373 Leave of Absence Friday September 16, 2011

SENATE Friday, September 16, 2011 The Senate met at 10.00 a.m. PRAYERS

[MADAM VICE-PRESIDENT in the Chair] LEAVE OF ABSENCE Madam Vice-President: Hon. Senators, I have granted leave of absence to Sen. Faris Al-Rawi who is out of the country. SENATOR’S APPOINTMENT Madam Vice-President: Hon. Senators, I have received the following correspondence from His Excellency the Acting President, Sen. The Hon. Timothy Hamel-Smith: “THE CONSTITUTION OF THE REPUBLIC OF TRINIDAD AND TOBAGO By His Excellency TIMOTHY HAMEL-SMITH, Acting President and Commander-in-Chief of the Republic of Trinidad and Tobago. /s/ T. Hamel-Smith Acting President TO: MR. MARIANO BROWNE

WHEREAS Senator Faris Al-Rawi is incapable of performing his duties as a Senator by reason of his absence from Trinidad and Tobago:

NOW, THEREFORE, I, TIMOTHY HAMEL-SMITH, Acting President as aforesaid, in exercise of the power vested in me by section 40(2)(c) and section 44 of the Constitution of the Republic of Trinidad and Tobago, do hereby appoint you, MARIANO BROWNE, to be temporarily a member of the Senate, with effect from 14th September, 2011 and continuing during the absence from Trinidad and Tobago of the said Senator Faris Al-Rawi. Given under my Hand and the Seal of the President of the Republic of Trinidad and Tobago at the Office of the President, St. Ann‟s, this 14th day of September, 2011. 374 Oath of Allegiance Friday September 16, 2011

OATH OF ALLEGIANCE Senator Mariano Browne took and subscribed the Oath of Allegiance as required by law. PURCHASE OF CERTAIN RIGHTS AND VALIDATION BILL, 2011 Bill to provide for the purchase by Government of certain rights belonging to holders of Short-Term Investment Products with Colonial Life Insurance Company (Trinidad) Limited; and British American Insurance (Trinidad) Limited; to empower the Minister of Finance to make payments and issue bonds for the purchase of those rights; to validate funding provided by Government to Colonial Life Insurance Company (Trinidad) Limited and British American Insurance Company (Trinidad) Limited; and for related matters [The Minister of Finance]; read the first time. Motion made: That the next stage be taken at a later stage in the proceedings. [Hon. W. Dookeran] Question put and agreed to.

CENTRAL BANK (AMDT.) BILL, 2011 Bill to amend the Central Bank Act, Chap. 79:02 and for related matters [The Minister of Finance]; read the first time. Motion made: That the next stage be taken at a later stage in the proceedings. [Hon. W. Dookeran] Question put and agreed to.

PAPER LAID Annual Report of the Princes Town Regional Corporation for the period 2007- 2008. [The Minister of Public Utilities (Sen. The Hon. Emmanuel George)]

PURCHASE OF CERTAIN RIGHTS AND VALIDATION BILL, 2011 The Minister of Finance (Hon. Winston Dookeran): Madam Vice- President, I beg to move: That a Bill to provide for the purchase by Government of certain rights belonging to holders of Short-Term Investment Products, with Colonial Life Insurance Company (Trinidad) Limited and British American Insurance Company (Trinidad) Limited; to empower the Minister of Finance to make 375 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

payments and issue bonds for the purchase of those rights, to validate funding provided by Government to Colonial Life Insurance Company (Trinidad) Limited and British American Insurance Company (Trinidad) Limited; and for related matters, be now read a second time. Madam Vice-President, in moving the second reading of this Bill, I seek the leave of this Senate to debate along with this Bill, a Bill entitled: An Act to amend the Central Bank Act, Chap. 79:02 as they are interrelated. Question put. Sen. Pennelope Beckles: Well, just to say, Madam Vice-President, I would have hoped that my colleague would have consulted me on the matter but we will not object to them being dealt with together. [Desk thumping] Agreed to. Hon. W. Dookeran: Madam Vice-President, may I express by deep sense of appreciation to Sen. Pennelope Beckles for agreeing to deal with both Bills at the same time. Madam Vice-President, today, as I listened to the morning news from the international media, I saw a statement that was attributed to the Secretary of the Treasury of the United States, Tim Geithner, who is at this time attending a meeting in Warsaw, Poland, and the statement said in response to the financial crisis in Europe, he was calling for immediate action, and he said it is very dangerous if Europe cannot fix their challenges. Madam Vice-President, I think that statement emphasizes the timing and the urgency of the issues before us: timing in that fixing the challenges must be dealt with at a time in which the financial situation can be resolved; and the urgency is, if it is done early and it is prolonged over time, it becomes a more difficult situation. Madam Vice-President, as we speak, there is a very fertile debate taking place in Europe and in the United States concerning the issue of the bailout of large banks that are now affected by the global debt crisis. One of the issues that has emerged on the agenda is the issue of who shall meet the cost of the bailout, and what is before the ministers of finance in Europe now: will German taxpayers continue to bite the bullet and bail out the Greeks. Madam Vice-President, these issues are not dissimilar to the issues that we have been facing, and since 2008, when the world went into a financial tremor, many have, in different countries, had to pay the price of the regulatory failure on one hand, and on the other hand, the fiscal mismanagement of many of the financial institutions. 376 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [HON. W. DOOKERAN] In fact, within recent times, there has been a return to that sense of volatility, and US $14.5 trillion worth of value which is the loss of wealth has come out of the delivery of the actions in the world finance stock markets. Over 200 banks have collapsed in the United States; unemployment levels have increased, and as you know, it remains at a level of 9 per cent as of now in the United States. Three million families lost their homes, and the savings of many in that society, and indeed in the United Kingdom, had to face the price of the financial tremors. The challenge, therefore, before us has been best exemplified by the new vocabulary that has emerged in discussing these issues globally and here. Earlier on this year, and certainly last year, when this matter was first brought to the attention of the Parliament by the People‟s Partnership Government, there were great expectations of an early, if not slow, recovery in the world. And even as late as April, this expectation seemed to be well in order, but over the last four months, the vocabulary has changed. Now, the discussion is about uncertainty of the world future; is about the volatility of the world capital markets; it is about austerity of the world‟s government programme for its people. These are the new issues that have now engaged the attention of those who are commenting on their current situation. And the statement that I attributed a few moments ago to the Secretary of the Treasury in the United States is but a reflection of where we have reached. I say that, Madam Vice-President, because the problem that we intend to deal with today in terms of finding an appropriate solution and fixing the challenge has been with us for some time. It erupted in a very practical way, in January of 2009, and we were all aware of the events at that time when a major financial institution like the Clico Group had to agree to a bailout plan of some sort. 10.15 a.m. Thousands of people were at risk. The sum of 225,000 policyholders of traditional life and annuity policies were at risk, 26,000 other investors who had invested in short-term investments were at risk, many who have been the recipient of the management of the pension funds that Clico managed at that time were at risk, some workers, both in the head office and throughout the country were at risk and so too was the general population of Trinidad and Tobago who saw the prospect of the security of the savings being put at risk. It was indeed an enormous challenge, which we began to, as a society, try to deal with. 377 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

The first misstep in handling this challenge was the misdiagnosis of the then Government, who saw this as a purely liquidity problem when, as it turned out, it was a deep solvency problem and the prescription for a liquidity problem is quite different to the prescription for a solvency problem. A second misstep, in terms of diagnosing the problem, was the entire financial system was put at risk when in fact the risk could have been contained into parts of the financial system, be it the CIB and the Statutory Reserve Fund. The approach, therefore, led to a prescription that could not yield results to tackle that challenge, so much so that, even though the previous regime, in the discharge of its public responsibility in this regard, had placed $5 billion available to Clico and $100 million available to BAT as cash injections to deal with this problem, it was very clear that that would not solve the problem. So, for almost 18 months, the Government remained somewhat paralyzed in finding the next step forward. Between January 2009—May 2010, there was a sense of paralysis as to what is the next step. The reason for that is because the diagnosis of this problem did not go deep enough to understand that what we were facing in our challenge was a deep solvency problem and all its recurrent repercussions. For 18 months, almost, the Government stood, watching the situation, hoping that the liquidity problem would reverse itself. And, therefore, when this country decided that it was time now to change those who were in charge of public management, it gave this country a new opportunity and a fresh start. It was that fresh start that we started in May 2010, and we recognized, very early on, that how the Clico matter, as it is referred to, is resolved, would affect so many fundamental aspects of financial and economic management in our country and what was at risk in totality was much more than what was happening, with respect to the already enlarged problem in Clico. A report by the International Monetary Fund, done in June 2011, measured the size of the problem, it was huge, claiming it affected 17 per cent of the gross domestic product in the Caribbean region—[Interruption] Sen. Browne: Eastern Caribbean. Hon. W. Dookeran:—in the Eastern Caribbean, and went on to suggest that 10 per cent of the financial assets in Trinidad and Tobago can be so affected. I say that because it was a huge challenge and we have to fix that challenge. It is against that kind of background, Madam Vice-President, that we began to search for a sustainable solution to this matter. The bubble had burst and the society was now subject to new risks. What were those risks which have persisted since 378 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [HON. W. DOOKERAN] then to now? The first risk had to do with what has been loosely described as systemic risk. True, the injection of cash, at that time stalled the rapid decline of the financial system, but it did not remove the risk ahead of us. When we talk about systemic risks, we are talking about the financial exposures that are possible if we do not deal with this challenge; financial exposures in the banks and financial institutions other than Clico; and the contagion possibilities as well. Not only would it affect the bank and financial institutions, but it will also affect institutions in other parts of the Caribbean. The systemic risk, therefore was predicated on new financial exposures, some of which still remain the contagion possibilities. There was also some risk with respect to how this problem could make more difficult, the management of our inflation, depending on how it is handled, or, perhaps, the depletion of our foreign reserves, or, indeed, the management of our liquidity in our banking system. These are considerations that were important in designing the appropriate response. The general view of the uncertainty of the future, which, as I have indicated to you, has become part of the new vocabulary, and the volatility of the markets remain issues that had to be handled so as to reduce the systemic risk and also, very importantly, to forestall the possible downgrades of the credit rating of our country was an important risk that we had to manage. Those were the issues that led us to find an appropriate response to the challenge so as to mitigate these risks. If, for some reason, we were not able to do that, then we could have ended in a tailspin in the economy, and, in so doing, would have put at risk not only those who I have mentioned before, who were directly affected by Clico, but also the entire economy. We must not underestimate that, what the size of this problem was and what is the likely impact if it was not mitigated. It is in that kind of context, therefore, that the Government, having been given the responsibility, fully recognized that this was perhaps the single most important public policy issue in the world of finance that we had to face up to. We were concerned about ensuring that the stability of the banking system remains fully intact. We were concerned that the credit rating of Trinidad and Tobago, which we have acquired over the years, was not put at risk. We were concerned that the solution must not be one that responds only to the demands of the policyholders but also to respond to the demands of the 1.3 million people who shall pay for this bailout and how it shall be paid for. These were intricate matters that had to be dealt with, and, at the same time, we had to ensure that the world of uncertainty becomes, at least, a little more certain. 379 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Our analysis, therefore, started three months after this Government was put into office. In July 2010, an expert team reported their assessment of the extent of the problem and of the options that were available to the Government, and having put into place a different diagnostic assessment, came up with some prescriptions. It was July 2010 that matter was deliberated upon by the Government. Three options were placed before us then to deal with this challenge. The first option was, since this is a market failure and since this is a matter largely outside the purview of public responsibility in a narrow sense of that definition, let the liquidation process take its course. Whether it would have been a disorderly liquidation or an orderly liquidation did not really arise at that time, but the option to let the company go into liquidation, the assets will be sold off and the companies that had liabilities to the people could be paid off in accordance with that liquidation process. 10.30 a.m. The second option that was placed before us was: well let the Government do 100 per cent bailout and provide all the necessary funds that are required in order to satisfy the policyholders, and also to provide the necessary funds for the resuscitation of the company itself. I would not tell you, Madam Vice-President, the size of that operation if it were to be put into place. The third option was to programme, in a very structured way, a process that would achieve many goals. The first is to meet the legitimate demands of the policyholders, especially those who had invested in the short-term investments, but more so, the primary policyholders who had life insurances and annuities in this very large company that has done us well in the years earlier. And as I indicated to you, there were 225,000 such policyholders. Therefore, a programme was designed in order to provide the necessary support to the policyholders, but to do so without putting at risk the national debt profile of the country, for that then would have put at risk the other issues which I raised here today. In addition to that, it became necessary, Madam Vice-President, to begin to shed light as to how we shall come out of the problem even when we resolve the issue of the policyholders‟ claims. It is the right of any group that feels disaffected to deal with the disaffection by raising their voices, but it is the responsibility of the Government, not only to deal with those who raise their voices, but to deal with those many thousands of silent people in the country, whose voices are not raised, but who depend on the Government to have proper management of its affairs. [Desk thumping] 380 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [HON. W. DOOKERAN] So, Madam Vice-President, we began, therefore, to look more closely at all the issues before us, and we recognized there are five different areas in which we must now begin to deal with a structured approach that is sustainable, and one that will, of course, be more credible. You see, there is a lot of discussion—and certainly when this matter was raised in the other House, about the Government reneging on a promise of the last Government; well, if we had kept all the promises of the last Government we would not be here today. [Desk thumping] The very legitimate expectation of the people is that we will change course and find a new way that will create credibility in our solutions, which eluded that Government‟s approach in this matter. So, Madam Vice-President, we began to look at five different areas of concern, and to do that we continued our technical work and got many of our technicians involved. So beyond the Select Committee, which presented its initial findings in July of 2010, we went on, Madam Vice- President, to develop a framework for actions on Clico and CL Financial. One of the five areas that we began to focus on was the appropriate mechanism to repay the policyholders, including those who have, in fact, been categorized as over 75,000 in deposits. Perhaps I can say at this point, we had agreed and had put into effect our proposals for dealing with all those who had investments of less than $75,000. You see, the Government decided that its first priority must be the small depositors. And while we were working out the entire programme, we committed ourselves to dealing with those who are most vulnerable, the small investors. You see, we thought our first priority in dealing with this problem is to make good what the savings of the small depositors are. There were some who formed themselves in organizations calling for the interest of the large depositors. We have no problem with that, but we felt our priority of spending should first go to the small depositors, part of our own view, Madam Vice-President, that we must satisfy the vulnerable groups, and the low income groups. Therefore, we began in March of 2011 a payment programme for all those who had an investment of less than $75,000 in both Clico and in British American. In addition to that, there was an outstanding issue with respect to the mutual funds, which was another one of the set of depositors that was affected. I was told that there were at least a further 1,000 mutual fund depositors in Clico who had less than $75,000. So in terms of our payout to Clico, British American and the mutual fund holders, I can state today that within six months after we began this operation— and this operation required much technical, legal and financial work—that today 9,815 persons in this country have received 100 per cent of their deposits in this 381 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 scheme, [Desk thumping] and that represented an expenditure so far of $301 million, which represents an 83 per cent response rate of those who are entitled to it, and we continue with this process. In addition, Madam Vice-President, we are very concerned about those, especially the elderly among us but not exclusively so, who had major financial issues pertaining to their own situations, and, therefore, we introduced, from the very beginning, a compassionate relief window, and based on certain criteria, where our citizens who felt that they cannot wait for the second phase, that they can access $250,000 before the second phase were to start. So the compassionate window allowed support of up to $250,000 to those who were qualified to so do. To date, 455 cases have been processed, and the Government has met the value of that processing of $94 million. Madam Vice-President, I say that if only to emphasize that we were very concerned about the human cost, especially in terms of our senior citizens with medical challenges, but it also included others who had other financial challenges, and within the last six months we have spent $94 million through the compassionate relief window. In addition to that, Madam Vice-President, we began to look very carefully at the credit unions and the trade unions, and some other public institutions that had had their funds put at risk in this whole Clico fiasco, and we did a detailed analysis as to who they were in terms of the number of policies, and the number of trade unions and the number of credit unions, et cetera, and we found that there were actually 156 policies as of today that reflected thousands of trade union and credit union members—thousands; some people say up to 5,000—and they represented $788 million, and we began, Madam Vice-President, to deal with them in terms of the liquidity support programme, because we did not wish to put at risk the credit union finances, because that too was a risk factor that we had to take on, but more than that, we wanted to honour the obligations of those who, unsuspectingly, got themselves involved in this fiasco. So a further $788 million was earmarked, and very recently members would have noticed an advertisement calling on trade unions and credit unions to apply to the Central Bank for support in this liquidity window, which has commenced. The exact status of it is that, subject to the processing, payments will start very shortly. In other words, in our short-term programme—[Interruption] Madam Vice-President: Hon. Senators, as you might be hearing, the procession for the opening of the law term is passing, and in consultation with the 382 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [MADAM VICE-PRESIDENT] Leader of Government Business, I will now like to suspend the sitting for 10 minutes to allow for the procession to pass. This Senate is now suspended. 10.42 a.m.: Sitting suspended. 10.55. a.m.: Sitting resumed. Madam Vice-President: Before the session was suspended, Minister Dookeran, you were on your legs. By my calculation you have used 34 minutes. You have 26 minutes remaining from the original one hour. You may continue. [Desk thumping] Hon. W. Dookeran: Thank you, Madam Vice-President. As I was saying before the short break, there were five basic issues that we had to address, one of which was to deal with the policyholders, and I had indicated what were some of our achievements within this period of time. I could also indicate here, Madam Vice-President, that those 10,000 thereabouts number of people who had received their payments in full had left the office, I was told, with a great sense of relief, and a great sense of happiness that this Government has provided them with 100 per cent support of their savings in light of that fiasco. [Desk thumping] We will, today, make proposals with respect to those who have more than $75,000 in their policies. But we will also look, Madam Vice-President, since it is clear that my time is a little limited, at how we are dealing with Clico itself. Those who had argued earlier on that liquidation is an option, which we rejected— because we are of the view that Clico as a company, notwithstanding all the problems and uncertainty which it had to go through over the last year and a half, has to be resuscitated. In that respect, Madam Vice-President, we began a programme to look at the financial viability of that operation. Obviously, it will not be of the size that it was before, which was a $22 billion company. Our estimates are that it will now be more in the realm of a $7 billion company, but its viability is something that we are looking at. Much has been said in the Lower House, Madam Vice-President, about the statutory fund, and I had indicated at some time that in the restructuring exercise we expect to put that fund, and make it good, and that has been the big problem, or one of the big risks that was undertaken in the previous situation. From my discussions with the Central Bank, Madam Vice-President, once we remove these toxic assets from the balance sheets and the figures point out to approximately $10.2 billion of such assets, and we place shares of the methanol 383 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 company into the statutory fund, the deficit will be $6.1 billion, and there will be sufficient assets to cover the deficit in the statutory fund, which will be made good when this transaction takes place. So while we are dealing with the payments issue, we are dealing with putting the company on a solid footing, and notwithstanding the fact that they remain in deficit overall even now, I have been advised by the management that, even during the year 2011, they have written $10 million worth of new business, which really is testimony to our confidence that we can resuscitate this operation over time. How we handle that in the future will be our continuing challenge. The third area that we had to deal with, and to some extent, once we have covered these grounds, is: how would the Government be able to access funding, or rather, get back the money that it has placed in this operation. By the time we are through with this exercise, we are talking now about something in the order of near to $20 billion, and what was previously done, what is done, and I have not yet included, and it is something I should just indicate, some of the moral obligations that the OECS countries have been discussing with us on this issue, given the plight that they are facing. In this respect, we have begun discussions with the Caribbean Development Bank to see how we could provide some support to our sister countries in the Caribbean. So we, therefore, will have to make claims on the assets. But let me point out at this time, there is also the view that the CL assets are, in fact, enormous in value, and the figures that are before us, the details of which I can make available, Madam Vice- President, and which was actually done at a meeting that I requested and invited members to attend, and many of whom did attend, on the issue of the actual figures with respect to CL Financial, that notwithstanding that there are some good investments within the group—and let it be known that that group is not owned by the Government; the Government has, by virtue of the agreement, representation on the board—and majority representation on the board. And, therefore, the Government will have to make a claim on CL Financial in accordance with the agreement that was arrived at. And the next situation with respect to CL Financial, Madam Vice-President, is that their total assets is—and let me also indicate here that getting the figures was, itself, a challenge. Auditors were involved and accountants were involved in trying to get the figures. As of now, what we have before us are unaudited accounts up to December 2010, and the work is continuing. But based on that, the total assets of CL Financial is in the order of $7.5 billion, and the total liabilities is in the order of $7.3 billion, leaving a net asset of $220 million based on the unaudited December 2010 figures. 384 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [HON. W. DOOKERAN] So in the public domain, it was felt that there was a lot to be done there, but in the last two years, things have deteriorated even more in that respect and, therefore, it will be a challenge, both legal and financial, to try to seek redress over the years to come; but that is our intention to work in that regard. Once we have satisfied the problems, how would the Government get back some of the funds that it has placed into it? I indicated that the new Clico is being looked at, and there are still decisions to be made as to how we resuscitate and float this company for perhaps further expansion and growth. The restructuring—and finally, in order to be able to deal with this since we are dealing with both Bills at the same time—and maybe I should spend some time on that, Madam Vice-President—is that we must enact a stay of proceedings in order to allow the restructuring process to take place in an orderly manner. Two things I will focus on. What do we mean by the restructuring process? First of all, we must clear up the balance sheet, some of which I have made reference to. Secondly, we will have to change the very structure of the financials in the company that is involved. Third, we will have to place the distressed entity into a position of viability. And fourthly, we will have to establish a sustainable growth path for this entity and other entities associated and related. So it is an enormous task that is still required. Some have been achieved, but there is an enormous task of restructuring that is required. And it is, therefore, in the context of restructuring against the backdrop of financial risk that it has now become necessary to provide the legal protection for the restructuring to take place and so save this economy and save this country and its financial system from any undue risk. That is why today, in the second piece of legislation that is before this Senate in the amendment to the Central Bank Act, we are proposing that such a stay of proceedings be introduced in the Central Bank Act as an amendment. Madam Vice-President, I am advised, and I am sure it will be elaborated upon by the Attorney General in his contribution, that under the current financial and legal landscape that deals with these matters of bankruptcy and insolvency, the current Act that deals with these matters cannot be applied in the case of financial institutions and, therefore, if it were to be applied, it cannot be applied in the context in which it has to be applied now. I am also advised that there was a provision in the Insurance Act that gave some leeway for such a situation to be handled, that is when a company goes into distress that you will protect this company from litigation and certainly 385 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 liquidation, and that that was, in fact, in the Insurance Act, which was revised in 2009, and for some reason it was taken out. So we are left in Trinidad and Tobago totally exposed with a legal landscape dealing with financial matters, that does not give the financial regulator, and in this case the Central Bank, the authority—the financial authority—to discharge the financial responsibility, and that is the big issue. It is in that context, Madam Vice-President, that we have introduced the provision of the stay of proceedings. It is not new; it was just not in the landscape before. It was, but it was removed. What we are doing has been based on what has happened in other jurisdictions. Every country faces financial crisis of some sort, at some time, and they have the legal authority to handle them. Much of what we have done is very similar to the legislation with respect to financial regulators in New Zealand and in Australia, and the intent is similar to what has happened in the UK, although the method is different. 11.10 a.m. We sought advice on these things and, therefore, decided that the most efficient course of action will be to provide that authority to the Central Bank, but that authority is restricted on two bases: one is that quarterly reports will be submitted to the Judiciary on the progress of the restructuring exercise, and on the extent to which the financial systemic risk remains; so that there will be a reporting mechanism; and, secondly that the stay can be removed even before the institution in distress is removed from section 44(B) which is where it is now. Because what happens is, when an institution goes into distress as we have had here, it goes under the Central Bank Act to be able to be placed under some kind of intensive care; and that may continue for some time, but the stay shall be removed except in the case of liquidation. In other words, we believe that there is need for a legal space within which the economic solution must be able to be worked out, and this is not something which is not done elsewhere. In some cases it is even more dramatic than that and, as I said, in the United Kingdom—and we did seek technical, Senior Counsel advice on these matters; along with our own advice on these matters. So the point I want to make is that the stay which existed in our system under the Insurance Act was removed. The stay which exists under the Bankruptcy Act did not apply and could not apply, and, therefore, the Central Bank had to find the authority to deal with it. And that is why I want to link that point to the one I made earlier, that a large part of the regulatory rigour which was expected in this 386 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [HON. W. DOOKERAN] situation did not have the legislative power; and to that end we are bringing to this Parliament a new Insurance Act shortly to remedy some of those problems, to learn from the lessons of the collapse of the Clico situation. And we will also be bringing into this Parliament legislation to empower the Central Bank to exercise regulatory control over the credit unions. We are not looking at this problem in a one issue context. We are looking at the solution in the context of the solution for the future. So in terms of the regulatory system, we are enhancing the scope of regulation and at the same time we are ensuring that there is legal authority for the Central Bank to discharge its functions with respect to matters of this nature; and that I have no doubt would be elaborated upon later in our proceedings; but that essentially is the issue pertaining to the stay. It is an important aspect of this operation that we have put together to find a credible solution. Let me point out that in every jurisdiction such protection is provided to the regulator, it is not—some may argue it is a denial of rights, and indeed it does have the effect of denying access to the court and, therefore, to some extent has affected that provision. But it is part of the regulatory system elsewhere to provide that legal cover in times of which you have the two problems which I have discussed here today; the financial systemic risk to the whole society and, secondly, the restructuring process which has to be undertaken in order to have it and will, of course, be lifted as soon as the Central Bank believes that neither of those two requirements exists. Madam Vice-President, may I also at this point go into a little detail with respect to the concerns to the public at large, and much of what I have said here has to do with the issues of governance of this problem. But the public at large is clearly concerned as to what is in it for them, what type of protection will be provided by this flurry of measures which have been put together. In this regard we have had extensive discussions with a number of interested parties particularly in the banking and insurance sectors. There has been some improvement in the fortunes of Republic Bank Limited and the methanol companies over the last year. We hope that those improvements will continue, but that is based on a risk in the future, but based on the existing situation there has been some improvement which now allows us to amend and enhance our programme which we had first announced last year. Madam Vice-President, as I indicated then in terms of those who have deposits of more than $75,000, that we will indeed provide a new framework which is between cash, bonds and shares: cash would be the $75,000 to which we were committed; bonds will be 20-one year bonds for the amount which is due to policyholders, subject to the verification and that itself was an issue which we had to deal with, 387 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 and that those bonds will then be redeemed through two mechanisms. For the first 10 years those bonds will be redeemed at a discount rate of approximately 80 cents subject to the yield curve which exists at the time. For the second 10 years, those bonds will be redeemed at par in lieu of shares which will now be available to depositors through the creation of a NEL 2 institution, and they will then have access to that and it will be done in the future. So essentially we have modified the programme to have support by cash, bonds and shares. The end result of this is that those who have over $75,000 could have a discount of near to 92 cents overall; but for the first 10 years it will be 20 cents, or rather 80 cents and reflects a haircut of 20 cents. That essentially is the proposal before us. We have already worked out, Madam Vice-President, many features of the bonds that are going to be placed—in the first place it would be of an electronic form and there are many specific requirements of this bond to make it tradable at the best price to the deposit holder. The bonds will be issued in electronic form and this is viewed as a more efficient and internationally accepted system. I am advised by the authorities in the Central Bank and Clico that they are ready to proceed with the data available to them. Once this Parliament gives its approval to authorize the Government, through the Minister of Finance, to issue these bonds which is what this Bill is all about, issue and validate, then these payments can start. We have had discussions with the commercial banks on the matter and they have indicated to us their willingness to work along with us. In fact, I must say that the commercial banks and the insurance companies were all very eager to put behind us the issue of systemic risk. For too long they felt that our country was under the clouds of these kinds of systemic risks and they agreed to also contribute to the NEL trust which will be created within certain limits; so as to have the necessary resources in the NEL to meet all the commitments if persons were to choose that option. And I want to indicate the support of both insurance companies and the banking sector. Their interest is to put behind us this issue of systemic risk which has plagued the banking system for too long in terms of possibilities. It is in that context, Madam Vice-President, that the proposal before us in terms of the payout could commence immediately. Those who have and who are issued these bonds can go to the financial institutions and be able to redeem them at the rate of 80 cents. When this proposal was first put forward without these enhancements, the rate of discount was in the order of 67 cents based on the 388 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [HON. W. DOOKERAN] calculations at that time. So we have enhanced it by doing this, but we have not added to our debt position, in fact, we have somehow reduced our debt position, because now we are using the shares to pay off for the next 10 years. So it has become even more prudent, because we had committed ourselves to $512 million a year for 20 years to meet the commitment; and that is one of the big differences between what we are proposing and was what offered before and those so-called promises and those so-called guarantees, because there cannot be a guarantee if you did not provide the support, and what we have done, we have shown how these arrangements will be funded and financed. The bonds will be sovereign back bonds and, therefore, the first claim on the Treasury and the share is a risk which can work up or down depending on how the market develops; so many who invest in the shares could see themselves getting positive returns at the same time. Some have argued, “What about if the shares dropped?” Well, what I want to say to you, Madam Vice-President, is that there is responsibility which each individual must take. There are some who have argued that responsibility for taking risk must be borne by the Government. Now, this cannot be so in any society. What we have done is to try to remedy a situation, but individuals will have to take responsibility for their investments. [Desk thumping] Madam Vice-President, I think this basically allows me to close, but before I close, I want to say that this proposal has been done as a joint effort, and there are many who have participated in it, in terms of technical persons in the Central Bank, the Governor of the Central Bank, the Ministry of Finance, the Permanent Secretary, the Clico officials and others as well as in the banking community; and I want to record in the Hansard my appreciation for the work which they have done. [Desk thumping] I beg to move. Question proposed. 11.25 a.m. Sen. Dr. Lester Henry: Thank you, Madam Vice-President, once again, for allowing me to contribute on this Bill before us in terms of the proposal to try to bring some solution, as the Minister said, to the Clico matter that has been dogging us for the past approximately two and a half years. The Minister started off by looking at the global environment and I will follow suit and add a few things that I think we need to consider. What we are looking at in terms of the bailouts of the other countries tends to be somewhat different to what we are confronting here. If you look at the global economy, what has happened 389 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 over the past 20, 25 years or so, the whole issue of finalization of the whole of the Wall Street crowd and their associates on a global scale, we have seen, accompanying that, a massive build-up of debts on the part of individuals, governments and firms. What we are seeing now in Europe is the most recent manifestation of this kind of free market bonanza in financial wheeling and dealing. When you hear, for example, that the Germans are paying for the debts of the Greeks in the European system; when you get down to the nitty-gritty, what the Germans are doing is paying back their banks, which lent money to Greece. Greece will have to pay by selling off its assets and making structural adjustment; in fact, some fairly draconian structural adjustment. So whereas the headlines generally read, the Greeks—and they resisted it for a long time; they did not want to get involved—in fact, initially the Chancellor said no because it was very unpopular among the German citizens to bail out Greece, which they were fully aware was really bailing out their own banking institutions which loaned the money to Greece and who bought instruments sold by Goldman Sachs and these other major American brokerage houses or what you—well, they are now commercial banks as well, since the crisis. The global financial system is in a mess and it is dragging down the real economy with it. I am saying that to give us a kind of warning, some of which the Minister alluded to, but we may still end up with that situation, as I will probably detail a little later. What we have at the global level is the role of finance over the past 20 years or so, where the financial system became completely divorced from the real economy; where people ran up massive debts. I believe I mentioned at one time in this honourable Senate that total debt in the US, corporate, government and individual debt, is in the order of $60 trillion, or some ridiculous number. So people cannot afford, as we speak, to continue purchasing. It is one of the reasons for the economic morass in the United States. Consumers are broke. They cannot continue to run up credit card bills as they used to in the 1970s, 1980s and 1990s. They have no money, plus they are faced with unemployment as the Minister himself alluded to. So, we have a situation where the dominance of the financial system has created significant problems and many people lived high off the hog during that time. They made lots of money and everything appeared to be going well. One of the problems with financialization is that when we run up these huge debts, many people kind of overlook that debts of significant magnitude are seldom ever repaid. In fact, there was a time back in ancient Babylonia where they used to cancel all debts after some number of years. They knew they could not be repaid. 390 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. DR. HENRY] So the $60 trillion I mentioned, just to use an example, nobody really expects anybody to pay that back so, generally, the banks and the financial institutions make money by people making regular payments. Your credit card bill, if you carry a large credit card debt for 20 years paying off the minimum payment, the banks are quite happy. That is how they make money. The principal does not really bother them after a while, so large debts are hardly ever repaid. So the bailouts that we see in America and Europe are a bit different in the sense that, what they have been doing is bailing out large financial institutions and leaving the average consumer to suffer. That is why you see the massive foreclosures and so on with six million to eight million people losing their houses and another projected five million by the time the thing plays itself out. The reason I am harping on this for a few minutes is to show that this became normal practice among the elites of the developed world. They took this as given and you can see it on CNN and so on. They find all kinds of ways to justify running very, very unfair economic systems such as that. Now, in order to get closer to home in terms of the regional dimension of the problem, let me get into the Clico problem in particular. We have had this massive problem. It would have been a problem for any government we know. It was a problem for the previous Government, for us the PNM, and it is your problem as you won the election. There is generally no easy way to come up with a solution to solve a $10 billion or $12 billion problem. There will always be challenges and the regional dimension is that many of the OECS countries are in deep economic difficulty. In fact, Antigua, since 2010 or thereabouts, had run into problems where they were at a stage of default and had to go to the IMF for a package. More recently, St. Kitts had defaulted and a lot of this has to do with its debt; some of it in terms of the bailout that they pledged because of the Clico problem. They are in deep trouble and, as I mentioned last week, I believe, in my contribution, these islands provide a critical market for our manufactured exports and when they end up in trouble we suffer because we do not have people to buy our products. I was happy to hear that the Minister decided that there would be some facility to address this problem. If you go up the islands on this Clico matter—I was almost run out of a room in Nevis about a year or so ago because they said: why are you protecting these people? You are unfair to us. This was not as a PNM, not as the PPG or the UNC, but as a Trinidadian. I was the only Trinidadian in the room and the hostility was immense. 391 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

They wanted to attack me as though I represented the Government in some way. They did not care whether I was an opposition Senator or a government Senator. The problem is deep and should not be underestimated. In terms of the solutions that we are trying to come up with, that is a critical dimension and we should try in a deeper way to deal with that. Unfortunately, many of the indications coming from the Government seem to be a lax attitude to Caricom and Caricom issues. We hope that changes sometime soon. How did we arrive at this problem where we are faced with such a drastic demand on the Treasury that is facing us with this Clico situation? In terms of the development of this, I call it “the current mess”, what we had was an insurance industry run based on very, very loose, almost non-existent supervision. They started, not last week or last year, but as far back as the 1980s and 1990s when the company started to grow. If you look at the premiums that accrued to Clico over the past years, you will see that something is striking about it. You had a company that was a relatively orderly company up until about 1990 or so. There was a normal, level playing field, on a level path somewhat with Guardian Life; with its major competitors. If you look at the market share, it was reasonably 20 per cent or thereabouts; nothing alarming, and then something happened. If you look at 1995, premiums to Clico, $291 million; 1996, $275 million; 1998, $398 million and so on. No problem. Around 2000, you start seeing a jump—$924 million; in 2001, $1.3 billion in premiums accruing to the company. Now, many of us are old enough to remember, this was around the time when the former Attorney General made his infamous remark about Clico being insolvent and he was vilified by many, in fact, many in the current Government, for making this statement. The UNC was in government at the time and he was the Attorney General. So, by 2002, there was $1.6 billion; 2003, $2.99 billion in receipts in terms of premiums. This peaked at around $3.3 billion in 2006. By that time, Clico had gone to about 75 per cent of the market share in long-term insurance business. If you look at the annual reports and you see the figures next to Clico and Guardian Life, the gap just kept getting wider and this, to my mind, should have triggered some kind of action, at least major concerns as to how they were doing this. How does one company out of 18 or so active insurance companies on average over the time do this? The number of registered companies was about 24, but 17 to 18 were active over that same 20-year period. They were able to expand their 392 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. DR. HENRY] market share to about 75/76 per cent of the market, outstripping the nearest competition by a wide, wide margin. As regulators, economists, businesspeople, anyone who has a stake in the market and stability in the financial system, this should have been a source of major concern. It raises the issue: do we have adequate competition policies and so on? I have raised this issue on several occasions in terms of what triggers regulatory action when one company starts. In the United States and so on, when one company is about to acquire another company in a competitive market and the size of the market share of that company goes up by a certain amount, it triggers the SEC into action and they investigate whether this would constitute harmful elimination of competition to protect the economy. That is how it works. 11.40 a.m. We, apparently, did not see it necessary to do such over the time. Also, some people in the insurance industry which I have had my students go out and interview, they actually say, “That Henry fella at UWI is a kind of backward fella and so on. He is talking about competition and regulation, we should be able to make as much money and we did not have a problem with Clico making plenty money, that is not our problem. We want to make money like that too.” So even today, I am talking executives in certain insurance companies—I would not call names—have this attitude that you should not try to put anything in place that would restrict the ability to grow, and if they become 90 per cent of the market then—so what is wrong with that? Nothing is wrong with that, at a certain level, no problem, but the responsible people must know that you have to put things in place to safeguard the system. The private insurers, they are profit maximizers and they want to make their money, but we have to stand up to them and tell them no; you cannot allow the thing to go haywire, because it creates tremendous difficulties in the years ahead. It is similar to the international warnings in the US and so where people were warning the federal reserve chairman about creating this asset price bubble with extremely low interest rates and so on. And he kept saying, well, he has nothing against wealth creation, until he lived to regret it later on. So what I am saying is that we saw this development and a lot of it, in terms of the growth of the company and if I read the figures from the Clico Investment Bank it is pretty much a similar story. Ordinary deposits in the late 90s, $800 million, one billion, then up to five and six billion by 2006, 2000, similar. So they were attracting deposits. 393 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

