Tales From the COURTS IX – The CLICO AFFAIR Involving the FSC and the BIPA

June Fowler, head of BIPA

June Fowler, head of BIPA   Photo credit: Caribbean360

BU is perplexed by the latest news in this mess, in which it is reported that the BIPA (Barbados Investors Policyholders Alliance) aka CLICO investors – represented by Mr Alair Shepherd QC – has refused to stay the action against the CLICO directors. It is noted that the FSC is represented in this matter by Mr Adrian King.

BU’s attention was initially grabbed (or as it transpires, misdirected and sidetracked) by the fact that Mr Shepherd and Mr King both practice out of Inn Chambers and BU asked for clarification that, although Mr Shepherd and Mr King both practice from the same chambers, they are NOT partners, but ARE, in fact, individual counsel who simply share facilities. As such, therefore, there is no impropriety, nor does BU even suggest such of the two counsel named.

That disclaimer and clarification having now been made, BU asks its family and legal eagles to weigh in as to whether BIPA has the standing to bring its action against the CLICO directors, or not. If not, as this whole CLICO mess is of massive importance to Bajans in general, on what basis BIPA has refused to stay its action? Is there any merit in pursing an action that will be stayed at the end of the day?

BU, which first disclaims that it this is in any way a legal opinion, sets out its impressions gained from archives and from a reading of the Barbados Companies Act Cap 308 as follows:

Some years ago, BU posted the decision of the Court of Appeal in Civil Appeal No. 17 of 2001 (written on behalf of the panel consisting of Waterman AJ, Belgrave AJ and delivered by the Honourable Errol Chase CHB JA, the chairman of the panel) and confirmed by the Privy Council (Hoffman LJ) in which Chase AJ started his judgement on behalf of an unanimous panel by giving a scholarly, yet easily understandable to the layman, and precedent-supported dissertation on the difference between the Barbados Companies Act Cap. 308 of the Laws of Barbados and the former Act, being the Companies Act 1910.

BU’s impression gained from this judgement was that prior to 1986, Barbados’ corporate laws had followed those of the United Kingdom. However, post 1986, all Barbados corporations had been required to be “continued” under the new Act (Cap. 308) which, in its turn, followed the Canada Corporations Act 1975.

The conclusion of Chase AJ is set out in paragraph 22 of his judgement, wherein he states:

“Further, section 95(3) of the [Companies] Act makes it unequivocally clear that the person to whom the directors of a company owe their duty is the company, not to the shareholders, not to the creditors, not to the general public, but to the company itself.”

For clarity, BU cites section 95 of the Companies Act Cap. 308.

“Duty of Directors and Officers

95. (1) Every director and officer of a company in exercising his powers and discharging his duties must

(a) act honestly and in good faith with a view to the best interests of the company; and

(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

(2) In determining what are the best interests of a company, a director must have regard to the interests of the company’s employees in general as well as to the interests of its shareholder.

(3) The duty imposed by subsection (2) on the directors of a company is owned by them to the company alone; and the duty is enforceable in the same way as any other fiduciary duty owned to a company by its directors.

(4) Every director and officer of a company must comply with this Act and the regulations, and with the articles and by-laws of the company, and any unanimous shareholder agreement relating to the company.

(5) Subject to subsection (2) of section 133, no provision in a contract, the articles of a company, its by-laws or any resolution, relieves a director or officer of the company from the duty to act in accordance with this Act or the regulations, or relieves him from liability for a breach of this Act or the regulation.”

Chase AJ goes on in paragraph 23 of his judgement, to cite the Canadian case of:

Pelling v Pelling et al (1981), B.C.S.C. 130. D.L.R. (3) 761 at page 762, where Berger J. in dismissing a shareholder’s claim for breach of fiduciary duty, said:

“there is no fiduciary obligation between shareholders, and no general fiduciary obligation owed by a director to a shareholder. A director’s duty is to the company; he has no fiduciary obligation to the shareholders…..”

BU can find nowhere any subsequent case in which the decision of Chase AJ, as confirmed by the Privy Council, has been reversed or set aside by a court of competent and superior jurisdiction and therefore the Barbados courts are, it would seem to BU, bound by this ruling – and by the law as set out in the Companies Act Cap. 308.

Can BU’s legal eagles shed any further light or provide any opinions on this?

BU goes further, in so far as BIPA (as a party to the action is concerned) in asking its legal eagles for clarification as to whether as an association, it has any standing at all to bring such an action against the directors of CLICO in the name of the association. After all, the association is itself not a shareholder in CLICO, nor, so far as we can see, is this a class action of shareholders. It seems to BU that BIPA is acting as an agent in this, but so far as BU is aware, an agent has no right to bring such an action, only the shareholders themselves can do that in their own names. IF BU is correct (and we are very open to dissent, discussion and advice on that) then this action is fatally flawed from the get-go and doomed to be stayed.

