PORT OF SPAIN, Trinidad, July 9, CMC – Outgoing Central Bank Governor Ewart Williams has described the financial debacle that engulfed the Colonial Life Insurance Company (CLICO) as “a massive fraud on the people” and that the bank has taken action “to charge” certain players with fraud.

In an interview published in the Express newspaper, Williams, who demits office on July 16, said that “we are taking the position that CLICO was a massive fraud on the public and that’s our position”.

The Trinidad and Tobago government signed a shareholders’ agreement on June 12, 2009 with CLICO following the signing of a memorandum of understanding (MOU) between government and CL Financial, CLICLO’s parent company on January 30, 2009.

The MOU gave government control of 49 per cent of CLICO’s shares. The then Patrick Manning government injected TT$7 billion (US$1.01 billion) into CLICO in 2009 to keep the collapsed insurance firm running and protect policyholders.

Last September, the Kamla Persad Bissessar government through legislation committed an additional TT$13 billion (US$2.01 billion) to keep the insurance company afloat.

The collapse of the company is now the subject of an ongoing Commission of Inquiry.

Williams said that following CLICO’s collapse, the Central Bank sought to tighten its regulatory infrastructure and improve its supervisory practices.

He admitted to losing “a lot of sleep” over the CLICO issue, saying “it doesn’t put the Central Bank in the best light.

“People lost money. Whenever any regulator presides over a situation where there is disruption and financial instability, where depositors and policy holders lose their savings and have reason to question the stability of the system, the regulator must be concerned. I am sure that all the members of my regulatory staff lost a lot of sleep.”

Asked whether CLICO should have been allowed to fail, the former International Monetary Fund (IMF) employee said that “clearly this is a simplistic argument.

“You have to recognise the potential that a CLICO failure had for having systemic negative consequences on the economy as  whole”.

He said CLICO or its parent company, held a shareholding of 52 per cent in the largest commercial bank here and that CLICO had the largest portfolio of pension funds, credit union funds.

“CLICO in one way or the other was tied into such a significant part of the economic activity in the country that there was no way in which any Central Bank or any government would have let CLICO fail without trying to minimise the impact,” he said.

“You couldn’t let an institution which had such a massive impact on the economy fail. You just couldn’t. You couldn’t have a disorderly break-up of an institution that large,” he told the newspaper.