From my anecdotal information, I have not seen it in writing, for example Clico would offer people 10, 11 and 12 per cent when the average market rate was about 5 or 6 on deposits. So they were paying a premium of almost twice the market rate and people rushed in like lemmings because of this. So we have to keep that in mind, that this was the main attraction. Again, this should have triggered some kind of concern as to why a company or anyone would be able to pay such high interest rates. And also, in my own analysis of the situation back then—and let me say from the outset; I have no interest in Clico, never took out a deposit, no insurance or any dealings with the company, okay. I always figured, if it sounds too good to be true, then it is too good to be true. And as an economist and as a teacher of economics, I could not find myself participating in something like that. The only thing worse would have been if I was actually suckered into a Ponzi scheme like the ones in Jamaica, and so on, where they were offering 35 per cent in one month and all kind of craziness. The only thing more foolish would be to succumb to something like that. So we had a situation where this kind of thing was existing. So I am speaking purely as a concerned economist and someone who would want to be interested in the stability of the financial system. I would say this is a problem here. We have a big problem. Even if it is big problem now, and if you all have it, it will become a bigger problem later. So what we had—and of course a lot of the growth came with the introduction of the same thing that is giving us the headache now, the EFPAs in terms of that particular instrument being introduced in 1990 and it was tinkered with a couple of times from its original form and the interest rates offered were very high, of course, and people kept demanding more and more until we ended up in this problem now. So we had the problem. And I do not want to be accused of just talking about the problem and not dealing with the current issue. We all know of the problem. So what are our current economic situations? What is going on in the environment now that could lead us to deal with the plan or even any semblance of a plan that the Minister could come up with? What are the conditions that we are actually under right now? Now, one of the things that is in the favour of the Minister is our relatively low interest rate environment. And I believe a lot of the plan hinges on this low interest rate environment as opposed to two years ago when interest rates were much higher. Before I get into the plan itself and my comments on the plan in 394 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. DR. HENRY] terms of our economic situation, we still have a relatively good macroenvironment as we have insisted many times in this Chamber over the past year. This good macroenvironment allows this current Government some space to seek a solution. From the latest figures I have, our reserves have gone up slightly to something in the order of $9.7 billion. That is not including the Heritage and Stabilization Fund, that is the end of quarter two of 2011, and so on, plus our Stabilization Fund and all of the other good things that the Minister talks about when he is ready. When he wakes up on this side of the bed, the other side comes and tells us that we are in a mess, you know, clouds all over the place, and then the next day he comes and says, “blue skies”. [Desk thumping] So you can ignore all the good numbers on one day and then come back and say blue skies. As far as you are concerned, you are right both times. Many people—actually that is the strange thing, many of your supporters—probably believe that you are right both times. Okay, so what we have is a reasonable macroenvironment which, of course, they inherited, and because of the relatively conservative nature, contrary to popular perception, of the management of the economy before that. Now let me get into a few things about the plan itself and some of the concerns I have, okay, before someone says 35(1) or whatever. Let us get into the plan. The first question I have for the Minister: is this plan really feasible? [Crosstalk] Feasible, feasible! I will elaborate. I do not want you to—is the plan really feasible? Now, first to begin, since the last budget when the Minister announced his plan to deal with the Clico matter, he talked about it as a definitive plan. “Well, I have a plan that would work and I have solved the Clico matter”. That was September last year. We are in September this year, 2011 and on several occasions over that time when finance related Bills came to this Senate, I actually asked the Minister, how are you planning to finance the 20 one-year bonds? I am sure many of my colleagues—well some on the other side are not here anymore—would remember that. I have asked that question at least on three occasions and the Minister skillfully sidestepped it on every occasion. The Minister never really provided me with any form of answer. He answered a lot of my other questions, I must admit, but on that question I never really got quite the satisfactory response, in fact, I hardly got any response at all. So what I am talking about with the plan, you are going to issue 20-year bonds. I have a couple of questions. First question I had for the Minister, part of it is pledging the Republic Bank shares to the NEL-type arrangement— 395 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

[Interruption] You all did not do that deliberately? [Laughter] So part of the plan, I believe, is to pledge the Republic Bank shares to some NEL-type arrangement as the Minister spoke about—especially for the years 2010 to 2020. What I would like the Minister to say is: what is the status of those shares in terms of your ability to do what you want to do with them because supposing my information might be correct that 25 of those 39 or so million shares are encumbered, correct me if I am wrong, how are you going to pledge those? How are you dealing with the encumbrances of those shares? They are pledged towards other loans—sorry, they are collateral for other loans, and so on, 25 million of the 39 million shares. What are you going to do about that? Are you going to take on the debts and put a Government guarantee on those debts?

In that case—because if there are only 13 million unencumbered shares, then the revenue you can generate from that is about $1.2 billion. The public statement is four billion from the Republic Bank shares. So that would still leave you with a hole of $2.8 billion. So either you will have to cover those debts by giving a Government guarantee or maybe, unless you did something, you work some magic over—and you did away with the encumbrances on those shares. So how are you going to deal with that? How will you actually guarantee those things? How are you going to free up those shares, in other words, to make them available to the policyholders in your NEL-type structure? Now, one other potential problem with the plan is, the Minister mentioned the 80 cents on the dollar for the first 10 years. That is my information, so that we could accept that without any quarrel. But then the Minister slips in a little phrase after, “subject to the yield curve”. So this means that the 80 cents is not guaranteed. The 80 cents on the dollar is not a guarantee as many people reading the papers, and so on, might be thinking. So it depends on the market conditions. [Interruption] Basically it depends on the market conditions. Let me leave it there for now. That is the phrase he used—sorry, the Minister—my apologies, Madam Vice-President. So the 80 cents is not necessarily guaranteed. So what you have to do, whoever is buying the bonds or if you are dealing with the commercial banks or the pension funds like insurance companies and so on, how long would they guarantee this 80 cents for? Would the depositors, the people who are supposed to get these bonds, have a week to sell them before the rate changes; a month? 396 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. DR. HENRY] 11.55 a.m. Are you going to interfere with the market in some way and make the commercial banks guarantee that they will keep the 80 cents for some period of time? These are some of the details that I find to be a bit fuzzy in terms of the plan. That is why I asked, is it feasible. Now it might be, and maybe the Minister has answers that I do not have, but I think it is important to raise these questions. So an important premise of this whole potential plan is that the interest rates will remain relatively low for an extended period. Now, if interest rates start to increase later this year and into next year, the yields and so on will be lowered. In fact, it is one of the risks any of the banks, the financial institutions, who take these bonds and pay out cash to the depositors will be facing. The Minister mentioned that the Central Bank is ready to deal with the bonds and so on. If you take 15,000 depositors—I am not sure what the exact number is now, because people have been paid off so it might be lower—20 one-year bonds, that is 300,000 entries. So the Central Bank will have a lot of work to do in terms of dealing with this registry, so the Central Bank is now a registrar of bonds in this scenario. Now if that changes, one of the options is to sell the bonds in some bulk form to commercial banks, and let them handle it and deal with registration with the Central Bank in a more simplified manner, and they will have, obviously, to make some money off it. So if the commercial banks and the insurance companies, as you say, take all these bonds off your hand, and they then sell to the depositors, basically give the 80 cents on the dollar for the first 10 years, as you say, the banks will have to make some money. Tell us: how is this going to work? Banks are not necessarily in the charity business, or I am not sure that you are asking them to do national service and not make any money on this. So, one of the key elements of this is this commitment or this presumption that interest rates will be low. Unless you have some kind of agreement then this could be a problem. So in keeping us waiting for the year, and to come with the two Bills together, not only to help finance the plan, but also to take away the rights of the people from going to court and so on, my argument is that you have not overcome the first hurdle yet, and maybe by the end of the day if you have that information, go right ahead and tell it to this honourable Senate but, to me, basically you are still struggling in your own half. You have not crossed the 50- yard line yet. 397 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

So that is what I would like to see some clarification on, and I am sure the policyholders‟ groups and so on will be discussing similar matters when they have their meetings, because on the surface, 80 cents or 90 cents on the dollar sounds pretty good. I mean, it is a reasonable offer if you have money tied up in an institution that became insolvent and you are not sure you will get back anything. An offer, of course, as the Minister that said moved from 60-odd cents or 67 cents—whatever the figure was—to 80 cents or 90 cents on the dollar is obviously something that policyholders and depositors should not easily dismiss. So no problem there, but the problem is in the details of how the plan is going to be executed and that is where my questions for the Minister mainly emanate from. This plan has the potential to actually unravel and become quite a problem in a very short space of time. Now, maybe you had an agreement at certain levels at the commercial banks and so on, as I said, that they might help you out somewhere or the other, but I would like to know, what is the missing link, then, in terms of why would the bank support you on this and what are they getting in return? That is why I started by outlining the whole notion of international banking and so on and these people are not usually playing charity. I would like to move on from that and wait for the answers and look at what is happening in terms of the overall approach after the plan itself—whether it is successful or not—what are we doing about stability and stabilizing our financial system overall in terms of legislation and things such as that that would prevent another Clico from coming up on our doorsteps? One of the things I have noticed since being here almost a year and a half now is the relative absence of Bills pertaining to the financial system. The Minister mentioned the new Insurance Bill that was drafted. The Minister talked about some loopholes and so in the Bill—something that was in there and was taken out in terms of dealing with the stressed financial institutions along the same lines of the bankruptcy laws and so on in the United States of America—but the Minister really did not tell us why the Bill has not come forward, or give us some indication as to a time when you are going to bring this Bill that I have seen a while ago, and it is critical for the stability of the system. It is not just solving this problem, but we have to go forward. Now, the new insurance Bill that is supposed to come is supposed to give the regulator the ability to introduce risk-based regulatory capital, and to increase the capital requirements for the insurance industry. Now, this is critical, because I believe a company such as Clico or CL Financial at its peak had assets in the 398 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. DR. HENRY] vicinity of $22 billion or $24 billion or something thereabout, and they needed only $3 million in capital to keep operating—$3 million not $3 billion—unlike the banking system that falls under Basel I and so on where they need 8 per cent of overall assets and most of our local banks are way above that anyway. So we do not have a problem in meeting those minimum standards, but for the insurance companies we had no such requirement. So the new Bill will make it easier to bring in regulations and adopt new guidelines and enable the Central Bank to share supervisory information with other institutions, which is a very important part of the Bill, and not just institutions with supervisory agencies; the economic intelligence unit and also very critical is information sharing across borders, because the Clico problem, as I started off in my earlier part of my contribution, is a serious regional problem, and part of the problem is that the information flow among regulators of the different islands is either very, very poor or not even possible. So whereas the people in Clico Barbados and Clico Guyana and so on were seeing their difficulties or seeing certain things, they were assuming that the people in Trinidad and Tobago had it under control, because they look at us as the home base of the company to be the watchdog initially. So they will say, “Well, this is an established well-run company and so on.” This is what they presumed, because the Trinidad and Tobago Government did not raise any issue. When I say “the Government”, I mean all Governments over the existence of the company. The regulators in Trinidad and Tobago did not signal that, and that is part of the shock and awe of the collapse that hit the islands and Guyana at the time. So supervisory information is extremely critical in terms of going forward; generally improve the regulations of insurance companies to limit third party transactions, and this Bill has been sitting around now for quite a while. As the Minister said, it was drafted under the old administration, but that is not an excuse for it not coming here much faster, though we have had quite a significant time. We have other issues confronting our financial systems like the new products coming on the market with very little knowledge on the part of the regulators. Some of these harmful derivatives and so on—suitcase traders coming in from Canada and the United States of America and all over, and penetrating our market and no one really stops them. You have people, again, putting a lot of money because, as I said before, there is a lot of liquidity out there. I mentioned last week excessive liquidity went up to $4.5 billion in the banking system. Today it is closer to $5 billion and it keeps climbing. It is ironic that I did not introduce that topic. The Minister also did so on the last occasion, and he 399 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 made reference to excess liquidity decreasing in the earlier part of the year, and took that as a sign of things happening. So what do you take of the excess liquidity going the other way now, increasing to almost record level? It means nothing is happening. There is just not enough demand for investment and for loans and so the banks are awash with cash which, of course, you are hoping to capitalize on to solve the problem. So I will summarize in a minute. We have all of these issues confronting the financial system and, in a nutshell, what I think is that you have a fortunate situation currently with the low interest rate environment and the excess liquidity, so there is an opportunity to solve the problem, but after a year of saying that you have a solution, in my estimation you are not quite there yet. Until we get some more concrete details in terms of what are the mechanisms to make this plan really operational, and not have the banks discuss it one day or at the same day that you come to bring the legislation—the bankers met on Wednesday, the same day the legislation came to Parliament—that is the source of my concern. I thank you, Madam Vice-President. 12.10 p.m. Sen. Subhas Ramkhelawan: Thank you, Madam Vice-President, for giving me the opportunity to contribute in one presentation on both these Bills. First is the Bill relating to the purchase of certain rights of Clico policyholders, and secondly, the matter of the Central Bank amendment which seeks, inter alia, a stay of execution in terms of legal actions which have been taken or which are contemplated to be taken against the various parties in this matter. Let me start by—for the avoidance and out of an abundance of caution—declaring my interest with regard to this matter. Firstly, I am the Managing Director of a securities company which, over time, has had some commercial dealings with some of these enterprises that are involved—Clico Investment Bank, CMMB as it was then, and, of course, the insurance company, Clico. In my capacity as a director on the board of the stock exchange we do have some interest—the stock exchange, that is, would have some interests in this particular matter, whether it is on the question of trading of these bonds if this particular piece of legislation is passed. In my personal capacity and to the best of my knowledge, I have no insurances nor any other investments with this group. I think it is important to put that on the table. And it is in this context I want to commence my contribution and speak not so much as the Minister of Finance did on a top-down basis speaking to the 400 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. RAMKHELAWAN] fundamentals, the economy, inflation, interest rates, et cetera, as well as Sen. Dr. Henry, but I want to start from a bottom-up basis, because at the end of the day individuals and persons have been suffering, whether it has been brought about on their own accord, or whether for other reasons we have had a situation where a vast amount of funds in the system have essentially been frozen. People who have had their investments with Clico and the CL Financial group, in general do not have their money to utilize—that is one.

Secondly, those persons who would have invested with the CL Financial, Clico group would have invested, in many instances, hard-earned US dollars, and now they find that they are not going to receive any repayment in US dollars. So it is a clear case of some level of suffering. But I think that the essential question that must be answered on behalf of those citizens is whether—and I will come to the other parts, the legislative and others soon. But the harsh question is that a decision has been taken to make a certain payment. Do you want your money now or do you want to wait on some period unknown and uncertain to receive your moneys? Do you want to receive 90 cents on the dollar, according to the Minister‟s calculation, up from 62 cents on the dollar, or 67 cents on the dollar now, or do you want to wait for some period in the future unknown, uncertain as to how much you are going to get if you enter into a situation where there will be some winding up of Clico? That really is the essential question. Now, I have been a practitioner in this business for a very long time and people speak to me from all sides of the, shall I say, fence. And there are those who say: “Listen, if I could get my money now when it was 62 cents I will take it. I do not want to have to wait and not have my income and not have my assets to utilize.” And of course, there is that other group which says that the Government and the people of this country ought to make full payment for all losses because they said so at some point in time. And then there is that other group of people, I think it was called the silent majority. That silent group, well, they are not so silent as you think. They might not be published in the newspapers as a collective group, but they do speak out. What are they saying? They are saying: “You are using my money as a taxpayer. You are taking my money as a taxpayer to pay those people who took inordinate risks. They were getting very high rates of return, but you know there is no free lunch. You do not get something for nothing. So, you are taking my money.” 401 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

These are the taxpayers who may not have an interest in some of these investments. And you are taking my children‟s money, because, make no mistake about it, the Government has to make that repayment and how is the Government going to fund that repayment to those Clico policyholders? It is through taxation. It is taking my money and your money. It is taking the moneys and the income via taxation of so many people—1.3 million people to pay 15,000 people. Let us put the thing in stark reality so that we could seek to answer these questions and go forward. Madam Vice-President, yes, if this matter of CL Financial and Clico is not resolved, we will continue to have a stalled economy, because confidence is dependent on many things, one of which is people having access to their money to spend, consume and to invest as the case may be. And according to the Minister‟s figures, there are about 3,000 people whose rights he wants to buy, who hold about 75 per cent of the obligations or the deemed obligations that we in this Parliament are being asked to essentially validate for payment. Three thousand people holding $7.5 billion if their arithmetic is correct, and if they do not have this $7.5 billion to invest, one can expect that the economy will continue to be stalled. So at the macro level we have this situation that must be addressed. We have been skating along without any kind of serious activity for the past 15 months, two years, two and a half years, despite all the protestations of the hon. Minister of Finance that there are blue skies and he is seeing them. He has some glasses that none of us have at this point in time. And therefore, we need to break that deadlock, and an important, important decision that has to be made and executed is this decision with regard to Clico. Once we do that, I think we would open up the doors for the way forward. Then there is the question in addressing this issue of what is called, in the financial jargon and investment jargon: moral hazard. So we are going to validate the payment for some of our citizens who took inordinately high risks and we are going to pay them and say—essentially the message that might go there is: “Okay, you invested in very high returns, the company that you invested with was unable to repay you, the Government steps in and repays you. Then what is going to happen the next time? You are not telling people that they must take responsibility for their actions, that when they take risks they are subject to: higher the risks, higher the returns, lower the risks, lower the returns. So we have that issue of moral hazard, and if we continue to bail out we are going to find that there will be no kind of restraint as there ought to be, there will be no kind of vigilance as every investor ought to have for the placement of his or her 402 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. RAMKHELAWAN] funds, whether it be individual or institutional. And so these are critical issues that circumscribe the issue of repayment. But we cannot stand in the shoes of the Executive, they have been voted in, they have taken a position that they are going to pay, and they have taken a position as trustees for the people of Trinidad and Tobago, and they will have to pay the price, whatever that price is, if that silent majority decides to revolt at the polling stations. That is up to them. That is a matter for the Executive. Our decision is a decision as far as the Parliament goes, which is to give support or not give support to this question of validation and payment. That is our decision. The Executive has made its decision. But let me say, I have heard other arguments, arguments about equity, about classes of payment, about who is getting 100 per cent repayment, and who is getting less than 100 per cent repayment. There is never going to be, in a matter as this which is seemingly intractable, a solution that is going to please every single person all the time, and therefore, you have to essentially take a position that seems to be as balanced as you can in order to forward. So that the question of the payment that has been debated for a very long time, and I think that we would really need now to come to the point of execution; what you are going to do and how you are going to do it. I myself in terms of the methodology of payment, wanted to say a few words about the methodology of the payment. The Minister has proposed—his original proposal was to pay bonds in 20 separate segments so that if you had $2 million—if you were fortunate to be one of these 3,000 people with over a million dollars—it would be separated into 20 bonds each equivalent to $100,000, and that is simple enough. If you were to go to the banks—and it is not only the banks that would be capable of discounting such paper. I think we have been talking about the banks, the banks all the time, but we do have a securities industry as well that I believe would participate in discounting this paper, buying this paper, selling this paper, trading this paper, as we go along. So that there will be several parties, apart from the banks, apart from the insurance companies, the securities companies, but I do not know that that is so much the issue at hand for the investors in Clico. The issue at hand is: how much are we going to get, when are we going to collect our money, and how are we going to receive that money? And I do not think that the Bill is complex in any way. 403 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

I think that the issue is complex, but the Bill in terms of the validation of payments and the approval sought from the Parliament to make these payments is pretty straightforward and simple. I think the Minister would have some challenges because of the change that the hon. Minister has made in terms of the quantum of payment. He is speaking to the first 10 years being discounted in the same way as the original proposal, but then he speaks from year 11 to 20 where these bonds are actually exchanged on a dollar-for-dollar basis, for certain investments in shares which is NEL. 12.25 p.m. Madam Vice-President, the economic reality is that if you have bonds from year 2011—2020, as the Clico policyholders would have known all along, they would have gotten about 40 cents on the dollar, on aggregate. Now in one fell swoop, they are actually getting dollar for dollar, which is a phrase that has been coined and used over time, in all kinds of different scenarios. What you get now is for every dollar of bond that you have, which in the jargon is called “face value”, you are getting a dollar for it. We all know that you cannot make something out of nothing. That has to be funded in some way and from some place. You cannot say, “I am paying you 62 cents today and tomorrow I am paying you 92 cents, in terms of the today‟s value”, and that does not have to be funded. It is how it is funded. It is whether it is funded, let us say, on the balance sheet of the Government of Trinidad and Tobago in terms of the debt side of the equation, or whether it is funded from some other source. Clearly the Minister is going to have to find resources and he is going to have to fund those resources from somewhere. So if you take the shares out of Clico, there is going to be a bigger hole in terms of Clico‟s liability, and somebody is going to have to fund that to make Clico whole. Let us be very clear as far as that is concerned, and we would like to hear his explanation of how that is going to be done. It may be, as the Minister likes to speak of, an off balance sheet item, but it is an economic factor nevertheless. So it might not show in terms of the debt, and it might not show in the statistics in terms of the debt to GDP, but you have to find the value from somewhere, transferring value from Government, from the coffers of the people to the coffers of the select group of people that are the policyholders. We have been talking about risk. We have been talking about two aspects of risks; one is the risk inherent in holding the bond if interest rates go up. That was the point made by Sen. Dr. Henry. If interest rates go up, what would be the 404 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. RAMKHELAWAN] implications of holding these bonds? The hon. Minister spoke to the risk of certain assets in the hands of the policyholder, when we see what could happen in terms of the market value of the shares going up or down. We all know, and we have heard before, that there are only two things that are certain in life: death and taxes. Life itself is a risk, no matter what we do. I do not think anybody could indemnify fully against those risks. So my advice to investors is, if you are worried that interest rates would go up and your value would go down, go and cash in your bonds now, so that you take away the interest rate risk. In fact, without attempting to give a financial lesson, if you cash them now and interest rates go up, you would be better off, because you would be getting interest on your cash. With regard to the share component, I think there would be some issues, because the Minister is proposing that you have some $5 billion in shares in the hands of a wide range of people, and if they decide to encash now, valuations, according to the theory, where there is so much more supply than possible demand, valuations may go down. So it is up to the investor who has received funds, as to what he is going to do and how he is going to decide how he moves forward. No government can deal with that. No entity can deal with that. That whole question of risk taking and the whole question of what you do with your assets are up to the investor. I want to talk about the way and the calculation of the assets and liabilities of the group Clico and CL Financial. It is not a fully convincing situation where you, the Government, say, “These are the assets, these are the liabilities”, without any audited accounts. There are no audited accounts, so all of us here have to trust to the virtue of the Government. [Interruption] Madam Vice-President: Hon. Senators, I would like to advise that lunch is available, but by agreement of the Leader of Government Business in the Senate as well as the Leader of Opposition Business in the Senate, we will go straight through. So you may stream as you wish; however, bear in mind the quorum that is required at all times. Sen. S. Ramkhelawan: I was trying to collect my thoughts here, especially with the spectre of lunch and the call that has at 12.30. On the question of audited accounts, I have enquired and the feedback that I have received is that there are no audited accounts for Clico. There are no audited accounts for CL Financial, and I have not heard of audited accounts for any of the other entities. I am particularly concerned about Clico. The Government is saying, 405 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

“Look, you trust us; these are the facts”, but there is no third party to say, “Listen, what the Government is saying is correct in all material aspects.” I am concerned about that, especially since the administration, previous or current, did sign a memorandum of understanding with the shareholders, and one of the commitments was that by June 2010 there would be audited accounts. I would like the Minister in his response and his winding up to deal with this matter of audited accounts. He is saying, “Here is the position. This is what happened to Methanol Holdings. We are better off now.” But I am not seeing any figures to support that. I have to take his word for it. I am not casting any aspersions on the hon. Minister; I consider him an honourable man, I consider him a man of integrity, but I would like to see the audited accounts, so there would be absolutely no doubt as to what is there before us and the capacity of these institutions to pay We are really, in a sense, shooting, if not in the dark, we are shooting in the dust, because management accounts do not say that a third party of repute and capability has been able to review these accounts and say, “Those are correct in all material respects”; or to qualify and say, “They are correct in respect of one, two and three, but there are issues,” and what those issues are. I want to address another matter, apart from the management accounts. I want to address this matter of responsibility, because this issue with regard to Clico appears to have gone to a stage, “Well, Government should pay”, and by “Government”, taxpayers should pay, because they said so. But there was a responsibility of the company or companies involved; they gave the undertaking to pay the investors. The entire community seems to be extremely silent about that. Those vociferous people who say, “We want all our money and we want all our money now”, seem to forget that they decided free will, freely, to put their money with a particular institution. They seem to forget that that institution did not, could not pay. They seem now to rely on the taxpayers, through the Government, to make that payment fully to them. The past administration may have been premature in deciding to guarantee a black hole. They had no information. They had not sufficient data. They had no management accounts. They had no audited accounts and they said, “I am going to guarantee it, whatever it takes”, putting the people of this country in financial danger. And now, in the context of that financial danger, we are going to have in a sense to declare a financial state of emergency in order to achieve a stay and take 406 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. RAMKHELAWAN] away the rights of people, so we could deal with them and satisfy them, so that we could look after them, in a sense. How ironic, Madam Vice-President. And the most vocal in our community say, “We want we money and we want we money now, and if the fellas who we put it with could not pay, you have to pay; you the taxpayers.” The Executive, representing the people said, “Yes”, and they have come to the Parliament now to say, “Okay, we want you to endorse; we want you to approve; we want you to give effect to what we want to do.” That is really the question today. But those people who are responsible for putting us in the debacle that we are in, and I am not talking about Clico policyholders, I am talking to those who actually took the policyholders‟ money, making various promises that, “We will pay at a much higher rate than anybody else could pay, than the market could pay, and your funds are secured by the Statutory Fund”, where are they? I want to know from this Government: what are you doing about it? When we talk about responsibility, I would like the Minister of Finance, the Minister of National Security and the hon. Attorney General to answer me that question, because you want me to vote for this. I want to know: those who are responsible, are they going to be held accountable?

In other places, you could be a billionaire, you could be a millionaire, you could be centimillionaire, when you are found with your hand in the cookie jar, you are going to find yourself in serious trouble; a la Madoff in New York. But even here in the Caribbean, we have the famous case in Antigua of Sir Alan Stanford. What a pathetic sight that cut. Sir Alan Stanford, one year ago, was doling US $1 million per player for playing in a Twenty20 match. When I saw that figure, chain around his legs in a pink or salmon suit or a fluorescent suit, I felt, “Yes, there is some justice in the world.” I want to feel that there is some justice in Trinidad and Tobago. If there is no justice in Trinidad and Tobago somebody, some bright person, is going to come again to do the same thing, and is going to ask we the people, through whatever government is in power, to do the same thing, make good. These companies, these players who have gone out and made all these promises, cannot deliver on these promises, where are they? Bring them to account; bring them to account. I am speaking on behalf of all the people in Trinidad and Tobago. Bring those—should I say perpetrators?—Yes, bring those perpetrators to account. They have not. 407 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

12.40 p.m. Relatedly, Madam Vice-President, when we start to speak about this concept of reciprocal responsibility, we having a responsibility in the Parliament, the Executive having a responsibility, the Clico policyholders having a responsibility, the taxpayers forking out of their pockets for which they are not responsible coming to have to deal with this matter because the Minister said, and former Ministers have said, we are at a point of systemic risk. Now as we know, 93.72 per cent of the people do not even understand what systemic risk is. So the Central Bank Governor comes and says, we have systemic risk, so we should fork out all of this money and pay everybody. Well, explain what it is. The financial system is going to crash and therefore, nobody will be able to get their money. Well, there were signs of that taking place over the past two years. You will recall, Madam Vice-President, that when this crisis—and I call it a crisis— first broke in January 2009, we had a situation with one of our pre-eminent banks which had something of a run, which was part of the Clico and CL Financial grouping. Then, more recently, we heard all sorts of news as to one of our pre- eminent mutual fund companies, being exposed to Clico, or so it was said, and would have had people going and taking their money out of that institution. So yes, I accept that there is some element of systemic risk—and let me say, Madam Vice-President, lest I be cautioned, that the 93.7 was a hypothetical figure and not some statistical figure. But the point is that we have to—I am a strong advocate of transparency. What really happened? I am a strong advocate of disclosure, at the correct point in time. I am a strong advocate of accountability, and we have been faced with a situation where the one word that comes to mind to me is opacity. We are really trying to piece this together and find what has really happened. It is like Gautam buddha spoke, that you have four or five blind men trying to feel this thing and one saying it is the hair brush and one saying it is a trunk and whatsoever. And at the end of the day they have to collectively put their heads together to figure out that what I was touching here and what I was feeling here, et cetera, was an elephant. And there is a massive elephant in the room, not a gorilla, but a massive elephant in the room that is essentially—it is essentially a millstone around our collective necks in order for us to be able to go forward. That is why I would advocate a solution which will take this from our necks so that we can in fact go forward, notwithstanding the various costs, and notwithstanding the concerns of our taxpayers that we are possibly mortgaging 408 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. RAMKHELAWAN] the education of our children, the health of our children and the security of our children in the future. But, we need to open the doors so that we must go forward. That really is the concern that I have. I want to make two other points, in terms of responsibility. I have spoken about bringing those to heel, who are responsible for putting us in this crisis. But the Government having taken a position as the Executive that they are going to take my money and your money and our children‟s money to pay this and settle this matter, they having taken this position and they having accepted responsibility for it, have responsibility for certain other matters which I come to. One is that over the past two years, two and a half years, since the breaking of this crisis, we have put in a number of pieces of legislation to ensure and assure against money laundering. Now, I have nothing against anybody having $25 million or $30 million in the bank. I am happy that people have worked hard, people have worked honestly, people have worked decently to acquire that wealth. But what I do not want the Government to do is to make the mistake and break the laws that we have passed in this Parliament by paying out the sums before ensuring that they have put the appropriate money laundering screen in place before payment. So we are putting regulations, and the regulations only speak to, “Oh, I think we owe you this and we pay you”, but I want the Government to ensure that it does not break the money laundering laws that we have put in. And I want to hear some sort of commitment from the Government—the hon. Minister of Finance, the Attorney General who has positioned himself as the chief crime buster—that this, in fact, will be done or else, what you are doing is taking our taxpayers‟ money, mine, yours, our children‟s, still not yet paid, but you are not putting in place the checks and balances—and you have a wonderful opportunity to put the checks and balances in place right now—that those who have acquired their assets in an illegitimate way would be found out and dealt with through our money laundering rules. The Minister of National Security, hon. Brig. John Sandy, has been at pains to establish a Financial Intelligence Unit. I ask the question: when these moneys were being brought in, did you have the standards? The answer might be no. Were the standards applied? The answer might be no. When you are paying out Government‟s money—when you are paying out the people‟s money, not Government‟s money—ensure that your Financial Intelligence Unit has a role to play as far as that is concerned. 409 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

My next point has to do with taxation, Madam Vice-President, and that is that I have heard the hon. Minister provide an amnesty of significant proportions to people who did not pay up, not just their taxes but who were late payers and who did not pay penalties and interest and so on. Here you have a sufficiently wide pool of people, and I think it is important if you are owed taxes that you put in mechanisms that you ensure that there is a right of offset of taxation owed by these persons. That is the only way I feel that taxpayers, ordinary taxpayers would say yes, my Government—our Government is responsible and has acted responsibly; notwithstanding they have stood in the shoes of a company to pay $5.1 billion initially injected into that group and notwithstanding they are going to put in $10.7 billion of additional liability, and notwithstanding that they will have to find a way to fund this dollar-for-dollar trust as yet uncalculated, as yet undetermined. I believe this current administration has taken a page out of the book of the former administration which went about guaranteeing something that was not determined or calculated. They seem to be swimming in the same river, maybe on different sides of the river, but within the same river. So let us get to the highest standard of responsibility so our citizens, all of them, can feel, “Okay, we have to get the economy moving and on a roll. We have to settle certain matters in order to move forward, but we do not do it in a glib and irresponsible manner where we have not done, we have not checked and ticked all the outstanding areas where we can make this a better society and a better economy because there is a question of equity that is coming up here. I have heard persons speak about equity on behalf of the payment, that some policyholders are not receiving the same kind of benefit rateably as others. I want to know who is paying attention to the taxpayer. Is he being treated equitably? And of course we know that the answer is no. We know that the answer is no because you have asked him, you have asked taxpayers and you have asked potential investors who would have stayed away from Clico, because they felt that all was not well. They stayed away. And instead of earning 9 per cent, they earned 2 or they earned 3, right, and they acted responsibly and they avoided moral hazard. And now you are telling them, “Well, you got less in interest, but now you have to take your money and pay those fellas who did what they had to do”. I am aware that many of those who had invested did not sleep well at nights. You will receive the many calls, “Boy you think Clico is a good place to invest”, or this, that and the other. “You think we should put our money there”, et cetera, 410 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. RAMKHELAWAN] et cetera. That has been circling in the financial system for a long time, for any practitioner. Any practitioner knows what was happening there. So these are the concerns that I have in terms of the validation and the repayment. Madam Vice-President, there are a lot of technical issues in this payment, but I will not want to burden the Parliament with some of those technical issues in terms of how this payment is going to be made, what would be the issues. There are issues in terms of trading these bonds; there are issues in terms of electronic trading and so on. And those issues are critical because basically what the Government has done, they have taken chunks and parts of the old emolument bond Bill, and they have taken various parts of it and spoken to fiscal agents and so on. Remember in that Bill, remember what was involved in that Bill. You had physical pieces of paper. So if a holder of that paper wanted to encash it, he had to bring that physical piece of paper, a certificate, and he had to bring identification and he could take it and the person on the other side could verify, “Yes this is Mr. so and so. These are his bonds.”

With electronic trading you need to have a ring fence system. Because the only thing that this person is going to get with electronic trading is a statement saying the Government owes you $25,000—no, well, all of those are paid already. The Government owes you $500,000. But when he goes to the fiscal agent, according to this Bill, when he goes to the fiscal agent, the bank or a securities company or an insurance company authorized to deal, there is a whole, long, convoluted process that could lead to greater issues in terms of, shall we say, issues which could lead to—I will come to the word in a little while. But it is a different game and the Minister has simply injected electronic trading to replace physical trading and I do not think that the full process has been thought out, but we will deal with that, I think outside of this Parliament. One other matter on the first Bill, which is this validation Bill, is that, under clause 7(2), provision has been made for the Minister to make regulations to be laid in the Parliament. Now, nothing has said that those regulations are subject to negative resolution. You are talking about $10.7 billion. We say okay, “Give me the authority”—[Interruption] Madam Vice-President: Hon. Senators, the speaking time of the hon. Senator has expired. 411 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Motion made: That the hon. Senator‟s speaking time be extended by 15 minutes. [Sen. T. Deyalsingh] Question put and agreed to. 12.55 p.m. Sen. S. Ramkhelawan: Madam Vice-President, the point that I was making with regard to regulations is that, in a matter that is so sensitive and so vital with regard to the economy of this country, such regulations should be in a simple majority vote, and, when laid in Parliament, they should be subject to negative resolution. Of course, I would like the hon. Minister—I hope that somebody is taking notes for him—to answer that question as to this matter of regulations; you pass a law and then you leave it to the Minister. Of course, we all trust this Minister; let me just say that, but Ministers change, as we have seen before. I think three of my colleagues on the Front Bench have disappeared since the last couple of sittings, and I want to add my congratulations to Sen. Devant Maharaj, who has joined the Front Bench, and Sen. Nicole Dyer, and Sen. Terance Baynes, and welcome them, wholeheartedly, to the Senate. I want to add my welcome to them. But Ministers change and when Ministers change, we do not know who that next Minister might be. It might be Sen. Bharath, who does have a good understanding of finance, as he claims. So it might be him, and I am only speaking hypothetically. Sen. Bharath is my very good friend, but we do not know that he will operate at the same level. So those are the comments on the first Bill.

