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Posted: Monday 9 March, 2009 at 2:56 PM

Depositors demanding millions from CLICO and British American

By: VonDez Phipps, SKNVibes

    BASSETERRE, St. Kitts – As financial demands on CLICO and British American skyrocket to millions of dollars, the Government of Trinidad and Tobago has recommended that the Trinidad and Tobago/CARICOM Petroleum Fund be made accessible for the CL subsidiaries to pay out cash to their depositors.

    Minister of Finance, International Trade and Commerce Hon. Dr. Timothy Harris informed SKNVibes that “Both companies have millions requested to be paid by their depositors which they may not be prepared to handle. They must be able to give depositors their money upon demand or rumours will get worse and the businesses may go through self-fulfilling prophecy and plunge as demands continue at an abnormal rate.”

    The recommendation to utilise the Petroleum Fund was made last Wednesday (Mar. 4) during an urgent meeting of the Prime Ministers and Ministers of Finance from Barbados and Trinidad and Tobago along with Ministers of Government from the Organization of the Eastern Caribbean States (OECS), when it was realized that the company’s liquidity problems potentially posed great threats to their nations’ depositors.

    Harris explained that a number of “positive ideas” emanated from the meeting as various financial representatives were able to decide upon a short-term response to keep CLICO and British American functional.   

     “In our short-term response, consideration would be given to the Trinidad and Tobago/CARICOM Petroleum Fund to make finances available to both companies in a way to boost consumer confidence in them. This fund would provide liquidity so as to reassure policy holders that their companies are not going under. We have not determined the terms of the loan, but understanding that their cash is tied up in investment, we can offer easy terms of lending and allow the companies to pay back in an appropriate time.”

    Although Harris noted that the Fund was established to pay particular attention to improving the standard of living, reducing poverty and improving security measures, he stressed that considering the magnitude of the problem and the stress it potentially has on the OECS, it is necessary to make such funds available to avoid any further liquidity difficulties.

    Harris, who led the St. Kitts-Nevis contingent to Barbados last Wednesday said the Governments of Barbados and Trinidad and Tobago have committed “explore all options” in order for CLICO and British American to remain able to serve their depositors and investors noting that if these businesses were to fail, it would be “calamitous for us as individual nations and particularly our depositors into the companies”. 

    Minister Harris added that another important part of the meeting was a confirmation by Prime Minister of Barbados Hon. David Thompson that in relation to the depositors and investors of CLICO, the Government of Barbados “stands ready to ensure that the fallout in the Eastern Caribbean is minimized. They reassured us [Ministers of Finance] that they would employ whatever resources to ensure equitable settlement of the issue”.

    “CLICO Holdings Barbados has very significant investment from Barbados and the Eastern Caribbean and so that confirmation was very important as it signified the willingness of that government to protect the investors that stand to lose,” Harris stated.
    Harris noted that the commitment from the Trinidad and Tobago Government had not been as explicit as that from Barbados, adding that all the necessary data in relation to the potential exposure had not yet been gathered by each country. 

    He stressed though that governors of the relevant central banks along with the necessary regulators will be keenly assessing the situation with the aim of protecting the depositors and investors.

     

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