Wednesday, December 5, 2012

Clico didn't follow CB guidelines; Bank powerless to act: WIlliams

File: Former CB Governor Ewart Williams
Former Central Bank Governor Ewart Williams said Tuesday the Bank had to fight with Clico to get the conglomerate to follow specific guidelines set by the Bank.

Williams was governor when the former Patrick Manning PNM administration approved a billion-dollar bailout for Clico. That package has cost the government of Trinidad & Tobago about TT$20 billion so far.

The former governor was speaking at the Clico/HCU Commission of Enquiry. A lawyer for the ministry of finance asked Williams if the Central Bank relied too much on "moral suasion" to get Clico to abide by regulations.

Williams said, "You had to fight for even the smallest thing." He added, "I agree that for the period as a whole, the success was limited, but there were small victories along the way. 

"Governance is not an area that lends itself very much to rules and regulations. You can take the horse to the well, but it is the horse that must want to drink, in the sense that in the final analysis, we expected that they implement what we agreed to. Then we realised that some of those things were not implemented.”

Williams said Bank had monthly and quarterly meetings with Clico. He explained that after 2009, Clico was able to have a forensic examination. "After the fact, we got to realise that many of those committees were not used, or used on a limited basis,” he said. 

Nelson questioned why Williams and the Bank did not drive home the point clearly that corporate governance was important.

He replied, “The issue of corporate governance is something that was discussed, but as I said, particularly in a private company like Clico, it is very difficult to force the company along that course when they do not want to,” Williams replied. 

Nelson suggested that something should have been done about it but Williams stated that there are no sanctions specified in law corporate governance.

He said there are guidelines in Insurance Act but while other insurance companies followed those guidelines Clico, "for the most part" did not.

Williams said regulators had limited scope in dealing with Clico. “The company was meeting its legal requirements and, at the same time, Central Bank regulators were using moral suasion in order to get the company to recognise that, notwithstanding what the law said, this is not correct action."

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Jai & Sero

Jai & Sero

Our family at home in Toronto 2008

Our family at home in Toronto 2008
Amit, Heather, Fuzz, Aj, Jiv, Shiva, Rampa, Sero, Jai