KINGSTOWN, St. Vincent – A commercial bank in Kingstown will be sued in relation to the British American Insurance Co. Ltd. (BAICO) fiasco, Prime Minister Dr. Ralph Gonsalves announced in Parliament on Thursday.
He said the suit is being brought as members of a technical committee managing the assets of the failed company also consider “certain kinds of legal action in Trinidad and possibly elsewhere”.
BAICO 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 possible legal action in Trinidad relates to the regional elements of BAICO, but Gonsalves said that there are issues specific to St. Vincent and the Grenadines.
BIACO’s judicial manager, Brian Glasgow and Supervisor of Insurance Morris Edwards have therefore given instructions for the bank to be sued.
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Gonsalves did not name the bank but said it was not the Bank of SVG, formerly the National Commercial Bank.
He further said that the suit relates to matter of EC$140.547 million.
The bank, Gonsalves explained, accepted, from 1996, to act as trustee of certain BAICO assets. This was to satisfy the statutory requirements in relation to the statutory fund.
Gonsalves explained that as part of its duties, the bank was to report to the register of insurers all assets it held in trust for BAICO St. Vincent.
He emphasized that Vincentian policyholders would therefore benefit from any monies recovered from the lawsuit.
The bank was to also safe keep BAICO assets held, and monitor and update record on the release and renewal these assets.
Gonsalves told lawmakers that when the unravelling of BAICO’s parent company CLICO began in early 2009, the bank told the Insurance Supervisor in Kingstown that BAICO assets, to be held in trust, was EC$140,547,665.57 – in fulfilment of BAICO statutory fund obligations.
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Gonsalves, a lawyer, said that legal opinion suggests several possible causes of action, including breach of statutory duty, breach of fiduciary duties, misrepresentation, and negligence for negligent misstatements.
“It has turned out that what has been held out to have been held in trust by this commercial bank … that the response has been such to occasion the need for the legal action,” Gonsalves said.
Gonsalves spoke of transactions in the United States in which monies from BAICO was used to close deals worth hundreds of millions of dollars.
“… the story goes on but I am only giving you the gravamen of what out judicial manager has unearthed. There may well be other subject matters for the cause of action against these persons, but there is this one,” he said.
Gonsalves further said that in the next two weeks newspaper advertisements would invite insurance companies to pre-qualify for the sale of BAICO’s traditional life.
He further said that an EC$5 million medical insurance fund has been established. He said the fund is for persons who have BAICO medical insurance and not to pay medical bills for persons who have other instruments, such as annuities.
Gonsalves further noted that governments of the Eastern Caribbean Currency Union are capitalising the traditional life insurance component at EC$38 million to take care of 22,000 policyholders, including 4,100 Vincentians.