On its Facebook site BIPA sets out its mission statement as:

“BIPA is a non-profit organisation which was formed out of the coming together of policyholders of the bankrupt insurance companies, CLICO and BAICO who are seeking to get their money back using the legal system to achieve this goal.” [BU’s emphasis]

While BU applauds and encourages the BIPA intentions and is certainly 100% behind holding CLICO and BAICO to account, it sincerely questions the grounds of this latest and asks if in this case “using the legal system” is prudent…….or a possible mis-use and whether the stay BIPA has refused to agree to may not inevitably be granted by the courts, based “unequivocally” (the word used by Chase AJ) on both statute and precedent?

It is noted solely as a by-the-way that the losing counsel in Appeal No. 17 of 2001 were Mr Alair Shepherd QC acting in association with Mr Adrian King.

We are, frankly, confused on this one and we hope that BU’s legal eagles will assist us to understand what is going on, for clearly Mr Shepherd QC knows something that is completely obscured from the scope of BU’s layman knowledge. We would like to know what it is. For to quote BIPA’s Facebook statement:

“The ongoing CLICO and BAICO situation is without doubt the most disgraceful financial debacle Barbados has ever witnessed. For nearly four years now it has devastated the lives …of 35,000 Barbadians, most of whom can least afford it, particularly the elderly.”

BU ENDORSES THIS STATEMENT WITHOUT RESERVATION OF ANY KIND.

In a country of approximately 285,000 souls, something that has “devastated the lives …of 35,000 Barbadians, most of whom can least afford it, particularly the elderly,” requires more journalistic investigation than the mere bald statement that BIPA has refused to agree a stay of the action against the CLICO directors. It requires an investigation on the chances of success of such an action and whether good money is not being thrown after bad.

And it is no good claiming that the matter is sub judice and that BU should not comment or question, as in any other free society with a functional press, such an action would be discussed in all media by legal experts, as to law and chances of success. In addition, elected members of the executive would be weighing in heavily with their views and statements of outrage and AGGRESSIVE suggestions of ways forward. Imagine that 12+% of the population of the United Kingdom (8.4 million souls) were affected by a situation like CLICO……imagine the press and investigative journalism feeding frenzy. There would be parliamentary inquiries, judge-led inquiries, police inquiries and a major international scandal and every UK MP would be fighting for air time to make their views known.

Well, according to BIPA, 12+% of Barbados’ population are victims of CLICO and, so far as we can see, not much is being done – and frankly a change of government in February 21 is highly unlikely to change this, given the deafening silence and the political games that has one party trying to blame another for a situation for which BOTH are clearly responsible. BU is fully on side with BIPA in any law-based action that can bring with it the chance of success and restitution for the CLICO investors.

Where BU and BIPA would part company is if the money of BIPA members, already egregiously harmed by CLICO, is being used by counsel to bring meritless litigation with little or nil chance of success – for which the losing party will have to pay the costs. For that would be to exacerbate the harm and loss and hardship already suffered by CLICO investors. All for nothing, except dollars in the pockets of the legal profession and the further clogging up of an already fully clogged and moribund court system under the administration of a chief justice who hasn’t a clue what is going on or, even if he had a clue – which he clearly does not, how to fix it.

And it is no good to say that this action is brought as a means of getting the matter before the CCJ, if, once it is before the CCJ, it fails. The CCJ is bound to apply the laws of Barbados, being the Barbados Companies Act Cap 308, not the 1910 Act. In the circumstances, and as a pure layman, BU does not see on what basis the precedent decision of Chase AJ can be overturned. It seems crystal clear and unshakeable and a matter of statute.

BU, having little or no legal training, does not pretend to know the answers. It merely presents its impressions and poses obvious questions and now affords the family and legal eagles the chance to weigh in, in the spirit of a true, functional and democratic press. We are, after all, the Fifth Estate and, in Barbados at any rate, charged with the responsibility of making up for the deplorable lack of duty of what calls itself the Barbados Fourth Estate. Also, frankly, the family as a whole is far brighter and better educated and much more on the ball than those posing as reporters in the Fourth Estate.

0 responses to “Tales From the COURTS IX – The CLICO AFFAIR Involving the FSC and the BIPA

  1. @David Sorry I meant Gordian Knot not gorgon, typographical error.

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  2. Observing(...)

    @check it out
    Good questions!!

    The political fallout will hurt the DLP. Not on the scale of scandal since the JM report has been placed in file 13 and no investigation has been done that we know of. Notice too the BLP is attacking the issue on the platform from the perspective of solution rather than problem , which suggests that their hands are slightly soiled as well. Re question one, DT has to hold large amounts of blame for the fallout. OSA a bit for lack of oversight, but this particular demon belongs fully on the back of this present government. Re oecs, I’m keen to hear Alvin’s explanation re “no bajan solution without the other countries involved.”. Every other country so far has looked after their own. Gonsalves brokered a deal to take care of his people as recently as last October. Yet, we here in Bim are sucking salts and smelling another “s” words with no assurance, progress or movement and definitely no revenue, recourse or recrimination. It stinks to high hell and every right thinking person pretty much knows it.

    If the DLP loses seats by 100 votes or so across the island, rest assured that it would have been CLICO that helped to make it that way.

