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State firms hit hard by CL Financial
The Government will have to come up with a plan to assist state institutions that have invested in CL Financial. State enterprises have exposure to CL Financial of about $5 billion. Finance Minister Winston Dookeran said four state companies, among them National Gas Company (NGC), National Insurance Board (NIB) and Home Mortgage Bank (HMB) have exposure to the failed Lawrence Duprey conglomerate.
The Finance Minister said he’s now commissioned a report to determine the extent of exposure of all state institutions to CL Financial. “I can’t give you figures now... We are first dealing with the policyholders and their exposure which has cost us over $13 billion,” he told the Guardian. “Now I am focusing on the state enterprise sector, their exposure and how we resolve that. It’s now rearing it’s head because the state enterprises are coming to ask,” he said.
Is it that they invested in Clico, CL Financial or Clico Investment Bank? “All three,” said Dookeran. “Different people have done different things. I met with one or two of the state enterprises who are now coming to me for a solution. Each one will have to be dealt with individually to see how we can resolve it.” When he inherited the Clico/CL Financial fiasco, Dookeran said, there was no analysis as to the extent of the problem done by the former administration except the Memorandum of Understanding. It’s been almost two years since Duprey approached the Government for help and pieces of the Clico/CL Financial puzzle, the extent of the systemic risk posed, are slowly emerging.
“I realised that if Clico problem was not resolved quickly, the whole balance sheet of the country was at risk,” Dookeran said. “Having dealt with the policyholders, I am looking at this situation to see how best we can handle it.” Dookeran has been steadfast in his decision that Clico policyholders would receive what’s been allocated in the budget—an initial $75,000 cheque and 20 zero-rated annual bonds. He’s made allowances for the credit unions and and created a compassionate window. But given the extent of the bailout which his Government has to engage, Dookeran is adamant that the offer they receive is the best policyholders will get.
He said that all proposals given to the Government were considered but rejected. It’ll cost the Government $500 million annually for 20 years to pay Clico depositors. The Government has already secured an initial $500 million from First Citizens for it’s first payment. “I am beginning to realise that it is a bigger problem that I first thought,” he said.
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