[MR. PRESIDING OFFICER in the Chair] I want in the few minutes left to me to make some comments on the Central Bank (Amdt.) Bill, 2011. Let me say, first of all, Presiding Officer—and welcome to you— that we have known all along, and we have had the experience, all of us, that you can change the rules of the game over time. Usually that is done before the game starts or at the end of the game where you see that there are certain, shall we say, lacuna. But this is a most peculiar situation. While the game is going on, we are changing the rules, meaning that other jurisdictions have put in place and have maintained in place, provisions for a stay of execution in matters relating to the financial system, and these have included—and we have been advised by the Central Bank—for such matters: New Zealand, Australia, even Jamaica, our neighbour, other whole range of players. But here we are, smack in the middle, actions are being taken and we are now putting in rules to stay actions that have already started and actions that have been determined, but now to be executed. 412 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. RAMKHELAWAN] It is a most peculiar situation, but it is something that any rational person would want to weigh the cost and the benefits of doing something like this. Now, without that stay, you could have a situation—judgment and so on, has already been given—where Clico and the Clico group, allowed to fend for itself or having to go into a wind-up situation, could create havoc and systemic risk—which we have already explained—in the financial system. While I have concerns, I view this piece of legislation—and I have termed it before—as creating a financial state of emergency where, in the middle of the game you stop and you take away people‟s rights to action. But I think, what would be the implications and what would be the alternatives? The implications are that if we do not create some level of, shall I say, fiscal financial discipline at this point in time, we could have a situation where all the intentions about making payment could be derailed, and many of those persons who are prepared to take their money, and whatever is given to them now would have to wait for, as I said before, a period of time that is uncertain as to when you will get your money and uncertain about how much you will get. I will not speak of the greater good, but I will say that that is the greater evil; the greater evil when one compares this financial state of emergency which the Executive has come to us to call, versus the absolute chaos that could result, the derailment that could be caused to the economy when we trade them off, I would lean to the side of a limited financial state of emergency. But the Central Bank has the trigger in its hand, which is, they will say, and they are allowed to say, how long the stay of execution will be, and when they are saying this with this piece of legislation, they do not have to report back to the Parliament; they have to report to the courts. I think one of my colleagues made the point clear, that if you come to this Parliament for this financial state of emergency, you should report to this Parliament as to what is the status of the Clico/CL Financial situation. You want to report to the courts quarterly; report to the Parliament as well, because it is the Parliament that is giving you the A-OK, the authorization for the stay of execution. That, really, is my great concern about this matter of the stay of execution of the Central Bank. I have looked about and this arrangement is in place in a number of other well organized and run jurisdictions. It is usually, as I said, in place before rather than just during the game; so be it. But I would like the Minister to bring to this Parliament an undertaking that the matter would be laid in the Parliament, because it is a matter that Parliament is debating; it is a matter that Parliament has to decide on; it is a matter that Parliament has to authorize. 413 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Therefore, while I do not have an objection to the implementation, I have concerns about the taking away of the rights of persons. While I have the concern of taking away the rights of persons, I have to ask myself the question—and the nation has to ask itself the question when we are doing this—which is the greater evil: financial and economic chaos; the inability of persons to receive their money within a certain point in time and a known point in time, or this particular right? Therefore, I said where I would err on. If I have to err, it is for the widest possible beneficiaries rather than the few litigants, if you want to put it that way. So, these are my thoughts on both Bills, one which requires a simple majority, and the other one with regard to the truncation of rights which requires a special majority. But they are hinged; they go hand in hand, because, if one is derailed, the other with regard to payment is derailed. I want to see this nation move forward. It is a difficulty; it is a complexity; it is a situation that two administrations have had great difficulty at resolving, but it is time that we move forward as a people, mindful of some of the responsibilities; mindful of the challenges; mindful of the fact that we can never orchestrate a perfect solution as far as this matter goes, but it is a solution that is good enough to take us forward. I thank you, Mr. Presiding Officer. [Desk thumping]

Sen. David Abdulah: Thank you very much, Mr. Presiding Officer, for allowing me to contribute to the debate on these two pieces of legislation: the Purchase of Certain Rights and Validation Bill, 2011 and the Central Bank (Amdt.) Bill, Chap. 79:02, both of which, as already emerged in the debate today, are very important pieces of legislation with respect to the national interest. Before I get any further, let me identify very openly what my own interests are in this particular matter. As an individual, I do have some traditional—to use that term—savings or investment in Clico, and as the General Secretary of the Oilfields Workers‟ Trade Union, one of the hats that I wear, the union itself has EFPAs in Clico, and, as well, the staff pension plan of the Oilfields Workers‟ Trade Union, of which I am both a member and, having been an employee of the union for 34 years, that staff pension plan is also invested with Clico, and has been since the start of that pension plan in 1974. So I want to be very clear that in those several ways, both in individual terms as well as from an administrative point of view in the Oilfields Workers‟ Trade Union, that I have an interest. 414 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. ABDULAH] That having been said, I am going to attempt to address this issue in a very objective manner and to speak to a number of the points that have been made, both by the Minister of Finance and by Senators opposite. I think that the first point I want to make is that we had the benefit of a very important briefing, and the Minister of Finance spoke to that in his presentation—a very important briefing—by technical people earlier this week, from the Central Bank and from the Ministry of Finance and other professionals, on this very crucial issue. I think that that was exceptionally important, because it enabled Members of Parliament, as we address a fundamental issue like this, to look at it, perhaps, from a dispassionate point of view, and address the facts and figures, and analyze and be provided with analysis as well, of the very critical nature of the legislation that we are debating today, because of the fact that they deal with the survival, if you wish, and stability, of the financial system of Trinidad and Tobago, and, by extension, the economy and so on. I think that we benefited, and I want to congratulate those persons who have done a lot of the technical work to get us to this point. I think it was very, very useful indeed. It was a pity that Members of the Opposition—I am not speaking of the Independent Senators; I am speaking specifically of the Opposition; of the PNM— did not take the opportunity which was availed to them to be also provided with that technical briefing and that technical information, because my understanding is that the Opposition was, in fact, invited and I heard it said in the other place by the Leader of the Opposition, that, yes, they were invited but they took the decision not to go. 1.10 p.m. I think that was unfortunate in the extreme, because this issue of the two pieces of legislation which we are debating and more to the root of it, the issue of Clico/CL Financial and the financial system and so on, and the stability of our economy, cannot at any time be viewed or should not at any time be viewed as a partisan issue. This, if anything, is a national issue and we should enter into the spirit of the debate in terms of the sharing of information, learning about the matter, being briefed and so on, and be provided by information as persons committed to the national interest rather than perhaps taking a very narrow partisan point of view. I wanted to make that point very, very clear because it is one of those issues— because we are dealing with confidence and the stability of the financial sector which stability is critically dependent upon confidence, it is critical that we do not 415 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 make statements that may be rhetorical and which may sound great and so on, and we enter into all kinds of flights of fancy which appeal to populist sentiments outside or to our party and supporters and so on, and in the context of that trying to score cheap political points against the Government, really then set the cats among the pigeons and cause particular problems. Sen. Ramkhelawan was referring to the situation some time ago, where some investors may have heard rumours and so on and began to withdraw their funds. In fact, one of those situations could well have been attributable to irresponsible statements made by politicians. So I wanted to make the point that this is an important debate and for the national community that would be viewing and listening, we have to enter into it in trying to identify solutions as the Government has done in going forward. The issue is critical and Sen. Ramkhelawan was making the point that it concerns every single citizen. Yes, it concerns every single citizen because if the financial sector—we have seen the example abroad and Sen. Dr. Henry was absolutely correct in his analysis. I do not think Sen. Mariano Browne perhaps shares the same views as Sen. Dr. Henry in terms of the assessment of the reasons of the problems in the global financial sector, but perhaps that is a debate that will take place in another forum about economic policies. We have seen what has happened in the global markets where the collapse of one financial institution has had a domino effect and has triggered a collapse of not just one, but two, but three, but four, but five, but six, eight and 10 financial institutions requiring major Government intervention. Of course, the more institutions that are in difficulty—because one impacts on the other in a domino way—the more institutions that are affected, the greater the size the Government intervention ultimately may have to be. Therefore, it is very important that steps be taken to ensure that the systemic risk that has been referred to is contained, addressed and ring-fenced, if you wish, in this regard, and that is what we are seeking with these two pieces of legislation with respect to Clico in particular. So, a problem in the financial sector becomes a problem for the whole economy, and it becomes a problem for Government‟s budget and Government‟s fiscal situation. Just last week we were dealing with Government‟s fiscal situation and the need to borrow, and obviously if the Government has to put out more and more money to address a crisis in the financial sector, that is going to impact on its deficit, it is going to impact on the need to borrow on all those issues that we had debated on the last occasion, and it will impact ultimately on the 416 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. ABDULAH] Government‟s ability to address the economic and social requirements of every single citizen of Trinidad and Tobago because for every dollar that has to be spent to shore up a financial institution, that is one less dollar that is available to deal with roads, water, health care, education and all of the other needs of the citizens of Trinidad and Tobago. Therefore, the People‟s Partnership Government in that regard saw the need to ensure that the best possible solution was found to maintain the stability of the Government‟s fiscal position, as well as to ensure the stability of the financial sector and of the economy as a whole, and at the same time to deal with the individuals who have policies, deposits and investments, or who may have part of a medical plan and so on which is insured by Clico. Therefore, in a very real way—and I think Sen. Ramkhelawan made the point—this has to be a critical balancing act of balancing the various interests that exist, and overall to look at the national interest. If the right measures are taken, ultimately the taxpayers themselves will benefit. So even though—yes, Sen. Ramkhelawan, the point is that the money that has to be used to bail out and so on is money that we do not have available for other things, but ultimately the taxpayers will benefit in the long run because if there is a stable economy and a stable financial sector leading to further economic growth, then ultimately the taxpayers will benefit. So, therefore, there will be time when taxpayers may need to make interventions and sacrifices in order to ensure the longer term benefit. [Interruption] Sen. Browne: That is something we agreed on. Sen. D. Abdulah: With respect to the issue of Clico, Mr. Presiding Officer, much of the focus in the public media has been on the holders of the Executive Flexible Premium Annuity, other such short-term investment instruments and mutual fund holders, the number of which, as the Minister of Finance said, numbered some 25,000 or 26,000 persons. The Minister has already addressed how many of those had less than $75,000 and those who had more. Of the 16,000 persons who hold mutual funds and EFPAs exceeding $75,000, there are some 14,000 of those who are individuals and 2,000 are companies. Of those 16,000— and Sen. Ramkhelawan made the point—3,000 of those have more than $1 million each, totalling, in terms of their investments, $8.7 billion. So a lot of the focus has been on the EFPA holders in a lot of statements in the media over the last year or so, but there are, of course, other Clico stakeholders, and although the Minister said it, I want to repeat it because I think it bears 417 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 repetition, that there are more than 220,000 other traditional clients of Clico, persons who hold insurance policies, who hold traditional annuities and so on, who are members of group medical plans with their respective employers, or who are part of pension plans which pension funds are invested with Clico. I am going to return to this issue because we cannot lose sight of those 225,000 traditional clients of Clico. They have not been spoken of much in the various discussions and discourses around this issue over the last year, because the Clico policyholders group has, by and large, been addressing the issue of those who have EFPAs and not dealing with the traditional clients of Clico. I come back to that in terms of the difference between the short-term investments and the long-term investments. The size of the problem has been stated that $5.1 billion—it is in the Purchase of Certain Rights and Validation Bill—had been expended prior to May 2010— between January 2009 and May 2010—which was already disbursed and now we are being asked to validate going forward expenditure of some $10.7 billion to be paid out over a period of time by the Government, through the arrangement described by the Minister of Finance in terms of the bonds and so on, and the shares in the National Enterprise Limited 2 (NEL 2) as the case may be. Now this is a very significant amount of money. We are talking about close to $16 billion in total over a period of time, which is some 10 per cent of our GDP. That is a very significant chunk of our national income which is being committed to addressing this issue of resolving Clico and it, therefore, is very much national in scope. We as an economy, Mr. Presiding Officer, do not have the luxury of an economy like the United States, and as we had discussed on the last occasion, the United States having its currency being the principal reserve currency in the world can simply print more US dollars to pay for its debt and hope to get away with it. We saw that is beginning to catch up with the United States, but it still has that luxury of printing more money to address its question of debt and, therefore, in the case of bailouts and so on, the US Government can manage that in a way that this Trinidad and Tobago economy cannot address that matter, simply because we cannot print more TT dollars because nobody is going to be out there in the world buying out TT dollars because our currency is not a reserve currency in the world. Therefore, there is a fundamental difference in that regard between our situation and the situation of the United States, and their bailouts in the ability of the Government to meet the large payments for bailing out financial institutions, and I think that is very important for us to say. 418 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. ABDULAH] Let me just look at the international situation as I made mention of it, Mr. Presiding Officer, and to say that the bailouts were very significant. In the United Kingdom, while all the figures are not in and there is some debate about the size and quantum of the bailout, many economists and other analysts have identified that bailout to be in the vicinity of £130 billion to £140 billion—not US dollars, but pounds—which is anything like 10 per cent of their GDP, and that bailout related to financial institutions such as Northern Rock, the Royal Bank of Scotland, Lloyds Banking Group and others. In the United States, the figures have varied quite widely and, of course, there are now repayments on the initial bailout by a number of companies and some estimates are in the range of between US $80 billion and US $100 billion in terms of a net bailout, given the fact that their returns are to come back in repayments of some of that debt. So we are talking about US $80 billion to US $1,000 billion net. Now, those amounts have impacted very significantly on the deficit position of the Governments, and those Governments‟ deficits, as we saw from the recent debate in the US Congress and the stalemate between the President and the Congress with respect to the debt ceiling, the bailout was one factor in increasing the level of US Government debt. Another factor, of course, was the huge cost or is the huge cost of the various wars that the United States is engaged in. That is another very, very large cost to the US Government. Certainly in the case of the United Kingdom, both the bailouts and the wars as well have been major factors in the UK Government‟s deficit position, which has led the present Government to engage in major social spending cuts, which social spending cuts have had their own implications as we have seen recently on the streets of London and so on. So, while the bailouts seemed to have saved the day, initially, those very large cash injections that took place because they were not bailout spread over time, were immediate cash injections and so on into the financial institutions to save the entire financial system. If you remember in September 2008, there was a virtual meltdown of financial institutions as one after the other began to collapse and those Governments decided to put large cash injections into those financial institutions, and it was those large cash injections into those institutions that have added significantly to those governments‟ debt, and all of that has led to including the issue of the downgrade by Standards and Poors of the US Government sovereign credit rating and so on, and have also contributed to a major slowdown in the growth of jobs, of their national income of GDP, and a loss of confidence in the general economic system. 419 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

1.25 p.m. Mr. Presiding Officer, we have to ensure that that scenario does not take place here in Trinidad and Tobago. We do not have the same buffers, as I just mentioned, as the US and other large economies; even given the difficulties that they have, we certainly do not have the buffers that they have, and therefore it was necessary to ensure that this does not happen here. This was why the Minister of Finance—and we need to support the Minister of Finance in that position—took the position that the approach taken by the last Government in 2009 was, in fact, the wrong approach because it was predicated on a short-term liquidity problem; and therefore the solution was apparently a short-term injection of cash into Clico and other CL Financial institutions and so on, and through that short-term injection of cash enabled the companies to refloat and regain their financial strength and so on. It is very clear that that was not the problem and we had the situation facing us of a continued haemorrhaging of funds because $5.1 billion was paid out between January 2010 and that did not solve the problem. Had the Government continued to make those large cash injections into Clico to deal with the crisis that it was facing in terms of liabilities exceeding its assets, and therefore not being able to meet its obligation to particularly the short-term investors who need their money back in the time that those investments mature, we would have been in a situation of making another 10 or more if you were to add the interest, certainly much more than the $10 billion. The $10 billion that we are now seeking to validate is principal, it does not include interest; and if one were to include interest on that $10 billion, it would be very, very much larger than that. And if, therefore, you had that situation of $10 billion-plus being paid out in large cash injections, we would have been in a situation of very significantly rising expenditures by the Government and consequential difficulties with respect to its deficit and so on. So, there was no way that that could have continued because it would have put us in a situation where the Government at the end of the day would not have been able to continue to sustain those cash injections, and then the original problem would not have been resolved either. So, perhaps more of the EFPA holders would have gotten their investments back with interest and so on, so more of those would have been satisfied. But then the traditional policyholders of Clico would have been up the gum tree because the problem of Clico in terms of its liabilities exceeding its assets would have still remained, and that problem then could not 420 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. ABDULAH] have been resolved because the Government would have already spent so much money—five million plus, $10 million plus interest and so on—to deal with one subset of the interest groups, and therefore would not have had any resources to continue a bailout of the company. So the approach by the Minister of Finance was correct in terms of stopping the haemorrhage, so to speak, and then trying to find a solution that would satisfy, in the best way possible, all the various interests and all the various stakeholders, and taking the point made by Sen. Ramkhelawan, that you could not satisfy everyone at the same time to 100 per cent, but you had to find a way of satisfying as many people at possible in the best way possible. So, the approach by the last Government ultimately would have seen the Government having to get to the point of no return, of having expended large amounts of money and then still having a problem of Clico being in difficulty; and that itself would have contributed even more to the systemic risk which it sought to avoid in the first place; and I think that is what we have sought to address at this time. Mr. Presiding Officer, in the other place I heard a Member of the Opposition referring to the EFPA holders as policyholders—that these were not investments— he was objecting to the terminology—short-term investment products, STIPs, and was saying that these were policies. I think the whole country is aware that those EFPAs were seen by one and all as investments—as short-term investments. As investments that would have enabled with a high rate of interest, and so on, a quick turnaround on one‟s moneys and they were not long-term investments that are akin to a pension fund—in other words, our traditional annuities—people did not purchase those EFPAs for 25 and 30 years and so on. They were purchased for one and two and three and five years, maybe seven years and so on, but they certainly were not like pension funds which really are the deferred incomes of workers to be received on retirement, or as individual annuities which are similar to a pension except that one is doing it on an individual basis rather than a collective basis in a pension fund. These were short-term investments.

And the fact that there are some 2,000 companies that have EFPAs, certainly the companies could not have been viewing them as long-term investments; I doubt that companies would put up such significant sums of money over 20 and 25 and 30 years and so on. They were seen as short-term investments. I just wanted to make that point that we need to debunk the idea that these were somehow policies in the way that—I buy or you may buy an insurance policy, 421 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 either a term insurance or a life policy for 25 and 30 years to obtain a benefit or one‟s beneficiary to obtain a benefit on one‟s death, or you obtain it on retirement at X year—60 or 65 as the case may be. These were not seen in that light and we ought not to confuse the dialogue and debate in that way. I also want to say that we cannot only focus on those persons who have EFPAs. Yes, it is important for them to have the benefit of their savings—that was their savings which they invested and so on to improve their own wealth situation and that is very, very important. No one wants to see anyone‟s savings being dissipated or being lost as a result of bad financial management of a firm which obviously is what happened in this case, and Sen. Ramkhelawan spoke to that very eloquently. So, one wants to protect those who had EFPAs but we cannot only address the issue of the EFPA owners. To address only the EFPA owners it will be discriminating—one hears talk about discrimination and so on—but to address only one category of stakeholders, if you wish, in Clico itself will be discriminatory. I therefore want to come back to the issue of the 220,000 other persons whose savings are there. In other words, someone who is in a pension fund has given up part of their income and has had that matched either equally or by some multiple thereof by the employer, and the employer has done it because the employer says that, “I am not going to pay you that as wages or salaries now, I am going to put it together with your contribution in a pension fund so it is your deferred income.” That money that the employer puts in is not the employer‟s; it is really the employee‟s and so on, as the worker‟s deferred income. So, those savings—the employee‟s deferred income, which he or she is saving in a pension fund or those who have bought annuities and insurance policies and so on, those persons‟ interest must also be protected and maintained. Therefore, the issue of the stay is absolutely necessary at this time because the actions that seem to be coming up are actions around the issue of the EFPA. If we were to see, Mr. Presiding Officer, the liquidation of Clico, or if we were to see a whole series of judgments by the court which the court would be obligated to do given the law and so on—to pay X, Y and Z individuals an A, B, C amount of money—then we could very well put Clico at significant risk. And that significant risk would have an implication for the entire financial sector, for the economy and so on. 422 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. ABDULAH] More than that, liquidations in times of crisis result generally in those assets being sold at a very low price, what is known as a “fire sale”. In other words, when you are in trouble, if you as an individual are in financial difficulty and you have some jewellery, perhaps, that you inherited from your parents or grandparents, you are likely to go and pawn it at a price that is way below the market price for the very simple reason that you need some short-term cash now; and the person who is buying, knowing that you are in desperate times, will negotiate you down because they know you are desperate. So, sale of assets in moments of crisis is never advisable because the full value of those assets will not accrue to those who ought to benefit or not to benefit from it. [Desk thumping] In that regard, I cannot help but remember the mid-1990s, when the then Government—none of those Senators there now were in the Government at that time—of the PNM sold Trinidad and Tobago Methanol Company which was bought by CL Financial and became Trinidad and Tobago Methanol Holdings Limited. It was at a time when the country was experiencing a significant problem of debt—that is true—and I recall very distinctly because, as you know, Mr. Presiding Officer, I have been around the place for quite some number of years though I am not that old. I remember very distinctly, myself and the then President General, Errol Mc Leod, now Minister of Labour, meeting with the then Minister of Energy, and we had documented this as well in a detailed memorandum to the Government on the issue of the energy sector advising that the state owned assets in the energy sector—Methanol Company, Urea Company, the 51 per cent shareholdings in what was then Fertrin—Fertilizers of Trinidad and Tobago Limited: 49 per cent was owned by Amoco at the time—should not be sold at this time. Now, at the time the assets were sold, methanol prices were down, Euro prices were down; oil prices were down; gas prices were down, and we said that this was a cyclical situation, and that prices would likely rise as older plants went out of business because they were no longer economic, given the fact that the prices were low. And that our plants which were relatively new and state-of-the-art technology having been built only fairly recently, would then become highly competitive in a couple of years as output fell given low prices. Basic economics there, Sen. Deyalsingh, and contrary to what you may have said the other day, economics is what I not only studied in university but which I have practised all my life and I have engaged in tonnes—and the listing is very, very long—of forums and so on with eminent economists and many of them I count not only as my mentors but as my friends. 423 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

1.40 p.m. So elementary and the Government ignored our advice—the PNM Government—and they sold the methanol company and the urea company and their shares in Fertrin, and the CL Financial Group together with its partners— Trinidad and Tobago Methanol Holdings—bought it. And the talk about the town is that within two years or so they were able to pay off the purchase price and begin to make significant profits. Why? Because the price of methanol jumped within months of the sale of those plants. They were sold at a fire sale price. If we make the mistake—so the State sold it at that time. Fortunately, in the case of the methanol company, significant national ownership remained, not state ownership but significant national ownership remained. If we were to sell now, chances are that, in such a fire sale, it would not remain in national hands at all, so we would be dissipating our national assets and dissipating them at a very low price. The whole approach of liquidation will be very negative, not only to those who have debts by Clico, because they will not likely get the return on those assets, because they would be sold at a lower price, but also they will be negative to the national interest. To avoid the possibility of liquidation and to avoid the possibility of a series of payouts to certain categories of investors in CL Financial, which will deplete the asset base of Clico and, therefore, put that equation of assets and liabilities at even greater disparity, therefore, creating a worse problem for Clico, the Central Bank (Amdt.) Bill is necessary to give effect to a stay. I think, when we look at it in this way, we will see that the ideal thing is not for a regulator to have to do it by way of legislation, or by having legislation available to it. The ideal thing would be for investors to say “We accept the proposals of the Government with respect to the, now 1—10 zero-rated bonds and the 11—20 with shares, and on that basis we will get back 90 cents-plus on our dollar as the case may be and we accept that and we are quite happy with that.” But, unfortunately not everyone acts in such a rational manner. Some will seek to get all. In the attempt for some to get all, not only will they lose, perhaps, but everyone will lose. It might be the proverbial situation of the dog having a bone in its mouth and looking at it in the water and seeing that bone magnified by the water and then dropping the bone trying to grab the one that he did not realize was a reflection and ending up getting neither bone or anything else. That is really where we are. That is why the stay becomes so necessary. We have to try to ensure that the approach is as fair and as equitable to everyone. 424 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. ABDULAH] In this regard, the economies of the Eastern Caribbean—Sen. Dr. Henry was correct when he made the point about the umbilical cord that links the economy of Trinidad and Tobago to the economies of the Eastern Caribbean. But it is more than just an economic umbilical cord, but there is a cultural and familial umbilical cord that links us, because there are many of us in this country who still have uncles and cousins and even brothers and sisters up the islands. We have to take their interest into consideration. This approach will enable those institutions up the islands to benefit as well. It will enable or provide the breathing space for the restructuring of Clico, so that Clico itself could focus on its core business and its traditional business of pension funds, annuities and insurances and, therefore secure the interest of those 220,000-plus stakeholders who are involved in that and perhaps more who may wish to buy Clico‟s products over a period of time. It addresses the interests of the EFPA holders to enable them not to recoup 100 per cent of their money, except those who had $75,000 or less, but to recoup nearly all of it, 90 per cent of their money. Yes, they do not get their interest, but they get 90 per cent of their principal that was invested, and it enables the Government to manage, in terms of its cash flow. It enables Government to manage the debt situation and the bailout in a way that was not being done before. In other words, it avoids the necessity of huge cash payments having to be made at any one time and spreads the Government‟s expenditure commitments over a period of 20 years. In that way therefore—although as Sen. Ramkhelawan made the point about the taxpayers, not just us, but future generations having to pay— yes, they would have to pay but the extent of the payment will not be as onerous.

[MADAM VICE-PRESIDENT in the Chair] Welcome back, Madam Vice-President. I thank Mr. Presiding Officer for listening to me with such rapt attention. It will enable the Government to meet those commitments in a way that is not onerous and, therefore, not putting at risk the Government‟s own fiscal position, and in that way secure the interest of the Government, and at the same time stabilize the financial sector, avoiding any contagion effect, any systemic risk, any impact on other financial institutions and also stabilizing the economy, while at the same time enabling persons to get access to their funds to then be reinvested elsewhere. I think all of those things can be done through the proposal by the Minister of Finance, and I want to commend and congratulate him in this regard. [Desk thumping] 425 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

I wish to make a few other points. Sen. Ramkhelawan raised the issue of the moral hazard, that we ought not, as legislators, to be putting in place mechanisms such as bailouts that will send a signal that individuals can either invest in risky business and be sure they are going to get back their money because the Government is going to guarantee it when the thing fails, or to say to those who have to manage the financial institutions, that you can manage as badly as you want and when the thing collapses you would have no responsibility and the Government will pick up the pieces and try to put it back together like Humpty- Dumpty. I want to make the point that it is therefore very important that the regulators ensure what was being overlooked over time—because what happened with Clico did not happen overnight, it happened over a period of time—that no firm is allowed to do what Clico did in the past. You have to, as the old saying goes, have a stitch in time. A stitch in time will save nine. Certainly, if we had put that stitch in whenever—I am not going to ascribe blame to anyone, but in hindsight had the stitch gone in earlier—we would have saved nine now. If we do not put in the stitch now, we would have nine more to pay going forward. If the regulators do not operate effectively, then we are going to have many nine times nine. In agreeing with this piece of legislation, Sen. Ramkhelawan and others should not be worried that we are sending the wrong signals. It is important, therefore, that we do make statements about people being responsible as individual investors, as well as those who have responsibility for managing other people‟s money. We saw yesterday, I think it was, on television that one rogue trader with UBS lost that company US $2 billion; one guy, a young guy. As a result of that, UBS is going to be in some financial difficulty. Obviously, their share price would have fallen—I think Sen. Browne would agree—their profit outlook will decline, because they are going to have to write that loss off their books, whether they write it off in one go or over a period of time. That is for the auditors to say. But, in writing down their profits, the shareholders—[Interruption] Madam Vice-President: Hon. Senators, the speaking time of the hon. Senators has expired. Motion made: That the hon. Senator‟s speaking time be extended by 15 minutes. [Sen. The Hon. E. George] Question put and agreed to. 426 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

1.55 p.m. Sen. D. Abdulah: Thank you very much, Madam Vice-President, thank you to colleagues. I would not take up the full 15 minutes. I do want to say that that UBS case, profits would be written down and therefore that would impact on shareholders‟ dividends, it would impact on many, many things and other financial institutions may also now be scurrying around to see if they have rogue traders, because if it happened in one institution, after 2008, it could certainly happen yet again. In that regard, I just want to recall as well another development that had happened in the 1990s—in the early 1990s—when one of the actors in CL Financial—he is not now there, but he was there up until fairly recently, and was also there in the early 1990s—was Chairman of the Trinidad and Tobago Electricity Commission, Madam Vice-President, Mr. André Monteil, and as chairman of T&TEC, he also was Chairman of the T&TEC Pension Fund—the management committee of the pension fund. He proposed that the T&TEC Pension Fund—because the management committee of the pension fund of T&TEC functions as the investment manager; it is not the trustee, it is the management committee that makes investment decisions—sell all of the equity holdings that the pension fund had; and the equity holdings were significant in most of the leading traded companies on the stock exchange in Trinidad and Tobago. He then declared an interest and did not take part any further in the meeting, or voted—neither did he vote. But he indicated that a company with which he is associated, Viveka Holdings, was interested in buying the shares of Republic Bank Limited. And, in fact, the management committee decided to sell all of the equity holdings in the pension fund, very, very substantial amounts of money, including a very significant stake—I do not recall the percentage off the top of my head, but a very significant stake in Republic Bank Limited. At that time the shares were being traded at around $13.00 or thereabouts. And the argument was made at the time that because those shares were bought at $5.00 or $6.00, the pension fund made a significant profit, if they were to sell them at 13-plus—which is partially true—and the shares were sold to Viveka. Viveka, of course, being owned by Mr. Monteil and others, was really being used as an instrument so that CL Financial could get controlling interest in Republic Bank. It was part of a takeover strategy. They could not do it frontally, so part of it was being done sideways. 427 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

The courts intervened—well, members of the pension fund, together with the trustees, did challenge that issue—that decision in court, and the court found that that was wrong. While the court matter was taking place, the shares of Republic Bank were put into an escrow account, they were not accessible by Viveka, they were put in an escrow account and when the court ruled that what took place was wrong, those shares were transferred back to the T&TEC Pension Fund. Of course, the Republic Bank shares are now being traded at ninety-something dollars, I think. So, had that not happened, the T&TEC Pension Fund would have lost the value of between $13.00 and whatever, and ninety-something dollars today, which would have been a huge loss to that pension fund. And the pension fund of T&TEC workers, including PowerGen workers, today is in significant surplus, and, therefore, able to pay those workers very good pensions—as negotiated, incidentally, by the Oilfields Workers‟ Trade Union—pay those workers very good pensions because of the fact that Mr. Monteil was not able to get away with what he was trying to do. Now, had it been in another jurisdiction—and I recall, anecdotally, a former member of the Government at that time, saying to me, “Why are we being so hard on this gentleman, chairman of T&TEC?” And I said, “If this was in the United States, somebody probably would have gone to jail”. And this is the point—I want to refer to the point that Sen. Ramkhelawan was making, that certainly that action then perhaps was symptomatic of behaviour that took place subsequently in terms of how some individuals saw their responsibility, not in terms of being trustees, really, of the savings and investments of other people, but being big power players who were looking for control of power and wealth for themselves. In that regard, we have to ensure that, as we move forward, we put in place the systems and so on that do not allow these managers of other people‟s money to behave in ways that are reckless, and which jeopardize the savings of ordinary people—life savings of ordinary people. And that, not only that they do not behave in that way, but I agree with Sen. Ramkhelawan in this regard, that if they do, that they have sanctions, and not simply a slap on the wrist. I am sure that my colleagues will speak to the initiatives and efforts that the Government has taken in regard to various legal matters in this issue of Clico and CL Financial, because, as a Government, the People‟s Partnership Government, we are committed to ensure that those who engage in that kind of activity do not get away scot-free, of course, recognizing the fact that it is not the Government who arrests and does things like that, it is the Director of Public Prosecutions and the police, et cetera. 428 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. ABDULAH] Having said that, yes, those who have behaved recklessly with other people‟s money and still live a life of great comfort—because I am not aware that any of those senior executive officers of Clico and CL Financial have suffered themselves any loss of their standard of living, and had their life savings tied up, and so on, and that ought not to be the case. So, Madam Vice-President, having said that—and I do not suppose I need to rub it in and remind those Senators opposite that Mr. Monteil was also the treasurer of your party. I certainly hope he did not operate with your party‟s finances in the way that he operated with the people‟s finances in Clico. I just thought I would throw that in to give you a smile, Sen. Beckles, because I know you could smile over that, having regard to the fact that he is no longer in that position. So, in closing, I just wanted to say that the approach taken by the Minister of Finance and what is being put on the table with these two pieces of legislation, as well as the manner of dealing with the debt to the EFPA holders and mutual fund holders, is the fairest and most equitable way of dealing with all the different stakeholders in this particular situation, and in sharing the financial stability of not just Clico, of the financial sector generally, but the stability of the economy of Trinidad and Tobago, and therefore the well-being of all of the citizens as well as the stakeholders. Thank you very much. [Desk thumping] Sen. Mariano Browne: Thank you very much, Madam Vice-President, for the opportunity to speak on today‟s Bills: the Purchase of Certain Rights and Validation Bill, 2011 and the Central Bank (Amdt.) Bill. In keeping with the spirit of today—and not that I have not disclosed this before, and I think everybody generally knows, but I think in the spirit in which we are operating it is only fair that I disclose that I have been, at one time or another, an employee of the CL Financial Group. I ran a bank in Barbados for a total of 11 years on their behalf. I also did start Clico Investment Bank and left in 1993, long before these difficulties took place. [Desk thumping] I could also indicate that I also have two policies with Clico, which I still have, into which I have not made any payments since I left the group in 2004. One of them is a traditional annuity, and one of them is an EFPA; and that EFPA, actually, is very much of the pension plan. Inasmuch as there are no provisions between any of the Caribbean territories that allow for pension plan payments to be recognized by jurisdiction, there was established an EFPA to take care of my pension contributions, which were actually subject to tax in Barbados, and also subject to tax in Trinidad under the plan. 429 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

