CB Governor says Bank was unable to act in Clico matter

The Governor of the Central Bank of Trinidad and Tobago (CBTT) said Tuesday the Bank had concerns over Clico and its overlapping relationship with its parent company, CL Financial, for years. However he said the Bank's hands were "tied" by a lack of legislative powers to deal with the problem.

Ewart Williams also defended the Bank's policy of allowing Clico's controversial Executive Flexible Premium Annuity (EFPA) as bona fide annuities, saying it acted on the advice of experts in the field. The EFPAs today account for $12 billion in policyholder debt.

Williams made the points in an interview with the Newsday newspaper. He said successive Central Bank governors have been concerned about Clico's operations "since the 1990s."

However he said the law governing the Central Bank’s role was not designed to deal with insurance companies that form a part of a conglomerate. 

“The Insurance Act does not even conceive of something named a conglomerate. There is no reference to it in the Insurance Act.”

Williams said Finance Minister Winston Dookeran, who served as CB Governor from 1997-2002, started work on a review of the Insurance Act to make the CL financial and the CL board independent of each other.

"In 2002 I picked it up and we met with hundreds of those in the insurance sector. The Chief Parliamentary Counsel now has a new draft Insurance Act that deals with all of these issues,” he said. 

He explained that it took this because of the preparatory work needed. “We would have had 50 to 100 meetings. The Financial Institutions Act (FIA) alone took five years. That is the process. The Securities Industries Act (SIA) had an even longer gestation period,” he said.

Williams acknowledged that there a problem with the system. 

“In the case of the Insurance Act, because of the shortage of legal drafters, I got the IMF (International Monetary Fund) to provide drafting services. The draft was done by the IMF because of the relations I had with them,” he said.