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Full refunds for CLICO Guyana policyholders

September 18, 2010 Leave a comment Go to comments

President Jagdeo

GEORGETOWN -CLICO policyholders who may have thought they’d lost all their money following last week’s ordered wind-up of the operations of the troubled company’s Guyana branch, have received some good news from  President Bharrat Jagdeo: They’ll get back their money within a matter of weeks.

Jagdeo has rolled out a rescue plan that guarantees refunds to all those who were affected by the company’s financial troubles. Disclosing the bailout plan to a large gathering of CLICO shareholders yesterday, the country’s leader explained that policyholders with investments in the company up to a maximum GUY$30 million (US$145,842) as of February 2009, will be repaid in full.

Of the GUY$600 million (US$2.9 million) in cash resources which CLICO has immediate access to, Jagdeo said GUY$500 million (US$2.4 million) will be used to ensure that 6,924 people with long-term insurance policies, including life insurance, are covered; while the remaining funds will be set aside to cover the expenses of the company until wind up.

He said the government has made GUY$3.6 billion (US$17.4 million) available to finance the payout to other policyholders. Of that amount, about GUY$2.7 billion (US$13 million) will be used to pay 4,366 holders of investment annuity policies and other insurance liabilities not in dispute, including pension funds held by Grace Kennedy, Davis Memorial Hospital, New Guyana Marketing Corporation the Cheddi Jagan International Airport, the Guyana Office for Investment and the Guyana Agricultural and General Workers Union.

The rest of the money – GUY$900 million (US$4.4 million) – will be split among 39 large policyholders.

With most of the liabilities remaining in government agencies such as the National Insurance Scheme, the Guyana Forestry Commission, Dependants’ Pension Fund, and Guyoil, President Jagdeo said government will also have to ensure that their interests are protected.

“We will liquidate some of their claims from the sale of assets and from the money that hopefully will be realised through this legal action and then the state will then determine how it will repay,” he said.

President Jagdeo said while he will be pursing investigations into those responsible for the CLICO debacle, the immediate priority was to ensure people get their money back.

“These investigations take years sometimes and people don’t get their money and I’m not going to let that happen,” he stressed.

Last Friday, Chief Justice Ian Chang ruled that CLICO be wound up and that the Bank of Guyana be appointed liquidator for the purpose of executing the order for the company’s winding up.

The CLICO catastrophe stemmed from volatility in the global financial sector that resulted in the Bahamian regulators, obtaining a liquidation order on February 24th, 2009 from the courts in relation to CLICO Bahamas Limited.

The Guyana Government subsequently approached the High Court and obtained an order placing CLICO under judicial management.

Based on the information received by Government, CLICO Guyana has GUY $6.9 billion (US$33.5 million) invested in CLICO Bahamas, which represents 53 percent of the Guyana Company’s total assets. The National Insurance Scheme (NIS), in turn, has invested GUY$6 billion (US$29 million) in CLICO Guyana.

Investigations revealed that the Bahamian Company was exposed to real estate investments in Florida through related party transactions with other subsidiaries in the Group. As a result, CLICO Guyana has been unable to convert its holdings into more suitable investments despite repeated instructions by the Government to do so.

The Government also took steps to recover the investment in the Bahamas and holdings of the CL Financial Group in Guyana, and will also seek to access the CARICOM facility that is being set up to help the Organisation of Eastern Caribbean States (OECS).

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