is a bad idea. It is an idea that is fraught with risks of a poorly drafted final document, which can be exploited by clever lawyers for their clients' interests.
And given the fact that it would provide the government with over $12 billion in cash and access to the property on which it is proposed that the Sandals and Beaches hotels should be built in Tobago, it is obvious that the PwC plan would go a long way to solving the country's fiscal problems and pave the way for the execution of Prime Minister Keith Rowley's dream of enhanced long-term development for Tobago, his birthplace.
There is merit in closing off this issue after close to eight years.
But there is even greater merit in ensuring that the final resolution of this long-standing thorn in the body politic of T&T is closed off with a one-time, final payment of all of CL Financial's debt to the taxpayers of T&T and the return of what's left of the group to its owners.
And what would be ideal is if Minister of Finance, Colm Imbert, makes public the PwC advice and opens the issue up to a short national debate on what would be the best way to resolve this issue.
Whichever way Cabinet decides to go, it is imperative that it takes a decision quickly after a comprehensive discussion of the merits and demerits of this matter. In other words, this ought not to be a situation in which the Cabinet fails to make a decision because one or two ministers object to a small part of the overall proposal or work at the pace of molasses being poured uphill, as a recent Sunday Guardian editorial put it.
If, as Prime Minister Rowley put it earlier this month, 2017 is going to be a year of delivery for the current administration, there are few deliverables bigger or more important to the future welfare of T&T than the Clico resolution.
 
The author is a shareholder of Angostura Holdings Ltd, which is owned by Clico and CL Financial and is likely to form part of the final resolution of this issue.