Jul 2010 Financial News

NGC, NIB in bid to block CIB winding up

Jul 09, 2010

Two State companies— the National Gas Company (NGC) and the National Insurance Board (NIB)—are seeking to stop a petition before the High Court which seeks to wind up the assets of Clico Investment Bank (CIB).

Both companies have a combined investment of $1.8 billion in the failed bank, which was operated under the CL Financial Group of Companies.

When the matter was called yesterday before Justice Ronnie Boodoosingh, in the Port of Spain High Court, attorneys seeking the interest of NGC, NIB and CIB each made submissions.

Senior Counsel Deborah Peake, who is seeking the interest of NIB, complained that several documents requested from CIB through its attorneys, Senior Counsel Reginald Armour and attorney Neal Bisnath, were not forthcoming.

Peake said NIB had requested a copy of Ernst & Young's analysis of CIB, but were only given portions of the report and not the entire document.

She said she requested the report since she wanted to review whether the application by CIB claiming to be insolvent was substantiated.

Both NGC and NIB entered the hearings as interested parties after a notice was advertised in the newspapers.

Last year the government bailed out insurance giant Clico, a subsidiary of CL Financial. In a bid to prevent a financial crisis on other CL Financial institutions, government handed over control of CIB to the Central Bank.

Government then gave a guarantee that all depositors' money was safe.

During the bank's crisis, it offered an Investment Note Certificate (INC), which is a short term deposit designed to give customers a safe haven for their investments above market rates.

However, Central Bank disagreed and noted that an INC was not an approved financial instrument and not eligible to allow payment of full principal amount of all third party deposits guaranteed by government following CIB's collapse.

Attorneys seeking the interest of NGC and NIB argued that the issue regarding the validity of an INC should be determined before the trial began.

Boodoosingh directed that arguments on whether the INC should be deemed a preliminary issue be submitted on or before September 17 and that any response be filed on or before September 27.


Source:
Denyse Renne
denyse.renne@trinidadexpress.com
Trinidad Express
Friday July 9, 2010

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