My pension contributions were made by the company, and made by myself into that EFPA. So that EFPA, as are many of the other EFPAs, do not fall into that rubric, which have all of a sudden come to be called investments. And, in fact, given that many people have, over time, saved, they may not call it a pension, but that they have saved money, and they have deemed a suitable way of putting it would be to put it in a form of what one would call a tax avoidance shelter, which essentially is what the EFPA was—a tax avoidance shelter. So it is not fair to say that they are investors, in the sense that we are going to buy out shares, stocks, bonds, where there is a certain known and calculated risk. And I know that there are many people who are wise after the fact, including my colleague, Sen. Dr. Henry, who indicates that he did not put any money in it, but at the same token there are many people who saw that as a potential opportunity. Some of them, of course, were attracted by the rates of interest. I would say that in my own case, as in the case of many others, we were not necessarily attracted by the rate of interest, but also by virtue of the opportunity simply to have a pension plan, which did not fall within the rubric that would be allowed for tax purposes in Trinidad and Tobago, simply put. So that, there is another methodology of looking at it, so that one size, as we have attempted to put in this particular Bill, does not fit all. I think that there are some clear determinations, within the definitions of some of the products that are included here, that do not fall within the definition of “investments” or a “short- term policy” from that perspective and I think I want to make the fundamental point that there are only two kinds of money: money that is taxed and money that is not taxed, and I think if we look at it from that perspective, we need to be very clear: pension planning is about tax planning. So that many of the people who put money inside there, you cannot look at them from the perspective of investors. They are not—these are not stocks and shares. They have stocks and shares in their portfolio. This is a form of putting aside savings, maybe perhaps in a different form of pension. In fact, many people put money aside for pension, not necessarily in a pension plan, and I think that is something that has been completely missed in terms of the language that has been used to describe owners of EFPAs or any other such device. I think that is something that needs to be corrected. Within the definition of “economics”, we have a thing that we call savers, and we call deficit spenders. And the bottom line, once you are in the business of saving, you are also saving for the long term, and that ultimately includes saving 430 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. BROWNE] for your future, saving for your retirement years. So even if it is not called a pension, then by definition we are putting money aside to treat with that. And that point has been completely missed in the discussion. I have not heard anybody talk about it from that perspective. It is all of a sudden, if you put money in an EFPA, then by definition you are an investor, you were not looking, you did this, you are taking risk, you should have known. I think we need to take another point in that regard. Whilst we are talking about the EFPA and EFPA holders as being investors who should have known better, under the SEC Act—and I think Sen. Ramkhelewan will back me up on that—we talk about transparency, we talk about information, which will allow people to make necessary decisions. Is that not so, Sen. Ramkhelawan? Well, all right. You were not listening. [Interruption] I am just asking for confirmation. You are right, I am so sorry, Madam Vice- President. But also I want to put it from this perspective. There is no legislative provision that requires any insurance company to publish its financial statements in a fashion that any third party could have sight of it and analyze it. That is one. Secondly, the form in which the financial statements are currently provided do not allow for a third party, other than a very intelligent and very specific segment of the market to be able to analyze it to determine whether that particular institution is strong, good or viable. So even if they were to publish it, who would know? So when we are talking about investors and investors knew the risk, I think we need to think about it from a slightly different perspective. And from another angle, let us look at it from the perspective of the regulator, if you want, the insurance supervisor collating information under the Insurance Act accounts and publishing them. When was the last one published? Anybody could tell me? Was it 2007, was it 2008, was it 2009? I think the answer is 2006. So that even if you wanted to use public data to be able to analyze an insurance company and to determine where the insurance company was, what would one person use? So when we are sharing out, and we are talking about inequalities and the fact that people need to be better informed, that they were intelligent investors, they should have known the risk, what was the information they were going to use to know those risks? I would like to hear that. And I have not heard that at all, because we have been so gung-ho, if you will, on abrogating the rights of a specific set of investors that we have forgotten to ask some fundamental 431 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 questions. Not only have we forgotten to ask the fundamental questions, in very much the same way that we want to tar them and feather them, without saying, perhaps, “You know something, how did these people accumulate this money?” I fully agree with the Independent Sen. Subhas Ramkhelawan when he talks about we should know, and the money laundering rule should apply, and we should know the sources of funds and where they should come from. In fact, that is what the legislation is about. I perfectly agree with you on that particular score. Any company collecting money from a third party should be very clear about what the source of these funds are, especially given our current climate, especially given our current situation, especially given everything that is taking place everywhere else in the world. We need to understand that; and it is not about terrorism. At the end of the day we are talking about money laundering, we are talking about illegal proceeds of crime and we are also talking about drug money. So let us be very clear about that. The financial institutions—all financial institutions, all regulated financial institutions, and including the wider class of business that we would have included in the last definition or the wider definition of the Act—should follow those particular practices. So I do not have any difficulty with that at all but I do have some difficulty in pillorying a particular individual or class of individual who has been proficient in his savings, who has worked hard over time. Like one policyholder who, as I understand, is a melon farmer, but has substantial values included on this, who is being disaffected. So we do not have some nefarious class of people who, by definition, because they have money, only come from one particular area, and they should know better. There is a wide range of investors. By the way, some of those corporations that we are thinking about, that have invested funds, one of the difficulties that we perhaps may have had, or alternatively, another form of tax planning, is that some people incorporate themselves as companies and run their income through that particular company as a form of tax planning itself. So the mere fact that a corporation holds an EFPA is not in itself indicative of any, if you want, malpractice on the part of the company or anything else, other than the company may, in fact, be a reflection of the particular individual. In my own case, for example—well, I am a professional. I operate under the rules of the Chartered Accountancy Association, but I run myself as M Browne & Company, but it is not an incorporated entity. I am a sole practitioner, I am an individual practitioner, so whatever surpluses there are in that are subject to 432 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. BROWNE] taxation virtually as if I am an individual. And then if I save money in the name of that particular entity and I were to put it in, then, perhaps, one would look at me in the same fashion. But it is a completely different arrangement. So we ought not, without applying some level of analysis, just simply willy- nilly write off how these things came to happen, and maybe there are other institutions, maybe there are other—a range of possibilities that are also being covered, but I want to encourage you to look at some alternative scenarios which I have not heard expressed in this room, nor have I seen it in the press for all of the criticism that they had. So, when we are getting down to establishing the Bill, I think that is one of the fundamental things that we need to bring to an analysis in terms of when we are dealing with rights here, because there are things about individuals. One of the things that we need to talk about, and we need to understand very clearly, and I am not going to deal with immediately but I am going to deal with it later on in the course of my contribution, is the rights of individuals, but I am going to get to that. The next point I want to talk about is this concept of a validation Bill. I could understand if we came to validate the establishment of a Commission of Enquiry that did not have sufficient legislative cover. I could understand that. I could even understand us, you know, perhaps wanting to validate a scheme of arrangement, which may want to put—and we want to get legislative cover for it. I find it very difficult to understand the concept of validating an expenditure of $5.1 billion under the heading of a validation Bill. Unless something is wrong with me, I thought that when we come to Parliament to deal with matters of money we deal with it under the heading of an Appropriation Bill. So I do not know how we are coming to validate the expenditure of $5.1 billion or to validate the expenditure of $10.1 billion. In fact, if I am not mistaken, and you can correct me if I am wrong, but I think this is what section 112, Chapter 8 of the Constitution says; 112(2): “No moneys shall be withdrawn from the Consolidated Fund except to meet expenditure that is charged upon the Fund by this Constitution or any Act or where the issue of those moneys has been authorised by an Appropriation Act or an Act passed in pursuance of section 114 or in accordance with any other law.” This is in pursuit of an Appropriation Bill? A Supplementary Appropriation Bill has been brought to this Senate? I do not think so. 433 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Subsection (3): “No moneys shall be withdrawn from any public fund other than the Consolidated Fund unless the issue of those moneys has been authorised by an Act.” And: “No moneys shall be withdrawn”—subsection (4)—“from the Consolidated Fund or any other public fund except in the manner prescribed.” So I do not know what that Bill is validating, because it cannot validate an appropriation, because no Appropriation Bill has been brought to cover these expenditures, so I have a little issue. But that, perhaps, may have been a legalistic cover to really deal with the real issue, which is to deal with people‟s rights, and abrogating people‟s rights. [Desk thumping] That is the real problem. It is not validating any expenditure at all, because if it were to validate the expenditure of $5.1 billion, and the subsequent issue of a bond of $10 billion or ten point whatever billion dollars, you will have to explain to me how it does not validate the expenditure of $1.9 billion, which was used to support the depositors of CIB. And if I am not mistaken, if we look at the Hansard and we look at the comments of the hon. Minister in Hansard, we will see that he talks about the establishment of a bond to repay the Central Bank of Trinidad and Tobago for the expenditure of $1.9 billion in support to FCB for those deposits. How come that is not part of this? Because that also would need to be validated, and also be brought to this House by way of an Appropriation Bill and I am not hearing that neither am I seeing it. So I have a little problem. I have a little problem with the exact construction of this Bill. Quite frankly, given the point that I have made with regard to section 112, I think that there are some issues that have to be resolved, because I do not think that it is in accordance with section 112 of the Constitution, and, therefore, I do not think that the Bill can stand, unless, of course, an Appropriation Bill is brought at the appropriate time. That is my first point. Second point: now, I listened to the Minister of Finance talking about a misdiagnosis, and I also talked about—I heard him talk about a systemic risk. As I understand it—and I think I followed the definitions of systemic risk for some time and I have to tell you by way of my background, I did, in fact, work on the establishment of Workers Bank 1989, and there was a statement made in the Lower House by a Minister where he lost his money, because he had put money by way of deposits. 434 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. BROWNE] Well, in that particular transaction, if I am not mistaken, the policy is well established, because it was then subsequently followed through with NCB and TCB. So there is a well-established policy of dealing with those types of difficulties. What happened is that the shareholders lost their money. The depositors did not. And it was felt sufficiently important to ensure the safety, soundness and security of the system that the Government made the decision to ensure that the depositors did not lose. Now, Jerry Caprio Jr., Professor Caprio, who was formerly at the World Bank, has written extensively on the issue of banking soundness, banking failure, anything that you can think about, he generally has written on it. He has left the World Bank now, and he lectures in a university separately. But he did, in fact, write a paper, which he presented in 2010 at the University of Milan—a set of proceedings. And he has described a systemic issue as one where a significant part of the financial sector is unable to survive without the assistance of the regulatory or the monitory authorities; very, very, clear definition: unable; and a significant sector. But what is significant: 5 per cent; 10 per cent; 15 per cent? In the case of Clico, which we have to say is very much part of the financial sector, a significant part— because essentially, in that particular situation, you move from a liquidity crisis to a solvency crisis in nanoseconds. From the time people begin to think that they are not going to get their money back, we move from liquidity issues to solvency issues, because no financial institution can withstand a run; none. Because nobody keeps more than 10 to 15 per cent of their assets in reasonably liquid form: cash, bonds, treasury bills, whatever. So that nobody can withstand a run. So when there is a difficulty with safety, when there is a difficulty with soundness, when there is a difficulty with confidence, there is no doubt about what the regulator must do, and that is to support the system. Let us get that and be very clear about that. So when Clico comes to the Government, when Clico comes to the Central Bank Governor, you cannot tell them you will fail, because immediately that has a ripple effect right through the system. And if we had any doubt about it, let us just take the clear example, and let us use North America. As big as it is, as committed as it is to private sector disciplines, and as we have seen exactly what the Tea Party has in mind, we know exactly where they want to go: You should be responsible; if you lose money you should be able to take it; you should pay your way; we should not have welfare systems. Well, guess what happens when bank one gets into problems—this is Bear Stearns—immediately the Government kicks into position; very gently, behind the scenes. Everybody talked about Bear Stearns being acquired, but whoever 435 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 acquired it? Paulson sold it. He did not come out in public. Nobody knew what was taking place behind the scenes, but to ensure the safety and survival of the system it was sold, because it could not fail. The next step, we then had two important institutions, Fannie Mae, Freddie Mac, implicitly guaranteed by the State. He goes to Senate, tells the Senate and the Senate says, well, we do not really want to do this. It should not happen because responsible government and everything else and so happens. What happens? They support the system. Why? Because the cost of not supporting it essentially is to carry us back to a situation which was worse than 1929, and it was clear that that was not going to happen. And that is why Bernanke is the Federal Reserve Board Chairman. Because that is what his discipline is; that is what his doctoral thesis was about. And what we have seen over the last 30 years is a continuation of a series of financial changes which would have taken place, which my colleague, Sen. Dr. Henry, gave some reasons for. But the bottom line, regardless of what those reasons are, we cannot allow the system to fail. So they put a man in charge of the Federal Reserve whose background is about understanding failures. So that when a failure comes action will be taken, and if it does not come from one place, it will come from another. And to carry my point further, they allowed Lehman Brothers to fail, and then learned the unfortunate lesson that liquidity was provided to the mortgage system by Lehman Brothers. And when Lehman Brothers failed, it became a credible threat to the entire system. Paulson goes before the House with a 19-page Bill for $419 billion and they kick him out. They tell him it cannot pass. We are not dealing with that. That is on Thursday. On Friday afternoon, the Federal Reserve Board spend $650 billion to support the system. By the following Friday a Bill called the Troubled Assets Recovery Programme is passed. Total value of the Bill, $789 billion. We move from $400 billion to $789 billion in one week, because it is that important; it is that significant. And the same thing happened in Ireland, which is closer to us from the point of view of size: 3.5 million people; a GDP 164 billion euros. We had a TT $164 billion, but the number is nice; same issue—very same issue; England, the same thing. How did they intervene in the marketplace? Very much the same way that the Americans did. In fact, the English set the tone for it. They went through on the capital market side. They provided mezzanine finance in the form of debentures and/or equity financing. But those are big capital markets. We are not big. We are small. We have, how many, 19 tiles on the stock exchange? We are not big. So changes in one have a ripple effect. 436 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. BROWNE] So when Sen. Abdulah is making the point, going back to the 1990s, that we are selling assets at a distressed time, that is the difficulty, the constraint in which the Government finds itself. It is a small financial system. If you let—and you start selling assets in one particular way, you affect the capital values of all; every single one. Every tile on the stock exchange is being affected, and every financial institution too, because they hold some of those values as what? Security. That is the fundamental issue with contagion, that when you affect the underlying values of a particular asset class, it affects the asset classes across a whole stream and that whole spectra. So that the entire financial system is under risk, and that is why you have to take action.

Now, given the fact that the Government is in position, is prepared to take financial action, but we are constrained; we are constrained. This is January 2009. A financial crisis a now taking place. The world is engulfed in a financial difficulty. So we are very careful, very conscious; we want to keep the thing going; we want to know that the system is not shocked, because this is not being generated by any external shock. This is being generated by a situation taking place in our own market, so we have to find a way to deal with it in a domestic environment. And the answer is that the Government of the day has to stand up and say, we will support it, let us keep the system under control, and that is what the Government of the day did. [Desk thumping] And they did not blink an eye in doing it. They did it immediately, as it needed to, as it should have been done. 2.25 p.m. Perhaps if we had the resources and if we had the funding, what we should really have done was to plug the gap immediately. If you look at the Irish situation, they started in January 2009, the Allied Irish Bank, they put £7 billion in; then they brought in—I forget the name of the other one, all right. They bought four key banks in the system. It is not a multiple banking system as in North America. North America has a completely different set of institutions. Four banks, that is the core. Almost 80 per cent or 90 per cent of the total assets of the banking system is Ireland, and they started in January. This year they are doing their fourth effort to get it right, four times over a period of two and a half years to get it right; and they are now up to £75 billion. So it is not easy! It is not easy!

It is not simply a matter of paralysis, and you cannot do X, Y and Z. If you do not have the cash “where you putting it into?” Yes, we could underwrite it, we could basically get the Central Bank to print some more money and put it in the 437 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 system, but that has destabilizing effects on the system. So the answers you—and the one thing I learned, because I had been through two. I have actually turned around two banks; so I understand what it is in that situation. In the first bank I had to deal with, I had a 30 per cent non-performing loan portfolio, I had more loans than I had deposits. I was borrowing money from the Central Bank. Have you ever been in that position? It is not a good position to be in. You know what the Central Bank was charging me? It was charging me penalty interest. Do you know what penalty interest was? Twenty one per cent, and the average rate on my loan portfolio was about 12, “so I in real trouble,” so I had to turn around that situation; and to deal with that, the issue is confidence. I got an immediate patch of grey hair when I went inside there after six weeks, because I did not know how I was going to deal with it, but I dealt with it. It took me a long time, but I dealt with it. But the one lesson that you learn is that you deal with your liabilities virtually immediately, you find the money and you pay them out, and you have to find the other way now to turn around, to monetize your resources to be able to treat with it. The one thing that we may have made a mistake in is not spending the $12 billion immediately, that is the mistake which we made, and we ought to have done that, and we ought to have been brave enough to stand up and do it, even if we were going to lose office the next year—[Laughter] “we lose it anyway”—and we ought to have done that. Perhaps that would have been the right decision. You would have been cussing me for it now, for a different reason. But at the same token, what is the penalty for failure? There is a significant penalty for failure of financial systems. Your economies do not recover; they do not. I do not want to use Jamaica as an example, so I will leave them out for the time being, but where the banking systems fail it takes an economy a very long time to come back. The estimate is that when you have a mild crisis, it knocks off at least 1 to 2 percentage of GDP for a minimum of five years. When you have a serious crisis, it could knock off as much as 5. Look at Greece. With all the austerity measures that they have in position now, every single austerity measure, the economy shrunk by 5 per cent. They cannot raise the taxation, and guess what? “The debt load going up again”, and it is going to shrink. It is estimated to shrink by another 5 per cent next year. So if we want the structural adjustment process which the IMF has in position, we have Greece as an example, we do not have to go to Jamaica any more, we could take Greece. It is not working and the answers which—they are going to be 438 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. BROWNE] bailed out. They have to be bailed out at the end of the day. And guess who is going to do it? The same persons whom the hon. Minister of Finance said, because it is in their interest to so do, to maintain the stability in the Eurosystem, because ultimately Sen. Dr. Henry is right, they are bailing out their banks. It is a banking crisis that is masquerading as a national debt crisis. So that is what is taking place. So the stability of your financial system is not something which you play with. There is no room for error there. You have to do it and you have to do it fast, and our mistake was not to do it fast enough. That is what I would say. Somebody else might say something differently. So yes, and the reason we did not do it fast enough is precisely because of the cost. If we spend $12 billion now, you know we would not be spending $15 billion now, though. Right? So it is costing you $3 billion, you could cost it immediately. That delay has cost us $3 billion. That is what has happened. And therein we separate now. “I doh agree” with the issue of abridging person‟s rights. I cannot. I cannot agree with it. I started off on the principle, how do you identify these different people. So hear what we have—anyhow—we will get to that. Let me just go on before we get there. And there is a fundamental principle that in terms of―we talk about responsibility. What people want is predictability, they want some level of constancy, they want to know what the system is, and the last point is certainty, because risk is always there. You just never know where it is going to come. I think that is what you call it, that is in the 1990 report of Bankers Trust, that is the theme of their report, not to be lost on us at all. Governments have the same difficulty. We have different risk perspectives, and we have different risk environment, but in the issue of economics and dealing with the financial matters, this is something which we ought not—and I fully agree with you—we ought not to play politics with the business of what you called it—the fundamentals of the economy. That does not mean to say that you all have not. I remember—I am listening to the hon. Minister. He said that if you had followed all the promises which had been given by the PNM, we would not be here. But if he had just kept one promise which is in his election manifesto, you all would not be talking now, and that one promise is your pension plan; because it would have cost you the same $10 billion now. [Desk thumping] That was the effect of your promise in the plan, for we costed it out. [Inaudible] I guess that is the benefit of being in Opposition; when you are making promises, you can say anything you want; when you get in it is a different reality. Anyhow maybe somebody will remember you and penalize you for it when it cannot. [Crosstalk] [Inaudible] 439 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

So I make those points if only to establish and to get it clear that there is no paralysis and the issue of contagion is not continuing, the issue of contagion was dealt with. And just simply to look at what is said I think in the IMF report, the last consultation Country Report which was published on March 2001, and I quote paragraph 18, page 11: The stability module mission confirmed the general resilience of the banking sector reflecting strong capitalization, conservative lending practices and high interest rates specials. In other words, the banks are very profitable. While credit concentration and rising NPLs—nonperforming loans—in some banks are of some concerns, banks and general and life insurance companies (aside from CLICO/BAICO) are well capitalised and remain profitable. In other words, the basis for intervention and the reason for intervention was achieved. So that there is no systemic risk at this time, but we do have a problem in dealing and finding a way to treat with the issue of the liabilities. I said before, perhaps what we should have done was just pay them, and we would have done with it and we would have to restructure the company anyhow, which is what you have to do. Perhaps that was our mistake. And I concede, I concede that we did not get it all right, because you cannot tell me after coming now to look at what you call it, that experts come and tell me that you could close, you could merge or you could reorganize. Well, all right, I mean that is the text book, that is 101. “Ah doh need no expert to tell me that.” That is par for the course. The issue at the end of the day, the devil is in the details. How do we reorganize? The issue when we go back to predictability, certainty, constancy is also about judicial equality, because if—[Interruption]—yes. Sen. Abdulah is making the point that we have to consider peoples‟—how did he call it, the benefit of—I forget exactly what was the term, but effectively that, somehow, or the other, this particular group of people was destabilizing the system, but the court did not think so. I forget, I cannot remember exactly what you said. Sen. Abdulah: Thank you for giving way, Sen. Browne. No, I did not say that one particular group was seeking to destabilize. What I said is that there is a possibility that if some lawsuits proceed, and so on, with a few persons, that could lead to—I was not suggesting that they have a motive to destabilize or any such thing. They are pursuing their legitimate interest, but the impact and effect of their pursuing their interest could lead to destabilization. That in summary is like what I was trying to say. 440 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Sen. M. Browne: I apologize if I did not put it right, but I take the point. But that is what the courts are for, and the reason people have access to the courts is because we did not—neither of us came up with an appropriate administrative scheme to be able to deal with this particular matter. I accept the responsibility when we were there that we did not do X. I accept that. I make the point, hindsight is 20/20 vision. I could look at it now with a certain level of dispassion. I was not involved in it in detail at the time, by the way, precisely because it was felt that my involvement would have created a conflict of interest situation, which people could have pointed to subsequently. [Crosstalk] Sen. Abdulah: You should have told Karen that! Sen. M. Browne: Well, you know I would prefer to pass on that one. [Laughter] I prefer to pass on that one. Hon. Senator: Tell him it is before the courts. Sen. M. Browne: I know that you have been in the position that you have given advice to your friends which has not always been taken. Sen. Abdulah: [Inaudible] Sen. M. Browne: [Laughter] Well, I would not say what I gave, all right. I just want us to get there. So when we talk about the PNM method or the PNM this, and the PNM that, what the PNM got? We put on the table what was required to keep the system going. [Desk thumping] We told people we were going to pay them back their money. Very simple. Maybe we should have compromised on the interest rate early—and I accept that that was mistake number two; pay them quickly, maybe pay them all the interest, maybe compromise on the interest for what you call a quick settlement, because we were not talking about it, because the interest cost by the way, we are paying in a different way. That is one of the difficulties with finance costs, they come back at you anyhow! Anyhow it comes back at you! And I am going to get to that point when we are talking about the scheme of arrangement that we want to put on the table. So that the issue about responsibility, who should pay, I think I want to establish that clearly, and I accept the principle that every individual is responsible for how he spends his money. I think that is clear. But I think we also have demonstrated examples across the world, even in systems which are very much more robust than ours, that when your financial system is threatened, you take action, and the only person who is going to take action at the end of the day will be the State. And the reason it is the State, is because at the end of the day 441 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 that is the person who they are going to come to, to complain. They are the ones they are going to say are responsible. “You should have done this. You should have passed the right legislation. The regulations should have been tighter. You should have been looking at this. You should have done that”—all the 20/20 vision comments. Nobody ever puts up their hand and say, you know, “I really should not have done that, you know.” So the State always has to go in front, whether you like it or not, and quite frankly, if we do not go in front, the cost of not going in front means that the economy will fall into a rut. That is part of the issue, that is a fundamental part of the issue; a rut from which you do not always get out. Confidence is a fundamental issue and while we are dealing with it, and we are dealing with the issues of—I go back to three fundamental points: judicial equality; predictability; constancy; has to do with policy. I think I have clearly established the policy with respect to Workers Bank, with respect to FCB, with regard to NCB. By the way, workouts take a long time. It is only in 2008 or 2009 that FCB moved away essentially from the oversight of the Central Bank. It took what—that is 20 years. It took 20 years to get there. Turning around financial institutions in our markets take time. “We doh have the breadth and doh have the depth,” so the only thing that you can compensate for is time. You have to mother it and follow it through. So I listened with interest when the Minister was talking about well, we got $10 million in new policies sold in a $22 billion company, well, you know something? It may be a snail‟s pace but it might indicate some turn. 2.40 p.m. In a sense, I can understand the feeling of, if you want, hope, faith, that I might see some blue skies even though everybody does not at this time. I can understand where he is coming from because it takes a long time and confidence. The best example I can give—and I give it all the time—is the relationship between a husband and a wife; a man and a woman. The day that you are caught out on the wrong foot, how long will it take for you to get back in good graces? You are not coming back today, you know. Sen. Beckles: If you get back. Sen. M. Browne: If you get back, yeah. These days, women want to divorce you one time because, like you, I am experienced. 442 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. BROWNE] That is a fundamental example. It takes a long time to rebuild confidence in the system. You do not shake the tree; you do what is required to keep the confidence in the system going. That is what the system does. At the end of the day, the only thing that will keep confidence going; what every investor wants to know—and I will give you one example: Sometimes you have to be ambitious. An opportunity comes up and I decide I want to buy a bank. It will put me in a lot of trouble by the way, but I decide to buy this bank. I am starting to make a pitch in New York; go the rounds of the various venture capital firms to raise money to get them involved in it. Ninety seconds into a presentation: “Thank you, I have heard all of that. What is the governing law?” That is all he wanted to know. I will deal with the rest, the numbers and everything else. “How will I ensure that my contract and my agreement with you will stand up in court?” “Can I sue you and get my money back?” That is the first thing he wanted to know; any investor, be he a domestic investor—and worse again if he is international and does not understand your market. Political risk insurance cannot cover everything. It would not, so the one thing he wants to know when he comes into your market is that he is confident that the basic systems of contract law works and that there are no clear examples in which a basic contract is not recognized and maintained and cannot be made enforceable before the court. What are we doing in this particular Bill? Are we sending a bad signal to our domestic and foreign investors? We are. We are sending a very, very bad signal under the exception routine that we are attempting to do because the exception routine is the wrong routine. I will deal with that issue because there is an Act on the books, as much as the Minister said it is not applicable, which allows us to do what we want to do. It exists. By the way, this is virtually the same Act that is in existence in Jamaica, Barbados and Guyana and they are using it. We cannot say that they have deficiencies. They probably do, but they cannot have any more deficiencies than what we are doing right now. Let us face that too. We need to recognize that when we make decisions such as these, even though we want to treat them as an exception routine, somebody looking in on us might not think that. I will give you my example, once again, on the basis of my experience. A significant investor who is a Trinidadian decides to build a plant. He writes me a letter asking for me to confirm that the scheme of incentives and waivers that currently exists, import duty concessions, would continue. He wants a commitment from me for the life of his plant, 15 years, at least on a commercial principle. 443 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

That is a domestic investor. He is quite prepared to invest, but the risk area is not in the interest rate; it is not on how much money comes; whether or not Trinidad and Tobago is a bad place to invest or whether the terms of the game will change when he has already spent his money and he is now at risk. That is what they want. They want that level of certainty. Sending this message, as we are now, sends a bad signal. I want to put it in another context too. You have to put it in the context of an international investor and, unfortunately, I may be throwing a little stone here. We have a relationship with the UK Government. We decided to buy OPVs. Madam Vice-President: Hon. Senators, the speaking time of the hon. Senator has expired. Motion made: That the hon. Senator‟s speaking time be extended by 15 minutes. [Sen. F. Hinds] Question put and agreed to. Sen. M. Browne: Thank you very much, Madam Vice-President. So the issue of certainty is an important factor. When we abridge a contract which we have established—we did not void it; it was not voidable—we abridged the contract, that is why we have to go to arbitration, otherwise we would not have a problem. There are a couple people looking on. The UK Government who partnered with us on one side; the international investors who figure that if they enter into a significant contract and you renege on it, literally when you are about to receive delivery; in other words, I have committed funds, you have committed funds; we have spent time; we have done this, it is a significant delivery and you backed out. That is not a good sign. An investment contract, we say we are “setting up smelter”. Politically, they say it is not a good thing. We do not have any options yet; we do not have any alternatives; we have not reviewed the project, but we cancel it. We have spent significant amounts of money. We have done “X”. We have put electricity generating plant in position. Happily, the electricity generating plant basically will generate enough electricity to put into the grid and we need the power anyhow, so that is fine. On the other side, we have an investor who was a good faith third party who expected us to operate in a certain way and spent significant sums of money, which they will not recover and which they have not told us about. They have a note. They will deal with us again. They are one of the most significant powers in 444 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. BROWNE] the world today and growing and we have a little red flag with them and they have long memories. Today we come and we are abridging people‟s rights in a fundamental principle in law. It is not a good signal. I am being reminded by my colleague that one has to look at it also in the concept of a state of emergency. As much as the general consensus of an opinion might be that it is an important thing that Trinidad has reached a level of desperation and is prepared to accept any remedy, at the end of day, where will it carry us? What will it do for us? How is it being implemented and how are people‟s rights affected? Those are things that people will look at. They will make decisions on those bases. They cannot forget it. Here again we are making some abridgement of rights and a distinction between the small investor who will get 100 per cent of his money; the credit unions, a special interest group, they will get 100 per cent of their money; the traditional policies, they will get 100 per cent of their money; all the depositors in CIB, 100 per cent of their money; and Caribbean Money Market Brokers (CMMB), which is not even a regulated institution, which is taken over by a bank to ensure that the investors come out properly, they will get all of their money. “Then, suddenly, we reach up on these fellas, these FPAs and however you characterize them.” You have STIPs; they are a different kettle of fish. You know something? They have to pay. They should have known better; and to do that we will abridge their rights in that Act and we are also going to do some other things in terms of amending the Central Bank Act. Now amending the Central Bank Act and the stay of proceedings is being advocated, not in the context of what is done in other jurisdictions, because those stay of proceedings legislations that are involved in other jurisdictions are done subject to the court. It is not that the Central Bank or the regulator has a guaranteed right. This is one of the things that we always had in a democratic institution, not so? Balance. We balanced off the institutions; their rights and corresponding duties and there is always some sort of arbiter called the court? This stay of proceedings which we are encapsulating into the amendment of the Central Bank Act makes the Central Bank a leviathan, a complete and total leviathan. That cannot be acceptable. Whereas, for example, for all its deficiencies, if we had used and proclaimed—is it not proclaimed; it is on the books—the Bankruptcy and Insolvency Act, Part IV, section 55, Stay of Proceedings upon Filings; Stay of Proceedings upon Bankruptcy, Aggrieved Creditors, this attempts to put into position a mechanism which is similar to Chap. 11, which is what the English have followed. They have followed the Americans in that regard. 445 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

The problem with the judicial manager under the old legislation is that it is a one-way liquidation. There is no programme where the judicial manager has ever come into position; where he has ever nursed anybody back to health. They have all been buried. That is what the judicial manager was and it was felt, in these circumstances, a judicial manager was not what we wanted because of the substantial amount of money involved. What we want to do is to give the company time to breathe a little life into it, so that we can recover. It can come back. That is exactly what the Minister is saying. There is no difference to us. I think that is what Sen. Ramkhelawan said: we are swimming in the same river, but on different sides. You cannot swim on the bank of the river. You are either in the water and you are swimming or you are not. Quite frankly, we are all in the water. That is the point that Sen. David Abdulah was making. We are in the water and the country is in the water with us. At the end of the day, it is not that we are prejudicing the rights of taxpayers, Sen. Ramkhelawan and Madam Vice- President. In fact, we are ensuring that the rate of unemployment, which is still very low in relation to all the other countries with which we are doing business, we are not prejudicing their rights; we are trying to ensure the system remains sound, stable, and that there is a future for all. It was a form of social investment. We are not condoning irresponsibility by any sense of the term. That is why we did a thorough forensic audit, an analysis, which was completed, by and large, in April 2010. The Minister gains no point from me by telling me to hand over the file to the DPP in September 2011. It was done in April 2010 and the one thing that we learned is that there is a rule of proximity. Stanford Bank failed; Stanford Bank held; Madoff clients failed, Madoff held; pretty close, the rule of proximity. We do not give them a chance to take up citizenship elsewhere where we cannot get at them because there is no extradition treaty. So I have a great difficulty with the issue of the amendment to the Central Bank Act. While it will have the benefit of law, it is not done subject to review. The Central Bank is already a leviathan. You do not need any extra help. There is another mechanism that could have been used. I know that the Minister looked at it and said that they did not think it could be used; but this is a one-way ticket. It is not enough to say that we are protecting or deferring people‟s right. Under the statute of limitations—by the way, this Act will be struck down. It will go to the Privy Council because we have a Constitution that sets out very 446 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. BROWNE] clear reasons as to how you can change those rights. You have to have a valid reason and I do not think it meets the sufficiency test. It is going to be tested. What we have now is that all those who, in a sense, are not before the court, do not have judgment; have not taken action, their rights are not deferred; their rights are lost. The statute of limitation will kick in and it has no exception limit. Am I right? They will lose their rights, so we are not helping them. On the other matter, which is about part four of my conversation, I tried to understand the financial arithmetic that the hon. Minister was giving when he said 80 cents on the dollar. I presume he is giving me a bond for $1.00 for 10 years. If it is 80 cents, if I am not mistaken, the implied interest rate and discount factor on that has to be 2.15 per cent. [Interruption] You give me a bond, I want my money, I am coming for it today, not this year or next year. If you are giving me a bond and telling me when I can come for it, you are exposing me to three different levels of risk. 2.55 p.m. I have already experienced my risk. I want to lock in where I am, I do not want to have any more. I am coming to collect my money. I am going to the bank to say, “Give me my money”. And by the way, it is $10 billion we are talking about, what is the liquidity in the system? Five? Four? So the system cannot deal with it. The system cannot deal with it. [Interruption] Well, arithmetically so far, it “cyah” deal with it. We will agree to disagree on that one. On the basis of the liquidity in the system, how are you dealing with a $10 billion bond if your liquidity is five? Because by the way, we need systemic liquidity for other things. Correct? You know, speculative motive, precautionary motive, those kinds of things. So I am not going to use up my entire liquidity on this issue. So only a portion of the funds that are available are going to be available to deal with this. So the bond must fail. And if you tell me on the next bet that I do not have enough money in the system to be able to take out the entire proceeds or give everybody back their money now, I then have the difficulty of—it becomes a buyers‟ market. And the Minister said something that pricked my ears; he said “subject to the yield curve.” What is subject to the yield curve? Subject to the yield curve means that it cannot be 80 cents to the dollar, it could be anything; it could be 40 cents. In fact, when you discount it over time—because effectively you are putting a bond with a convertible warrant in it. It is not a dollar for a dollar. A dollar 11 years from now is worth what? It depends on your rate of discount. If you use a 6.5 per cent rate, a 447 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

7.5 per cent rate, an implied rate of interest, whatever, it is going to be less than 50 cents and I want my money now, 10 years from now, not 11 because that, again, the real problem in the system, once the confidence goes, once the time has moved, we have moved from a liquidity to a solvency issue. The issue is not that it was misdiagnosed, the problem moves. The point I have to say is that the structure, as much as we think that it has been well thought out, is not. We have not dealt with the basics of the matter, and there are several other considerations. And the only thing that I could agree with the Minister so far is that it is a difficult proposition, it is not easy to resolve but we must make an effort. I accept the fact that you must make an effort but I do not agree with this effort, and on that basis I cannot support either of these two Bills. Thank you very much, Madam Vice-President. Sen. Helen Drayton: Thank you, Madam Vice-President. We have two Bills in front of us, one is the Purchase of Certain Rights and Validation Bill, 2011, and the other one is the Central Bank Bill. With respect to the former, generally speaking I have no major issues with that, and I certainly think that that is a Bill I can support, and also, I have no issues with the plan itself. I would like to limit my contribution to the Central Bank (Amdt.) Bill. I want to open by saying that I accept that legislation in this instance is necessary, and it is not just a simple thing of being the best option, but rather it is the only option that the Government has at this point in time, if the corporate restructuring exercise has to proceed smoothly without hindrance of various litigation. I also want to say at the start that I do not think that liquidation at this point in time would serve any useful purpose and it certainly should not be considered an option. Let me commend the Government for showing mercy on those investors who were in very difficult positions in some instances, life and death, and therefore, depended on funds to meet their urgent medical needs. I could well empathize with the investors. It is hard for anyone to know that a substantial part of their savings, savings for the most vulnerable time in their life, is under a cloud, so I appreciate the efforts of the Minister of Finances. It certainly does not mean that I have necessarily agreed with any enhancement, per se, because I do not think that the taxpayer had any such obligation. Let me also underscore my opening statements by reminding that our financial marketplace is littered with financial failure. Whether it is the Cooperative Bank, NCB, ITL Trade Confirmers, SWAIT, Mountain Finance, Summit Finance all the 448 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. DRAYTON] high finance which came crashing down. Mounting finance! So it is a serious failure on the part of successive Governments not to have addressed the matter of appropriate legislation to govern institutions and also the relevant procedures for corporate insolvency and restructuring. My position on this piece of legislation, an Act to amend the Central Bank Act, is premised on a few observations. I want to support good legislation, not just any piece of legislation because of issues of time. Let me emphasize once again that I have no issue with the payout plan. In summary, the Central Bank (Amdt.) Bill is designed to protect failed financial institutions, their successors and the Central Bank, its officers and directors against legal action by creditors, shareholders, depositors, policyholders or any person with a remedy against these bodies during a period of restructure. And the first observation is that, given the purpose of this piece of legislation, it is not just about a handful of investors who seek to pursue their legitimate aims. This legislation amends the Central Bank Act. And therefore, it speaks not only to the now of the Clico situation, but it is also future and that is why I think it is necessary to make these observations. It has far-reaching consequences including the power to disenfranchise persons with legitimate claims from pursuing legal recourse. And I emphasize, I am not saying this in the context of Clico; I am saying this in a general sense because it is a Bill to amend the Central Bank Act, it is not to address only the Clico matter. For this reason it requires a three-fifths majority for passage. Now in my respectful view it sets a very serious precedent and my research has not—and I would repeat—has not identified any comparable legislation which denies a person access to the law absolutely, and also, protects regulators from harm or rather from wrongdoing if they did wrong, if they are negligent, absolutely. And as I said I am not just speaking of the Clico debacle. In the United States, for example—and I would cite this because Chap. 11 and other pieces of legislation have been mentioned on several occasions—the Federal Deposit Insurance Corporation has the power to apply to the court for a stay of proceedings, and, if granted, it is limited to a specific time frame. Now this piece of legislation which is present and future, there is no court oversight, there is no one to review on an ongoing basis and take decisions if they so choose to say, “Well, this matter has to be completed in the interest of the wider public and investors or all stakeholders within a given period of time”. That should be of major concern in our context and I will explain why. 449 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

