NIB lost $625M in Clico
By SEAN DOUGLAS Wednesday, January 30 2013
UNDER the reign of the then People’s National Movement (PNM) Government and the National Insurance Board (NIB) chaired by Calder Hart lost $625 million invested in a failing Clico in 2008 and 2009, the Parliament’s Public Accounts Committee (PAC) was told at a hearing on the NIB’s 2010 Financial Statement yesterday at Tower D of the International Waterfront Centre, Port-of-Spain.
Several other losses and revenue shortfalls were also identified by the committee chaired by Diego Martin North East MP, Colm Imbert, probing NIB top officials including chairman, Adrian Bharath, director Ruben Mc Sween and acting executive director, Karen Gopaul.
In the NIB 2010 Annual Report online, the notes to the financial statement say that from 2008 to 2009 the board had invested US$99,652,121 and TT$45,200,876 in secured short-term deposits Clico Investment Bank (CIB) (about TT$670 million in sum) which had all since matured without NIB receiving neither principal nor interest, prompting an aggressive attempt at recovery including legal action against the collapsed firm.
However yesterday Attorney-General Anand Ramlogan queried the description of this sum as a “claim receivable.”
“What is the Government’s plan? Is there a plan B if this $625 million is a bad debt and is not a receivable?” While Gopaul thought the NIB’s claim was covered by a Clico/Government MOU,
Bharath simply said the NIB is trying to determine the true state of its balance sheet, prompting Ramlogan to urge NIB to mull a best case and a worst case scenario.
Sport Minister, Anil Roberts, was aghast that the NIB had kept investing money into Clico in 2008 and in 2009 even when it was clear to many that Clico was on the brink of collapse. Gopaul admitted to NIB’s multiple investments in Clico in 2008 and 2009, saying the board now has a new investment policy including a limit to the power of individual officials at NIB. She said the NIB has had to be aggressive in its investing so as to achieve a high level of return.
Roberts hit this explanation. He said a loophole was used to allow short-term investments to keep turning-over so as to be akin to a long-term investment. He asked if it was an act of “aggressive” investing to keep putting money into a collapsing organisation (Clico)? He asked who had been in charge of investing: just the Board of Directors, or also any external investment experts?
Bharath admitted that NIB needs a better risk management framework. Roberts lamented that at that time former Udecott executive director, Calder Hart, had also had interlocking directorships in the NIB, TT Mortgage Finance Company (TTMF) and Home Mortgage Bank (HMB). In reply, Bharath said that now the Nipdec and TTMF each has a separate chairman to the NIB.
Imbert asked if the NIB is trying to retrieve its Clico investment from the Central Bank via the Ministry of Finance, rather than Clico. A guarded Gopaul replied, “We are considering all options”.
Mc Sween said not just the NIB, but the TT Unit Trust Corporation (TTUTC) and all banks practice a roll-over of short term investments. He said Calder Hart had not been an NIB executive chairman, but merely a chairman and under the NIB Act his powers had been very limited. Mc Sween said he could not say if NIB staff members had known that Clico was on the brink of collapse at the time of making the 2008 and 2009 investments. He said if they had known, but had still invested, that would have been reckless, but he assured that such was not the climate in which NIB investments were made.
Roberts said millions of dollars of NIB investments in Clico had rolled over repeatedly — some 12 times — so as to never have had to go to the NIB Board of Directors for approval. He lamented that Calder Hart had been chairman of several Sate companies at the time.
Ramlogan noted that while for its investments the NIB had a projected yield of nine percent, the actual yield had been just six percent, this difference equating to a shortfall of $500 million.