CLICO Scandal: Interlocking Directorships a recipe for corruption and self-serving behaviour

CL Financial, CLICO Investment Bank & Interlocking Directorships

Our old friend Afra Raymond has written another well-researched article about the CL Financial – CLICO financial collapse. This one focuses on ‘What main event/s caused the group to fail?’ and as usual Afra is asking questions the news media should long ago have asked.

And what dirty little secrets has Afra dug up from the fetid swamp of lies and corruption where Duprey and Parris hope no one looks?

Here’s a sample…

“One of the main rumours making the rounds at the time of the bailout was that the State-owned National Gas Company had made heavy withdrawals from CLICO Investment Bank.  Those withdrawals and the requests for the return of further deposits were said to have triggered the ‘crash’ within the CL Financial group.”

… from the April 25, 2010 Afra Raymond – Trinidad Guardian article Taking In Front

Why would National Gas Company have wanted to make “heavy withdrawals” from Clico Investment Bank?

Could it be that one of the Directors of NGC also served on Clico and therefore had insider knowledge that allowed one company to profit over the other?

Afra Raymond

Read what Afra has to say…

A continuing concern, in light of the growing challenges to the old order of the commercial and financial world, is the role of inter-locking Directorships.  That is the situation in which a very small group of people control most of the major companies and activities in a society.

Critics of that situation would say that such situations are a recipe for corruption and self-serving behaviour.  The small group of people can enrich themselves, leaving the leftovers for everyone else.

Those who support that situation would say that the emergence of such a small group of leaders is natural, particularly in a small society such as ours, and the real challenge is to develop rules and norms which limit the possible negatives.

This is an issue which I am exploring in the ongoing series to examine the governance implications of the UDeCOTT fiasco.  It is not surprising that it is also a feature of the CL Financial collapse and there is an example of that in the case of National Gas Corporation and CLICO Investment Bank.

The CLICO Investment Bank Directors

At the time of the collapse, the Board of Directors of CLICO Investment Bank comprised –

Mervyn Assam (Chairman)
Amjad Ali
Anthony Rahael
Maria Thorne
Michael Callendar
Faris Al Rawi

The NGC Executive

At that time, the National Gas Corporation’s executive management included –

Ms. Olave Maria Thorne, Vice President, Legal and Corporate Management and Company Secretary – Yes, the same person.

Comment on Afra Raymond’s latest article

This comment about Afra’s article was forwarded to us, but we don’t know if the author wishes to be identified, so we’ve changed some things about and removed some details…

You are onto something here on this issue of interlocking directorships.

Did Ms Thorne know something that we haven’t yet found out? How is her position different to the Minister of Finance and the Chairman other than they seemed to have benefited directly. Would her interest have rested at that of the NGC or did she personally benefit? Did she or did she not?

For us to stay quiet on these things would only lead to more anger in our society as more and more of our people now understand what these things mean and with the human carnage that has been created by this CL Financial debacle, I don’t think we have seen the real emotional outcry as yet, but it is coming.

“The governments approach to drip feeding hope is slowly losing currency.”

As more and more people feel cheated and exposed, only time will tell whether it would remain bottled up as it has been so far or explode into something sinister and ugly.

I pray not.

Similarly, we have to focus on the role of the Auditors. Internationally they are being called to account – i.e Goldman Sacs, where Ernst and Young are being called to board. In this region we seem to be approaching their seemingly ‘gross failures’ with a sense of the untouchables.

The time has come for those of us who lead public opinion to call for a serious overhaul of our financial and business systems in light of all this.

While we are being told things are being dealt with the CL Financial issue, other companies could be doing exactly the same thing and nothing is being done to close the stable door.

Afra Raymond is a Chartered Surveyor.  This series on the CL Financial bailout can be viewed or readers’ comments made at AfraRaymond.com

21 Comments

Filed under Barbados, Business & Banking, Consumer Issues, Corruption, Crime & Law, Ethics, Offshore Investments

21 responses to “CLICO Scandal: Interlocking Directorships a recipe for corruption and self-serving behaviour

  1. Donald Duck Esq

    The names of persons on the oversight committee has finally been revealed. Why is it that the former managing partner of clico’s auditors in Barbados is on the committee when he only retired from the audit firm shortly before it was established?

  2. Donald Duck Esq

    BFP

    You should feature the letter from William Layne, the Permanent Secretary in the Ministry of Finance, that is in the Sunday Sun today so that people could comment.

  3. Donald Duck Esq

    BFP

    What do readers think has to be done in order for clico life to be viable again?

  4. Donald Duck Esq

    Published on: 4/25/2010 in th e sunday sun.

    by WADE GIBBONS

    SEVERAL ACTIONS taken by chairman of CLICO Holdings (Barbados) Limited, Leroy Parris, have been red-flagged by head of the Oversight Committee set up by Government to supervise the sale of three of CLICO’s subsidiaries.

    Permanent Secretary in the Ministry of Finance, William Layne, told the SUNDAY SUN yesterday that two matured deposits withdrawn by Parris from the subsidiary company Clico Mortgage and Finance Corporation (CMFC) were worth over a quarter million dollars.

