Plan to save CLICO faces legal roadblock
There was stiff opposition in the High Court today to Government’s rescue plan for the beleaguered CLICO International Life Insurance Company, as attorneys representing local and and Eastern Caribbean policyholders shredded the proposal as discriminatory, unlawful and unfair.
Eastern Caribbean countries regulated by the Eastern Caribbean Currency Union (ECCU) and a number of corporate policyholders, as well as a large group of individuals from the business community have objected to the Freundel Stuart administration’s proposal to take over the collapsed insurance company.
The judicial manager, represented by Deloitte Consulting, has taken liquidation off the table and has supported Government’s scheme. Government has already appointed a board of directors to a new Barbados company which it proposed would take over the operations of the insurance firm and would purportedly look after the interest of local policyholders.
Minister of Finance Chris Sinckler revealed during his budget presentation on June 15 that when the matter returned to the High Court, the Ministry of Finance and the new company set up to oversee CLICO’s operations, New Life Investment Company Inc (NCLICO), would present fresh affidavits to the court to avoid liquidation.
According to Sinckler, the two parties would ask the court to approve recommendations by the judicial manager in support of restructuring plan put forward by his ministry and supported by NLICO.
“This option can derive significant benefits for policyholders to be returned to their position of near to full policy benefits if it is successful. In addition, an operational insurance company can in the future also create a solution for the policyholders in the Eastern Caribbean,” Sinckler said then.
“Barring no objection from the Court, it will mean that we can initiate the process of bringing a successful and orderly end to this phase of the restructuring of the company and the pain and inconvenience of thousands of policyholders and investors in that company, while maintaining the integrity and stability of the financial system.”
But when the matter came up before Justice William Chandler today, prominent Queen’s Counsel Sir Richard Cheltenham, representing policyholders in ECCU and attorneys-at-law appearing for corporate policyholders and the individuals from the business community blasted the initiative in its present form.
“We can’t support the plan at this stage. The issue here is, does the court have the authority to approve a plan that discriminates against policyholders of the same class or group? Is it lawful for the court to do so?” Sir Richard asked during an interview with Barbados TODAY minutes after the hearing ended this afternoon in the Registrar’s court.
Sir Richard pointed out that the Barbados Government was putting money into a plan that did not cover policyholders in the Eastern Caribbean states who have identical policies with the same CLICO Insurance in Barbados.
He emphasized that his case was based on discrimination and had nothing to do with Government’s policy, but all to do with the lawfulness of approving or implementing such a proposal.
Another attorney representing corporate policyholders and individuals, who did not want to be identified at this stage, told Barbados TODAY he too was challenging the initiative on the same grounds as Sir Richard.
“My clients want fairness for everybody,” said the lawyer, who was also standing in for Queen’s Counsel Ralph Thorne today. Thorne represents another group of policyholders.
But while the Barbados restructuring strategy got the thumbs down from at least three sources, it received the backing of the umbrella body for CLICO policyholders represented by Queen’s Counsel Alair Shepherd.
Head of the Barbados Investors and Policyholders Alliance (BIPA) June Fowler has already said her organization supported the plan, not only because there was nothing else on the table, but because policyholders would benefit if the Government stood true to the proposals.
Prime Minister Ralph Gonsalves of St Vincent and the Grenadines last month revealed he had written to Stuart objecting to a “Barbados-only” plan for policyholders of the collapsed British-American Insurance Company Limited (BAICO).
“The judicial manager in Barbados put forward a plan and I don’t like the plan,” Gonsalves told reporters, adding that he did not “mince words” in his five-page letter of June 25 to his Barbadian counterpart.
“ . . . we wish to place on record the vigorous objection of the Eastern Caribbean Currency Union to the proposed Barbados-first plan which is now emerging as a Barbados-only plan,” Gonsalves wrote, stressing that as the Prime Minister in the ECCU with responsibility for BAICO and CLICO, he had to defend the interest of policyholders in the ECCU.
The hearing in the matter continues tomorrow morning at 9:30.
The Financial Services Commission (FSC) is also represented by legal counsel in the case.