    Just Observing

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  3. millertheanunnaki

    @ David | February 10, 2013 at 12:06 AM |

    I disagree in principle with any proposal to compensate the holders of EFPA’s from any taxpayers’ money either by way of direct cash payments from the Treasury or through some form of tax relief.
    The first and foremost policyholders to be compensated must be those holding life insurance contracts and pension plans, whether individual or as a member of employer-based option. These exploited and financially abused people were not gambling and taking greedy risks to make more money but were simply protecting themselves against life’s financial vagaries and providing for their old age when they will be unable to make a living but still avoid being a burden on the State.

    The State’s sustained negligence in regulating the management of these legally recognized insurance and pension contracts as part of its obligations under Statutory legislation makes it liable to compensate the “contractee” policyholders for losses suffered.

    Any plan to compensate these two vulnerable and innocent sets of policyholders must apply across the region in which CLICO Barbados marketed and sold these annuities and is still legally responsible for the fiduciary management and control. By continuing to receive premium payments- the company CLICO and its associates benefiting from these payments- are effectively saying that they continue to recognize their legally enforceable contractual obligations to these policyholders.

    The compensation proposal must therefore be financed as follows:

    From the net proceeds from the sale of those assets that can easily be sold on the open market.
    Those assets that can’t be sold readily to realize cash should be compulsorily acquired by the State generating a debt due to the policyholders. The tracts of plantation lands and abandoned hotel properties readily spring to mind. A similar move to acquire and sell properties and other tangible assets must be made in the other affected territories.

    From the Treasury by way of the floating of a bond to immediately compensate those policyholders whose contracts (NOT EFPA) are overdue for payment.

    An option by way of tax relief (set off against assessable income) the paid-up value of those contracts not yet matured. This would apply mainly to corporate holders of pension plans with any resulting losses capable of being carried forward to perpetuity.

    Every little bit helps and any opportunity to recover any illegally gotten gains to finance lavish lifestyles should be steadfastly pursued. The State should immediately institute investigations into the financial affairs of the local CLICO senior executives, directors, and lawyers to see if any laws were breached as far as the provisions on the Income Tax Act and the Anti-Money Laundering legislation would allow. Any monies recovered would help, in small but meaningful ways, defer or mitigate the Treasury’s obligation and as an important show of a moral victory in the name of Justice.

    After these two classes of policyholders have been taken care of, then the holders of the high risk greedy illegally sold EFPA’s can fight over the residue with the JM’s and lawyers breaking for themselves.
    The corporate holders of EFPA’s- including the likes of BARP and other non-profit organization- will have to come to some arrangement in which the Treasury might be prepared to accept 50% as a tax write-off (when the Treasury can absorb the potential revenue loss) and the other 50% accepted as a ‘non-deductible tax’ loss to the company/shareholders/members who should seek to recover from the Directors and investment managers.

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  4. @Checkit-out

    BU notes that Chris Sinckler offers an explanation about the 837 million figure he mentioned at Passage Road last week and it reconciles with BU’s explanation. CLICO assets are not realizable if you apply fair market value in the current economic environment.

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  5. Watching Carefully and Listening.

    @ David .
    You are badly misleading yourself . The fact that CLICO did in fact continue selling insurance after the order of the Supervisor of Insurance to desist , had nothing to do with Mr Paris’ decision but the decision of the MINISTER OF FINANCE at the time MR OWEN S. ARTHUR who used the authority conferred upon him by Statute to overturn the decision of the Supervisor . You must check the facts .

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  6. millertheanunnaki

    @ David | February 10, 2013 at 10:10 AM |

    So what are the poor policyholders to do?
    Wait until the real estate appreciates in value to the amount of $837 million?
    Why should they continue to pay premiums that are not being used to enhance or maintain the values of those assets but to pay JM and legal fees and salaries to the likes of Terrence Thornhill?
    Have you seen the recent state of those real estate properties? These properties will never appreciate in value. Its better to sell off these assets for what the current market is prepared to offer and stop further deterioration in value and losses to policyholders.

    For a start the policyholders need to STOP PAYING PREMIUMS.
    Unless the governments in Barbados and the OECS are prepared to do like T&T and take over the assets and liabilities for future sale, the continuing payment of premiums is a waste of money and time because the only ones benefitting from the premiums are not the poorly maintained Assets but the ass lickers like the JM, remaining CLICO executives and the top vulture lawyers.

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  7. @Miller

    Who said CLICO was an easy fix? Perhaps it is why Sinckler has not factored the 300+ million in the way the deer-struck BIPA has factored it.

    On another note has any taken a look at the picture in the Nation this morning? Sinckler captured in the company of Leroy Parris and his lawyer Gollop?

    One can only describe it as political naivete bordering on stupidity.

    Here is the pic:

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  8. millertheanunnaki

    @ David | February 10, 2013 at 11:12 AM |

    No one in his or her right mind (excluding June of BIPA of course) would ever think a Ponzi scheme like CLICO will be an easy fix. But we are surprised that the fall of CLICO was not blamed on the international recession by the DLP apologists.
    But something has to give to relieve the innocent policyholders of this heavy burden placed around their necks through no fault of their own. We have to start some place some time instead of twiddling thumbs and assigning blame to OSA or the David Thompson regime. The miller’s proposal put on the table needs to be discussed and rejected based on sound argument.