    “. . . He withdrew two deposits in CMFC in the sums of BDS$129 827.74 and $136 776.58, respectively, when they matured on December 3, 2009 and January 8, 2010,” Layne said.

    Layne explained that the Oversight Committee had written Parris on the matter since CMFC was in receipt of public funding from the Central Bank of Barbados and was not in a position to repay the money.

    Layne also said CLICO International Life Insurance Limited (CIL) had contravened an order of the Supervisor of Insurance made in August 2009 prohibiting it from selling new business.

    “Leroy Parris [said] CIL sold 800 life policies in the first two months of 2010. If this statement is accurate, this action is in contravention of the order of the Supervisor of Insurance.

    “I expect that the Office of the Supervisor of Insurance will seek whatever legal redress is available against such a violation of its order,” Layne said.

    Layne also said the law gave scope for CLICO to write to the Supervisor of Insurance within 30 days of the August 2009 bar from selling business, and to have that decision reviewed by the Minister of Finance.

    However, Layne said CLICO instead wrote directly to the Minister of Finance [David Thompson] asking that the Supervisor of Insurance’s order be lifted.

    Layne also charged the Oversight Committee’s work had been hampered by difficulty in receiving timely information from Parris.

    He said Parris was asked since last year to provide the contracts between his company, Professional Financial Services, and the regulated subsidiaries of CLICO Holdings (Barbados) Limited. To date, he added, the Oversight Committee was still awaiting the information.

    He said CIL has been unable to meet payments to Executive Flexible Premium Annuity (EFPA) investors in a timely manner for either surrenders or maturities. At the end of November 2009, he revealed, the unpaid liability for EFPAs was estimated at BDS$108 million.

    Yesterday, Parris in responding to Layne’s charges, told the SUNDAY SUN that during 2009 CIL wrote business and was providing monthly reports to the Supervisor of Insurance from March of the same year.

    He said the only policy removed from the books were the EFPAs.

    He said CLICO’s president Terrence Thornhill wrote within 30 days to the Minister of Finance, with an expectation that the letter would be sent directly to the Supervisor of Insurance. The letter requested that the ban on CLICO be lifted.

    Parris said contrary to Layne’s statements, CLICO had paid out $108 million to EFPAs. He said the unpaid amount in Barbados was about $20-plus million in maturities and surrenders.

    Parris said Layne’s figure referred to Barbados and the Eastern Caribbean.

  5. Donald Duck Esq

    Parris clears air- article from sunday sun of april 25

    President of CLICO Holdings, Leroy Parris, says not once had chairman of the Oversight Committee and Permanent Secretary in the Ministry of Finance William Layne spoken to him about the company.

    Published on: 4/25/2010.

    by WADE GIBBONS

    EXECUTIVE CHAIRMAN of CLICO Holdings (Barbados) Limited, Leroy Parris, says he has done nothing to frustrate the work of the Oversight Committee set up by Government to supervise the sale of three of CLICO’s subsidiaries.

    Speaking to the SUNDAY SUN yesterday, Parris said he was executive chairman of CLICO and not once had chairman of the Oversight Committee and Permanent Secretary in the Ministry of Finance, William Layne, spoken to him about the company.

    He said the last occasion Layne had any verbal communication with him, was when the former was the Supervisor of Insurance.

    He also said he had never attended any meetings with the Oversight Committee, nor was any information requested from him by the committee since its formation.

    Parris said according to the Memorandum of Understanding with CLICO Holdings (Barbados) Limited and Government to manage the sale of the three regulated subsidiaries – CLICO International Life Insurance Limited (CIL), Clico International General Insurance Limited (CIG) and Clico Mortgage and Finance Corporation (CMFC) – he was under no obligation to report to Layne.

    Delivered

    Parris said Layne had written to him on April 6, 2010, for the second time with respect to a contract. But Parris said the only contract with respect to his company, Professional Financial Services, and its dealings with CLICO, had been delivered to Layne on July 24, 2009. He said this was a contract signed by former CL Financial boss Lawrence Duprey on January 1, 2000.

    Parris also cleared the air on his withdrawal of two deposits of BDS$129,827.74 and $136,776.58, respectively from CMFC, when they matured on December 3, 2009, and January 8, 2010.

    Layne had indicated Parris’ withdrawals were made against the background where CMFC was in receipt of public funding from the Central Bank of Barbados and was not in a position to repay the money.

    However, Parris said that when the deposits matured he asked the CMFC’s chief executive officer Andrew St John if he could pay the deposits and he responded in the affirmative and dispatched a cheque to him.

    Parris said CMFC was still giving loans to customers, and did so as recently as last Friday.

    The top insurance executive produced a letter from Governor of the Central Bank, Dr Delisle Worrell, dated February 3, 2010, indicating CMFC had an obligation to pay the deposits of all its clients, “including yourself” [Parris] at maturity.

    In the letter, however, Worrell indicated he would like the deposits at CMFC to “roll over” at maturity. Parris said that up to today’s date, he still had deposits in CMFC.

