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Making the discount rate of the Clico bond more attractive has been the sticking point in what should have been a new Clico plan for the Government, Finance Minister Winston Dookeran said yesterday. In the 2011 budget, Dookeran had proposed an annual zero-rated bond over a 20-year period to repay those Clico policyholders with investments of more than $75,000. Dookeran said for the first five years, Clico EFPA policyholders will get 90 cents to a dollar. But for the next 15 years, the discount rate ranges from 67-80 cents to a dollar.
But it’s this rate, he explained, which he’s working on trying to improve for the policyholders so they can cash in their 20 bonds for a lumpsum payment. Questioned on why would an EFPA policyholder opt for the Government’s plan as opposed to going to the courts to get their full payment by a court order, Dookeran observed that it isn’t such an easy option. He said that the Government was in the process of appealing a court decision which awarded six claimants almost $60 million last month. Secondly, he explained that if the lawsuit filed by Dr Claude Denbow against Clico, seeking the winding up of the insurance company, is successful it cannot be to the benefit of all policyholders.
“That would be working against the self-interest of everyone,” he said. “It’s not even in the interest of those who are asking for it,” he added. He believes that there must be a haircut for the investment. Dookeran did acknowledge that there is “an information challenge” with regard to Clico and CL Financial. And he did explain that returns from Clico’s assets such as the dividends from Republic Bank and Methanol Holdings (MHTL) were funneled back to the insurance company to meet the requirements of about 225,000 holders of traditional insurance policies. He said the company has not yet managed to turn around even though the statutory fund is not in arrears.
The state of affairs at Clico, he said, was “atrocious” but that the 2009 annual report would be completed soon. He said Government’s total investment in the empire of former CL Financial chairman Lawrence Duprey empire would be about $20 billion exclusive the request of T&T’s Caricom neighbours. He maintained that the Government was not robbing anyone nor is it hiding information.Winston Dookeran