    The say a picture is worth a thousand words or more aptly, 837 million dollars.
    Now everybody knows where the DLP loyalties lie with regard to the CLICO shitty mess. Certainly not with the policyholders!

    Again to BIPA: STOP PAYING YOUR PREMIUMS. You are being screwed to financial death.

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  9. As a member of BIPA and policy holder of CLICO I am anxious to get a resolution .

    But it must be approached in a transparent sincere manner.

    BIPA president , Ms. June Fowler , is owed $40,000.00 through the EPFA products she bought from CLICO.

    But what Ms. Fowler must tell Barbadians is that between she and her husband owes the Government of Barbados in excess of $80,000.00 through loans borrowed from Fund Access and Enterprise Growth Fund.

    If I am lying, I challenge Ms. Fowler or any agent of hers to come out and deny it .

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  10. What does Fowler’s personal liabilities to government – if true – has to do with managing the CLICO mess? Doesn’t Fund Access have recourse to how the loans were securiterized and if not the courts of Barbados?

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  11. @David and Checkit out.
    Two days ago, here in Toronto, we were in the midst of a snow storm. Visibility was severely impaired, people could not see where they were going. Ther were over three hundred and fifty vehicle collisions, with two deaths. The falling snow seemed never ending. Now as I write this, all is calm and the ground is pristine white. All the vehicles that crashed during the driving snow have been removed to the garages to be repaired or replaced. the storm has passed and all that is left now is the aftermath, and sorting out of vehicle insurances mess; just like the Colonial Life Insurance mess. I have deliberately used the full name for clarity, because that is the most pressing because of its implications. Now to your questions.
    Allocation of blame on the various leaders is not helpful at this stage-although I don’t agree with you that it (the clico mess) started while DT was PM. The whole thing started to unravel when the world financial collapse started and the housing market worldwide collapsed. Remember the multimillionaires who overnight became millionaires.CL financial’s collapse started a number of years before when the intercompany loans to the parent company, loans to various other entities to purchase investment properties etc; Sam Lord’s Castle, Rayside construction, Todd’s estate etc, without proper oversight by either government (supervisor of insurance) or internally (auditors; sharholders, through demanding annual financial reports, attendance at annual shareholders’ meetings and demanding answers from the Board of Directors of the relevant companies, such as CIL (if the policy holders are indeed shareholders?) CHBL andothers in the portfolio. The world financial collapse thus spelled doom for the whole empire; think Stanford, think Bernie Madoff, and so many others wwho suffered the same fate.
    Unfortunately DT is not here to answer for himself so anything regarding his input has to be speculative, unless written documentation is available.
    Re “lesser weight on other actors”, all the policy holders will feel pain, some more than others. I would not comment or posit the possibility of ‘inducements’ but I can understand trying to calm the waters “to prevent a “run” on the company and the immediate-as opposed to gradual- collapse.
    Dante in The Divine Comedy” allocates different levels in Hell to individuals depending on their degree of sin-big sins as opposed to little sins: those without sin, such as babies he sent to purgatory,a space between heaven and hell. At the lowest level was the Devil; buried up to his waist, not in hell fire, but in ice, and sitting on his horns were the Popes. I don’t attempt to make any discrimination. All the sins are the same, they cause suffering.
    The judicial manager should have been set up sooner.however, when does government have the legal authority to move to do this type of thing with a private company? Does it depend on the type of company, or who is running it? We have had other insurance companies that have collapsed and I am not aware of them being under judicial management. Was Trade confirmers ever the subject of any sort of official enquiry? I can’t hazzard a guess re possible lawsuits to “entities” and what might be the nature of these lawsuits.
    The current situation for the DLP is “dread” to borrow a word from the BLP, and will have a detrimental effect on them. You said something about OSA meeting with them…wonder what he said, because the figures don’t seem to add up…357 million (BIPA) and 77 Million (OSA). Which is correct?. OSA is taking advantage that began under his watch and stewardeship, and the obvious discontent of the populace, with constant fanning of the flames by the BLP propagandists who are good at such things. remember the campaign against Sandi? But that is the nature of Barbadian politics.The collapse of other insurance companies should have spurred the supervisor of insurance and the government of the day to greater diligence and oversight. Throwing everyone under the bus, now, is not helpful it only makes the ride rougher as it travells over the bodies.I can already predict what the Wickham poll will say and when it will come out; just before the election day. I don’t hold my breath. Like the snow storm of a few days ago, that too shall pass and the universe will unfold as it shoule.

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  12. millertheanunnaki

    @ Alvin Cummins | February 10, 2013 at 1:36 PM |

    We have been reading, with intrigue, your various repeated analyses of the myriad causes
    for the CLICO debacle and collapse. Your subterfuge attempt to link its collapse to the failure of the international financial markets taking with it the Ponzi schemes of the Stanfords and Madoffs of the finance and investment underworld is most interesting and indeed frightening.
    One should bear in mind that although Madoff and Stanford have been stripped of their ill-gotten lucre and now languish in jail their mark in history of financial scams will never bring full financial restitution to those pyramid builders but at least a moral victory has been won. Can we say the same about the CLICO scam?