So that Chap. 11 and other pieces of legislation I have looked at, such as in the UK, it is under the supervision of the respective courts. And Chap. 11 gives the institution in possession of failed business immunity against litigation through the imposition of an automatic stay until it can be resolved either in a bankruptcy court or resumed on its original venues. So that if there are issues which stakeholders wish to pursue after the stay period, there is nothing to prevent them from doing that. In our case in the context of the Central Bank and public authorities, you are time barred because, I think, it is between one and four years in which you can bring a claim. So from that point of view, this is not merely a suspension of rights, this is not a suspension of rights; this is the removal of rights, absolutely, and permanently in our case because of other statutes like the Central Bank Act. So that, this is why I am saying that in the context of this piece of legislation, I want to support legislation but there are issues and if the issues cannot be addressed now, probably those issues can be addressed at another time because this is legislation for now and the future. Now, having regard to what I have just said, by virtue of the fact that due process would be stayed for an indefinite period and thereafter possibly time barred in the case of Central Bank—as I said it is effectively a permanent denial. So that I do not think that the technical people and the Central Bank and Government should be saying that this legislation is comparable with this and that. Substantively, in the context of the stay to protect the institution from litigation, yes, but in no legislation I have seen I can say that the corporate entity during that period or the bank can get away with corporate malfeasance or negligence now or in the future. There are other pieces of legislation where that is dealt with. So I think that this Bill usurps the authority of the High Court, in certain aspects, and it actually places it in the hands of those who were supposed to be our guardians and protectors against the misuse of citizens‟ savings. Now let me say I am not casting any aspersions on the current Central Bank and its offices. I believe we have a team of professional, dedicated, honest, hardworking people; so I am not just talking about this regulator or that regulator. Similarly, I am not just speaking about Clico because this Bill is an amendment of the Central Bank Act. 450 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. DRAYTON] 3.10 p.m. So that I think a feeble attempt was made to bring in the courts, under section 44E(7) of the Bill, by saying that there will be reports on the restructure going to the High Court. But the reality is, in our case, all that can happen is that the High Court would receive reports, but this piece of legislation is not empowered to make any decision or do anything. Under section 44E(5), this new section of the Central Bank Act, as I said, will prevent persons with a remedy against the failed institution from commencing or continuing legal action against it after the publication of notice by the Central Bank, and until another notification is published by the Central Bank. Remember it is not time barred per se, so it is when the Central Bank says that it is ready and it can relinquish its controls. So, pursuant to this section, until the relevant notice is published by the Central Bank, a failed institution or its successor cannot be sued nor can judgment against it be pursued. So the question I would ask is, the Government has reminded us time and time again that it will go after and take action against persons who have done wrong, and they demonstrated that by convening a commission of enquiry. Now, this is a fact-finding commission of enquiry. What if the commission of enquiry implicates the regulator? This law effectively says, that commission of enquiry is a waste of taxpayers‟ money. You cannot take action, if I am interpreting this correct. If I am not, then I would be happy to be corrected in that context. Now, under section 44E, this section extends proceedings, actions and judgments pursued and obtained outside the jurisdiction, and what makes this or throws out an issue with this matter is that the immunity will end when one or two events are completed, and those two events are completely within the purview of the Central Bank, which is the relinquishing of control or the publication of the relevant notice saying, “Well, okay, it has relinquished control.” So this would beg the question, why an independent body, such as a court, would not have control over the imposition of a stay of proceedings, which affects the fundamental rights of so many, not just a few people, because this places the Central Bank in a conflict of interest position? If you can litigate against it during that period then it is in this interest, in the context of the stay of proceedings, to have it as long as it can. Remember I am not just speaking about Clico, and I am not speaking with respect to the Central Bank and its office. I am speaking generally, because we are not making laws just because we know that people are professional and nice. 451 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

We are making laws for good order, and we are making laws for the better interest of the people. So that it sets the Central Bank in a position of conflict, because it has control as to when it would relinquish. There is nothing in its law or this law that says in three, four or five years you have to complete this, and that if legal action has to be pursued on any matter, if any person feels aggrieved, then that period of grace by which they can pursue litigation would commence at the end of the stay. There is nothing like that. I would make an observation, because so much has been said about a minority holding back the majority. I would state again that I do not believe that liquidation is an option, but I do not want to be seen to have a situation where a small group of people who are legitimately pursuing their aims are profiled as being selfish and wanting to prevent a majority of investors from getting the settlement. They are not standing in their way. They took action in their interest, and were it not for those investors with large blocks of savings and investments, we would not be in a position to offer bonds. The market would not have had the absorptive capacity. So what we should fear here is investors like them having flight or blocs of savings and investments. Clause 44E seeks to subvert existing terms and conditions of contracts creating security interest over the failed institution property, including contracts finalized abroad. I would just raise a question. I would question the applicability of Trinidad and Tobago legislation to a contract governed by laws in another jurisdiction. I have already mentioned section 44E(7) which requires the Central Bank to submit quarterly reports and, unfortunately, the Bill does not give the court any powers to make a decision on the basis of those reports. So, generally, as noted before, I think the legislation has far-reaching consequences. I would question certain provisions, such as what I just mentioned in terms of applying it overseas. Like my colleague here, Sen. Subhas Ramkhelawan, let me say that, yes, generally, there has been a lack of information with respect to CL Financial, and I certainly appreciate the difficulty in establishing conclusively a true picture. I still think it is an unacceptable situation that even management accounts—because management accounts are valid instruments that give a snapshot of an institution at any given point in time, and we know that management accounts are subject to change based on market conditions. I think if you are asking investors to forego rights to due process, and we are asking taxpayers to bear the brunt of this situation then, if not now, but hopefully in the future as more work is done and more information is gathered, we will be able to have a better idea as to the assets of Clico. 452 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. DRAYTON] Also, a lot has been said with respect to systemic risk and contagion. I just want to make some points on where I think the real risks are at this point in time. The hon. Minister made reference to the global economic climate. We also have regional stagnation—we are not seeing any major growth in the context of our GDP; we have increasing debt; we have a credit union industry that controls about $5 billion to $6 billion or somewhere between $5 billion and $8 billion in assets that is not properly regulated. The insurance industry is still not properly regulated. We have members of boards of state enterprises and those enterprises have large investment portfolios. A number of them made investments into Clico and, certainly, one has to ask why the investment managers were not more robust in saying, “We want to see audited accounts before we decide to put the people‟s money there.” So that another risk is the qualifications, the experience on some of these boards and whether they even understand the basic concept of risk management. There are issues of transparency; there are issues of accountability and, of course, I must always mention my pet peeve, the issue of election campaign financing legislation. So, Madam Vice-President, I think that these are some of the real bogeys out there, and Clico in itself is one thing. I personally believe that a lot of the talk about systemic risk, whilst there is an element of truth it might be a bit overblown. I think, however, given all these underlying situations I have mentioned it will be more of a catalyst if we do not act. I want to close by commending the Government for helping the most vulnerable. I would like to see the investors receive their money as soon as possible, and I think they have an excellent plan on the table, and they should close their eyes and grab it and run. I give my support to the payment plan. I believe that the legislation to protect the bank from litigation during the period of restructuring is the right step. I believe it is necessary; I have serious issues with this piece of legislation. I believe that it puts the bank—I repeat that—in a position of conflict. I want to recommend to the Government an amendment. I recognize that there is an issue of time and, of course, this Senate has grown accustomed to having Bills before us where it is the midnight hour and we must approve. If we do not approve, there are consequences. So what I would say is that I hope the Government would consider it and undertake a promise that they would review this piece of legislation in due time and bring an amended version. I believe that a 453 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 provision should be inserted which permits the Central Bank to apply to the High Court to stay rights and exercise some jurisdiction over the process and time frame for completion, thereby having an independent arbiter in this situation. I thank you, Madam Vice-President. [Desk thumping] The Minister of Food Production, Land and Marine Affairs (Sen. The Hon. Vasant Bharath): Thank you, Madam Vice-President. [Desk thumping] I thank you for the opportunity for allowing me to join this debate to discuss these two matters: The Purchase of Certain Rights and Validation Bill, 2011 and the Central Bank (Amdt.) Bill, 2011. This is, in fact, the second consecutive week that we have come to Parliament, essentially, to rectify a matter or address a situation that is really not the making of this Government, but was really fabricated during the tenure of our predecessors. I want to just briefly address some concerns that Sen. Drayton had, I might add, some valid concerns. I would deal with the issue of rights a little later on but, certainly, with regard to the powers of the Central Bank, I am certain that the Minister of Finance in his winding up, after due deliberation with the legal people, will be in a better position to advise on that issue. I want to address two issues that Sen. Browne had concerns with, and to say that it is not often that I agree with those on the other side, but in this particular case there are a couple points that he did make that I did agree with. The first one was that he really cannot allow the State to fail under—under no circumstances really can the State allow organizations that will create systemic risk to fail. So I think we agreed on that. Secondly, this is in disagreement with several people that I do not believe—and this is in agreement with Sen. Browne—that we can classify those people who invested in the EFPAs as “greedy people”. I think that has been something that has been perpetuated for quite some time, certainly, since this fiasco started. Let me just say at the outset that I have no interest whatsoever and never have had any interest in Clico or any of its subsidiary companies. So the issue of the people who invested in EFPA as being greedy, I do not think that is the case at all. And I want to agree with Sen. Browne, that people invest in many different vehicles as a form of retirement. There are many people who invest in property as a form of a pension for their retirement, and many people would have invested in the EFPA and there would have been, at the time, an expectation that these people—these investors—these people who are investing in this particular vehicle were protected by the State. That is a fact. 454 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. THE HON. V. BHARATH] 3.25 p.m. Unless the state makes an announcement of some sort or takes any sort of action, one would reasonably expect and believe that there are regulations and regulators behind this that make it safe for them to invest, and that is the basis on which the financial system operates. It is the same when one goes into a bank, any of the banks: RBTT/RBC or First Citizens Bank Limited. One does not go and check on a daily basis to see what the financials are of that bank. One does not go and check and see what the ratios are. One expects the fact that they have not heard anything adverse from the regulators or the Government that all is hunky- dory, and therefore it is what instils the level of confidence to allow investors to go and put their money into financial institutions. So I wanted to agree with that, and maybe if Sen. Browne was the Minister of Finance in the last regime they may not find themselves in this position today, because as you remember, Madam Vice-President, the Minister of Finance was actually not a finance person at all. The other issue that he made, the other concern that he had—which I do not agree with—is the issue of how would we find money based on the liquidity in the system to absorb $10 billion worth of debt, and maybe he missed the point the hon. Minister of Finance made, which is essentially $5 billion worth of that is actually going to be in cash and $5 billion in shares, in NEL 2. And even then, we do not expect everyone to be lining up at the bank on day one to encash their bonds, or to sell their stocks. So at no given time would we be required to have $10 billion worth of cash in the system and I think the liquidity overhang at the moment in the banks is about $5 billion. So I just wanted to address those issues that Sen. Browne brought up which as I said are valid concerns. But it has always been our intention, Madam Vice-President, from day one, even when we argued this matter in Opposition in 2009, to protect the policyholders and the taxpayers, both at the same time, and it has been our unequivocal position that the depositors and the pension holders would be protected in this matter simply because I think, in 100 per cent of the cases, none of these people actually have any control of how their money is invested after they put it into an institution. They accept that this is a bona fide financial institution, they take their money, they hand it over, and they lose control of it thereafter. Many of these people also have invested, in most cases, their entire life‟s savings in places like the HCU, places like Clico. Their entire life‟s savings went into these institutions. Many Caroni workers, for example, T&TEC workers, WASA workers, many public servants, many people who got VSEP, they took their entire 455 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 savings and they put into these institutions. And I have to tell you that in a large number of cases many of these people survived on a month-to-month basis on the income coming in from these policies, on the interest that these policies bore. This is what a lot of these people actually survived on for day-to-day living, for medical expenses, for travel and so on and so forth. So, a lot of these people really were not investing in this vehicle because of greed. Many of them may have been advised, many of them may have been encouraged, many of them may have seen others earning large interest rates and so, but by no means can you say it is because of greed that they invested into this vehicle. But, for us to determine a way forward with regard to this very thorny issue that the Minister of Finance and the Government have been grappling with over the last 12 or 15 months or so, we have to try to understand what caused the group to fail—and you know there are many reasons. I mean, many say it was because at one point in time certain state agencies pulled out their money in large qualities at a strategic time, and as a direct result there was a run on the bank and Sen. Browne talked about the fact that no bank can survive a run. Once people decide that there is a loss of confidence from people, once people even get the inkling that their money is at risk and they start to pull their funds out, very few banks or probably no bank can survive a run on its deposits. And, of course, we know that and I suspect that Sen. Ramnarine, the Minister of Energy and Energy Affairs, will speak more in detail of this. And we know that NGC at one stage pulled out a significant quantity of funds in the last quarter of 2008 from CIB—Clico Investment Bank—which would have caused a significant hole to be created. What else would have caused the group to fail? When the MOU was signed, Madam Vice-President, the Central Bank Governor made a statement, it was dated January 30, 2009, of course, and he said and I quote: “There is no doubt that the increase in CIB withdrawals and the nervousness seen at Clico have something to do with the depositors‟ concerns about the impact of the sharp decline in methanol and real estate prices on CL Financial‟s overall financial situation. In the Bank‟s view however, the current financial difficulties”—is— “being faced by CIB and Clico have more to do with four things.”—The first was, “excessive related-party transactions which carry significant contagion risks.”— The second was—“an aggressive high interest rate resource mobilization strategy to finance an equally high risk investment, much of which are in illiquid assets.”—The third—“a very high leveraging of the Group‟s assets, which constrains the potential amount of cash that could be raised from the asset sales.” 456 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. THE HON. V. BHARATH] And he goes on to say: “In our regular monitoring of CIB and of Clico since 2004 (when insurance supervision was transferred from the Ministry of Finance), the Central Bank has consistently focused on these deficiencies but have been stymied by the inevitable challenge of change and by inadequacies in the legislative framework which do not give the Bank the authority to demand these changes. The Central Bank is very conscious of the contagion risks that financial difficulties in an institution as vast as the CL Financial Group could have on the entire financial system of Trinidad and Tobago and indeed in the entire Caribbean…” So the point is, Madam Vice-President, the Central Bank Governor was telling us that, as early as 2004, he had serious concerns about the operations of Clico, but because of the absence of the necessary legislative agenda he was unable, essentially he was immobilized from taking action and doing anything about it. So that was also one of the reasons why, according to the Central Bank Governor, there were problems at Clico. And who were the people at the helm, essentially, controlling things at Clico at the time and who conveniently left and exited leaving others to hold the cake? Mr. Andre Monteil retired at the end of March 2008, the same Mr. Monteil whom my colleague, Sen. Abdulah, talked about earlier on, and in addition of course to him at one time being Chairman of the T&TEC Pension Fund, he was also, as you know, Treasurer of the PNM, he was a CL Financial Group Finance Director, Chairman of the Education Facilities Company, Chairman of the National Housing Authority, Chairman of Clico Investment Bank and also at the same time Chairman of other organizations that had interlocking directorates. There was a gentleman called Mr. M.A. Fifi, retired in August 2008, also, and Mr. Robert Mayers, retired in December 2008. So those were the people really who were at the helm at the time when this matter broke and who left. But also the company itself became involved in a number of transactions where protocol was not observed and processes were very lax, Madam Vice-President. One such I can speak of because we have uncovered it at the EMBD and, of course, it is common knowledge now—public knowledge—where the then Executive Chairman of the EMBD, Mr. Uthara Rao, invested over $50 million of EMBD funds in his own name in two annuity polices, two of the EFPA policies with Clico, and of course, clearly, if any due diligence had been done by the organization, they would have realized that this was not Mr. Rao‟s money and therefore Mr. Rao could not and ought not to have been able to invest. 457 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

So therefore, it appears that the organization was taking in money from wherever it could, and this is why I am in full agreement with the point that Sen. Ramkhelawan made, that if and when we are going to be paying these funds out that there should be some mechanism to determine the source of where those funds came from in the first place. Because there may be many such instances like this where funds were just basically handed over without any due diligence having taken place, without any declarations having been made to the Central Bank with regard to source of funds, and this is an appropriate time to be in a position to get those moneys or to determine the source of those funds. There was also a situation—actually stated on the last balance sheet of Clico, I think it is dated 2007—where a loan was given to Angostura for over a billion dollars with no guarantee at all. So there are many transactions, and I am sure that when the management accounts are finally delivered, we will find that there may be very many of these kinds of transactions that would have led to failure of the organization that we will uncover, and maybe the Minister of Finance may find out that there are other skeletons in the closet that we may not yet have uncovered. So those are some of the issues that brought us to the table, and brought the previous government to the table to sign an MOU with Clico, Madam Vice-President. “This Memorandum of Understanding dated January 30, 2009” was “made between the Minister of Finance acting for and on behalf of the Government of the Republic of Trinidad and Tobago (hereinafter referred to as „GORTT‟) of One Part and CL Financial Limited of CL Duprey Building…”—and so forth. And the Minister of Finance, of course, unlike all of us here today who have spoken, failed to declare her interests in this organization but negotiated on behalf of the Government of Trinidad and Tobago, in fact, not just negotiated but entered into an arrangement on behalf of the Government of Trinidad and Tobago and presumably would have signed on behalf of the Government of Trinidad and Tobago for this MOU, and clearly, if that is not a conflict of interest, I do not know what is but clearly the matter is now before the DPP, so I do not want to go any further into that issue. 3.40 p.m. Sen. Dr. Henry and also Sen. Browne spoke about the package, and about the similarities or dissimilarities between what took place at Clico and what was happening on the international markets, and that, yes, we had to step in and ensure that the State did not fail or these organizations that could potentially affect the State did not fail. But the issue I have got with regard to that is the manner in which the bailout took place. 458 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. THE HON. V. BHARATH] Every country that has entered into any bailout or stimulus package, as far as any of its large financial institutions have been concerned, particularly those that have been classified as being able to create systemic risk, have entered into these arrangements and are able, first of all, to quantify the amount of money originally going to be put in, and they may come back and put more in at some point in time, but at the outset they let their populations know, through the parliamentary system, what the quantities are and what the time frame is for repayment.

If we look at the United States, there was AIG, Citibank and the Bank of America. In the United Kingdom there was Northern Rock and Bradford & Bingley. In each case, the President of the United States and the Prime Minister of the United Kingdom, had to go to their respective Houses of Parliament and convince their fellow parliamentarians of the necessity to inject taxpayers‟ money into these organizations. In Trinidad and Tobago, when we came to the Parliament, and I was in Opposition at the time, to debate this issue of the MOU, we had no idea what the black hole was. We had absolutely no idea what the quantum was, whether it was $5 billion or $10 billion. We had no idea the amount of taxpayers‟ money that would be pumped into this organization known as Clico. We had no idea within what time frame that money was going to be repaid to the people of Trinidad and Tobago. We certainly knew that there was no security. In fact, in a statement made in the subsequent shareholders‟ agreement that was signed the following June16, I think, it talked about valuable consideration being given, but when one considers that on April 08, which would have been three months before the shareholders‟ agreement was signed, where it talked about valuable consideration being given by the CL group, the Central Bank Governor issued a statement quoted in the Guardian of April 08, 2009, the headline of which read:

“Government left empty handed in CL Financial bailout Government may face problems in trying to recover the money being advanced in the bailout of T&T and the Caribbean‟s largest conglomerate, CL Financial Limited according to Central Bank Governor, Ewart Williams. Williams said yesterday that CL Financial‟s $100 billion assets are otherwise committed... He said that because of a slump in real estate and methanol prices the Government would not be able to sell the conglomerate‟s vast real estate holdings at present to recover the funds provided to CL Financial to relieve a liquidity problem.” 459 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Of course, up until April, he was still referring to it as a liquidity problem. So, essentially, there was no security as part of the MOU. Of course, there was no interest to be paid or certainly no interest mentioned with regard to the moneys that were being advanced. Then you would remember, Madam Vice-President, that a new board of directors was brought in by the then Government. The then new Managing Director brought in under a new board, headed by I think Euric Bobb, this was Mr. Claude Musaib-Ali, said: “Lawyers and auditors are working feverishly to find out what has happened to more than $5 billion from Clico‟s Statutory Fund. Workers said they were told that some of the funds were invested with „companies that were connected with CL Financial,‟ which the lawyers and auditors were trying to trace. Musaib-Ali indicated to them that CL may not be able to repay the money. „So that is a loss for us that we have to bear. „We first have to find out where this money went to, and if we could get it back from where it went,‟ Musaib-Ali told them.” So here we were, a Government comes to the Parliament, brings legislation, essentially to prop up through financial means a failing organization that could present it with systemic risks, but tells the people of Trinidad and Tobago virtually nothing about how much money is going to be spent, what assets are going to back the taxpayers‟ funds, over what time frame this money is going to be outstanding and, of course, pushes it through the Parliament. But more was to come, because between January of 2009 and June of 2009, when the shareholders were able to sign, despite the financial distress that Clico was in, three days after, in fact, on January 16, 2009 they paid dividends of $3 per share. They paid $3 per share despite the financial distress they were in. They continued to pledge assets as collateral. It was as though nothing had happened. It was as though it was business as usual. They continued to pay huge commissions on rollovers. It was business as usual. They had taken, essentially, $5 billion that the then Government had pumped into Clico, and it was business as usual. They took no measures whatsoever to curtail the operations of the business, to streamline the operations of the business. They continued as though nothing had happened. One of issues I had at the time was that after the bailout, after the moneys had been advanced, there was a statement by the then Chairman of the group, Mr. Lawrence Duprey, which said that the Clico top brass was working through the 460 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. THE HON. V. BHARATH] weekend to put final value on the assets. Now, the Government had pumped $5.1 billion into this organization. The Government recognizing that there was an issue with Clico, had taken hold of this group, but yet still the top brass of the organization was working through the weekend to determine the valuation of the assets. Why would the top brass be determining the valuation of the assets? Surely they would be biased; surely they would be partial; surely if they had been hiding things for the last five years, they are not going to come now and divulge them. Why were independent valuers not put in at the time? It does not make sense. So the whole fiasco essentially continued. The situation continued and went on unabated. As the Minister of Finance said, it moved very quickly and very rapidly, as a direct result of that irresponsibility, from a position of liquidity to one of insolvency. As the Minister said, there are very different methodologies of dealing with a liquidity problem as opposed to dealing with an insolvency problem. For the uninitiated who may be listening to the television or the radio, a solvency problem occurs where, if you sell all your assets and liabilities, if you are solvent, you have cash left over. A liquidity problem is a short-term situation where you have the assets but you cannot pay your current short-term debts, in its simplest terms. So there are very different methodologies of dealing with the issue of solvency and the issue of liquidity. But as I said, it was business as usual. So much so that when this Minister of Finance stepped in, essentially which was to make any significant pronouncements after a bit of work had been done, which was at the budget in September of last year, and stopped what was taking place—the commission and interest payments—out of the $5.1 billion there was only $2.5 billion left. Clearly, at the rate it was being spent, that would have been depleted in a very short space of time. So for the first time the Minister of Finance and this Government actually took the bold step, and took a concrete step, to stem the tide and to put some strict measures in place in terms of the governance of this organization. At the time, the intention was to ensure that we could protect all the policyholders, the 200,000 who had long-term policies, in most cases life policies, and deemed to be and termed traditional policyholders and, of course, the 25,000-odd holders of the EFPA plan. The intention was to try to find a solution that would best satisfy the largest number of people across the board. The Minister came up with a particular plan that he announced in his budget of September 2010. There were some concerns. The Minister himself has admitted that the payout at the time represented about 67 cents on the dollar, which a lot of people felt was not sufficient. 461 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

In her wisdom, the hon. Prime Minister decided to put in place an interministerial committee. It is public knowledge. The mandate of the interministerial committee really was very simple. It was to listen to all the stakeholders and to restore and maintain a certain level of confidence in the financial system, so as to preclude a run on Clico, which was exactly what I was speaking about earlier and also other non-traditional banking institutions. Many people may not realize this, but if you lose confidence in one of these institutions, and Clico is termed a “non-traditional banking institution”, unfortunately what happens is that naturally, it is human nature, a certain degree of confidence is lost in other non-traditional banking institutions. I do not want to name any of them; everyone knows who they are. Therefore it was important that we maintained a dialogue to ensure that loss of confidence was not had. The third mandate was to ensure that we delayed any judgments already held in the absence of legislative protection, which is exactly what we have come to the Parliament to do. The stakeholders we engaged in that exercise were the Clico Policyholders Group, the Credit Union League, agents and agency managers‟ group members of the public and senior staff at Clico. I do not want to divulge all the contents of this report, but suffice it to say that we identified certain groups: 65 credit unions whose investments totalled $803,099 million; the trade unions; several churches also; the Maha Sabha; Caroni VSEP workers and, of course, many families, I have to tell you, who had pooled their resources together. Although it looked as though it was one EFPA policy, there were actually many people behind it; groups of people, friends and family, who together combined had bought one EFPA policy. 3.55 p.m. We made several recommendations relating to the immediate payment, a deferred payment and a discounted payment, and we also made recommendations, Madam Vice-President, with regard to the fact that certain classes should get favourable treatment, and we talked about the credit unions and the elderly and those requiring medical attention, religious organizations and so on. There is reason why I mentioned the contents of this, and that is, it shows, Madam Vice-President, that the Minister of Finance has listened to what the people of Trinidad and Tobago had to say. It shows that this Government listens to the people of Trinidad and Tobago, because many of the concerns that were shared by those who we spoke with are now incorporated in the Minister‟s plan of action for the settlement of Clico. 462 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. THE HON. V. BHARATH] So what does the proposal really give to us? We know that we have already secured the futures and the savings of over 200,000 people who formed the traditional policy—the long-term policyholders. We know that we have already satisfied over 9,815 people who had $75,000 and less in the EFPAs. All of them have gotten their money. And that amounted to I think over $300 million. The Minister of Finance mentioned earlier on, $94 million has been doled out to those who needed urgent relief and medical attention. The trade unions and the credit unions will also be dealt with in like manner, and I have to tell you, they are owed about $788 million, close to $800 million. There was some confusion—has been some confusion—with regard to, as I said the split of the payment. It is very simple: 20 one-year bonds, the first 10 years of which could be discounted in the financial institutions across Trinidad and Tobago, and the Minister of Finance had said that although he has not been guaranteed, the fact is that according to the existing yield curve, you are looking at 80 cents on the dollar if you are to encash all of it in day one.

The second half of your investment invested through NEL 2 which would be an accumulation of Republic Bank shares and others. And again once the administrative side of it is taken care of, because of course NEL 2 has to be set up within a few months, one would expect to get NEL 2 set up and therefore, policyholders will have these bonds in their hand that they can go and trade, and I expect as we have discussed on many occasions, I expect that a number of people—the fact that they have confidence in the shares that would be in NEL the majority of them—unless they need it for specific immediate reasons—will hold on to these shares, because they are an appreciating asset. Republic Bank alone has appreciated in value from I think $70 to over $90 in the last six months. So therefore, once you know that you have confidence in the underlying instrument which you are holding in your hand, whether it is a “green back” or whether it is a TT dollar or whether it is a share that you know has value, you can hold on to it unless you absolutely have to trade it. So we do not expect there to be an immediacy and an urgency that everyone is going to rush to the stock exchange on day one and say, “I want to sell all of these shares” or “I want to cash in all of my bonds.” Because, remember, Madam Vice-President, that for the first 10 years the investor has the opportunity—the policyholder has the opportunity of holding on to those bonds every year and just going in and cashing it and getting a hundred per cent. Year one you can go and get 100 per cent, year two 100 per cent, year three—just hold on to it. 463 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

So again, depending on what urgency levels a policyholder requires, he or she may decide they want to hold on to it and get 100 per cent in year five and a 100 per cent in year six as opposed to taking 80 per cent in year one. So it is a very simple and a very straightforward proposal. The average weighting, as the Minister has said, comes out to about 90 per cent across the board, which I think most policyholders would be very glad of. Having waited this long, having gone through the trauma of not knowing if their money was going to be safe or not, I think a payout of 90 per cent is something that they would be very, very happy with. So the Bill essentially seeks to restore the remaining indebtedness of these policyholders. The advantage of doing it this way is that it curbs any inflationary effect of putting $10 billion into the system immediately. If we had come and given $10 billion worth of cash to the policyholders in their hands and they decided that they were going to get involved in consumption expenditure with that $10 billion, we would have a massive inflation spiral in a very, very short space of time. So the fact that we have split it in such a way, that part of it is in bonds and part of it is in NEL, and we have restored confidence to the system would mean that we would curb to a large extent the consumption expenditure and therefore curb inflation as a direct result. The second advantage is that, if we had decided as had been noted previously, that Republic Bank shares be sold to pay off the policyholders, it is very likely that because the shareholding in Republic Bank was, I think 55 per cent— Minister of Finance—yes—government shareholding is 55 per cent—is very likely that it would only be a foreign institution, possibly a foreign bank, that would be able to purchase at the levels of that and be in a position to pay what would then be a premium for a controlling interest. And I am sure there would have been many foreign banks lining up to purchase a 55 per cent controlling shareholding in Republic Bank. So the second advantage of what we have done here is that we have kept Republic Bank as a local entity. The third advantage, Madam Vice-President, is that many local people are now going to have the opportunity to get involved in the capital markets in Trinidad and Tobago. They are now going to have a share of the asset appreciation of one of the premier banks in the Caribbean. It will widen, it will deepen the capital market, as I said, to allow many of our locals to become involved in the investment sector that they may not have ever been involved in before. As the Minister of Finance said earlier on, it represents a significant increase from the initially proposed 67 cents on a dollar to between 90 and 92 cents as it stands now. 464 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. THE HON. V. BHARATH] There is a concern shared by many that the cost to the Government in the first 10 years will be $500 million a year which will essentially equate to the $5 billion that we need to pay out. But I want to remind this honourable Senate, that to offset a lot of that, we have revenues in the form of dividends coming in from assets owned by Clico that are still owned by the Government. So essentially it is not a $500 million cost of the taxpayers, because a lot of that is going to be offset by the revenue streams coming in to the Government‟s coffers. And beyond the 10-year period, after the policyholders are paid off, those revenue streams will continue to accrue to the Treasury of Trinidad and Tobago and the Consolidated Fund. So ultimately this is not going to be a cost to taxpayers of Trinidad and Tobago. It is going to be self-funding over a period of time. I think that is crucial because I understand the torment that a number of people who feel that they would have the opportunities themselves to invest in a high yielding vehicle and they chose not to, and they instead settle for 2 and 3 per cent, when the high flyers at Clico were earning 7 and 8 and 9 per cent. I understand the torment that they must suffer thinking that they are going to have to fund this bailout. I want to assure all of those who are listening that essentially the assets that are owned by Clico will eventually repay the debt to the Government of Trinidad and Tobago via the revenue streams that will accrue through dividends to the Consolidated Fund. You know, many people, Madam Vice-President, also question why the Government would want to pay. As I said first of all there was, in my opinion, a legal expectation on behalf of those who invested, that their funds were safe. But I think it goes a little deeper than that, and that is as a responsible Government— and Sen. Mariano Browne made the point—we have to make decisions. Sometimes, there may be decisions that have come forward from a previous regime, but nevertheless we are the Government of Trinidad and Tobago, whether it is the PNM, whether it is UNC or whoever it is or the COP or whoever it is, the continuity—along the continuum we remain the Government of Trinidad and Tobago to those outside of Trinidad and Tobago. [Interruption] Madam Vice-President: Hon. Senators, the speaking time of the hon. Senator has expired. Motion made: That the hon. Senator‟s speaking time be extended by 15 minutes. [Sen. P. Beckles] Question put and agreed to. 465 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Sen. The Hon. V. Bharath: Thank you, Madam Vice-President, thank you to my colleagues. It is Food Production, Land and Marine Affairs—[Laughter]—just for future reference. Sen. Beckles: Thank you very much. Sen. The Hon. V. Bharath: Yes, Madam Vice-President, I am saying, so we operate on a continuum and when one looks from outside in, they do not decipher between PNM, UNC, COP, they look at the Government of Trinidad and Tobago and they look at the actions of the Government of Trinidad and Tobago. And Trinidad and Tobago is judged on the actions of its Government of the day. I know someone is going to mention OPVs and so on but the point—you know that was a separate issue in terms of delays and so on with regard to the contract being fulfilled, but in this particular instance, Madam Vice-President, it comes down to this whole issue of confidence. Regardless of how bad sometimes one may think a particular contractual arrangement may have been with a previous regime, I think it is incumbent—this is my personal opinion—on us who follow to carry through that, to instil the levels of confidence, both from our national community and from those looking on from outside, that we are the Government of Trinidad and Tobago and we should do whatever is absolutely necessary to ensure that when a Government makes a promise, the Government that succeeds fulfils that promise. 4.10 p.m. That is what I believe should be the case, unless there are, of course, exceptional circumstances, and that is exactly what we are attempting to do here. The previous Government made a commitment and made a promise, and this Government is now fulfilling that promise. You know, in the 1980s, several finance houses and insurance companies went belly up; they collapsed: Winsure, Summit Finance, International Trust, Commercial Finance and so on. Sen. Browne made the point that although the shareholders were not compensated—and we must make a clear distinction between shareholders, depositors and policyholders, because the shareholders, essentially, are the owners of the organization. They are the ones who have the responsibility for making investment decisions and, therefore, really and truly, they should bear the brunt of the mistakes that they make. But the depositors, the investors and the policyholders are the ones who are helpless, essentially. Once they hand over the money—go to the counter and they hand it over; they part with their funds—that is the end of it, as far as they are concerned. They have no idea. 466 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. THE HON. V. BHARATH] The people in the 60-odd credit unions who invested in this EFPA vehicle, they had no idea where their funds were going. They did not know whether part of it was invested in China in high-risk investment; in supermarkets in Barbados. They are little people. They had no idea. All they were concerned about was the fact that they were earning a higher than average rate of return and they were receiving it either on a quarterly or half-yearly or an annual basis. But, in many cases, as I said, in these insurance companies, what happened— it happened in the 1980s—is that the depositors did not get anything at all. Depositors, policyholders, lost absolutely everything. There are many of them still around today who lost their entire life‟s savings, and I think it was Sen. Browne who talked about our friends in Antigua who went through a similar situation with the Stanford Bank and Alan Stanford. I, myself, was really aghast when I saw the gentleman who, mere months before, was seen celebrating with cricket stars all over the world in England. He was actually in Lords. He arrived in a helicopter at Lords, that Lords cricket ground, the famous cricket ground in the United Kingdom. He arrived by helicopter. One was accustomed to seeing him with millions and millions of dollar bills around him, and to see him in manacles being led off to prison was really a very sorry sight. I want to agree with many who have expressed the concern with regard to the lethargy in bringing those culpable and holding them to account. I think if there is any area where we have to strengthen our laws and enforcement in Trinidad and Tobago it is the area of white-collar crime. Those people who get away with white-collar crime send a signal to the rest of the population, essentially, that lawlessness is okay, and they are essentially those who are the influencers in society. They are the ones who should set the example and to whom young people look up, and when they see flagrant disregard of the laws of Trinidad and Tobago they believe that, “If they can do it, we can do it too.” It is no secret that the views of the interministerial committee that was set up by the Prime Minister 10 months ago, and the views of the Minister of Finance, did not coincide at that point in time, but this proposal that we have on the table presents a far more attractive and lucrative option to the policyholders of Clico, the so-called EFPAs. It also shows, as I said earlier on, that the Government is prepared to listen; the Government is prepared to be flexible. Although it has taken a few months, the fact is that the Minister of Finance really has bent backwards in putting together this proposal and I think he needs to be congratulated, because it is an excellent proposal. [Desk thumping] 467 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

But for it to work, we need to have protection for those thousands of policyholders, and this is why we have brought to Parliament the second Bill, the Central Bank (Amdt.) Bill, 2011. As Sen. Abdulah said, this is not just about protecting the rights of the 15,000 EFPA holders who are left now; it is also about protecting the rights of the 200,000 long-term policyholders who have been assured of security. If you were just to have one person who, out of malice or ill will, or for whatever reason, decides that he or she is going to the courts and get a judgment against this organization, the entire proposal falls down like a deck of cards. So these two Motions are inextricably linked. For the first to work, the second must be in position. It is as simple as that. [Desk thumping] You cannot have one without the other. Therefore, I am here today to fully endorse these two Motions brought by the Minister of Finance, to throw my weight 100 per cent behind it. Many people have worked very hard, as the Minister of Finance has said, to be able to bring these two Bills to Parliament today. Our concern from day one, from the days of Opposition, has always been for the small man, even the small man who has made good and who may have millions of dollars in Clico, but may have started off as a yard boy, and has done well. We applaud him; we are happy for him; the very same man who helped Mr. Cyril Duprey build an empire when in days gone by the moneyed class were not of Mr. Duprey‟s colour. These are the people we have sought to help and to support in this whole matter. When I spoke on this matter in 2009, I quoted John Maynard Keynes, and I was referring to the then Government at the time. He was referring to the great depression of the 1930s and he said: “we have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand.” I was referring, of course, to the then Government at the time, and I had added to that as my conclusion during that debate: Unfortunately, for the people of Trinidad and Tobago, for the moment we are saddled with a team of amateur mechanics attempting to fine-tune the engine of a fine Rolls Royce when their only capabilities qualify them for looking under the bonnet of a Ford Cortina. [Laughter] [Desk thumping] Sen. Browne: So now you are there. Sen. The Hon. V. Bharath: Sen. Browne has now posed a question. Madam Vice-President, I want to say, now that we are here, the Rolls Royce is in the very safe hands of a specialist mechanic, [Laughter] [Desk thumping] in a People‟s 468 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. THE HON. V. BHARATH] Partnership garage, with all the latest tools and equipment to fix this motor vehicle, and he knows exactly where the spark plugs are to ensure that he fires up the engine of our economy. Madam Vice-President, I thank you very much. [Desk thumping] Sen. Terrence Deyalsingh: Thank you, Madam Vice-President, for allowing me the opportunity to put in my two cents‟ worth on these two Bills: the Purchase of Certain Rights and Validation Bill, 2011 and the Central Bank (Amdt.) Bill, 2011. First of all, I take umbrage at Sen. Bharath‟s referral to a Ford Cortina. My first car was a Ford Cortina, a yellow one, PX 712. Sen. Beckles: Yellow, “yuh say?” Sen. T. Deyalsingh: It was yellow, not red. It was a yellow Cortina, PX 712; cost $7,500 in those days. Sen. Beckles: What year was that, boy? Sen. T. Deyalsingh: That was 1981, around there. Anyhow, I hope that does not come out of my 45 minutes. Madam Vice-President, the European Space Agency recently put out a report about the amount of space debris there is in outer space, and it is only a matter of time before somebody from this Government blames the PNM for space debris. And while you are at it, you could probably blame us for El Niňo, because it seems that every ill that comes before this country is the fault of the PNM. Sen. Bharath: You were there for 45 years! Sen. T. Deyalsingh: I learnt a lot about the art of debating today from Sen. Bharath. He is an expert. I sat here and I listened to him make certain connections between Andre Monteil and the PNM. He is so eloquent and soft in manner, as opposed to myself who tends to be more like a bull in a China shop, but I am going to use Sen. Bharath‟s techniques today. I said last week that if you throw a stone across here and you blind me, I would throw one back across there and knock you unconscious. At the end of the day, we end up blind and you end up unconscious. It gets us nowhere, and I think Sen. Dr. Rolph Balgobin mentioned this. I did not come here today prepared with any boulders, but your debate, through you, Madam Vice-President—your debate, Sen. Bharath, caused me to— and I warned the Government last week, I have a long memory. In your attempt to link Andre Monteil, who was the treasurer of the PNM, in some way with Clico 469 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 and everything wrong, may I remind you that it was Lawrence Duprey who, unreservedly, supported the UNC and there were published cancelled cheques in the newspapers made out to the UNC for millions of dollars. Do not also forget that a former Clico executive, Mr. Carlos John, was made a Government Minister. So if we want to be honest about the linkages between Clico and Government, let us give the entire picture. Let us not also forget that UNC councillors at the time were on the board of Clico. Yes. You had UNC councillors who were on the board of Clico. So this whole Clico fiasco is tied up with the politics of the UNC much more than the politics of the PNM. It was Mr. Lawrence Duprey who, unreservedly, supported UNC.

