Manning gov't gave Grenada $315M support for Clico and British American

The former Manning government gave the government of Grenada a $315 million bailout to support Clico and British American.

Finance Minister Winston Dookeran made the disclosure Tuesday in the Senate during debate on the Finance Bill. The minister said the PNM government's support was announced in Grenada in April 2009. 

“I noticed in the list of support that has been granted by Trinidad and Tobago to the Caribbean, it included a US$50 million support for Clico in the Caribbean" adding that he was not aware of it until he saw the relevant documents.

Local media reports say three months after the State and the Central Bank intervened in Clico in Trinidad and Tobago the former government pledged assistance to allow Grenada officials to meet obligations in relation to matured Clico/British American insurance policies.

The Grenada Ministry of Finance and the Grenada Authority for the Regulation of Financial Institutions (GARFIN) stated on April 14, 2009 that Trinidad and Tobago was one of several countries that agreed to establish a special Clico liquidity fund.

The fund was set up after a meeting held in Antigua on April 2, 2009. Officials of the Ministry of Finance and Central Bank Governor Ewart Williams attended the meeting, which was chaired by St Vincent and the Grenadines Prime Minister Ralph Gonsalves.

“The Government of Grenada and GARFIN are keenly aware that some policyholders of British American have experienced delays with payments on their matured policies,” the 2009 release stated..

“In an effort to address this issue and bolster public confidence, we wish to advise that Trinidad and Tobago, Barbados and member states of the ECCU (Eastern Caribbean Currency Union) have agreed to establish a “Liquidity Support Fund” which would provide additional liquidity to the financial sector in the ECCU."

It added, “In relation to British American Insurance Company, the initial contributions toward the Fund would be comprised as follows: the Government of Trinidad and Tobago — through the Caricom Petroleum Fund–US$50 million ($315 million).”

Trinidad and Tobago’s contribution to the Grenada “Liquidity Support Fund” was the largest, according to the press release from the Grenada Ministry of Finance. Other contributors to the “Liquidity Support Fund” included: Barbados ($31.5 million); the Eastern Caribbean Currency Union ($63 million) and “regional and international organisations” ($94.5 million).

Former Prime Minister Patrick Manning established the Caricom Petroleum Fund in November 2006. In 2007, the government transferred $682.3 million from the Consolidated Fund to the Petroleum Fund It paid out $337.3 million in 2007, leaving a balance of $345 million.

Dookeran said the former government depleted the fund, which had $1.7 billion over the past five years, leaving only $65 million. US$50 million was used by the PNM government to support CLICO in the Caribbean.

He said the Caribbean Development Fund will no longer be used to "satisfy the whims and fancies of a country's problem" but a plan will be developed along with multilateral agencies of the world.

Prime Minister Kamla Persad-Bissessar spoke about the fund in Jamaica in July when she called for greater transparency. 

“I believe there needs to be greater accountability to how the funds are being used so that the resources spent are allocated in accordance with what are the most urgent areas of need in our region,” she said.

Speaking on the issue about payments for Clico policyholders, Dookeran said he understands the pain they and the trade unions are feeling. But he said this is necessary since sacrifices must be made to rebuild the country's economy.

He said the Government is firm that national interest is a priority over a select few who believed they alone were being affected by the country's economic challenges.

The minister said, "I've said it before and I'll say it again, the People's Partnership Government will always stay focused to defend the national interest of Trinidad and Tobago. 

"So there is pain but this pain is necessary if we are to put back our country on a positive track and to be able to create a sense of comfort and sustainability for the future. We are not yet out of the woods but we are beginning to see some of the light ahead of us."

Dookeran added that the economy is now in a stable position and if this was not so, the Inter American Development Bank would not have had the confidence to approve two loans to the State last Friday. He also said the Heritage and Stabilisation Fund was at US$3.6 billion the end of September.