    As you know these systemic failures have a way, like viruses, of spreading and infecting other entities or bodies perceived as financially healthy. Should we therefore be alert to the shakings of the giant Sagicor which is definitely too big to fail?

    We see you as a decent man of integrity blessed with a cup that “runneth” over with emotional intelligence and concern for the underdog, downtrodden and those financially exploited. We are therefore asking you to share some of that wisdom and love for your fellow man by offering some advice to those aggrieved policyholders.

    We are not referring to the those who committed the big deadly double sin of Greed & Avarice- by investing in those illegal EFPA’s that even the devil would scoff at- but those naïve innocent policyholders of life insurance and pension annuities who like little children are caught between a cold hard rock and that hot place called purgatory.

    What advice would you give these poor innocent souls caught in financial limbo? Should they continue to chase the financial dragon by paying the piper with their premiums without hearing a tune?

    “Noblesse Oblige “ought to be the hallmark etched in your response!

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  13. Simplistic reasoning tells me that Clico policy holders should be paid.

    All physical assets of Clico Barbados should be sold and the proceeds paid to those who paid Life Insurance premiums and those who are depending on pension payments.

    If any money left pay the EFPA policy holders.

    If there is reason and evidence to show that fraud was committed by Clico executives then the perps should be dealt with according to law.

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  14. Very important. As written by BU bloggers time after time.

    http://www.nationnews.com/index.php/articles/view/justice-delayed/

    Shepard now decide to open he mout?

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  15. @millertheannuki. Thank you for your kind words. I am not an expert at financil matters or law but I read a lot and try to follow the advice of one of my professors from early university days. “Do not allow yourslf to be brainwashed. Analyse everything, tear it apart and examine its innards, when you have done that to your satisfaction, then make up your mind”. I would not label the CLICO debacle as a “scam”. All insurance companies operate the same way; technically, they have to. They function by using the money policy holders pay in premiums to make investments; short term and long term, at an interest rate that will allow them to have the funds available when the term of the contract (insurance policy) has reached the stage that the policy holder can be paid what is due to him/her.Due diligence is absolutely needed to ensure that the investments can fulfill these requirements. Thus ALL insurance copanies ust be subject to the same scrutiny. Investment strategies have to be exained for their long term viability and possible losses.
    By the way according to Dante purgatory is not a “hot” place, it is between heaven and hell.
    Big and difficult as the pill would be to swallow, my “advice” for whatever it is worth, to “those poor innocent sould, caught in financial libo” is to exercise as much patience as possible. By continuing to pay premiums you are maintaining the contract and the “legal obligation” of the other signator to the contract-the insurance company-to provide “satisfaction”. When persons have diabetes and a foot has to be amputated, acceptance of this fact although difficult might result in saving the life at least. If the “poor souls” unilaterally “break the contract” then their chances of “refunds” however little are diminished or negligible. One of the basic tenets of the stock market (the biggest gambling arena in the world”) is to buy low, hold on and sell high.That might mean waiting for a very long time for the stock bought to reach a satisfactory rate of return. If however the company of the stock collapses the only thing that can be done is to accept the losses. I have shares (not many) in a local mutual fund that is worth less now than when I bought it originally. The fund managers determine the investment strategies. I can sell it now; at a loss, or hold on in the hope it increases in value. That choice is mine. Investors have to educate themselves about what they are investing in and be aware of what they are getting themselves in.
    The government cannot; nor should it be expected, to recompense everyone who makes an individual investment decision and looses.If Sagicor, because fo bad investments goes bust would Government be expected to recompense these policy holders? what about ICBL? Don’t forget that because of its ties to BNB; now part of the CL Financial portfolio, their “instruments’ are subject to the same forces.
    Government and individuals have to ask more questions and be more aware of what is going onlocally and internationally. If a local company invests in the outside markets, what ahppens outside have a very direct effect locally.

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  16. David on February 10, 2013 at 12:47 PM

    What does Fowler’s personal liabilities to government – if true – has to do with managing the CLICO mess? Doesn’t Fund Access have recourse to how the loans were securiterized and if not the courts of Barbados?
    —————————————-
    The Fowler family have blatantly refused to repay the Government of Barbados (GOB) for loans they had since 2006 long before the CLICO debacle.

    It demonstrates that the Fowler family have a history of making broken promises. And disregarding commitments to those that the owe.

    Their position is akin to the Private Sector Association (PSA) of Barbados who recently complained to the GOB for outstanding payment of $50 million , but the PSA owes GOB $300 million.

    He who comes to equity must come with clean hands.
    Remember that Ms. Fowler and PSA.

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  17. @hants: you should realise “simplistically” that it is not as simple as you might assume. We operate according to the law and the law courts have to be resorted to to resolve the matter. That takes time. So OSA’s impression given that he has an early solution is so much twaddle. The process takes time.

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  18. Observing(...)