My other reply has to do with the hon. Minister of Finance who gave the impression that the compassionate relief was something recently instituted. That was instituted way back since 2009, and I will explain why. Let me declare my interest in Clico upfront. I have absolutely no interest in Clico, but my parents did. When my father, in 2009, recognized that the end to his life was approaching, he asked me if I could have gone to Clico and seek to get his moneys out so that he could die in peace knowing that his wife, my mother, would be well taken care of. I went to the Clico office down at the Barracks in St.James, I got the proper forms, I went to the head office, made my application to a panel of two, and I got the funds out before the maturity date. So that compassionate relief was enforced since 2009, and I had a personal experience of it. [Interruption] 4.25 p.m. Sen. Beckles: [Inaudible] Sen. T. Deyalsingh: Yes. My mom recently passed, but at least she had the funds to use during her illness.

My third rebuttal goes back to Sen. Bharath‟s claim with Mr. Monteil as a PNM treasurer. I would like to remind Sen. Bharath—I would not call this person‟s name and I would explain why later. A very high Angostura official, keen supporter of the UNC, founding member of the Congress of the People, was also involved in supporting the UNC and the Congress of the People, but because that person has gone through great personal difficulty in recent years—hon. Senator, as you know—I will refrain from trying to score cheap political points. 470 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. DEYALSINGH] My compassion for that family outweighs my desire to score cheap political points, but let it not go unrecorded that that top UNC supporter—Angostura— could not produce audited financial statements. I leave that there. My other rebuttal has to do with Sen. David Abdulah chiding us for not attending Tuesday‟s—whatever you call it. What was it? Sorry? Sen. Abdulah: Presentation. Sen. T. Deyalisngh:—presentation, and I do apologize, Sen. Abdulah, for my statement last week about your background in economics. I sincerely apologize. But in making that statement, Sen. Abdulah, you did show that you do not understand how a civil service is supposed to operate. One of the tenets of a good civil service—three underlying principles of a good civil service are: one, invisibility; two, independence; and three, permanence, that is, civil servants should not be fired at the whims and fancies of Government officials. That is the permanence part. It is not correct for any Government to make presentations to Members of Parliament who are elected by the people, and to use the civil service or technocrats to make such presentations. It brings the civil service into the realm of politics, and civil servants should be above politics. The reason we did not attend on Tuesday is because we do not agree with the principle of having civil servants and technocrats talking to active politicians. You may scoff at it, but you can check with your new Permanent Secretary, Head of the Civil Service, and get his views. Madam Vice-President, we are here to discuss the intervention into the Clico affairs and if I may just briefly go back to February 06, 2009, under sector 44D of the Central Bank Act of Trinidad and Tobago where the Central Bank intervened into Colonial Life and the rationale was to immediately stop the systemic risk, what were the features of the then plan put up by the last administration, backed by the Government of the Republic of Trinidad and Tobago? It was a commitment to fulfilling all obligations; a commitment to fulfilling all liabilities. One of the major features which started to be successful was to encourage the rollover, that is, if people had confidence they would not seek to withdraw their funds, and while some people sought to withdraw on maturity, many people were starting to leave their funds, roll over the funds, so that the confidence was there. We sought to establish a certain degree of confidence, and we were going to pay out the obligations on maturity. 471 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

We, in Trinidad and Tobago, do not have a Chap. 11 piece of legislation on our books, but we adopted some of the Chap. 11 characteristics, that is, trying to run it as a going concern so that people could be paid, liabilities could be met. That was—sorry. Madam Vice-President: I was going to let you finish your sentence. Sen. T. Deyalisngh: That is all right. Madam Vice-President: Hon. Senators, it is 4.30 p.m., we will take the tea break and resume at 5.00 p.m. This sitting is now suspended until 5.00 p.m. 4.30 p.m.: Sitting suspended. 5.00 p.m.: Sitting resumed. Madam Vice-President: Sen. Deyalsingh, you were on your legs and you have spoken for 11 minutes, so you have 34 minutes remaining. Please continue. Sen. T. Deyalsingh: Thank you, Madam Vice-President. Before the break I was talking about the virtues of the way the last administration was handling the Clico affair, trying to run the company under the principles of Chap. 11 Bankruptcy Laws of the United States as a going concern. However—and we know—that idea was rejected on May 24, 2010, and now we have to see what ideas we have. Madam Vice-President, there is a maxim in financial circles that markets can cope with bad news, markets like good news, but markets hate uncertainty. Since May 24, 2010, there has been a series of pronouncements by either the hon. Prime Minister, the hon. Minister of Finance or the hon. Minister of Food Production, Land and Marine Affairs, because since May 2010 to the present we have had various plans—I do not want to refer to it as the “Dookeran plan” because I think that is being disrespectful to the hon. Minister, but in the name of the hon. Minister there has been one plan, another plan, and what caused much uncertainty was when the hon. Prime Minister announced a subcommittee or a committee under another Minister, the Minister of Food Production, Land and Marine Affairs, to look at the issue. Now, the hon. Vasant Bharath may be quite a capable financial expert, but what people saw at the time was a Minister of Food Production, Land and Marine Affairs looking at a serious financial issue, and that bred a certain degree of uncertainty again in the market. So we are here today—not because of the 472 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. DEYALSINGH] misdeeds of the past administration, I put it to you, Madam Vice-President— because we have had a series of plans: plan one; plan two; the plan under the subcommittee of Sen. Vasant Bharath which went to Cabinet, which we never heard about again. So that is one of the issues. Madam Vice-President, Motion one talks about reclassifying EFPAs under a short-term investment product. I put it to you and this honourable Senate that that move is possibly illegal, and I intend to show the grounds for possible illegality. Reclassifying these products such as EFPAs: the Group Annuity and Advanced Annuity Performance Policy were never meant to be investment policies. I have in my possession which I got from Clico/Colonial Life policyholders, the United Kingdom Executive Flexible Premium Annuity and if I could just read a couple of lines to illustrate the fact that these were not meant to be treated as short-term products: They will pay if the annuitant is living on the retirement date which is shown in the schedule of benefits, the first of a series of annuity payments as determined under the provisions given so and so. This clearly demonstrates that these EFPAs were always meant to be a long-term product. They were never meant to be classified as a short-term product or reclassified now as a short-term product. So the argument that one Government speaker put out earlier is that if you want high returns, you have to accept high risk. It does not hold water. These were never meant to be investment products in the sense that we use it to look for a quick return. These were meant to be long-term products. The suggested illegality of this is now before the courts as we know. That is the part of the second Motion which we have the most difficulty with and I intend to show where it will land this Government and this country in serious, expensive, drawn-out litigation, because, again, there were mixed signals about this litigation. The hon. Prime Minister, herself, at one time described the legislation as draconian, but now we have it again. It is this uncertainty and these series of different versions of events I put forward to you as one of the principal reasons for the state that we are in now. I say that because this Government, from May 25, 2010, would have had the benefit—as Sen. Mariano Browne said earlier—of looking at the mistakes that we may have made from 2009. When we were plunged into the crisis, we had to take drastic, serious immediate action. This Government would have had the benefit of hindsight to come up with a viable plan from day one. We did not have the luxury. 473 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

As I move on, sources of potential illegality, the EFPAs—and under the EFPA we have the EFPA 2, EFPA 4, EPSA, the GAAPP, the Colonial Life Core Fund Series 6, the Group Advance Protection, and these were never meant to be short-term products as stipulated under the Insurance Act, but the Minister of Finance now wants to separate the EFPA policyholders as beneficiaries of the trust set up by the statutory fund under sections 37 and 39 of the Insurance Act. Madam Vice-President, this brings me to the status of the statutory fund. Again, my earlier maxim that investors like good news, investors can cope with bad news, but investors hate uncertainty, the status of the statutory fund has been the subject of much uncertainty and I would read from an article of Saturday, May 28, 2011: “Clico policyholders now protected under Insurance Companies Statutory Fund” It says: “Finance Minister Winston Dookeran told legislators on Friday all Clico policyholders are now protected by a guarantee under the Insurance companies Statutory Fund. „The 225,000 policyholders under Clico now have the assurance that their policies are protected in the Statutory Fund‟...” That was a statement made on May 28, 2011. If that was in fact so— [Interruption] Hon. Dookeran: That was a quote? Sen. T. Deyalsingh: Yes! Hon. Dookeran: That was not a statement. That was taken from the newspaper. Sen. T. Deyalsingh: But since then, there has been a toing and froing about the status of the statutory fund. What is the status with the statutory fund if it is there? Can the policyholders be paid out of it or not? I refer to an article in the Business Guardian by Asha Javeed, again, which raises the whole issue of the statutory fund and it begs the question: what is the status of the statutory fund? This is tied up with the whole issue of what is a long- term business investment. To illustrate that, I go to the actual Insurance Act. Under sections 37 and 39 of the Insurance Act, Chap. 84:01, a trust has been 474 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. DEYALSINGH] created of the assets of Clico for the purposes of the statutory fund established in order to protect the interest of, and to cover the liabilities to, policyholders of Clico‟s long-term insurance business. So what is a long-term insurance business? Definition of a long-term insurance business: “1. „Ordinary long-term insurance business‟ means business of any of the following classes: (a) the effecting and carrying out of contracts of insurance on human life or contracts to pay annuities on human life;” This is exactly what I just read about the definition of an EFPA, and an EFPA was not meant to be, is not, a short-term investment product. Therefore, the treatment has to be different. 5.10 p.m. Madam Vice-President, much weather has been made about the past PNM policies of profligate spending and so on, but moneys classified, for example, to the Point Fortin Highway—$7.2 billion—that highway was conceptualized under the past administration at a time when energy prices were buoyant. But in 2011, when the energy prices are not as buoyant, as I said in my debate last week, the rationale for restarting this project was simply to change the newspaper headline in November from the Resmi Ramnarine affair. So, the Government of the day hurriedly left the Hyatt where the Commonwealth Parliamentary Association meeting was being held, held a photo op with a big cheque, and if anybody could tell me now that the Government knew then where the $7.2 billion was coming from, I will be happy. So it is not a matter of money. If you could find $7.2 billion just to change the headlines in the newspaper from Resmi Ramnarine to something else, then I think we could treat with Clico differently. Because, Madam Vice-President, last week again, I made a contribution after Sen. Ramnarine when he was speaking about the illegal bunkering of diesel, and I said at the time, go down to Carli Bay, long-held constituencies of the UNC, and you will find out about UNC people in the illegal bunkering of diesel. Lo and behold, two days later, Carli Bay is now under curfew, so I knew what I was speaking about, because the link that I am going to make now has to do with the potential for corruption in the disposal of Clico‟s assets. There is one chairman of a state company who has his eyes on Chaguaramas property owned by Clico, formerly Caridoc facilities. And I hope that this chairman of this state company does not get a boarding pass and take flight—pun intended—with the assets of Caridoc, because that chairman is apparently 475 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 untouchable. He has already brought down one line Minister and another line Minister is having serious troubles bringing that particular State board chairman to heel. But that state board chairman has his eyes on part of Clico assets. He does not want the plant; he does not want the Caridoc plant, what he wants is the land in Chaguaramas because certain arrangements were made. So the financiers and supporters are now waiting for payback and I am quite sure payback they will get. Madam Vice-President, I now move to the second Motion. The second Motion was once described by the hon. Prime Minister as draconian and it is draconian, because what this particular piece of legislation seeks to do is to deny citizens access to justice. Madam Vice-President, how sadly ironic it is; sadly ironic that today, in this Parliament, we are possibly going to pass a piece of legislation to debar citizens of their constitutional right to access the courts when today, the law term opened. Sad irony that across there the law term is being opened and across here we are going to possibly pass a law to tell people you cannot access the courts. Madam Vice-President, I put it to you—and I said that last week in my contribution when I lauded the hon. Minister of Finance and I meant it—that having been in public life for so long, having lived through July 27, 1990—I do not know if you heard my contribution, I meant every word. Madam Vice-President, we have a portrait on that western wall of one Mr. Leo Des Vignes who lost his life here protecting democracy; protecting the place where you make laws, and here we are today to tell citizens—we are selecting a class of citizens and telling those citizens that “The Parliament is going to pass a law to prevent you from accessing the courts.” Sad irony! What is so sad is that there are very good people on the opposite side: Hon. Winston Dookeran, Sen. The Hon. Vasant Bharath—who I have come to know—Sen. The Hon. Verna St. Rose-Greaves who once took a principled stand on an issue and she is to be congratulated. I hold Sen. The Hon. Dr. Bhoendradatt Tewarie in high esteem and regard; Sen. The Hon. Fazal Karim, Sen. The Hon. Kevin Ramanrine. I would like Sen. Ramnarine, when he writes his memoirs 30 years from now, that the first chapter in his book should not be that twice he supported his Government in taking away the rights of people—not once. I can forgive it once but twice you are going to take away the rights of people. There is precedence on the Government side where, in the past, members who have disagreed with them have voted with the PNM and I refer to the late, great Frank Lionel Seukeran who twice voted with the PNM—the Education Act and the Industrial Stabilization Act. He twice voted with the PNM. He saw the wisdom in what we were doing. 476 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. DEYALSINGH] I am asking this honourable House today, we are in the Parliament where we pass laws, please, let us step back, take a deep breath and not even put this to a vote; let us withdraw it. And like the political leader of the People‟s National Movement on Saturday, August 20, after the Arima massacre, he wrote to the hon. Prime Minister, he wrote to her extending an olive branch to meet with her to discuss the escalating crime situation. The response was a state of emergency the following day. We could debate—this is not the debate about the state of emergency and I know that—the results are mixed, but I am putting it to the Government side today, let us step back from this second door of litigation, take a deep breath. The olive branch that was offered by the political leader to the hon. Prime Minister on Saturday, August 20, we offer an olive branch again today—take the whole tree. But let us step back from this and see if taking away the rights of people to access the court is the correct way to go, because this has to do with serious arguments about the separation of powers, and the value of the courts, and I want—Sen. The Hon. Vasant Bharath is not here. I wish he was here. Sen. The Hon. Vasant Bharath was the lucky recipient of a decision and I refer to the case National Flour Mills v Huntsville Navigation Company Limited, claim 1999, Folio No. 61, where the Hon. Sen. Vasant Bharath had his good name cleared; his integrity restored; but he had access to the courts. Is it Sen. The Hon. Vasant Bharath‟s desire today to take away that right which he so enjoyed in 1999? It cannot be. It cannot be; it should not be. Secondly, Madam Vice-President, last week we heard one of the authors of the Government‟s manifesto say, “If you want to see our plan, look at the manifesto”—and again, I have the highest regard for the gentleman I just called— but I did not see in that manifesto if you have a crime problem, you go to a state of emergency and abrogate people‟s rights. I did not see in the manifesto that if you have a financial crisis, the solution is take away my rights. I did not see that. And the link I was making with separation of powers in any State, especially small States, the three arms are the Executive, Legislature—which we are—and the Judiciary. When we talk about the separation of powers, we more than not mean the separation between the Judiciary and the Executive. What the doctrine of separation of powers tries to teach us is that power should not be concentrated or overly concentrated at any one arm. That one arm should be a check and balance on the other. 477 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

From August 21, 2011 to now, the Executive has concentrated more and more powers in its hands, leaving the Judiciary out in the cold. The Judiciary cannot now rule on this matter; people who seek redress cannot go to the courts of law. That cannot be right, Madam Vice-President, cannot be right, because one of the doctrines of the rule of law is holding the Executive in check. And what we have now is an Executive, whenever faced with a difficult situation, the default position is, “Take away my rights.” Is this the society that we want to build? Is this what Mr. Leo De Vignes died for? I put it to you not, Madam Vice-President. It ought not to be, because it is—it ought not to be that every time there is a difficult situation, you take away our rights. It is, that is the reality, but it ought not to be. Madam Vice-President, what will past legislators, past political thinkers, think about us now? I mentioned the late, great Frank Lionel Seukeran. People like Dr. Rudranath Capildeo who fought his good battle, Mr. Stephen Maraj from Princes Town who I knew; I met him in the 1980s, what would Mr. Lloyd Best, leader of TAPIA, think about this? Do you think these people will look kindly on this Parliament—on us individually and collectively—for passing these types of laws; for singling out a group of people who have broken no law, they put their money in a vehicle backed by the Central Bank—they have broken no law—what would these great thinkers feel about us? How will history judge us here today when we take away people‟s rights to access the courts? Madam Vice-President, what is happening now also has serious implications for authoritarianism because what we are seeking to do is actually pass a law to prevent some people who are now before the courts and the courts may be seen to be leading in the one direction from taking their action forward. Retrospectivity is something that civil society around the world abhors and only passes laws retrospectively for serious reasons; serious reasons, Madam Vice-President. The famous case about retrospectivity where it is allowed is the case of R v R—a case which involved marital rape. Because prior to that decision, a woman was considered to have given consent to sex within marriage stretching back to 16th Century common law doctrine. So even if you were married, you could not tell your husband “no”, your consent to sex was implied. It took that case between a divorced couple to prove that that old common law thinking was no longer valid, and that a law could, in fact, be passed retrospectively; but that was only in special circumstances, where the courts at the time felt that the present law was so punitive, was so wrong, but we do not have such a situation to justify passing this type of legislation retrospectively. 478 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. DEYALSINGH] 5.25 p.m. Madam Vice-President, if this law is passed today, it is going to be challenged under section 13 of our Constitution, which deals with laws in violation of section 4 or 5 could be passed but if they pass the test of what we call reasonableness. Allow me to briefly illustrate what is meant by “reasonableness”, and I will be using both United Kingdom law and local law. The doctrine of reasonableness in modern times was set by a case between Associated Provincial Picture Houses Limited v Wednesbury Corporation. It gave a modern test of unreasonableness. I read: “A standard of unreasonableness used in assessing an application for judicial review of a public authority‟s decision. A reasoning or a decision is Wednesbury unreasonable (or irrational) if it is so unreasonable that no reasonable person acting reasonably could have made it.” Are we acting reasonably here today? The lawyers, I am told, are already lining up to challenge this Central Bank (Amdt.) Bill, on the grounds of reasonableness. In the local courts, we had the case of Surratt v the Attorney General, 2010, but I want to go to a more recent decision and that case is the case of Francis Paponette and Others (3) v The Attorney General of Trinidad and Tobago. This was the maxi-taxi case. Madam Vice-President: It is finished. Sen. T. Deyalsingh: It is finished, so I can comment on it. This was heard before Lord Phillips, Lady Hale, Lord Brown, Sir John Dyson, SCJ and Sir Malachy Higgins. If you allow me to read two passages which illustrate what I am talking about, unreasonableness, and whether the people who have signed up for their EFPA have an expectation of fulfillment. I read page 8 of the judgment, paragraph 28. “In a case where the legitimate expectation is based on a promise or representation, a useful summary of the relevant principles was given by Lord Hoffman in R…v Secretary of State for Foreign and Commonwealth Affairs. It is clear that in a case such as the present, a claim to a legitimate expectation can be based only upon a promise which is „clear, unambiguous and devoid of relevant qualification‟…” In my bush lawyer reasoning, and I am sure the lawyers who are lining up to take this case to the Privy Council will find comfort in these words. 479 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Madam Vice-President I quote from page 11 of the judgment, where the court considers: “…that (c) a lawful promise or practice has induced a legitimate expectation of a benefit which is substantive, not simply procedural,”—authority now establishes that thereto the court will in a proper case decide whether to— “frustrate the expectation…” is so unfair; that is the expectation is unfair—so, these people with EFPAs, I do not think their expectation is unfair—that to take a new and different course will amount to an abuse of power. That is what we are being asked to legitimize here today. These people have a legitimate expectation. Those are the three authorities which are used to illustrate the point that the Government may or may not, I do not know how people are going to vote, get the Central Bank (Amdt.) passed today. If they get it passed, I would advise the Government that the lawyers are waiting. We know in these battles, the only people who win and make the money are the lawyers. [Interruption Sen. Hinds: Certain lawyers. Sen. T. Deyalsingh: Certain lawyers. We have a very poor one here. The access to courts and court records is a fundamental principle in law. For that, I turn to the Bill of Human Rights and the Convention for the Protection of Human Rights and Fundamental Freedoms under the European Court of Human Rights. Article 6 deals with a right to a fair trial. If you read Article 6, it speaks originally about criminal proceedings, but the subsequent case law in that particular court has evolved to the point where it now considers both criminal proceedings and civil proceedings. The law has evolved. Everything in Article 6: the right to a fair trial, the right to access the courts and the right to seek redress apply to civil proceedings as much as to criminal proceedings. We are flying in the face of a lot of international conventions. The right to a fair trial is also held dear in the African Commission of Human Peoples Right and the Universal Declaration of Human Rights. I want this honourable Senate, under the ghost of Mr. Leo Des Vignes, to step back from door two that we are about to enter. Door one has been entered. We are in door one, where certain rights have been taken away. This is the only place where I can speak freely. Door two is to take away the rights of a selected group of people and to say an EFPA, which is a long-term instrument, is now a short-term instrument. It is like passing a law to say the Red House is green when everybody can see it is red. 480 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. DEYALSINGH] Does the law make the Red House green? No, but that is what we are being asked to do; to pass a law to say the Red House is green when everybody can see it is red. The EFPAs were never meant to be short-term products. What are the solutions to this problem? The Government has put forward the writings and learnings of certain people. I think Mr. Gabriel Moss is one. Am I correct? Yes. I have here The Law of Administrators and Receivers of Companies written by Sir Gavin Lightman. This is the same Sir Gavin Lightman who the hon. Attorney General was originally bringing down to investigate the Clico affair, but we had to show the hon. Attorney General that he was associated with the Clico business some time before, therefore there was a clear conflict of interest. This paper was written by Sir Gavin Lightman and Gabriel Moss, with Hamish Anderson, Ian Fletcher and Richard Snowden. The work of Gabriel Moss and Sir Gavin Lightman has been used to justify the Central Bank (Amdt.) Bill, to a certain extent. I am putting it forward to you, Madam Vice-President, if you read this, whilst the Government is extracting certain parts of it, nowhere in this does Sir Gabriel Moss and Sir Gavin Lightman talk about or contemplate (c) that the court should be ousted. Rather, they speak about doing certain things only after the court had adjudicated. The work of Mr. Gabriel Moss and Sir Gavin Lightman on administration is clear; “We preserve your rights but let the court adjudicate and then the politicians go forward.” The hon. Minister of Finance in his opening said words to the effect that we do not have laws to see about receiverships. Am I correct; words to that effect? I do not want to misquote you. Well, I would not quote you. I do not want to misquote you. Madam Vice-President: Hon. Senators, the speaking time of the hon. Senator has expired. Motion made: That the hon. Senator‟s speaking time be extended by 15 minutes. [Sen. F. Hinds] Question put and agreed to. Sen. T. Deyalsingh: Thank you, Sen. Hinds, for piloting that and thank you hon. Senators, for indulging me. If we look at the Financial Institutions Act—oh yes, hon. Minister, I think I made a note which I just found. Please tell me if I am correct. You said words to the effect there are no laws for winding up of a financial institution. 481 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Hon. Dookeran: Under the Bankruptcy Act. Sen. T. Deyalsingh: Under the Bankruptcy Act. We have the Bankruptcy and Insolvency Act, 2007, which former Sen. Mariano Browne said may not have been proclaimed as yet, so it may not apply. But, if you go to the Financial Institutions Act and if we want to look at where responsibility for this Clico debacle lies, I read page 18 of the Act, Part II. “GENERAL PROVISIONS CONCERNING REGULATION, SUPERVISION, GUIDELINES AND PENALTIES 5.(1) The Central Bank shall be responsible for the general administration of this Act, the supervision of licensees and the oversight of payment systems, and shall have the powers and duties conferred by it by this Act and the Central Bank Act. (2) The primary objective of the Central Bank, in respect of licensees shall be to maintain confidence in, and promote the soundness and stability of, the financial system in Trinidad and Tobago.” I am simply putting it to you that there was a failure on the part of those charged with oversight. That is another matter which is for this particular debate. However, if you read the Financial Institutions Act, under the different Schedules there are clear procedures for dealing with crises like this and I would suggest that we look at new legislation to prevent a reoccurrence of this, and my colleague, Sen. Shamfa Cudjoe, will deal with this later. Madam Vice-President, I will end briefly with a little personal experience with financial losses, because there is a feeling that we as politicians do not really lose. In my earlier life, when I had the yellow Cortina and afterwards, PX 712—it was 1977, I remember the year—I owned a small pharmaceutical distribution company as a sole trader. My experience with losses have to do with the Kirpalani‟s collapse, because I was a big supplier to Dis Drugs, which was part of the Kirpalani‟s group. The then authority tried to manage Kirpalani‟s under the Chapter 11 principles. The Kirpalani‟s empire muddled along for about one year, but at the end of the day it was liquidated. Needless to say I suffered great financial loss. Fast on the heels of the Kirpalani‟s collapse as a small businessman again trying to make an honest dollar, there was the collapse of Stephens and Johnson which owned Ross Drugs. Name rings a bell? Ross Drugs. Again, I took a bath, recovered and moved on. Then came the 1990 coup, where many people I supplied were looted and burnt out and I never received a cent. 482 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. DEYALSINGH] 5.40 p.m. So I am just declaring my interest in issues like this, because I feel I have personal experience of experiencing heavy financial losses. But in experiencing those losses I do not want my right to access the courts for justice to be taken away from me. I am asking the Government again to take a hard look at the Central Bank (Amdt.) Bill. I am asking the Government to please “re-look” at the issue of classifying these EFPAs as short-term investment products; the documents are there to show that they were never meant to be short-term products. I am asking the Government to please, please honour the sanctity of this place where we pass laws and not further take away our rights. Madam Vice-President, I thank you. [Desk thumping] Sen. Dr. Rolph Balgobin: Thank you, Madam Vice-President. I rise to join a spirited debate on two separate but very much related pieces of legislation, and I propose to express some views and some concerns, as well as what I think might answer those in the course of my hopefully brief treatment of the matters under consideration. The first thing I would like to begin by saying, Madam Vice-President, for the benefit of the wider public, is that what we have before us, and with the Central Bank (Amdt.) Act, 2011 in particular, really would be a set of suggestions for law, based on existing legislation in other jurisdictions that operate with similar legal systems, such as the UK, Australia, New Zealand and so on. But, of course, they use logics that we, being in Trinidad and Tobago, would see more frequently, because of proximity, again, in the US. And it really has to do with—it has the effect of preventing legal action; action for winding up or liquidation and so on in particular, to facilitate orderly reorganizing of operations of a distressed—an entity that is distressed, which falls under the supervisory ambit of the Central Bank of Trinidad and Tobago. You know, it would then naturally beg the question of whether the bankruptcy legislation should apply—the existing one—which is the Bankruptcy and Insolvency Act, which says here, 2007. And I was just asked by my colleague to say where, because I was just whispering earlier that I do not think that it applies. In any event it has not been proclaimed, and in any event, in Part I—in the definitions part, section 3, the definition of a corporation which should apply here, says: “Corporation”—if I may quote: 483 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

“„Corporation‟ means any incorporated company, wherever or however incorporated, that is authorized to carry on business in Trinidad and Tobago or that has an office or property in Trinidad and Tobago, but does not include financial institutions to which the Financial Institutions Act applies or insurance companies;” And therefore, it is quite clear that it does not apply. Therefore we need some kind of legislation that provides us with cover to do whatever we need to do to facilitate an orderly reorganization of operations. Madam Vice-President, I am minded to consider in a strategic sense, if I pull myself away from the toing and froing of the debate, that what we are really dealing with here are the consequences of greed, overarching ambition, overconfidence, hubris, call it what you will. We are also dealing with the consequences of weak, at best weak oversight or at worst regulatory failure. The upshot of all of this is that we are now faced with a situation where we are confronting a threat to the stability and the integrity of the financial sector itself. And so a lot of things have gone wrong in order for us to have arrived at this particular place in this particular time. Of course, Murphy‟s Law would suggest that things go wrong at the worst possible time. And so it was with Trinidad and Tobago, where the world entered a global financial crisis, which later on gave birth to an economic crisis, and we, I think, would have weathered that reasonably well, except that just when all of this stuff was going on, we had a significant drop in, or levelling off in prices of the commodities that we base our economy on for export, and Clico. So we now have a threat to the stability of the financial system itself. But we are also faced with a broader, more esoteric question about democracy, and that is: should we take away, or in any way delay or suspend the democratic rights that people have to seek redress through one of the three pillars of democracy, and that is the courts? And I propose to consider that and answer that in some way, shape or form. But I would ask the question another way as well, and that is: if the effect of legal action would be to precipitate a winding up of these companies, can the economy, and by extension the society of Trinidad and Tobago, withstand a liquidation of Clico, British American, Investment Bank, whatever? Can we withstand a liquidation of this magnitude? As best as I have been able to calculate it, Madam Vice-President, the answer appears to be no. In that regard, I would say that Governments, both previous and present, were very quick, I think, to recognize the significance of the systemic risk posed by even the prospect of a disorderly collapse of this group of companies. 484 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. DR. BALGOBIN] Financial institutions in this country alone—not counting all of the other indebtedness that we have—financial institutions alone, if I understood the Minister correctly, are owed almost $3 billion. With the exception of a very few strong banks and so on, there are some financial institutions, I think, that really cannot afford to be paid cents on the dollar. And that would apply in particular to the credit union movement, I think, where there are a few strong credit unions, but there are several that are not as strong, and who would not be able to withstand the kind of losses that a disorderly collapse would give rise to. I listened to the, as usual, compelling arguments put forward on both sides, and I was particularly moved by Sen. Deyalsingh‟s contribution, where he spoke of the fact that really the depositors in these companies broke no law, and I fully agree with that sentiment. I think that that is something that the entire society needs to pay attention to. These are innocent people who broke no law. I would, however, round that perspective out, Madam Vice-President, to say that although they broke no law, they were also in no way, shape or form, compelled to make the investments that they made. They were not compelled to put their money there. And that, therefore—and this whole matter which at times has resembled an imbroglio has begged, and continues to beg the question: should the State repay depositors? We have covered the people who have $75,000 or less. You are dealing with 16,000 remaining depositors who have in excess of $250,000, which is not an insubstantial amount of money. Of these 16,000, 2,000 are corporations, businesses; 14,000 are individuals. But when you look at the amount of money that is held, and it is, you know, it is 16,000 people with more than $75,000 who do not qualify for the early repayment treatment, you have about 3,000 people who have a lot of money—a lot of money—deposited in these companies, and you are talking about, therefore, a group of depositors who are, at the very least, reasonably well off, but the liability for that is somewhere in the region of $7 to $8 billion, as I understand it; or it is 8.6 billion. So we owe a few people a lot of money. But it really again, Madam Vice-President, begs the question: do we really owe these people anything? Do we owe them anything? We are using, or proposing to use, taxpayers‟ funds to repay what, in at least a few thousand instances, would amount to people who we would normally classify as high rollers. If they walked into, I suppose, a casino or something like that, they would be so labelled. They are that liquid. Well, not any more. But they certainly are not poor. 485 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

