ST. VINCENT (Jan. 13):-Prime Minster Dr. Ralph Gonsalves has told Vincentians that a resolution to the British American Insurance Company debacle will be “a big problem” for his government and the Caribbean Community (CARICOM) this year.
British American has been placed under judicial management following the financial problems plaguing its parent company, the Trinidad and Tobago-based regional conglomerate CL Financial, which had also operated the beleaguered Colonial Life Insurance Company (CLICO).
The Organisation of Eastern Caribbean States (OECS) and other Caribbean governments were last year partnering with investors to form a new company to assume BAICO liabilities.
The Patrick Manning government, which was voted out of office last May in Trinidad and Tobago, home to British American parent company CL Financial, had pledged US$100 million to the rescue effort.
However, the new Kamla Persad-Bissessar government in Port-of-Spain withdrew from the arrangement in December, resulting in new challenges to finding a resolution.
Gonsalves spoke of the difficulties on Thursday, Jan. 13, during a radio consultation with citizens as his government formulates the 2011 budget to be laid before legislators later this month.
“If you had asked me the 23rd of May or the morning of the 24th of May last year, I would have told you ‘Yes, we have an arrangement going, ourselves and the Eastern Caribbean and Trinidad and Tobago –the Patrick Manning government, which was prepared to put US$100 million to help us in bringing back British American,” he said.
Gonsalves, who is also Minister of Finance, added that OECS nations were to contribute US$75 million while a strategic investor out of North America was going to put in between US$30 million and US$40 million.
“…I had outlined how that was going to work. But, the new government in Trinidad and Tobago, they took a while in telling us what they were doing and on the 8th of December, they tell us they are not participating in the new company,” he said.
He told Vincentians that the Persad-Bissessar administration had announced that it wanted to work with the Caribbean Development Bank and the OECS “to build a fund in CARICOM.
“But, at the moment, it is fairly amorphous. It isn’t well shaped. So, the change in the government in Trinidad and Tobago has given us a big setback on British American,” he said.
He further said that the illness and death of former Barbados Prime Minister David Thompson late last year “downed the operation in relation to CLICO”, another CL Financial enterprise.
Gonsalves, however, assured Vincentians that “we will be working on it,” adding that he was perusing a document he had received on Wednesday from all the technical people in the region “as to possibilities”.
“I know that I am asking for patience, more patience, but that is all I can ask for because we had a particular way of going forward with Trinidad and Tobago but that has gone. They still say they want to be involved but their involvement is going to be in a different way and the contours of that different way are not yet properly spelt out.
“I say this: if we don’t find a regional solution to British American, CARICOM is going to have a lot of problems. Because people’s money was taken and CL Financial was the parent company to British American They bought a lot of real estate in places like Miami. They over-leveraged them – these assets; they took a lot of money from the OECS and put them in facilities in Trinidad in investments,” he said.
British American has used monies from its OECS subsidiaries to fund a methanol plant in Trinidad and Tobago and also used similar funds to buy in the United States 6,000 acres of undeveloped lands at US$600 million (EC$1.62 billion).
“Now, they can’t have those facilities and investments and selling them and taking care of themselves and we hold the burden but we don’t get any benefit,” Gonsalves added.
“Now, that is going to cause a lot of problems and I don’t have any smoke in my eyes about this. I am very unsentimental about this matter. I am just looking forward to the interest of the annuity holders and the policy holders, the people who put their money in British American, and then, of course, in CLICO,” Gonsalves said.