    @david
    Seems like someone has been persuaded paid or prodded to run a hatchet job on Fowler. Could this be payback for not holding off that darn lawsuit? Could it be in tandem with Chris and Leroy’s drinking spree in the Ivy? Did any one notice ye Hal of Redman fame turning from the camera so as not to be seen with his “pals”?

    @alvin
    Good exposition on the legal and regulatory side of the matter. The challenge is, it surpassed those a while back and became a fraternal/paternal and political one. Herein lies the rub.

    @hants
    Your simplistic reasoning is quite sound. Waiting on JM, waiting on assets to regain value, waiting on the OECS countries, waiting on an FSC investigation…all the while money iss tied up, premiums still being thrown down the hole and the “culprits” drink wine and champagne without a care for those whose lives they have affected…maybe even ruined in some instances.

    As me great gran used to say…”God don’t like ugly.”

    Karma will tip the scales of balancee one way or the other.

    Just observing

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  19. millertheanunnaki

    @ BIPA member | February 10, 2013 at 3:35 PM |
    “He who comes to equity must come with clean hands.
    Remember that Ms. Fowler and PSA.”

    Listen jackass, this is not about “equity” but about meeting obligations under the law, that is Statutory Obligations.
    Members of the local private sector (and even government bodies and agencies) have a Statutory obligation to pay over all PAYE deductions from employees wages and salaries and net VAT collected from customers within a specified time.

    There are no ifs or buts or equity considerations where these responsibilities are concerned.
    There is nothing to argue over in a court of law.

    The government also has a similar statutory obligation to refund overpayments whether under the Income Tax or VAT Legislation within a specified period.

    Do you want to see Barbados continue to be a law abiding society or a free-for-all wild wild west banana republic?

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  20. I told a friend of mine this morning that very soon we are going to see the goons of the DLP throwing mud on BU at June Fowler. Wow, less than 12 hours and it has happened. But June Fowler said in a VOB interview that her back is board to take the attacks.

    How will the policyholders feel today after they saw that photo with Sinkliar and his pals? They will truly feel that the have been screwed. Sinkliar a big liar has been lying to these folk since the day he took over as MOF. Did not the king on his dying bed said that a solution was found and that the MOF would reveal it in a few days? Well that was in October 2010.

    Any hope they had of getting back money is gone should the DLP win this election. BIPA should have sued Leroy Parris as CEO and Lawrence Duprey as the owner. If the king had not died, he too as the lawyer. All these people assets should be seized as it is clear that they misused the policyholders monies.

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  21. david; Re. your 10.10 am comments.
    I have great difficulty in accepting the intended cloud that masks Chris’ statement that the current market value of the CLICO assets are well below market value and hence this invalidates the “solution” that OSA is now offering the BIPA folk. Sounds like a circular argument to me.

    DT, CS and FS’ fingerprints must be prominent amongst those of the entities that would have contributed to, or even knowingly engineered, that situation. Imho it seems certain that if they had each acted as would have been expected of government officials with no axes to grind for the CLICO hierarchy in the early days of the collapse of Clico (2008-2009) and instituted a Judicial Management operation, with dispatch, like the other countries in the region the CLICO asset base would surely have been significantly higher today.

    CS can’t reasonably claim that the CLICO problem has now become irretrievably insoluble in so far as the BIPA people recouping a reasonable portion of their investments when his policies (the continuation of the DT’s policies), would have been directly responsible for the current state of such assets.

    He appears to have washed his and his Government’s hands of any culpability in this while trying to blame the current external environment. Sounds like a familiar DLP strategy, doesn’t it?

    As Observing suggested “God don’t like ugly” and perhaps the channel that might evidence this could be opened after the coming elections if OSA wins and is true to his promise to vigorously pursue the CLICO principals which just might include a few politicians quick or dead.

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  22. watching and waiting

    While I am certainly not a lawyer, I believe there are special circumstances when a company is accepting deposits from the public – as in a Bank or other financial intermediary, A Pension Fund and under the Insurance Act as well.

    In addition there may be additional areas to explore under the concept of securities law/regulation. In this area, the public pronouncements by various Government officials would have influenced people’s decisions because these are persons in a special class who are presumed o be giving advice – lawyers, economists, CEO’s etc.

    In the USA for example, regulators, public officials and company officials would have to be very careful what they say IF it could be seen as statements that are likely to distort the markets and/or provide “incorrect” information.

    I think the entire matter requires some legal actions brought to force the judiciary to consider and pass judgement on the various matters.

    Even though CLICO was a private company, it was collecting funds (some might say taking deposits without the requisite licence under the Financial Intermediaries Act) and premiums for its various insurance products.

    The fact that it was regulated by a Government agency and then key Government Officials would have issued statements describing the entity as safe, says to me, the Government is very liable. These three officials are key:

    – David Thompson in his capacity as Prime Minister in the presence of all the key advisers indicated CLICO’s safety and soundness;
    – Leroy Parris in his Capacity as Board Chairman went on TV to indicate there was no connection between CLICO Trinidad and CLICO Barbados. It is presumed that he is in a position to know and therefore even if he made the statement in ignorence – he establishes some liability. Again he did not make the statement to CLICO Shareholders or in the Boardroom to Directors, his statement was directed to the entire populace. Again in my view if he wanted to talk only to the shareholders, he could have done so directly through a circular. His public statements establish the PUBLIC nature of these businesses.
    -Thirdly the Central Bank Governor – in the case of Dr. Marion Williams, was present when the PM made his statement and any reasonable person would conclude that she concurred with the PM’s statement of safety and soundness. But even when the Governors changed, Dr. Worrell who, since the Central bank does not regulate CLICO, could have remained silent, made a comment in terms of Policy-holders getting back at least their principle.