So—[Interruption] I do not know. I am not advocating that at all. I am not saying that it is our place to make them poor, but I am making my point that we are asking people who did not take those risks to pick up the tab for those that did. I do not think that there can be any debate about that. So we have to balance our understanding, because what has not been said in all of this, when we talk about putting $500 million into the financial system to prop up the recovery arrangements for this thing, what does $500 million get you a year? Well, this is going to come at the cost of education, health care, security, infrastructure. I mean, there is a price that the society has to pay. So this is not as simple as passing a law, denying somebody their rights to sue. The systemic risk that is being discussed extends way beyond the financial system. There is a significant opportunity cost to any plan that involves a payout, whether short-term or long-term, to people in these companies. And I think that the whole society has to recognize that. So, on this basis, I would say that there are lots of reasons to say, “No, you should take a long-term payout”; or, “No, we would not pay you back”; or, “No, we will give you cents on the dollar. You invested; you took a risk.” However, there are two mitigating aspects which I think ought to bear on our consideration. The first is, it is a matter—it is a fact that it can be traced in the public record that the Government of the Republic of Trinidad and Tobago gave assurances to depositors. And in the same way a sovereign debt is viewed to be as good as gold, in the same way a government‟s word has to stand. Whether the party that constitutes the government changes or not, a government‟s commitment is a very serious thing, and it ought to be taken seriously. [Desk thumping] The other aspect that mitigates one‟s interest in saying “No, nothing for you”, would be that the Central Bank of Trinidad and Tobago, which is supposed to operate in the financial system as independent from political influence of the State, well, from Government, the Central Bank also gave assurances that everything is okay, everything would be okay; the financial system will be fine. Now, if I ask myself this question: well were those public pronouncements justified? Well I do not know, but it is very easy in hindsight to say those promises should never have been made. It is very easy in hindsight to say that those who spoke might have spoken too soon or too openly. But hindsight gives you that gift of 20/20 vision, even to the blind. 486 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. DR. BALGOBIN] So it raises the question, at least for me: are we engaged here in a breach of promise? Are we engaged in a breach of promise? Probably. Maybe somewhere inside all of these public pronouncements, some people said some things that others relied on—not that they could have done anything else, because these institutions were already in deep, deep trouble and could not pay anybody anything. So then, in a very practical way one asks the question: well, would those affected be better off with a plan like this? And one can argue the point one way or the other, but in my judgment the answer is, probably they are better off. I think that we need to consider that the Government guaranteed debt it did not understand. It took on an obligation it did not understand, and it could not understand it. I would have tremendous sympathy for any Minister of Finance in the current or the last administration who had to be faced with a meltdown like this, because it happened so fast, and it was so big, I think that if I were in the situation, I might have done far worse, frankly, because you are going to have to do a lot of talking to prop up the financial system, to prevent a run on other banks, to prevent blind, naked panic. But what ended up happening really is, well the Government thought that— we thought we were in for a penny, but we ended up being in for a pound, and then a pound turned into a kilogram, a kilogram turned into a hundredweight, a hundredweight turned into a tonne. So yes, we jumped from imperial to metric. We went up in scale. We went everywhere; we went everywhere—and I have the guardian of the imperial system here. [Interruption] I was not talking about the British pound. So, the Government‟s intentions, I think, were entirely honourable, and in this regard, therefore, I tend to ignore any kind of recrimination about who should have done what, because I think that all the way through, the Governments‟ intentions have been honourable, both the last and the present one. I think that everyone just genuinely had an interest in settling this thing down, getting our heads around it. But in doing that, we obviously would have had to take on some liabilities we did not understand. And I endorse the view of Sen. Ramkhelawan that we gave a guarantee on a black hole, which is what it turned out to be, and what presented itself as a liquidity problem actually masked a very, very significant solvency problem. So what is a government to do other than intervene? There was no other choice. And I think as a society we have to recognize that. What makes Clico different to many of the other institutions that would have failed over the years is its size, the sheer scale of the thing. It is so big that it would have touched, in 487 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 some way, shape or form, directly, almost 20 per cent, somewhere between 15 and 20 per cent of the population, and by extension maybe 30 or 40 per cent of the population, assuming an even distribution among households, and 25 per cent of GDP. This was a big, big problem. This was a big, big problem happening at the worst possible time. So, I think that, particularly in the public domain, some of the players, we need to calm the rhetoric down. I think we need to calm the rhetoric down and understand that the intentions are honourable. Because I will tell you something, Madam Vice-President, that perhaps has not been said enough in Trinidad and Tobago, because here we have a culture of entitlement since independence, so when something goes wrong with you, the Government must fix the problem. I listen to people all the time. Any problem: “Well, the Government must fix it”, and that attitude can be traced, I am sure, by any competent historian, right back to independence, and the mindset that prevailed in Trinidad and Tobago at the time, that we were being bled by somebody else, and that really, we were owed more. What, perhaps, is required here, as we advance into the 21st Century, is for someone to face the nation and say, “You know, we need to apply the Kennedy logic here. At some point it needs to be: stop asking what your country can do for you, and ask what you can do for your country.” [Desk thumping] That has not happened here as yet, but I think we are approaching a tipping point where it must happen, where we must confront this culture of entitlement that makes people feel that Clico or British American or whatever are failing or have failed and Government must pick up the tab. Government has no money. Government is entrusted with money belonging to the citizens of the Republic. That is the money Government spends. So when someone loses money and they turn up to the Government and say, “You must pay me”, understand, you were asking your neighbour to pay for you. You are asking your spouse, your sons, your daughters, whoever else is working and paying tax, you are asking them to pay for you. I think we need to calm some of the rhetoric down, and we need to move away from the place where people hang on by the most tenuous threads to say, well the Minister of Finance said this in the last administration, and, therefore, we are owed that, and we are going to rely on these things. Really and truly, I mean from a purely pragmatic point of view, you made a bet, you lost. You are asking the public to pick up the tab, and the least you could do is work positively and productively with all of the stakeholders who are trying to solve your problem, so that we can find an optimal solution. 488 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. DR. BALGOBIN] So, in my view, we ought to stop beating up on the Ministry of Finance and the Minister, present and past. I think that what this looks like here to me is, it has been a good job. I think that I want to commend PS Allison Lewis and her team for a work that has been done [Desk thumping] because, up until now, we did not really have our heads around much to do with this, and I think for the first time we are getting a very clear articulation of what has happened and the scale of what is required to fix it. So we have come into a situation nobody understood, and now we are trying to develop legislation based on an improved understanding of what has happened. Of course, Madam Vice-President, that does not change the fact that we are setting aside the democratic rights of some citizens. But on the other hand, what are we doing it for? We are doing it to protect the financial system. So while this thing should give us pause, I think we ought to look at: well, what is this thing really about? What is it trying to do? What mischief does it precipitate if we proceed with it? And if it is really designed to protect or give protection to the financial system and its stability, which, in a small, open economy can be so fragile, then it is okay, or at least more acceptable, than if it were being done by “vaps” for no particular point. What is the experience elsewhere? When we look at legislation in other jurisdictions, particularly in the Commonwealth, what do we find? We find very similar arrangements with a few minor changes, which I propose to ask for. But, Madam Vice-President, what no one has told the country, or perhaps what we need to tell the country more loudly, is that in other jurisdictions people lose all their money. Have we said that to the country? Has anyone said that? That, “Listen nah, if you are getting 62 or 68 cents or 80 cents or 92 cents, understand, that is 92 cents more than you would have got somewhere else.” I know people who are affected personally by Bernie, Madoff and so on, and they got nothing. They lost all their wealth. “Madoff in jail, after he made off with all their money.” He is in jail. What you are going to do? The most you are going to do is look at what happened with Alan Stanford in jail and say that was poetic justice. Nobody wishes that kind of violence on anybody, but “people beat up the man in jail” and I did not hear anybody feeling sad. So these arrangements exist in other jurisdictions with one significant difference. There is consequence for depositors: that is, you lose big; and there is consequence for perpetrators. And by perpetrators we mean the people who watched this thing knowingly and drilled it so far into the ground that if you stood on the surface of the earth with the most powerful light and telescope, you still cannot see it, the way how far down it is. You are probably looking for it on the other side of the world. 489 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

So that is the big difference between what the Ministry of Finance has tried to do and is trying to do, and what is happening in other parts of the world. And certainly, we will advocate in a moment how to treat with that. But in looking at the two pieces of legislation, one of the things that I would like to suggest by way of a change is that many other jurisdictions require some kind of reporting to a court; that is court oversight or court supervision. But I think in here we are voting to impact the rights of citizens, even if only for a time; even if only temporarily. And, therefore, I cannot stress enough the importance of having reports come here to the Parliament. [Desk thumping] The three legs of our democracy are not of equal length. That needs to start to change. If the Parliament is voting for this, let the reports come through the Parliament, and let the Parliament see it and confront it and live with the consequences of our decisions. Let us do that. Let us not have it in a court somewhere. Let it come to the Parliament, and through the Parliament go to the people so that everybody is clear what is happening, where we are at in this process and so on. 6.10 p.m. Then, Madam Vice-President, as is suggested in the Bill, let us say that we shall lift the stay when objectively set targets are met. What are these targets? I would refer us to section 44(G)(1) of the Central Bank Act or, as amended in the House of Representatives what I gathered is 44(E)(5)(b) or thereabouts, which prescribes the process by which the Central Bank shall lift this control that it will be exercising over the afflicted financial institutions. But when do we invoke this? Is it that someone again, by “vaps,” or in a private office somewhere, gets to decide when we should invoke these sections? I think not, and I would, therefore, like to suggest and endorse the view that at least three tests are met. The first should be that all policyholders and depositors should receive the equivalent of 92 cents on their dollar, which is what we are promising them through this whole arrangement. So we supervise these entities, we manage these entities, we drive these entities forward, and we satisfy ourselves that they have received the equivalent of 92 cents on the dollar. The second thing—[Interruption] [Inaudible] well, yes—you are at a strike gate obviously, right, yes. So the second thing would be that to the extent that we are contemplating a new code, what we are calling NEL 2. So another test ought to be that a new code for life insurance, for example, if we have a new life insurance company, a new NEL 2, whatever, that these things be set up and establish their sustainability. And sustainability would really, I suppose in financial or academic terms, be measured by at least three years of good financial performance. 490 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. DR. BALGOBIN] The third thing I think that ought to trigger section 44(E) or (G) with regard to lifting the stay, would be to satisfy the regulatory mechanisms we have in place, and the Central Bank in particular, that their exposure to these CLF subsidiaries are no longer so significant that they pose a systemic risk, or a risk to any of these particular institutions; otherwise we run the risk of, you know, avoiding one punch and walking right into another. Now, this then brings to mind the question, because we are talking a lot about rights and the argument, of course, put forward by the legal minds here, is that we are not taking away your rights, we are merely putting a pause on them, a stay. You know like you talk to a recalcitrant canine and you say, “stay! So what we are doing here is—there is asset of procedures which we want to invoke and we are saying here through the Parliament and through these laws, stay! These are not “Do that.” This not about that; and I am clear that I am talking about a set of procedures and not about policyholders, because “I do not want policyholders then to be more vex with me than they might already be, since I told them that I doh think they have rights to anything, there.” Yes, I do not have doggish intent towards them, I see them as an aggrieved class of persons who have really been hurt through no fault of their own. So really what we are trying to do here is craft the best way possible forward for them, whatever that is. So how do we then protect these rights? Well one of the things that we must do is to ensure that when we have an emergency intervention by the Central Bank, and we have these financial institutions under the governance or control of the Central Bank, when we have a stay on legal proceedings, that time for which the stay is operating does not count in terms of any kind of statute of limitation. In other words you cannot have something which is statute barred by virtue of the time that has elapsed during the stay. That is very important in order to protect the rights of depositors who may feel: “Look, I am not happy with this proposal; I am not accepting this proposal; I am going to wait until the stay is over and sue.” That depositor cannot be told, “Well, you ran out of time.” So the clock stops, as long as the stay is running—I am sure the Minister of Finance will clarify that, but that ought to be the operating principle if we are going to drive forward with a sense of any kind of justice, natural or otherwise. So that right to sue, to take legal action, it is suspended, but time must also be suspended, so that the right to action does not become statute barred. 491 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Well, Madam Vice-President, what is the consequence for those who have led us into this kind of scenario? What is the sanction? Innocent persons have been harmed; this economy; this society; our taxpayers; our workforce; have been burdened for years to come. It will take us years to work through these obligations. So those who have got us here, if it had happened anywhere else they would be decorating the inside of a very small, enclosed space. You know, well, yes—[Interruption] wearing something which looks like coveralls, where there is very little room for personal style to creep in. And that is not just throughout this case, I mean, look at what happened with the Hindu Credit Union. There are a lot of persons who have been injured there as well. What have we done? You know, Madam Vice-President, what I will say is that it is very easy—I remember once going to Harvard Business School and meeting a very eminent professor there—I would not call his name, because I know “everybody vex with him”—an eminent man, everyone knows him, everyone here has probably heard his name. And he said, “Where are you from?” I said, “Trinidad and Tobago”; and he looks me dead in the eye, with all of the innocence of a child and said, “What do the natives do there?” That is what the man asked me. In Boston, an advanced city, in an advanced country, by an advanced thinker, in an advanced institution, asking me what the natives do here. I was not wearing a grass skirt or I did not have a feather in my hair.” I had on a suit.” So I watched this man, I said, “Well, when I see ah native I will ask him.” But it makes us look as if we swing on trees when the rich could do this to the poor and get away. It makes us look like a developing country when there is no consequence for people who could perpetrate these kinds of acts and get away, and they are living good! So I do not think that the rich should be allowed to do this to the poor at all. PROCEDURAL MOTION The Minister of Public Utilities (Sen. The Hon. Emmanuel George): Madam Vice-President, in accordance with Standing Order 9(8), I beg to move that the Senate continue in session until the conclusion of the debate on the two Bills before the Senate. Question put and agreed to. PURCHASE OF CERTAIN RIGHTS AND VALIDATION BILL, 2011 Sen. Dr. R. Balgobin: Thank you, Madam Vice-President. So I was merely pointing out that everyone has a price to pay and I think if the society is being asked to pay a price, the workforce, the taxpayer, our children, our successors, the 492 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. DR. BALGOBIN] depositors; everyone is feeling the pain except the persons who got us there. So I think that something ought to be done, or contemplated in that regard. I think too that the banking sector, the financial sector, need to be examined in the context of its role in the society. I think—just as I have come to the view in this country that education is too important to be left to educators, I do not think that financial institutions are any different, and that we ought to involve them in a conversation about the role they have in society. Because some of these institutions make obscene profits, $800 million, almost $1 billion in profits, nobody has any problem with that, but I would like to know what is your role in society and I am not interested in hearing about wallpaper CSR activities— wallpaper activities where you sponsor $50,000 somewhere or $1 million there to sponsor something. What is your role? What is the good that you do? Because a poor man cannot get a loan by you, or has problems to get a loan by you, and any time he has a problem paying you, you want to take his house, or take his car, okay, fine. But let us hear from you then, and what it is you want to do. There ought to be consequences for these kinds of players, so that we understand better that if you want to engage in white-collar crime, or white-collar irresponsibility, there ought to be, or there will be a price to pay. I think any approval of this kind of legislation should include an articulation of what the matrix or the universe of consequences might be. Or is it that this can happen again with no consequences to anyone other than the innocent? I think, Madam Vice-President, I will be very explicit about why I am saying this. Failures of this size involve institutions which have tremendous financial reach, but financial reach also brings with it political reach. I think that the common man, the average citizen of this Republic, needs to recognize and appreciate that the Government, that the arms of the State which have to deal with these matters, are even-handed in the way that we treat with these things, and that these kinds of action or failures cannot go unpunished, as it were. I think also, Madam Vice-President, that the debate in a sense obscures the question of ownership of CL Financial. We have intervened, using a specific set of powers granted under the Central Bank legislation, to help keep alive companies which otherwise would have failed. In any other sector if I am putting in more money into your business, I am going to own a bigger and bigger part of it. So I expect that at some point you would be calling on the other owners, because I heard the Minister, I think in his opening remarks, say, we do not actually own these companies. And for the amount of money that we are putting in, we should 493 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 own it, we should own everything. I am not putting $20 billion in somebody else‟s business, I am putting it in mine, so these things now become ships of the State until you put on your NEL and so on and you expand the capital market which, of course, ought to be done, but if we are recapitalizating a business we should own it. We should own it! 6.25 p.m. We are not going to pump public funds; we cannot pump public funds into something to hand it back to the owners and say, “It is okay now.” Madam Vice-President: Hon. Senators, the speaking time of the hon. Senator has expired. Motion made: That the hon. Senator‟s speaking time be extended by 15 minutes. [Sen. S. Ramkhelawan] Question put and agreed to. Sen. Dr. R. Balgobin: Thank you, colleagues, for allowing me to continue. I would not be much longer. I find the lack of audited financials extremely disturbing. That came up in our conversation earlier in the week and I continue to have difficulty accepting that we are being asked to make $10 billion or $20 billion in commitments. We are putting in billions of dollars in cash and we do not have audited financials. The auditors have questions to answer and they must answer them because we are again being asked to make commitments that indebt us all and we need a clear fix on what is going on. That alone is cause for some kind of consequence for the people involved.

I support the development of a version of NEL 2, not only to expand the capital market. I think that we need more companies on the exchange as Sen. The Hon. K. Ramnarine, in a different forum, pointed out. We are an energy economy and there are very few or any companies on the stock exchange that can make a claim to having even a tangential relationship to the sector. That means we have a lot of work to do. We have some interest in these groups that perhaps we can spin out into NEL 2, so I support that. In any event, our stock exchange looks good on the surface, but too many of those companies are very closely held. Many of the companies that we look at on the stock exchange, their stocks are not traded freely. They are held by families or very small groups of investors. 494 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. DR. BALGOBIN] The quality of the boards that we put into these entities is very important. Board quality is critical. I implore all concerned to ensure that we do no politicize these boards; that we put the best minds we can find, whatever side of the divide they sit on, because this is a problem that affects us all. We need strong directors. I think that given the fact that we have now 16,000 depositors with $75,000 or more and a small portion, about 3,000 of those, have quite significant sums of money, I endorse, without reservation, the ideas put forward by my colleagues and, in particular, Sen. Ramkhelawan, that no repayment should occur without a proper due diligence by the Financial Intelligence Unit (FIU) or some other supervisory unit and that appropriate checks are undertaken to determine existing tax liability. A depositor cannot really expect to get their money back and they owe the State somewhere else. Left hand and right hand have to know what they are doing. If the State is dipping into its pocket, it must also dip into the pocket of the depositor to the extent to which they are owed money. I am quite certain that we will find that there are at least some people who are smart enough to make significant sums of money by extra legal or illegal means, but who are too stupid to have anticipated the failure of companies like these and would have put their money right there. This means that the FIU or someone else can pick up with them because the returns given here were insane, so a greedy person would probably say: “Hey, you know what? I can put it there.” So we may have a chance and then we can catch some really big fish and cook them. [Interruption] Fillet them and cook them. We can deal with the symptoms of these problems, but until we nail these guys; until we deal with these people who have these tremendous cash flows, we are not doing as much as we can. We have to do more and we have the perfect opportunity because they are caught. If they do not come for the money, it will raise suspicion. If they come for the money, we are still interested to know where they got it. It should be very easy to verify. Sen. Hinds: That includes Cabinet Ministers? Sen. Dr. R. Balgobin: It must include everybody. Of course. With regard, therefore, Madam Vice-President—I know that I have talked a little longer than I normally would, but I support the actions contemplated here on the basis that they are consistent with provisions elsewhere. What we have here, quite unfortunately, is a mischief involving timing. We did not have these arrangements in place prior to the Clico collapse. 495 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

If we put that aside, it is largely consistent with the exception, of course, that I would like more public disclosure. I think it improves returns to those affected; at least provides a greater potential to get those returns faster and on the basis that if we were to allow things to proceed unimpeded, the risk to the financial system that would arise from a disorganized failure of these organizations would be very significant. Therefore, to the extent that we lower the risk by providing a means of orderly organization, I think that proposals such as these have merit. Madam Vice-President and colleagues, thank you. Sen. Rabindra Moonan: Thank you very much, Madam Vice-President, for giving me this opportunity to contribute on these two Bills here before us in this Senate on this quiet Friday afternoon. First of all, I thank Sen. Beckles for being so magnanimous in agreeing to have both these Bills debated at one time. She has shown some leadership which was absent from another place. I know you did it in the absence of Sen. Hinds, that is why I congratulate you. Madam Vice-President, let me take the opportunity to congratulate the Minister of Finance in presenting these two Bills for consideration this afternoon, and on the unprecedented step he took earlier this week when he invited all Members of Parliament to meet a technical team to get behind what is happening right now. This has never happened in the country before and the Minister of Finance deserves our commendation. [Desk thumping]. Madam Vice-President, both these Bills really are interconnected and they deal to a large extent with the role of the Central Bank now because it is being called upon to oversee the disbursement of funds and to oversee the further control over financial institutions. If you permit me—and I got this from the Central Bank website—to read the history of the Central Bank. It is very short. Between 1945 and 1964:

“At the end of World War II, the financial sector was dominated and regulated by foreign institutions such as the British Currency Board (1951). It was felt that these institutions administered policies that were not consistent with the domestic economic environment. In 1964, the Central Bank of Trinidad & Tobago was established by an Act of Parliament. Its main functions were outlined as follows: 496 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. MOONAN] Issue and redeem currency. Act as the Government‟s banker. Promote financial stability. Manage the exchange rate. Maintain monetary stability” What we are facing today in this country really hinges on all these things. Between 1970 and 1989: “This period can be described as one of the Bank‟s most trying periods. With falling oil prices and a fragile financial structure, the economy was faced with the prospect of near collapse. The Bank at this time played a more interventionist role within the economy by providing short-term liquidity to the commercial banks. However, this failed to prove a viable solution. The Bank was then moved to close five National Financial Institutions as it was given „emergency powers‟ by way of the amendments made to the Central Bank Act and Financial Sector Acts. It was in this period that the Deposit Insurance Corporation and Home Mortgage Bank were established. The Bank played a critical role in the institutional building of the financial sector.” Madam Vice-President, I say this to put it in the context of where we are today. It seems to me that there is always a lag between what takes place in the financial economy and the role of the Central Bank or whatever institution that governs these institutions. That is why, in the 1980s, upon the collapse of the finance houses, five, these finance houses operated without any regulations. In fact, they operated under money lenders‟ licence, for which the annual fee was $24. The Central Bank had no control over them. They operated freely in the society. When the economy collapsed during that time, the finance houses felt the brunt and they were subjected to litigation by customers when they could not pay, and one thing led to another. It was then that the Central Bank moved in to introduce the Deposit Insurance Scheme, whereby depositors got back $50,000 on each of their deposits and the finance houses were then licensed under the Central Bank where they had to make all the reserve requirements, statutory payments and whatnot. We have had, again, to repeat the history of a lag between an action and an intervention by the bank. If we fast-forward to 2000 and the collapse of Clico, on that fateful afternoon, I think sometime on Boxing Day, the Minister of Finance 497 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 went across to the Central Bank to have us all glued to our television stations to bring the news that Clico had collapsed and the Government was going to intervene together with the Central Bank. I think it was late January 2009 that an amendment to the Central Bank Act was made to give the Central Bank powers to have control of insurance companies. Insurance companies were not under the control of the Central Bank at that time. When they did so, they had to have a three-fifths majority because that Act interfered with sections 4 and 5 of the Constitution. Most of the times you see amendments to the Central Bank Act, they interfere with sections 4 and 5 of the Constitution. Today, we come to make an amendment to the Central Bank Act and again we ask for a three-fifths majority because it interferes with sections 4 and 5. This is not something new and it is not something that people must get frightened about. It is part of the system. What this Government is doing right now is trying to close the gap between action and intervention. 6.40 p.m. Madam Vice-President, a financial system operates on confidence of the institutions which operate the controlling bodies. And it was only last night I was reading on the net, the BBC news: “Central banks act as economy hits „dangerous new phase‟.” If you permit me, Madam Vice-President: “Five central banks have announced their coordinated move to try to help the financial system, as the boss of the IMF warns of a „dangerous‟ new economic phase. The central banks are to provide commercial banks with three additional tranches of loans to help ease funding pressures. Banking stocks rose sharply with BNP Paribaus up as much as 22%.

IMF managing director Christine Lagarde said „bold action‟ was needed.” Madam Vice-President, this is what this Government is doing right now. We are taking bold action to save a financial system from collapse. Much has been said about the plans we have, but we must ask ourselves how did we reach here? What caused the fall in confidence in the banking sector? What caused Clico to collapse? I have here an article written by Camini Marajh in 498 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. MOONAN] the Express, June 21, 2009. The headline is Clico $20 million PNM gift. Because it is was said by my friend, Debbie Singh. I am sorry, Sen. Deyalsingh. He is nowhere here right now. [Crosstalk] Hon. Senator: Debbie Singh! Sen. R. Moonan: Is it? I am sorry, it is not Debbie Singh, it is Deyalsingh. It was said by him that Clico had little to do with the PNM. It states here: “Lawrence Duprey‟s CL Financial Group provided scarcely imaginable largesse to the ruling People‟s National Movement party in the last general election at a time when it was already on the ropes—short on cash and highly leveraged. The by-then cash-poor conglomerate bank rolled the 2007 election campaign of the Patrick Manning-led PNM to the tune of some $20 million according to sources...” Twenty million dollars in a cash-starved company. And there is a photocopy of a cheque. I think it was $5 million, made payable to Clico. Yes: “A cheque for $5 million, made out to the People‟s National Movement dated June 29, 2007, and signed by then CL Financial Chairman, Lawrence Duprey, as well as three other signatories, was endorsed less than a month before the…2007 election by”—the late—“Rose Janniere, assistant party secretary, and Linus Rogers, PNM elections officer.” So, Madam Vice-President, here it is without regulations—and Sen. Drayton made a point earlier about campaign finance reform—without regulations a company which is in dire financial straits makes a $20 million contribution to a political party. If we fast-forward, in 2009, when the company got into trouble, and Karen Nunez-Teshiera, then Minister of Finance, rushed in—we thought blindly but apparently it was not so—she rushed in to make an agreement on behalf of the Government. Now we did not know if any discussions took place before, but only after we found out that Karen Nunez-Teshiera was a major shareholder in Clico. If I am incorrect—[Interruption] Hon. Senator: [Inaudible] Sen. R. Moonan: Should I speak to you, or should I speak to you, Madam Vice-President? She had a major shareholding, I think, in the vicinity of $12 million as a shareholder, and then she was also a depositor. Sen. Deyalsingh spoke about them wanting to put something in place where they had roll-over; that means that people would not take their money, they would roll it over. But 499 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 their Minister of Finance, the first thing, she went there on Old Year‟s Day with a basket, was to full her money and roll out of CL Financial. Then they come here to tell us they wanted to save CL Financial. They wanted to save themselves. And I say this because we must put this into the real context of what causes a run, what causes a collapse. The Governor of the Central Bank was moved to say around that time—and here we speak of legislation: “In his January 30, 2009, containment effort to rescue the floundering financial giant, Governor Ewart Williams complained that the Central Bank had been „stymied‟ by inadequate legislation from going after the rogue insurance company.” This is Governor Ewart Williams speaking about a rogue insurance company. And we ask: why did the Government of the day not intervene to give the Central Bank powers to control this rogue insurance company? My friend, Sen. Bharath, spoke earlier about how big Clico had gotten, how uncontrolled they were, but we must ask: was it in the interest of certain Government officials to let it go as it did whilst Governor Williams from the Central Bank was begging for more legislation to come in? In the 1980s, I think it was, when Euric Bobb was the Governor of the Central Bank, he moved with great dispatch to cause the deposit insurance legislation, an amendment to the Central Bank Act, to come in to control whatever falloffs they may have had in the financial system at that time. So, Madam Vice-President, I put it in the context of the importance of legislation to control the financial sector. What we are asking for today is to contain a greater fallout. We are asking that the greater good of this country take precedence over individual rights. That is why we have proposed the amendment whereby the rights of citizens will be put on hold. Because what you want to do is to put these troubled companies into a quarantine until they could be healed and where there will be falloffs as you would expect. If Clico is wound-up by court action, what would be the consequences of that? Hundreds of thousands of people may have to wait for more than five to 10 years before they unravel what Clico is. Hundreds of thousands of pensioners will not get their money, and that will have catastrophic consequences on the economy. We are saying, Madam Vice-President, that it is necessary as patriotic citizens, to look at the greater good. 500 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. MOONAN] Rights are not free and untrammelled; every right that you have there is a restriction. You have a right to walk without clothes in your house but not with the blinds drawn. You must show some decency. But you could say; “I have a right”, but the law does not give you that right to walk on the road. So we have a right to go to the court, but the court in this particular instance is constrained to deal with only what is before them; and what is before them is an action that “a company cannot pay me and I have taken action, and I want my money.” So the court sees that. The court cannot go out to see about what the financial stability of the economy is; that is not the jurisdiction of the court. So what we are saying now: “Give us the right to give the Central Bank that overriding authority to see what the mandate was all about of financial stability in the country”. That is what we are asking. We are not asking for the moon and the stars, we are asking to protect the economy of this country. I do not think it is so complex, you know, what we are—it is not complex because we are guided, as it has been said many times before by what has happened in many other parts of the world, New Zealand, Australia the UK, Chap. 11. We are guided, so it is not rocket science and people must not get into histrionics; speaking about individual rights. When I listen to the PNM about individual rights, and you are taking away the right, what was the right of Occah Seapaul when they declared a state of emergency on Mary Street for one poor woman? Where was the right? They talk about individual rights. Was the nation under siege? One—this woman had to spend a weekend climbing coconut trees to drink—nobody could have gone into her house and they come now to talk about individual rights. They come now, Madam Vice-President, to tell you about rights, when the nation is under siege from criminals, but they do not support the state of emergency. They come and they tell you about rights, but when we bring the Capital Punishment Bill they do not vote for it, and then they tell you, “it have too much crime.” But you know what, this Government is a Government of action. This Government is not a Government of words that they sit down and talk whole day. The role of the PNM here is to twiddle their thumbs and wish away problems and in the morning when they get up it does not exist again. We as a Government must move to insulate this country from the ravages of the PNM, and by moving and bringing progressive legislation whereby people who thought a couple of years ago that they would have lost every single cent of their money, they have now seen hope. Because it is a Government who consults, it is a Government who goes behind the scenes to protect. And what we are doing here 501 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 is we protecting the national economy. The same people who they say they want to protect by giving them the rights to go to court, if they have their way, everybody would lose their money. I have heard them this afternoon and sometimes I thought they made an argument which was convincing as to why they should support the Bill, and then “badam”, they change. Somewhere along the line what they think and what they say, there is a gap. We again, to repeat, Madam Vice-President, we are here to save Trinidad and Tobago. Today is a day when we call on all patriotic citizens, including the PNM, to rise above individual, petty party rancour and to think about every single citizen, to think about the financial economy. 6.55 p.m. We would not want a situation to come back where, from the 1970s—you know, I listened to Sen. Deyalsingh. I like to listen to him. In 1970 he dealt with the yellow Cortina. He said he has a new car now, but he is still driving it as a Cortina, that is not the problem. In the 1970s, he said he suffered the misfortune of the Kirpalani crash and his drugs company went through. If that was not bad enough, he went to Ross Drugs, “They crashed, they gone through.” In 1990 they had the Black Power riots. He did not learn. After that he joined the PNM— Hon. Member: The coup! Sen. R. Moonan: The coup—after that he joined the PNM. “I mean, this fellow going through a graph for about 20 years.” You should have learnt by then Senator. You continually make mistakes, and even in your analysis this evening, you have completely misdiagnosed. Where they call for one type of tune, you sing something else. You cannot say that you want to protect small people when you put them at risk. It is gone so far, Madam Vice-President, where, in another place, they speak that they support the small people and they even colour the small people now. They tell you what the colour of the small people is. We in this People‟s Partnership Government do not have a colour for people. We are here to serve every single person in Trinidad and Tobago. [Desk thumping] So, I support the both pieces of legislation, and to tell you that some concerns were made about the Central Bank having to report to the courts, I think it is on a quarterly basis, to give a quarterly report to the courts. My understanding—not having been a first-year law graduate as Sen. Deyalsingh—is that every court document is a public document, and once the Central Bank files these documents 502 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. MOONAN] with the courts, they are available to every single person in the country, including parliamentarians who could know what is happening. So that in itself—the Minister may say otherwise later on—gives you transparency. So we have intervened progressively and in a very transparent manner. My friend, Sen. Hinds, I want to thank you for the undivided attention that you have given this afternoon. This is the first time I have not heard much from you, much to my delight. I am sure Sen. Beckles‟ leadership here will encourage her Senators to support these two pieces of legislation. I thank you, Madam Vice-President. [Desk thumping] Sen. Fitzgerald Hinds: Madam Vice-President, I listened—before I say that, let me ask again, that the words of my mouth and the meditation of my heart be acceptable in God‟s sight. [Desk thumping] I heard Sen. Moonan, and I have observed that he has frequented this Chamber in the past few months. In the beginning, he came intermittently, but now he has been spending more time here, but yet he continues to sing sweetly. You are on the team. You do not have to sing so sweetly again. Madam Vice-President, the Guardian of yesterday‟s date, Thursday, September 15, 2011 at page A19 carries a report headlined: “Two salesmen robbed in Erin”. The article says, if I may be permitted to quote: “South Western Division Police are searching for two suspects in the robbery of two travelling salesmen in Erin on Tuesday..” That is Tuesday past, in the middle of the state of emergency. “Police said Anthony Narry, 27, of Balmain, Couva, and his co-worker Rajesh Bunsee, of Claxton Bay, were conducting sales in the area.” It did not say what type of sales, so I assume it might be Colonial Life salesmen, hence its relevance. [Desk thumping] The article continues: “At around 11.25 am, following a visit to a client...” Again the word “client” is instructive: “...at 710 Erin Main Road, two men armed with guns approached them and announced a hold-up. One of them pointed a gun at the men and relieved them of a Blackberry phone, as well as Nokia and Samsung cellphones.” Smack bang in the middle of the state of emergency that Sen. Moonan spoke about a while ago, as if it were a panacea to the problems of crime in Trinidad and Tobago, a matter to which I shall return. Interestingly enough, that is in the constituency of the hon. Prime Minister of the Republic of Trinidad and Tobago. 503 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Madam Vice-President, one day in 2009, the nation woke up to hear that there was trouble with Clico, the CL Financial Group, more generally, and that they were in trouble, and that they had approached the Central Bank for some support. They reported they had cash flow problems. Of course, it is very possible that those in the know may have had a more detailed picture of the reality of the situation before that and, in fact, as we heard earlier, the Central Bank commissioned Bob Lindquist to do an investigation, and the report, as we heard recently, but we know it took place a long time ago, was sent to the DPP. The PNM was in office and the PNM, of course, as the Government, a responsible Government, had to treat with that situation, with that problem. The Governor of the Central Bank and others in the national community told us that the situation that confronted us—in fact, the assets, if you like, or the worth of Clico and the CL Group at that time, represented some 24 or 25 per cent of the GDP of this country, and that if action was not promptly taken, the entire economy was at systemic risk. So there was some urgency about the Government‟s response and the Government, therefore, intervened. Many individuals, as we know, and corporate entities had invested money and saved money in that group. I know of a particular woman who sustained very serious spinal and leg injuries. The result was that she suffered complete paraplegia. She won an award in the court as a result of that accident, and when she received that lump sum award, she placed it into Clico, and she was one of those who cried when the news broke, because she was depending, as so many others, on the interest on her investment to continue to live in her state of paraplegia. The suffering was great and, therefore, I agree that those who are responsible ought to be held responsible. That is the reason in the middle of the crisis that the Government of the day was trying to “avert”—a word that is very familiar to my friend Sen. Brig. Sandy, the Attorney General and the Prime Minister—a major crisis that was. The entire economy was at systemic risk. There was no state of emergency. The Government manfully dealt with it and responded. The upshot of that was a memorandum of understanding, and as the Government proceeded to deal with the matter, it began to become more evident that the situation was far graver than the first blush, so that the hole became bigger as the Government went along as more and more facts started to emerge. I heard the Minister of Finance repeat time and time again, over the last few days, and I heard some of his colleagues on that side repeat here today that the Government of the day erred, because it approached the issue as a problem of 504 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. HINDS] liquidity when, in fact, it was a problem of insolvency, but who could have known at that early stage? Even now, the Government is admittedly encountering fresh issues. The very Minister of Finance recently told us as they proceed, they are encountering fresh issues involved in this whole Clico affair, and they have to adjust strategies and responses as they go along, even now but, yet, untruthfully, he tries to lend the impression that someone in the previous Government got the approach and response entirely wrong. The upshot, Madam Vice-President— Madam Vice-President: Senator, please, do not attribute untruthfulness or dishonesty on the part of the hon. Minister. Could you please kindly withdraw that word “untruthfully”? Sen. F. Hinds: I was not aware that “untruthful” was unparliamentary. Had I been aware, I would not have uttered it, but I would withdraw that word. I would also take note of your swift response on this occasion. Madam Vice-President: Continue. Sen. F. Hinds: I am continuing, Madam Vice-President—your swift response, but I would withdraw the word. It did not require any other Senator to raise a Standing Order, you did it on your own volition. I would withdraw the word. When Sen. Mariano Browne spoke he expressed the view, rightly so, that in the agenda set out by the Minister in resolution to the problem on this occasion— bearing in mind that in the 2010 budget, the very Minister of Finance brought a package to this Parliament that was supposed to resolve the problem of Clico, and today he is here offering another one, and all we could do now, as we did then, is to hope that the thing works. On that occasion, it did not, but the package that he offers now has an element of discrimination, as Sen. Browne pointed out, because some persons are going to enjoy a return, if you like, of some 92 cents on the dollar, if that is so, and others not. I only touched on the question of discrimination, because something went through my mind, and I am going to tell you what it is in a short while. The upshot was that the Government agreed, and some $5 billion was injected into the scenario to attempt to bring some stability to it. 7.10 p.m. The Government in that memorandum of understanding gave a guarantee not only to the policyholders and investors, but to all else in the national community because the entire economy was at risk—systemic risk—that it would guarantee the investments, it would guarantee their policies and their savings and the like. 505 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