    Parris said his attorney corresponded by letter with Layne on April 21, 2010, outlining to him that the withdrawal of deposits from CMFC was made by Parris in his capacity as “a citizen of Barbados

  6. BFP

    Parris? Thompson?

    Who can tell the difference?

  7. FAITH GOODY

    It would be welcome if the CBB Governor could find something in this issue to shed some light on since the CBB provided some assistance to CLICO Barbados. While on this subject perhaps the New Chairman of NIS Fund could let Barbados know the amount of business they hold for CLICO Barbados and likewise and the amount CLICO Barbados owes to the NIS Fund. In the event that Mr Marshall is unable to get the facts, he should seek out Senator Jepter Ince.

  8. Donald Duck Esq

    I was just informed that the oversight committee has 2 retired partners from the audit firm which audits the clico group. Not one but 2!!!!

  9. Donald Duck Esq

    An interesting article from the nation this morning

    Published on: 4/26/2010.

    by WADE GIBBONS

    ABOUT EIGHT HUNDRED PEOPLE are likely walking around Barbados today with useless pieces of paper, believing they own valid insurance policies from CLICO, according to former Prime Minister Owen Arthur.

    What is worse, Arthur suggested last night, is that according to executive chairman of CLICO Holdings (Barbados) Limited, Leroy Parris, Prime Minister David Thompson was aware of it but did nothing.

    Speaking at the successful nomination of Barbados Labour Party Christ Church South candidate Dr Jerome Walcott at Foundation School, Arthur said CLICO had no legal authority to sell business from August 2009, following the directive of the Supervisor of Insurance.

    Quoting from Sections 55 (1) and 177 of the Insurance Act, Chapter 310, which deal with the prohibition of selling insurance business and the process for requesting review of that bar, Arthur said CLICO did not follow procedure and had appealed to Thompson rather than the Supervisor of Insurance.

    Arthur explained that if CLICO did not follow procedure, according to the provisions of the law, that translated into a cancellation of the certificate to carry on insurance transactions.

    “What makes it so serious is that 800 people went ahead and entered into new insurance policies with CLICO when CLICO had no lawful authority to write insurance business,” he said.

    Arthur stated Permanent Secretary in the Ministry of Finance, William Layne, had done Barbados a great service by blowing the whistle on what CLICO had done.

    “. . . Thompson knew [of it], if only because Parris said he wrote him,” Arthur argued.

  10. Peltdownman

    One questions for the government and the Oversight Committee..

    WHY IS HE STILL THERE?!!

  11. Peltdownman

    Other policy holders whose policies have also matured, have been told that no funds are available. Yet Parris can withdraw over 1/4 million dollars for himself. This is shaping into a scandal that the government will not be able to control. The government, the Oversight Cpmmittee, and especially, the management of CLICO, are taking us all for fools.

  12. Peltdownman

    BFP, the last two anonymous posts were mine.

  13. Donald Duck Esq

    Anonymous

    I agree with you. It will save the group loads of cash if he was just asked not to turn up for work!!!

  14. Donald Duck Esq

    anonymous

    Send him home asap.

  15. Donald Duck Esq

    why are my comments still awaiting moderation?

  16. Donald Duck Esq

    anonymous

    I agree. Why is he still there?

  17. Peltdownman

    Mine too, maybe Parris has given BFP a call!

  18. Donald Duck Esq

    peltdownman

    I only said that they should send him home asap.

  19. Who can tell the difference?

    Parris? Thompson?

    Who can tell the difference?

    BFP, You forgot Arthur!

    He may not be godfather to Thompsons child but he was definitely Barbados godfather when the BLP ignored the undercapitalization of the insurance company for years.

    send them home?

    What happened to Dodds?

    Did it burn down again?

  20. Bad man saying nuttin

    With all due respect what you have referred to is not a case of interlocking directorships. The term is used when one person or group of persons hold many directorships in associated, symbiotic, otherwise related or even competitor companies. NGC and CL were not really related so there was no conflict in the lady as a professional being a director on both Boards. It is very difficult to stop the underhand exchange of information in small countries because the professional cadre is relatively small. People talk especially when they are close. So your wife’s nephew may be in a position to know something that may influence your thinking and you get info that the public does not have. As far as I know its only illegal to act on that info if you are trading securities.

    Certain people all over the caribbean knew about the CL debacle in trinidad before it broke. The news was buzzing around in certain circles. If you check the timely withdrawals from CL you will see that a lot of the professional investors got out. It would be impossible for them not to have heard rumblings. They would have contacts in the regulatory agency, the auditors, the accountants and the legal staff so not knowing would be difficult.

  21. Makaveli

    Never ceases to amaze me how many times this game can be played….people just don’t learn. Mr Arthur for all his limitations, is correct about CL paper IT IS USELESS. Better for toilet use,as Clico is INSOLVENT… all the small players are told to hold while the big boys pull out…. so sad. So many hard working Bajans screwed, docile sheep, lambs to the slaughter. When you are ready to be wolves, then shall your prosperity be earned, you do not have what you cannot defend.