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Trinidad government may lose billions on CL Financial bail out
Related to country: Trinidad & Tobago

Translations available in: English (original) | French | Spanish | Italian | German | Portuguese | Swedish | Russian | Dutch | Arabic

By Oscar Ramjeet:
Caribbean Net News Special Correspondent -
Email: oscar@caribbeannetnews.com

PORT OF SPAIN, Trinidad: The Trinidad and Tobago government may face problems in trying to recover the money being advanced in the bail out of CL Financial Limited, the Caribbean’s largest conglomerate.

This was disclosed by Central Bank Governor, Ewart Williams, who said that CL Financial's $100 billion assets are otherwise committed.

Williams made the disclosure during an address to members of the South Trinidad Chamber of Industry and Commerce during a luncheon.

The Central Bank Governor said that most of CLICO's assets are pledged in one way or another.

He pointed out that, because of a slump in real estate and methanol prices, the government would not be able to sell the conglomerate's vast real estate holdings at present to recover the funds provided to CL Financial to relieve a liquidity problem.

In a memorandum of understanding signed in January 31, 2009, Government, the Central Bank, and CL Financial chief, Lawrence Duprey, the government agreed to provide a bail out to CL Financial subsidiaries, Colonial Life Insurance Company Limited (CLICO), British American Insurance Company Limited, Caribbean Money Market Brokers Limited and CLICO Investment Bank (CIB), which were experiencing liquidity problems. CIB was shut down.

In a subsequent press conference, Williams said initial investigations determined that there was a hole of at least $10 billion in the group's finances. Williams said that the government would have to continue putting out cash for the next year or two, until the system is stabilised.

Williams added, "The rationale is based on the fact that CLICO is supposed to be asset rich"... so, therefore, whilst the government will put up the money up front, it would, over time, sell their assets in order to repay the Government."

He also said, "We hope that is so” However, in the same breath he said, "The more we are looking into it, the more we are recognising the reality that much of CLICO's assets are pledged in one way or the other".

April 9, 2009

caribbeannetnews

April 9, 2009 | 7:45 PM Comments  0 comments

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