    I would also argue that Directors owe a duty of care to the company and in the case of an insurance company that also manages PENSIONS, I would submit that the fiduciary responsibililty is actually to the Policy-Holder from whom they have taken money and entered into a contract.
    In fact the fiduciary relationship would seem to be established because usually we give the agent or company money in trust before an insurance contract is issued and indeed if the policy is not issued, we might be refunded this money which was in trust and therefore not theirs.

    In that regard CLICO’s Directors, Company Officers (CEO, COO, CFO etc) and indeed their licenced AGENTS owed a fiduciary responsibility to the Policy-holder as follows:

    1. Utmost Care- The agent/Director/Officer is bound to the higher standard of a professional in the field which extends the standard of duty to investigate within the means of the profession, to ensure the maximum protection and information be provided the policy-holder.

    2. Integrity- Defined as the soundness of moral principle and character. It means the agent/Officer/Director must act with fidelity and honesty.

    3. “Honesty and Duty of Full Disclosure” of all material facts, either known, within the knowledge of or reasonably discoverable by the agent/Director/Official which could influence in any way the policy-holder’s decisions, actions or willingness to enter into a transaction.

    4. Loyalty- An obligation to refrain from acquiring any interest adverse to that of a policy-holder without full and complete disclosure of all material facts and obtaining the policy-holders’ informed consent. This precludes the agent/Directors/Officers from personally benefitting from secret profits etc. (Or buying lotto tickets with the PENSION funds – and keeping the winnings personally)

    5. Duty of Good Faith- includes total truthfulness, absolute integrity and total fidelity to the policy holder’s interest. The duty of good faith prohibits any advantage over the policy-holder obtained by the slightest MISREPRESENTATION, CONCEALMENT, THREAT, or ADVERSE PRESSURE of any kind.

    So while I understand the arguments being advanced in respect of the Companies Act and the standing of BIPA, I think the special circumstances of this require strong legal action against at least the following:

    CLICO Directors
    CLICO Corporate Officers – CEO. COO, CFO etc
    FSC / Supervisor of Insurance
    Minister of Finance
    Prime Minister’s Office
    Auditors – PWC

    The CLICO Directors and other officials should have Director Liability Insurance (hopefully not with CLICO) so even the question of a failed lawsuit, where the courts are asked to award costs for Directors should not really arise because the Directors should not be required to personally pay for their own legal defence and therefore ought not to profit from it.

    I have watched this situation unfold from reasonably close to the action and I am horrified that it has been allowed to drag on in the way that it has. There is little doubt in my mind that CLICO’s EFPA business segment was an elaborate Ponzi Scheme where the relatively young and attractive CLICO Agents were highly incentivised to meet higher and higher targets every year in order to meet prior-year liabilities through current premium revenue. This ponzi scheme was disguised amidst legitimate insurance operations in a way that made it difficult to detect.

    The use of real Estate and other long-term investments as a primary investment tool and the relatively small short-term liquid assets is the clue that it was a ponzi because the returns on real-estate are long-term in nature and often not easily realiseable. They are however unlisted and therefore can be valued by a Board at whatever the Auditors will allow.

    Salaries, bonuses and perks bore no resemblance to the responsibilities of the job nor the profitability of the various companies and are another clue as to the ponzi nature of the scheme. The salaries and incentives for Staff/management/Agents were really a scheme devised to always ensure their acquiescence as targets became more and more challenging – to the point where these young female agents would happily sleep with a client if he was going to make a substantial EFPA “investment”.

    I look forward to further discussion on this matter especially from the legally trained.

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  23. @ watching and waiting. I agree with you in,almost entirely, what you have put forwaqrd. the only argument I might with a small portion of your representation is the connection between CLICO (Barbados) and CLICO(trinidad) Parris was right they are not connected :accirding to the organizational chart. The connection is with CL financial, and that is who the action, or lawsuits should be directed toward. I am also glad to see your linkage with a ponzi scheme. Some years ago when I pointed out to a senior operative in another large insurance copany that their operations were nothing but a large ponzi scheme I was; as they say colloquially, ‘laughed to scorn:. I am glad that I am now vindicated. I agree with the logic you use with regard to who should be pursued legally, but I think there has to be clarity with regard to English Law and American Law and what is covered. There has to be legal action taken. How it will be pursued, the areas it would cover, and the reedies sought and obtaained will keep this case, or cases, before the law courts for a very long time. ther is no doubt precedents will be set, as they should. Alvin Cummins

    ________________________________

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  24. @Alvin

    How it will be pursued, the areas it would cover, and the reedies sought and obtaained will keep this case, or cases, before the law courts for a very long time. ther is no doubt precedents will be set, as they should. Alvin Cummins

    To your quote above, this has been BU’s position for a while now. It will have to be tested in the courts and those with deep pockets will be the ‘winners’. Does BIPA have deep pockets? There move was a political tactic to scare but may lack substance in the long run. Note who benefit here, Alair Shepherd (BIPA), Adrian King (FSC) and Tariq Khan of the Inn Chambers stable.

