By Clint Chan Tack Friday, September 10 2010

GOVERNMENT ran the risk of sending the economy into a tailspin had it decided to pay all shareholders at Clico the money that was owed to them in one single move. This was disclosed by Finance Minister Winston Dookeran during an interview with reporters from Newsday, Express and Guardian at the Eric Williams Financial Complex, Port-of-Spain yesterday, one day after he presented the 2011 Budget in the House of Representatives.

This was the first time in recent memory that a finance minister held an interview with members of the print media immediately after presenting the Budget. Acknowledging that depositors and shareholders in Clico have been concerned about when they would be able to receive their money, Dookeran said, “We could not take the responsibility to pay everybody, everything that was owed to them.

That is what Jamaica did in their fiasco in the banking crisis and bankrupted the entire country. We are conscious of that. We took the financially responsible position.”

Explaining the strategy adopted by Government was the best under the current circumstances, Dookeran said, “It is fair. We are actually paying them but we are not paying them right away. If they want cash now, they will have to take a discount through the banking system.”

Government is paying $75,000 to all short-term investment and mutual fund depositors over the next four years. Short-term investment and mutual fund depositors whose principal balances exceed $75,000 will be paid through a Government IOU amortised over 20 years at zero interest. He said Government will soon issue a statement explaining how this payment system would work.

Dookeran said Government’s main concern with respect to Clico and its parent conglomerate CL Financial “is essentially to recoup the Government’s contribution” to these entities. Disclosing Government has obtained legal advice from British Queen’s counsels and is seeking the services of a reputable firm to divest the assets of CL Financial, Dookeran said, “It would not be a fire sale. Some of these industries are viable but they may be encumbered given what has happened.” He said a new board of directors for CL Financial should be appointed soon.

Reiterating Government’s intention to restructure and merge Clico and British American, Dookeran said he would soon have conversations with other Caricom countries about how this would affect steps they have taken to deal with British American in their jurisdictions. He added St Vincent and the Grenadines Prime Minister Dr Ralph Gonsalves has spoken to him on this matter. In terms of bringing those responsible for the Clico fiasco to account, Dookeran said those matters were engaging the attention of Director of Public Prosecutions and other authorities. “My job here is to find the economic solution.”

Dookeran hinted Government could seek to acquire control of the Hindu Credit Union (HCU).

It will cost Government $300 million to treat with the HCU’s depositors and shareholders, Dookeran said, adding no money will be given to the top people in the HCU unlike what happened in the case of Clico.

He said the HCU’s assets were now in court “because of all kind of trickery.” “They are using the courts to delay the obligations that they have to the depositors.”