FINANCE Minister, Colm Imbert, directed the Central Bank last year to order CLICO to transfer ownership of the insurance company’s iconic head office building on St Vincent St in Port of Spain to Government.
CLICO was also directed to transfer ownership of its office in Chaguanas to the Government at the same time.
This information is contained in the Central Bank’s latest quarterly report to the Trinidad and Tobago High Court and the Parliament on the financial regulator’s management of CLICO and British American Trinidad (BAT), two collapsed insurance companies that were once owned by the CL Financial group.
Fearing disruption to the country’s financial system as the insurers were likely to become unable to meet their obligations, the Central Bank in 2009 exercised its special emergency powers under section 44D of the Central Bank Act and assumed control of the two insurance companies, as well as the CLICO Investment Bank (CIB).
The Central Bank has retained day-to-day control of CLICO and BAT, while CIB was ordered wound up by the High Court in October 2011 and the Deposit Insurance Corporation (DIC) was appointed as its liquidator. The Central Bank Governor is chairman of both the Bank and the DIC.
In its 35th quarterly report on its control of CLICO and BAT, the Central Bank discloses: “Further to directions to the Central Bank from the Minister of Finance, CLICO was directed to transfer one of its properties located in Chaguanas and another located in Port of Spain to the Government, based on an up-to-date independent valuation, in consideration for an appropriate reduction in liabilities owed by CLICO to the Government in order of priority.”
Government sources told Express Business that the Port of Spain property is the CLICO head office and the Chaguanas property is CLICO’s office in the borough, which is located at Mulchan Seuchan Road.
The Central Bank report does not state when the up-to-date valuation report was done, who it was done by or what was the valuation placed on the two properties.
But the report does disclose that the sale and purchase agreement for Chaguanas property was executed on April 9, 2019 and the deed of assignment was registered on February 6, 2020.
The Central Bank report states: “The preparation of the relevant agreements for the transfer of the property located in Port of Spain is in progress.”
Express Business understands that after the cut-off date of the Central Bank report, which was June 30, 2020, the CLICO head office was transferred to the Government by a deed of assignment.
Government sources indicated that while the CLICO head office building has been sold to the Government, the insurance company has leased back several floors of the building to continue its operations. The Chaguanas property has been transferred to TGU, the electricity generation company that is 100 per cent owned by the State.
Section 44 F(5) of the Central Bank Act allows the Minister of Finance to give directions to the Central Bank regarding financial institutions the Bank has taken control of under section 44D. Section 44 F(5) states: “In the performance of its functions and in the exercise of its powers under section 44D the Bank shall comply with any general or special directions of the Minister and shall act only after due consultation with the Minister.”
The power to direct the Central Bank on its stewardship of CLICO and BAT is one that Imbert, who has been minister of finance since September 2015, has used liberally.
The report states:
• Minister Imbert triggered section 44 F(5) to direct the Central Bank to prepare sale and purchase agreements for the transfer of CLICO’s 29.9 per cent shareholding in Angostura Holdings Ltd (AHL) and 30.1 per cent direct shareholding in Home Construction Ltd (HCL) to reduce CLICO’s indebtedness to the Government. The transfer of the AHL and HCL shares were effected on September 29, 2017 and October 24, 2017 respectively;
• CLICO was instructed to proceed to sell its shareholding in Methanol Holdings International Ltd (MHIL) to a suitable buyer, consistent with the requirements of the MHIL shareholders’ agreement. CL Financial held 7.53 per cent of the MHIL shareholding in trust for the benefit of CLICO. The High Court granted permission for CL Financial’s 7.53 per cent shareholding in MHIL to be sold jointly with CLICO’s stake on September 18, 2018. Two attempts by CLICO to sell the 56.53 per cent stake in MHIL to Consolidated Energy Ltd (which is controlled by Swiss chemical giant Proman) failed;
• In January 2017, “in light of the unanticipated delay in the sale of the MHIL shares” and according to directions from the Minister of Finance, the Central Bank obtained an independent valuation of CLICO’s 100 per cent shareholding in Occidental Investment Ltd (OIL) and Oceanic Properties Ltd (OPL). On May 8, 2017 the share transfer forms were signed facilitating the transfer of OIL and OPL to the state enterprise Golden Grove-Buccoo Ltd. OIL and OPL controlled the property in Tobago known as No Man’s Land and were central to the Government’s unsuccessful attempt to persuade Jamaican company, Sandals Resorts International, to build two hotels in Tobago
• Following direction from the Minister of Finance on July 13, 2016, CLICO started making cash payments to the Government on July 25, 2016. Government received payments on: July 29, 2016, August 18, 2016; October 10, 2016; July 28, 2017, July 5, 13 and 20, 2018 and January 18 and 24, 2019. Those payments totalled $5 billion and reduced the insurance company’s liabilities to the Government.
A further cash payment of about $300 million (paid in tranches) was made to the Government by CLICO between March 20 and 27, 2020
• In November 2017, the Minister of Finance directed the Central Bank to facilitate the purchase and cancellation of certain Government bonds held by CLICO to reduce the company’s liability to the Government. On April 11, 2018, $107 million of a WASA loan facility, along with a cash payment of $21 million, were transferred to the Government. On September 7, 2018 and April 4, 2019, about $502 million in bonds were transferred to the Government for cancellation, which reduced CLICO’s liabilities to the Government;
• Imbert directed the Central Bank to transfer CLICO’s 21 per cent shareholding in One Caribbean Media (OCM) and 5 per cent shareholding in West Indian Tobacco Company. Those shares were transferred on April 25, 2018 and formed part of the National Investment Fund (NIF);
• Following CLICO receiving 27,619,219 Republic Bank shares and 848,564 OCM shares from the liquidator of CIB, and on Imbert’s directions, the Central Bank directed CLICO to transfer the RBL and OCM shares to the Government. Those shares also formed part of NIF and were used to reduce CLICO’s liability to the Government. OCM is the parent company of the Express Newspapers.
The Central Bank report states that CLICO has repaid the Government $15.37 billion of the approximately $18 billion the Government extended to the insurance company. That left CLICO owing the Government of about $2.8 billion, as at May 31, 2020, and its client, following the insurer’s collapse in January 2009.
The report also states that as at May 31, 2020, the remaining interest on the $4.9 billion in preference shares that the Government invested in CLICO in 2009, amounted to $23.8 million.