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  25. watching and waiting

    @ Alvin Cummins
    Actually you are perfectly correct with respect to the CL Financial / CLICO relationship. The truth is that the entire structure must have been created to deceive, even though others will say it was to create tax efficiency. I have tended to just lump everything together as ultimately I believe the corporate veil can also be pierced by a good lawyer as I suspect that the necessary corporate records which would effectively shield the group were mostly shabbily done based evidence of shabby record-keeping in other areas of the group. Once the veil is pierced I also believe it will be shown that the companies were shams established to do the bidding of Duprey and a select group including Parris. I also believe minutes of meetings will establish that because of the arrogance displayed by the key individuals and the extent to which they purchased immunity everywhere by buying governments. This close relationship between Panday/Duprey and Parris / thompson was duplicated by Parris in key markets like St. Lucia, St. Kitts, Dominica etc.

    And also agreed with the differences between the American and English systems. I would give way there as well. I am probably mixing the two but as I understand it, much of the litigation will likely have more to do with common law issues like fiduciary responsibility and duty of care which would I think open the door to precedents from both jurisdictions as I believe the US system’s common law derived from English Common law – but I would concede that ground in the face of evidence to the contrary.

    I also agree with you that a number of precedents will be established and are mostly needed to ensure that the post-CLICO environment is better, more secure and safe and that the valuable lessons do not escape us.

    I strongly believe that Parris will have a lot to answer for as he was a Director of CL Financial and therefore cannot plead innocence or ignorance because he was in a position of privilege.

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  26. Just A Lunatic

    I would suggest that the most likely way of taking the CLICO matter further, is to bring a civil suit vs Government / Office of Supervisor of Insurance, for negligence in conduct of supervision of said entity. i.e. it has been alleged that financial statements had not been filed for some time, if true, why was this omission allowed. The financial statements are testament to the solvency or lack thereof of the entity.

    This would be exacerbated if there were no financial statements lodged at the time that CLICO was offering the ridiculous product, thereby making it difficult on the part of the Supervisor to justify solvency and issuing of license, and difficult on the part of investor to assess state of company.

    This breach is merely a matter of fact, in that there is a legal requirement for statements to be filed, hence it may be that such breach is de facto negligence on part of both company and Office of Supervisor if it is allowed to continue without filing such statements.

    This would obviously have to be decided by a Court at its……leisure.

    I make no claim either way and no charges.

    That said, I would disagree with the directors not owing ‘
    investors’ any duty of care.

    Despite reference to previous case, the reality is that if it can be shown that the directors could have been aware, at the time of issuance of the investments, that the company’s solvency was in question and therefore should not have been operating (under the insurance act) then surely it would mean that they acted recklessly, and outside of the law.

    As such, the burden of duty of care may not come under company law, but derive under common law. and acts or omissions thereof be assessed as negligent, should these impimge on the rights or financial status of others.

    As an example, supposing you as a director of a company, to make more money, tell your drivers to drive as fast as possible to double deliveries each day.
    Someone is hit by your delivery truck. Whi is liable?
    The driver for listening to you? Yes, That is the law is he was speeding.
    But can one not sue under common law, despite the driver acting for the company, which is liable, the act of delivery and speeding is not ultra vires,

    Further, you as a director in encouraging the driver to speed and break the law, resulting in injury, are not absolved bacuase the company tell he to speed, not me’. No, you did. You are also liable under common law and negligence of duty of care to your neighbour on the Pie Corner bus..

    Wrong?

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  27. You are not only wrong, you are also clearly a lunatic as your name suggest.

    ….after a careful review of how things are done ’bout here, including the systematic BU analysis of our retarded courts, crooked and semi literate “learned” lawyers/politicians and our useless, but expensive, education system…..
    How the hell can you expect that such a sound and reasoned approach as you have articulated can be acceptable in Barbados?

    Who in their right minds would apportion any responsibility to the DIRECTORS of this PONZI scheme, who sat in their fancy BOARDROOM, collecting fees, enjoying the prestige of “running things”, signing off on policy, …..and generally acting as front men for a man who otherwise would match the profile of a village showoff….(one Green Verbs LP.)

    ….apparently only you….and Bushie.

    Sorry skippa…..you got to be just a lunatic.

    …we better hush we mouths too ….otherwise Amused and Legalese will find some kind of perverted reasoning to explain how it is that you and Bushie are the ones responsible for the whole CLICO mess
    …..and before you can cash a policy, the Guyanese DPP will have our behinds up Dodds on remand for the next 10 years.

    Bushie suggest that we join up with BU David and Miller the nooksie and blame the woman in charge of the policy holders group for the whole thing….. :)

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