BASSETERRE ST. KITTS (October 20, 2009) -- The Federal Minister of Finance, Dr Timothy Harris, Tuesday told the National Assembly that St. Kitts and Nevis has been a most active partner in the search for solutions relating to the humungous problems of British American Insurance Company (BAICO).
He however pointed out that the search for an amicable solution for all parties has been complicated by the fact that while BAICO is a private company, “its parent was an offshore company in The Bahamas, a jurisdiction which is not committed to CSME and whose proximity and strategic interests are more with U.S.A.”
Dr Harris further told the National Assembly that the administration and management of the Eastern Caribbean Branches of British American are undertaken in Trinidad and Tobago, as these branches were not stand alone entities. “Importantly too, the contracts with BAICO were private contracts to which OECS Governments were not privy,” added the Minister.
As a result of the country’s keen insight, active engagement and significant portfolio in British American Insurance Company, this may have prompted the nomination of Dr Harris to the four-member Ministerial Subcommittee on Insurance.
The Committee which is headed by Prime Minister, Dr Ralph Gonsalves, of St Vincent and the Grenadines and also includes the Minister of Finance of Dominica, who is also the country’s Prime Minister and the Minister of Finance of Grenada, has provided yeoman service to the efforts at seeking a most efficacious outcome, according to Dr Harris.
He informed the National Assembly that getting information on the local branch had been quite difficult and taxing, noting that most information had to await the intervention of BAICO officials in Trinidad and Tobago, who were not necessarily dedicated to dealing with St. Kitts-Nevis matters most expeditiously.
“We also had to be aware of and keep in sight the fact that, as far as possible, we needed the support and cooperation of critical parties such as regulators, investors, policy holders, the company – that is- British American, its directors, its auditors, the Governments of Trinidad and Tobago, Barbados, The Bahamas and all member states of the Eastern Caribbean Currency Union in which British American operated,” observed Dr Harris.
As it relates to the financial position of the St. Kitts-Nevis branch, the balance sheet shows a deficiency of assets over liabilities of several million dollars, and this deficiency is expected to increase over time, to the extent that there are intra-party and other assets, the values or collectability of which are dubious, as well as the possible emergence of other liabilities.
“I want members to bear in mind that British American’s involvement in our society and region was, and is, broad, deep and pervasive,” said the Federal Finance Minister. “Any rash move or injudicious statement would affect not only British American, but other institutions with beneficial and other interests in the company’s survival and survivability.”
As a way forward, one of the crucial interventions made by the Government of St. Kitts and Nevis, and other Governments of the ECCU, was to appoint a judicial manager in each of the respective jurisdictions.
“We in St. Kitts and Nevis were among the first so to do so,” commented Dr Harris. “Dominica is yet to come on board, due to an absence of the relevant legislation for such an appointment. However, a mechanism has been employed to ensure the participation of Dominica in the work of the Judicial Manager.
“In St Kitts and Nevis, Ms Lisa Taylor of KPMG, Barbados, was appointed pursuant to an order of the Eastern Caribbean Supreme Court dated 31 July 2009. The terms of her appointment are outlined in the Court Order, and importantly, under such Order, she is obliged to provide the Court with guidance on the way forward.”
Some of the options for the way forward he pointed out would include the “do-nothing” option, which would not produce efficacious results; liquidation which he advised was never an attractive proposition when it comes to an insolvent company; and to determine whether there is any way of carrying on some or all operations of BAICO by a new entity.
In the meantime, he told the National Assembly that the terminal report of the Judicial Manager is expected by the end of October 2009 adding that “In the interim, I am advised that the Judicial Manager is in effective control here. She has taken control and management of all assets. Premiums paid are kept in a separate account rather than being mixed in a pool.”
