Why is it that Drugdeo loves to stick his foot in his mouth all the time? Some timely reminders by Emile of what the CLICO fiasco was about a year ago and now Drugdeo's attempts to cover up obvious fraud - violation of the insurance act. All of those behind the ponzo should be charged, starting with Drugdeo.
President Jagdeo’s refusal of a Clico probe reeks of a cover-up
By Stabroek staff | March 31, 2010 in Letters
Your news article, “Probe into Clico would serve no purpose – Jagdeo,” (March 28), contains attributions to the President that are the equivalent of adding insult to injury and pouring salt into open wounds. For example, when he reportedly said that “an investigation would only disclose what has already been established through an audit of the company,” he seems to be inferring that the final report of whatever audit was done has been available to the public and the board of directors. But to the best of my knowledge, this did not happen. And when he said that “we have found no evidence of corruption,” he seemed to be speaking on behalf of his government, whereas Clico (Gy) was a private company and should have been subjected to a public investigation.
Even if folks want to believe him when he speaks on this issue, they are reminded that this is the same President who assured depositors in January 2009 that their money was safe and Clico (Gy) was on sound footing, only to watch Clico (Gy) collapse a few days later. So for him to now say there was no evidence of corruption, only ‘bad judgment’ and ‘bad investments’, and then use ‘bad judgment’ and ‘bad investments’ as an excuse for failing to mount a public investigation into Clico (Gy) further undermines his credibility since the excuse gives the appearance of an attempt to cover up the exact nature of the ‘bad judgment’ and ‘bad investments’. A truly caring, transparent, responsible and accountable government would have long pushed for an investigation to satisfy public concerns.
A careful review of the Clico (Gy) collapse will show that this was not merely an issue of management making a ‘bad judgment’ and making ‘bad investments’, as the President surmised; this actually was premeditated jiggery-pokery with depositors’ monies, followed by a perversion of justice, because evidence shows the government knew Clico (Gy) was in violation of the Insurance Act, yet did nothing in accordance with the punitive measures of the Insurance Act to stop the practice, and after the company collapsed, government worked stealthily to have Parliament pass legislation placing it under Bank of Guyana supervision. This latter move locked the door on depositors wanting to know what happened to their money via a public investigation, but in democracies that uphold the rule of law this act is considered tampering with evidence and obstruction of justice, because the law was not upheld.
A review of the records actually reveals that then Insurance Commissioner, Ms. Maria van Beek, repeatedly informed Clico (Gy) of its violation of the Insurance Act, but she either failed to take or was prevented from taking punitive action, in accordance with the Insurance Act, against the company and or its CEO. And it was Mr. Christopher Ram who actually made public the two specific sections of the Insurance Act relative to the Clico (Gy) violation. 1) No insurance company shall invest more than 15% of its clients’ deposits overseas, failing which fines will be immediately instituted against the company and then for every day the violation persists, and 2) The head of the insurance company in violation of the Insurance Act, regarding the 15% overseas investment, shall also be immediately subjected to prosecution and fines and or imprisonment. At the time of collapse, Clico (Gy) had over 53% invested overseas, no fines were levied, and it has been rather telling that the President hardly, if ever, addresses the legal aspects of this entire saga, yet his government rushed to take over Clico (Gy).
Nothing is wrong with a government taking over a major private entity caught in a financial crisis, but there should not be even an appearance of an attempt to cover-up the root causes of the crisis by simply saying ‘bad judgment’ or ‘bad investments’ without a public probe. In the United States, the feds took over institutions/companies to save them in the midst of the financial meltdown, not to cover up their misdeeds and mismanagement. Anyone in America, using the FOI law, can access those now public records. Leaders of banks and investment houses that held deposits and investments from private persons were called in to the US Congress to publicly explain what went wrong in their companies that contributed to the collapse of the financial system and the onset of the recession. They had to testify under oath, and even though the dust is still settling, these institutions are still liable to future investigations if the feds come across new information that raises red flags. But at least there were public hearings in the US; what we had in Guyana was a basic party line decision by the government’s parliamentary majority to rubber stamp whatever decision the government took vis a vis Clico (Gy) without any public investigation. An audit is not the same as an investigation.
But besides government’s knowledge of and failure to act to stop Clico (GY), another reason why a public investigation is needed was the sudden rush by the New Building Society to purchase Berbice Bridge bonds held by Clico (Gy) for local bond holders, shortly before Clico (Gy) collapsed. In the United States, that would have been almost equivalent to insider trading at Clico (Gy) and the repercussions for such behaviour would have been dire for all involved.
That the President would then go out of his way to defend Ms. Geeta Singh-Knight as a person with ‘special skills’, even though she oversaw the collapse of Clico (Gy) and sat on the GuySuCo board as the company registered severe financial losses, reflects a great deal on the paucity of his leadership acuity. As Chairman of the Berbice Bridge Project and former CEO of Clico (Gy), Ms. Singh-Knight should still be placed under the glare of investigators’ intense spotlight to answer under oath what she knew about the circumstances leading up to the sale of the bonds to NBS and how certain depositors were able to retrieve their monies.
Surely, there was and is more to this scandal, with government fingerprints all over it, than just ‘bad investments’ and ‘bad judgment’. In fact, any investigation should also target the government, because the President, of all people, was right there in the middle of it, taking the lead role assuring Clico (Gy) depositors in January 2009 that their monies were safe.
Then he rushed to do damage control by asking The Bahamian government for information on the money remitted from Guyana to that country, but when the information he received indicated the money seemed irretrievably lost, he resorted to saying he would use taxpayers’ hard-earned money to replace the US$34M and have it repaid over ten years. Right there was a huge, fluttering red flag. Which government digs into public funds to bail out a private company that loses this much money because it violated existing laws without first prosecuting the violators and or holding a public hearing? Doesn’t this bailout give the impression that government knew all along what was happening to the depositors’ money? Mind you, The Bahamas, in the meantime, said the money from Guyana was used for investments, but the President keeps insisting it was for deposits, as if either deposits or investments would make a difference, when the President should have been more focused on the violation of the law restricting overseas investments to 15% of local funds. And this is the same President whose government just passed legislation which could indefinitely imprison people it determines are criminals, even if a court finds people not guilty and frees them. What a political travesty!
A thorough public investigation into the Clico (Gy) collapse will not only answer questions previously posed, but it can also tell us whether some depositors knew or requested their deposits should end up in ‘real estate investments’ in Florida.