And as a result of that intervention, Madam Vice-President, there was settlement, there was calm, everyone understood that something had gone terribly wrong with the CL Group, but the intervention of the Government—I remember it well—it brought settlement and it brought comfort, and things settled down for a while as the Government continued to deal with things, of course in conjunction with the Central Bank. In other words, immediately, confidence was restored, and I want to put on Hansard, on record in this House, a publication by the Central Bank of Trinidad and Tobago on its website dealing with the very issue, and hear what the Central Bank said in that scenario: “As regulator of the financial Sector, we wish to assure the public that: The Government of Trinidad and Tobago has committed to meet obligations of Trinidad and Tobago third-party policyholders of Colonial Life Insurance Company (Trinidad) Ltd.…consistent with the Memorandum of Understanding between the Government…and CL Financial. Having assumed control of Clico under Section 44D of the Central Bank Act, the Central Bank is providing support to restore stability and the sound and efficient management of Clico.” It goes on to say: “These steps would convince policyholders that Clico has the full backing and commitment of the Government and Central Bank of Trinidad and Tobago. Policyholders should also feel confident that their funds are protected and this should encourage the maximum roll-over of policyholder funds. At worst, to facilitate an orderly recovery of Clico we would request that policyholders do not seek withdrawals before the maturity dates.” That was the state of affairs. Those were the words in a publication to the world by the Central Bank of Trinidad and Tobago, following the intervention of the Government; responsible responses to what was a looming crisis of significant proportions. But more information began to emerge and sometime later we had the incoming of the UNC Government and its friends: the TOP, the MSJ, which consisted of Sen. Abdulah, Minister Mc Leod, a secretary and perhaps a very efficient modern computer—no more than that—and NJAC, practically defunct politically, but for expressions, very important interventions in the field of culture they would not have been remembered. 506 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. HINDS] But the UNC Government was able to go out there in its usual manipulative way and win a few friends, eager friends, all who had grouses with the PNM, and they bound themselves together and we have “plenty pain”, “PP”—pressure, prejudice as I always remind us. They criticized the PNM‟s plan in the face of what you heard from the Central Bank, they criticized it, as indeed they criticized everything else that was branded PNM and not understanding that Trinidad and Tobago has to be about continuity and development, they decided to attack the PNM‟s plan and the guarantee that it had offered. But the record of Hansard would show when the then Government came to Parliament to amend the very Central Bank Act, in order to give effect to its proposals at that time, there was no discernible objection from the then Opposition UNC. There was none. They went along with it and they offered, as I said, no real objection until, of course, budget 2010 when we were accused of misdiagnosing the situation and Minister Dookeran announced a brand new package for the policyholders and investors that was stuck and stymied for the past year until he emerged again recently with what is before us now. In the intervening period, Sen. Bharath was a member of an interministerial team that the Prime Minister had put in place to oversee the thinking of the very Minister of Finance. Much to his chagrin, he groused and grumbled over it, not publicly but we are aware, and articles in the newspaper wondered what was happening, but at any rate, Minister Bharath was involved in that and he went around meeting with the policyholders and investors. And today, the Minister of Finance comes to us with a 20-year plan again, 20 one-year bonds—well no, that was what he had offered in budget 2010—zero interest rated and so on. And that was supposed to meet or account for about 62 cents to 67 cents in the dollar for those who were to benefit from it at that time. And there was protest, sustained protest from the policyholders and investors led by a fellow called Peter Permell, who headed what came to be known as the Clico Policyholders Group and there was a stalemate. As I said, there was court action, threats of litigation, all while the Minister of Finance dithered—is that unparliamentary—dithered, twiddled his thumbs, and the thing went on while the hon. Sen. Bharath and others were overseeing his work. And as I said, some people saw that as a statement of a lack of confidence by the Prime Minister in him. Sen. Bharath ought to know more and know better. I was not in the Chamber, but I am advised that in the course of his contribution today, he told this Parliament, as he had done before and since, he was one of the team that oversaw and supervised the Minister of Finance, appointed by the Prime Minister. He ought to have known better. 507 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

He told us today that out of the EMBD, the then Chairman or CEO, a gentleman by the name of Uthara Rao, had two policies with Colonial Life in his own name. That is not new, that is something they campaigned on in 2010, that is something they misled a number of people in this country over and gave the impression that Mr. Rao used his office—I do not know the gentleman, he is not my friend. I have never met him but I know the records and the facts will show that all the suggestions of those on the other side, including Sen. Bharath today, lend to the impression that two major investments in Clico were conducted and Mr. Rao, as CEO at EMBD, put them in his own name, and to imply that he benefited from them, and that was done under the PNM. Madam Vice-President, I do not know if the word vicious is unparliamentary, but they are vicious, you know. And thank God you are sitting where you are sitting today, so I would only see them on that side there—but vicious. That is the impression that they are giving. I happen to be the Chairman of the Public Accounts (Enterprises) Committee. My friend, Sen. Karim, is also a member, and we had the EMBD appear before us in that Public Accounts (Enterprises) Committee and it was a matter on which Sen. Karim and other members of the Government on that Committee waded in. They danced almost a jig around a bonfire. If you saw them—running in, in metaphor, and they asked questions of EMBD about the very matter and listen to what the reply published to all of us as members of that oversight Committee—the Public Accounts (Enterprises) Committee was. The question they asked—and I want the public to hear this because— let me divert for a minute, Madam Vice-President. Only last week in another debate the Attorney General who has the distinction in his first presentation in this Chamber when we came here 16 months ago—he accused Sen. Faris Al-Rawi and yours truly of being one of 10 lawyers who earned $84 million, and we found out later that while the Attorney General was telling us that, he knew full well that Sen. Al-Rawi and I were not part of that team—in his first presentation here. Madam Vice-President: Senator, please have your seat. That matter is complete. The question is a Standing Order for 35(1) relevance, but more than that, it is actually going against the rulings of the Chair on that prior occasion and I will ask you to desist from going back on a previous ruling. Continue your contribution as it relates to this particular Bill at hand. Thank you. Sen. F. Hinds: So let me get back to the matter with the Public Accounts Committee and EMBD to demonstrate, yet again, why I say with conviction that they are vicious— Hon. Member: PA(E)C. 508 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Sen. F. Hinds: PA(E)C—thank you. The question that members of the Committee, Sen. Karim and others on the Government side had asked, and in fact, a Joint Select Committee is supposed to be bipartisan so let me just say a Member of the Committee, Sen. Karim and others: “With respect to two insurance policies established to the value of $52m and USD $327,000.00 with the Annuitant being the former CEO, Mr. UtharaRao.” They wanted to know a. “The rationale as to why CLICO insurance policies were taken out in the first instance, in the name of the then CEO, Mr. Uthara Rao?” “Answer”—unchallenged, from the officials at EMBD: “(a) Answer: The two (2) investments made by EMBD in the Executive Flexible Premium Annuities” and the numbers are listed here, “at CLICO were taken out in the name of the Estate Management Business Development Company Limited as owner.” “Beneficiary-Relationship”—so under the heading beneficiary “Estate Management Business Development Company Limited” “Annuitant Mr. Uthara Rao”—but you hear who the “Beneficiary” was. “Payor Estate Management Business Development Company “Owner Estate Management Business Development Company…” Those are the facts. But before my intervention today, any unwary listener to that vicious UNC Government would have come to the conclusion that it were otherwise, and that is what they do. That is why I say without fear of contradiction and without apology, I do not and cannot and will not trust you. Madam Vice-President, Clico, CL financial—question. Sen. Karim: Will the Member give way please? Sen. F. Hinds: In a moment. “What was the total sum of interest accrued from the policy investments, how much of this was recorded and in what manner was it recorded in the Company‟s books?” 509 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

7.25 p.m. “(c) Answer: Policy No. R00186025 has an accrued interest of TTD 4,366,243.74m and Policy No. US0033219 has an accrued interest of USD $45,303.00 as at 30th September2008. The total sum of interest accrued on both policies was recorded in the Audited Financial Statements as Finance Income.” Question: “d. What evidence is there to show that no interest was paid to the former CEO from the insurance policies? (d) Answer: Correspondence issued by the Vice President of Insurance Operations at Clico, dated May 12th 2011...”—hear the date—”May 12th 2011 states „According to our records, no disbursements have been paid to EMBD or any of its representatives‟...” Question, as I close: “e. What evidence can be brought to show that the policies are now in the name of EMBDC Ltd.? (e) Answer: Correspondence dated January 26th 2009, signed by the Corporate Counsel/Asst Corporate Secretary states, „Colonial Life Insurance Company (Trinidad) Ltd. wishes to confirm that the captioned investments are held solely in the name of Estate Management & Business Development Co. Ltd as owner‟...” Madam Vice-President, a word to the wise is sufficient. Sen. Karim: Could Sen. Hinds say when these policies were taken out? Could you tell us in whose name they were taken out, the inception policies? Sen. F. Hinds: I dealt with that a while ago and I want to move on. Madam Vice-President, you see my leader, the hon. Dr. Keith Rowley, I have said it here before and I say it again without apology, there are several reasons why I have respect and admiration for him. One of the things he taught me, when 510 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. HINDS] I came to this Parliament as a young parliamentarian in 1995, the first thing he taught me, was that when you speak in the Parliament you must speak the truth. He demands that, the truth. That is why very recently a wise man told me, and it has been recorded indelibly on the tablets of my mind and heart, “If a man wants to change his community, his society, his country and the world, but does not want to change himself, he enters politics. But when a man wants to change his community, his society, his country and the world, but wants or recognizes that he must first change himself, he quietly pursues the truth.” A commitment from a Government is very serious business. Sen. Browne reinforced that today. This Government has a very unholy track record of breaching every commitment, every one; whether it was with the Chinese in the aluminium smelter project which was well on the way, and investor engaged, money spent, for political reasons, “swish”, gone, [Sen. Hinds gestures with his hand] gone. The OPV contract for three—one built, one ready for testing, in fact, around the time they cancelled it, it was seaworthy and they were doing tests. There was an issue with the firing of one of the guns on the ship, “swish”, gone, [Sen. Hinds gestures with his hand] gone. And we saw them on the bias last week, surreptitiously in an advertisement going to purchase OPVs again, but they do not want to call it that. The Minister told us he was seeing blue skies, only recently, that Minister of Finance. The only thing blue I see is the beautiful dress and head wrap of my sister, Minister Verna St. Rose-Greaves, [Desk thumping] a strong and principled woman, wanting to serve her country, but she will quickly discover, as she has already discovered, she is giving it another try, [Laughter] that “allyuh eh easy”. Deceptive, smiling, but dangerous. You embraced labour and then tell them, “Wap, 5 per cent, no more, and ah lock yuh up too; state of emergency”, [Laughter] according to Sen. Rabindra Moonan. [Desk thumping] I rather suspect the pounding of the desks affected the Chair. “Doh pound so hard; I saw the Chair jump.” The CEPEP contractors, you told them, “You do not have a thing to worry about. We are not like that. You do not have to worry, CEPEP contractors. We will deal with the thing equitably.” Not a single CEPEP contractor has remained since they came into office. As a matter of fact, as I said before—because we are talking about taxpayers; taking money to fill a hole in CL Financial, and we are amending the Central Bank Act in other words to facilitate that today. They took from the needy and the poor 511 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 and gave to the rich. Look at my friend, Sen. Rabindra Moonan. He sits here very often. Would you believe he has four or three CEPEP contracts? Would you believe it? Trust and confidence; this is where the trouble is. I read for you what the Central Bank said on its website to the world. I read to you the intervention. I demonstrated to you the intervention of the Government. [Interruption] Sen. Dookeran: You missed the entire debate this morning. Sen. F. Hinds: I know. I know that the Chief Justice spoke to the nation today, at the opening of the law term. Among other things, he criticized the Government for publishing those video recordings of incidents that took place on Nelson Street, in an untimely fashion. I just received a message that the Attorney General criticized the Chief Justice for his very responsible intervention; but that is the way this Government behaves. The Chief Justice felt it was quite improper to have published them; quite improper. Madam Vice-President, I agree with my colleagues who have already opined that the amendments that we engage today are going to have far-reaching implications into the future. I think Sen. Helen Drayton pointed it out as well. The amendment today will not only affect the immediate issue of CL Financial and Clico, but it is going to stare us in the face in the future, in the context of section 44D of the Central Bank Act, which allows the bank, when it is of the opinion that certain circumstances exist, and most of all that there is a systemic risk, to intervene and take control and it can therefore issue a notification in terms. I agree with that, and that is a concern. Anthony Wilson, writing in the Business Guardian of yesterday, Thursday, September 15, 2011, a commentary on page 3 under the heading: “Dear Prime Minister,” If you would permit me, Madam President, I must say it is a rather attractive photograph of the Prime Minister; very, very attractive. Anthony Wilson writes as follows:

“It is appropriate to address you personally on the Clico/CL Financial „fiasco‟ because the bills that were due to be tabled in Parliament yesterday represent a serious reversal of the policy outlined by you in the same Parliament less than a year ago. 512 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. HINDS] That speech, in my view, will go down in the history of the T&T parliament as one of your best presentations and one of your worst. It was one of your best because of the clarity and simplicity with which you expressed yourself. That was the speech in which you accused the PNM of wasting $7 billion in Clico „which passed through Clico in the proverbial „dose of salts‟ manner‟. That was the speech in which you made the point, Prime Minister, that the previous administration‟s repayment plan excluded the 1,100 investors in EFPAs who reside outside of Trinidad and Tobago and the 2,800 investors in the Clico and British American mutual funds... The issue that requires the most explanation—but is likely to receive the least—is the apparent reversal by the Government of the policy outlined by you on legislation that seeks to prevent an aggrieved Clico policyholder from taking legal action against the Central Bank to fully recover their investment.” So Anthony Wilson is challenging the Prime Minister, the Minister of Finance and the UNC Government, supported by the COP, to tell us a little more on the reversal on the policy that it espoused a while ago. Let me quote for you what the Prime Minister said, as referred to by Mr. Wilson, on Friday October 01, 2010 in a debate in the other place: “Hon. K. Persad-Bissessar: We have decided we will not proceed with that Bill...” She was speaking about a Bill that is almost identical, if not identical, to what we are debating today, that was to the Parliament from the Cabinet. It was not laid on the parliamentary Table, but it was brought. It could only have come from the Cabinet to the Parliament. The Opposition got word of it and launched an attack on it, something we could not support. Within 48 hours, the Government resiled from it, denied paternity, ran away from it. Hear the Prime Minister in relation to it: “We have decided we will not proceed with that Bill—I am hearing rumblings from the other side. I am hearing my friend saying we had no choice. There is always a choice of what we must do. At extensive discussions in the Cabinet yesterday, we made the choice that we will not proceed with that Bill because we were not of the view that we should use our special majority in the Parliament to deprive citizens of their right of access to the courts.” [Desk thumping] 513 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

7.40 p.m. She continued, Madam Vice-President: “Mr. Speaker, we have the majority in the House. So when further discussions were undertaken, when we looked at it very carefully...” And I could just, if I may pause, imagine the facial expressions and the emphasis. I could just imagine, and the accent; [Laughter] cool and deadly. I continue: “When we looked at it very carefully, we looked at the proposed Bill, we looked at further amendments to the Bill—Mr. Speaker, this is in the public domain. We have nothing to hide. The proposal had come that this may be one way to proceed. That was the proposal. So the Bill was drafted on the basis of that proposal, but it was laid in the Parliament on Tuesday, I believe—after the meeting on Monday—under the understanding that further amendments would be made and finalized at Thursday‟s Cabinet meeting.” But with that in mind, it reached the Parliament. Could we believe this? It reached the Parliament. Let me continue: “At the Cabinet yesterday, with more information that came to us, we decided we would explore other options. So we did not want to use our majority. For the first time we would have been using such a majority simply to deprive citizens of right of access to the courts. That is why we did not proceed—” And today, that is exactly what the Government has come to this Senate to ask us to do. I am not to pass judgment on the value or otherwise of it. I simply state this to show the contradiction that represents the UNC, only to show that you cannot be trusted, only to show that today you say one thing and tomorrow you say the other. When I hear you speak of transparency and openness, I smile and disregard it coming from you.

Clico is in a better position now than it was then—the CL Group—because I am advised that the methanol and bank shares, the value of these have improved since then—have gotten better in that sense. Things have improved. And we are no wiser as to what are the immediate circumstances that we are being called in this Parliament to resolve, much like in a previous debate—[Interruption] Madam Vice-President: Hon. Senators, the speaking time of the hon. Senator has expired. 514 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Motion made: That the hon. Senator‟s speaking time be extended by 15 minutes. [Sen. P. Beckles] Question put and agreed to. Sen. F. Hinds: Thank you very kindly, Madam Vice-President, and thank you, my friends and colleagues in the Senate, for extending my time—much like in a previous debate, when we were called upon to increase borrowing by $32 billion or so—the borrowing limits—and we were not told then what it was for. In the course of that debate, just to give you another example of the penchant of the Government to mislead rather than to guide—in veritas—for those who are familiar with some Latin, the Minister of Finance told us that he was so pleased with the Attorney General‟s intervention. The Attorney General gave us a bit of a mini thesis on the concept of off budget financing. When the Minister of Finance got up to wind up he was in high praise of his Attorney General. The Attorney General told us about off budget financing and he himself, the Minister of Finance, was at length about its virtues and so on, giving the unwary and unthinking in our society, of which there are too many, the impression that off budget financing is necessarily a bad, a dishonest or a corrupt thing. And I had to get up here and challenge the Minister of Finance to tell me clearly whether off budget financing necessarily means corruption and at that point, being too full of the milk of human kindness, to catch the nearest way, he was obliged to admit that it did not. But you know something, while they were both saying that, the largest project that that Government is running right now, the San Fernando to Point Fortin Highway, is an off budget financing project, right in your bosom. But those listening outside would not know that, those whose support you won, but we are here to remove the mask from your—is hideous unparliamentary? [Laughter] Madam Vice-President: [Inaudible] Sen. F. Hinds: —to remove the mask from your not so handsome faces and to expose you to the world so that they would see your fangs behind your smiles. This Government is dangerous, dangerous. Madam Vice-President, I heard Sen. Moonan—as I wind to a conclusion— very boldly and recklessly tell us today about “Colonial Life finance PNM campaign in 2007”. Okay. He said $20 million; I do not know where he got that. I know that gentleman does not have political experience, but he has tremendous political exposure, because he was DLP, PNM, UNC, COP and now “pure pressure”. He was everything, [Desk thumping] so I know he has some political exposure. 515 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

He has jumped everywhere like a political grasshopper. But he told us that some $20 million—I do not know how he knows that. The treasurer of my party told me that the largest contribution that they saw in that campaign was something in the region of $5 million. But I am told, and I stand to be corrected and you do not have to go as far back as 2007. In 2010, when Colonial Life was in the condition that we now know it is in, the very Colonial Life, your friend, financed your campaign as well. So even before the Senator told us that, I had a note here to—I was to ask the Government whether that part of the hole—because it is a big black hole somebody described it as. But there is a part of the hole, the big black hole, that in the 2010 campaign Colonial Life financed the UNC‟s campaign. And today taxpayers are being called upon—and that was when Clico was wobbling at its knees. That is 2010. Not Clico, sorry, let me personalize it, Lawrence Duprey. And I was afraid to call a name because some time ago I just called a name, Bin Hammam in here, and I was told by the Chair I should not do it. But I felt a little more encouraged to call that name because Sen. Moonan called plenty and he was not challenged so I call it with courage and without fear of being impeded. So you do not have to go so far back, 2010, when the company was in trouble and the main players were already aware of the circumstances that surrounded it, the circumstances that brought us here today. So, Madam Vice-President, as an attorney at law, I have to apply my mind to the laws and the Constitution of Trinidad and Tobago and I must say that while the Prime Minister assured us on October 1, 2010, in this august, honourable Chamber, where I had been told by my leader as far back as 1995, and I bear in mind constantly the Parliament is not a place to tell lies, you speak the truth, when the citizens hear you, it must have some value. They must be able to trust your word. Parliamentary privilege gives us some protection from suit and other trauma in here, but it carries the responsibility to speak truth. And while the Prime Minister told us on Friday October 1, 2010, that they would never use their majority to take away the people‟s right to go to court against Clico if they felt it necessary, and today we are here debating the very same thing brought by the very same Government, and you applaud yourselves and you will use your majority, you have used it in the other place—you will use it and seek your support around here. 516 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. HINDS] But as Sen. Deyalsingh pointed out, you passed your own test, you pat yourself on the back, that is fine and there is a constitutional court—and talking about court, the courts have already pronounced on some of these matters as you know full well. A group of policyholders have already gone to court and have already had judgment in their favour. Sen. Bharath would know. You oversaw his work, appointed by the Prime Minister to supervise him when he was dithering for a whole year. There is a constitutional test that might still have to be surpassed because, as you know, the Bill is inconsistent with sections 4 and 5 of our Constitution. And it states in the Constitution that it has to be passed with the requisite, in this case, three-fifths majority. Well I just want to remind us that that is not the be-all and the end-all of it. There is still another test in section 13 of the Constitution, one that by now we all ought to, at the very least, be familiar with and for those who are not, let me read, even if the Bill and this Bill said at clause 3 that this Act shall have effect even though it is inconsistent with sections 4 and 5 the Constitution. And it must say so, and it must get the necessary support in both Houses and even if we do all of that, section 13 of the Constitution has an outside protection and to give the courts jurisdiction in the matter even though Parliament decided something and the jurisdiction of the court is an important jurisdiction. Because the State has a tremendous amount of power, the State can trample on the rights of individuals and it is for that reason that the courts always had and reserved the inherent jurisdiction as a check and balance against the power of the State at common law and more recently in statute and in the Constitution where there are written constitutions. So section 13 says: “An Act to which this section applies may expressly declare that it shall have effect even though inconsistent with sections 4 and 5”—of the Constitution— “and if any such Act does so declare, it shall have effect accordingly unless the Act is shown not to be reasonably justifiable in a society that has a proper respect for the rights and freedoms of the individual.” And it is the courts that decide that, a judge, a single judge. 7.55 p.m. He or she would decide whether it passes this test. The question, therefore, is: is the decision of the Government, using its majority, as you promised you would never do, through the spokesperson of your Prime Minister—the question that must surge through your collective minds must be whether a court will consider 517 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 your decision to take away the rights of the persons to access the very courts. Courts very jealously guard their jurisdictions, you see. It used to be inherent, as I said, as one of the three arms of the State; one acting as a check and balance on the other, and they hate ouster clauses. All over the Commonwealth we have seen all kinds of constructions, all kinds of drafting, to oust the jurisdiction of the court and the court has struck down all, because you just cannot. If the Executive and the Parliament with a majority in the Parliament could pass any law and there is no jurisdiction of the court, then may heaven help us! I conclude, as I say, “may heaven help us”. Sen. Moonan raised the prospects of a state of emergency. We are still under a state of emergency, and I am reminded of a young man who told me, quite wisely, he said, “Mr. Hinds, a state of emergency has to exist, whether it is because of natural disaster or insurrection. Whatever the reason, the impetus, a state of emergency must exist. All that the Government does, through the President in this constitutional democracy, is to declare it. So one assumes that conditions must exist, and then the Government declares that a state of emergency exists. On this occasion, it is obvious by the absences of very important persons, by the fact that police officers on vacation were not called out to duty for the past three weeks, by the fact that soldiers have never been confined to barracks; they work and they go home after their tour of duty, by the fact of their absence—and I say so with courtesy and deference to His Excellency the President—that the Prime Minister is planning to leave here next week to go abroad during the state of emergency; by the fact that my office is next to police headquarters and I see them every day; the body language, the posture is virtually the same— A state of emergency, as I wind to a conclusion— Madam Vice-President: Yes, thank you; your last words. Sen. F. Hinds:—that clearly it does not exist. Madam Vice-President, you smile as you told me those were my last words. It seems to me that that fact brought you great pleasure. With those few words, Madam Vice-President, I thank you for your courtesy. [Desk thumping] Sen. Basharat Ali: Thank you, Madam Vice-President. I intend to make a very brief contribution. In fact, I did not intend to speak at all tonight, but I wanted to exercise my vote. Having heard the hon. Speaker in the other place speaking about May‟s procedures, that if there is a matter in which you have an 518 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. ALI] interest, then you will have to declare it, for any stage of the debate on that matter, and I presume, apart from speaking and being in committee, voting is also one of the stages. So I believe I have to clarify certain things I said a year-and-a-half ago, on February 05, 2009, when the Clico debacle first came to this Senate with the MOU. I did give a fairly detailed account of a declaration of the interest of myself and my wife in matters relating to Clico and CL Financial. For myself, I did not give any figures at that time. In fact, the only interest I could declare was a pension which I receive from the National Gas Company (NGC) pension scheme which is administered by Clico as the fund manager. The debate at the last time—reading here—I would say if anybody asked me what that pension was I might be ashamed to say it, but I have to say it today, because it is a figure. The pension I have been receiving since 1991 is $1,480 a month. It is lower than my NIS pension and it is lower than the senior citizens pension. So I say the number because that will be their appreciation. Then the other matter which, in an update of my personal position, is that I noted that I am the beneficiary of an EFPA, and that is one in the name of my wife. That EFPA was supposed to mature in October 2010, so that is one stuck in the system, and it is, I think, $145,000 to $150,000, which includes accrued interest for the years. But I have to take issue with my friend, Sen. Deyalsingh, when he says that— I do not know what document he was reading from—the EFPA is not intended to be a short-term instrument or a product. But I know, having read all of this, I went back in the files and did a bit of research and I noted that my wife had a previous policy, that is, from 2004—2007; three years, and that was one listed as the Clico Core Fund, Series 6. So that is a short-term policy; three years, 2004—2007. In 2007 when that matured, it was rolled over. That is a famous word from the Ministry of Finance. It was rolled over and from then on it received the name of the Executive Flexible Premium Annuity, and that, as I said, matured in October 2010. So I beg to differ with you, Senator. [Desk thumping] And these are based on documentation from Clico, because each year when I have to face the Integrity Commission I have to get a statement. So I have read all of those things. The percentage is not 10 and 20 or 15 per cent, and it is three years in the first instance and three years again, so that is two periods of—[Document passed to Sen. Ali] Whatever they have, I have a copy of the contract issued to my wife in there, and that is what it says. It is a policy; it is three years. 519 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

So the definition of it being in the Bill that we have before us here, what I call the Clico Bill, saying it is short-term deposit, seems to be correct. In fact, the addition in the Bill now of the Core 6 series, is also there. So both periods are treated as short-term, and my wife, in fact, had short-term interest in that; three years for the Core Fund Series 6, and three years for this EFPA. So that is where I stand on this subject. I do not know—I see you have a matter there, but those are all the documents, and all my information has always gone to the Integrity Commission with respect to whatever I have, my holdings or interest and my wife‟s, and I am pleased to say that I have certificates of compliance from the Integrity Commission up to and including the year 2010. So I am fully up to date and I am supposed to be fully compliant. I think, if you go to the Integrity Commission, you will probably see my registrable interest in Form B for all those years. So if I have made a mistake it is not mine, and all of this I have got from Clico personnel, people who sell these products. So it is not some wayside peddler; it is a Clico product that they have. I just do not understand how anybody can say then, that it is other than what it says here in the definition section of the Bill where, they give short-term, the “STIPS include Executive Flexible Premium Annuity”. That is what my wife is supposed to have had, and the Colonial Life Core Fund, Series 6, which I saw the original documentation signed by Mr. Duprey, et cetera, when all those new funds were introduced by Clico. I saw the document, because, as I say, I wanted to do a little research and that is what I found. So, Madam Vice-President, as I say, those are the things I have to declare, as a beneficiary of an EFPA, and, as I say, I think it is $145,000. I do not know what I will get, or what my wife will get. I hope I do not receive it as a beneficiary, because that will mean she has expired; and, of course, that huge pension which I get as a former energy executive. Well, that is what it is when you work for the country of Trinidad and Tobago and not for the dollars. So having said that, I would like to say where I stand today. Let me first thank very much, the hon. Minister of Finance, [Desk thumping] who last week wanted to have this meeting of Senators. I thought it was just the Independent Senators, in the first instance, and we just could not organize it in time for last Thursday, I think it was, and then we had this meeting on Tuesday. For me, it was a very informative meeting, and I have to thank all those who were present and presented that meeting, including the hon. Minister, [Desk thumping] and I look 520 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. ALI] there and I see Miss Caroline John. The Governor of the Central Bank is not here, but his representative, his legal person is there. So thank you very much, and I think that is a common feeling of my Senators on this Bench. I think they will all agree if we applaud the hon. Minister for taking that initiative to try and explain to us what this is all about. [Desk thumping] So, having done that, having looked at a fair amount of the debate in the other place, and having sat down and listened carefully to what transpired in today‟s debate so far—contributions on the Government side, from the hon. Minister and from the hon. Minister of Food Production, Sen. Vasant Bharath; on the Opposition side, I listened to them also. My good friend from the last time when I voted for the first Central Bank amendment, Sen. Mariano Browne, had two responsibilities then: Minister in the Ministry of Finance and the Minister of Trade and Industry, I believe it was, and I voted there in the context of a three-fifths majority. I voted and I said so before the vote that I was going to do so. And today, having listened to them—and I have to openly congratulate the Senators of my Bench who have spoken. Well, everybody knows Sen. Subhas Ramkhewalan, Sen. Dr. Rolph Balgobin, Sen. Helen Drayton; my front-liners, I call them. [Desk thumping] I think, for me, it helped to crystallize what this Bill was about, and I feel that I am in a position to vote, and I will say quite plainly now that I will vote to support this Bill today. [Desk thumping] I say it, unreservedly, that I will do so. My friends have given—I do not know what they will do, but they have some comments, not related to the vote, but some of it to if the Bill is passed what should be done. So when the vote time comes, we will see where we go on that. So, as I say, I intended to be very brief. I feel quite happy that I can take a vote of conscience to bring into effect the Central Bank (Amdt.) Bill and, what I will call, the Clico Bill. Thank you very much. [Desk thumping] 8.10 p.m. The Attorney General (Sen. The Hon. Anand Ramlogan): Thank you very much, Madam Vice-President. I have listened to the contributions on these two Bills on a matter of great moment and significance to the financial sector of Trinidad and Tobago, and I must say it is with some pride I rise as a Senator, as a Member of this Chamber, to make my contribution. Coming on the heels of the ringing endorsement from Sen. Ali as well, I suppose my task might be made somewhat easier, but I think it will be remiss of me if I did not start by revisiting 521 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 the history of what led to this fiasco, this financial fiasco, to put in proper context for the nation what the genesis of the problem was and what led us to the brink of this precipice. This is by any stretch of the imagination the largest financial failure in our country‟s history, and it is important to reiterate the magnitude of the systemic exposure and the factors that contributed to it. In was in January of 2009 that the Central Bank intervened under section 44D and took control of Clico, CIB and British American (Trinidad). This decision was taken due to a request made by CL Financial Group for substantial Government and Central Bank support for what was then thought to be a temporary liquidity problem and perhaps that is a good starting point, because under the former administration the first mistake that the State perhaps made in addressing this problem was a critical misdiagnosis of what the true problem was with the Clico Financial Group. What was thought to be a temporary liquidity problem was in truth and in fact a deep-seated and wide problem of insolvency in the group. It was because that misdiagnosis took place that money was literally dumped into Clico without regard to the fact that the intercompany borrowings, the convoluted, complicated network of financial transactions that spawned the entire financial empire, with interlocking directorates and interlocking companies, was such that receivables in the books of one really meant precious little because it was going round and round in one cycle; one dollar going round and round, but being counted 10 times. Madam Vice-President, significant receivables being shown on the books of one as being a receivable because they lent money to another subsidiary, or brother, or sister company, was in fact no receivable because that money in turn would then be lent to another company. So it was clear to anyone that there were insufficient free assets available to actually liquidate the debts that had been incurred. What led to that position, of course, was the slow but certain shift in the very nature of the core business that was taking place. The insurance entities, Clico and British American, shifted from traditional long-term insurance products and began to sell the Executive Flexible Premium Annuity Products (EFPAs), and they marketed and guaranteed the principal and interest on a mutual fund. The maturity dates were typically three to five years and in some cases as low as one year. Now, to take this in context, this was being done at a time when the interest rate in the bank—the average interest—during the period 2006 to 2008 was roughly between 2 per cent to 3 per cent, and the rates they were guaranteeing or 522 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. THE HON. A. RAMLOGAN] offered on these EFPAs ranged from 8 per cent to 9 per cent on average and reached in some cases as high as 13 per cent. What that meant, essentially, is that they were offering higher than average rewards, but it also meant that they would have to take higher than average risk to be in a position to meet those rewards. I pause to make the point because one of the things the Government could do, and in the eyes of many people should do, is nothing. Why did some people feel we should do absolutely nothing? Because they feel, that “Me, who leave meh money in de bank and decide to take meh lil two and three interest, I bear that grind. I was a conservative person in the management of my finances. You, who decided to opt out and take yuh money out of the bank to go elsewhere for a higher than average return, to go and get 9 per cent to 13 per cent, you assumed a higher risk in exchange and in anticipation of a higher reward. And in the normal scheme of things, I should not have to pay for your decision to move your money and put it there.” Madam Vice-President, many of us would have visited the United States of America in recent times. It is like a virtual ghost town. People have foreclosed on their properties and the banks are allowing them to remain and live in the property because it cost the bank less to have the people living there. Even though they foreclosed, they have stopped paying their mortgage, it cost the bank less to have somebody in the place so that the place is not vandalized, the place is actually maintained, things are working—the lights, the appliances and the furniture are being used and so on. It cost them less to do that. There are many people who have lost everything: house, land, motor car, lead pencil, copybook, everything. “They have lost it and nobody eh come crying and bawling that Uncle Sam should pick up the tab for it.” They have to bite that bullet themselves because the equity on the homes that they bought—they paid down a little and decided they could rent it out and so on—it fell flat. The point I am making is that they have been asked to bear that grind on their own. Here in Trinidad and Tobago, contrary to the view of many, this Government recognizing the widespread implications and financial ramifications of this particular matter, given the scope and reach and the ripple effect it can have on the stability of the financial sector, we have decided to make a strategic intervention, and the hon. Winston Dookeran has worked out a masterful and ingenious plan that can restore stability, that can improve the credibility of the financial sector as a whole and inspire public confidence in the sector. [Desk thumping] 523 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Anyone who raises the arguments about the deprivation of their constitutional rights, you must bear in mind that this was a voluntary decision and the State is not under any moral or legal obligation in the matter. We could go the route of so many countries and do absolutely nothing. What about the constitutional rights of all the others who kept their money in the bank and took 2 per cent to 3 per cent? What about the constitutional rights of all the taxpayers whose money is now going to be used to effect the repayment plan? Madam Vice-President, to put it in context, EFPA and mutual fund liabilities owed to 26,000 Clico and BAT customers—that is just 26,000 customers—equal approximately $12.8 billion—almost $13 billion. So 26,000 people owed close to $13 billion; 235,000 people in the long-term traditional life insurance policies are owed $6 billion—half—and the reality is that we are now as a country going to take money to pay off everybody. Some may take a little haircut—the ones over 75 years, there may be a little cut involved—but it is better you take the haircut than you go bald. That is the reality. We equally face that reality because when we called upon the Minister of Finance to get money to buy more beds in the hospital so that a lady does not have to bawl and lie on the ground in the San Fernando General Hospital to give birth, he has to find money for that bed and I want to tell you what the cost is. The money that we are using for this plan belongs to and comes from the people of this country, the taxpayers. The former regime, the PNM, invested or pumped $7 billion, the People‟s Partnership Government will pump a further $13 billion. There are approximately 400,000 taxpayers in this country. Four hundred thousand taxpayers will foot the bill for $20 billion, and when you do the math that amounts to approximately $50,000 per taxpayer. So every single taxpayer in this country is about to take $50,000 of their own money that they have paid to the State—they are going to take $50,000 each—and give it to Clico policyholders and the EFP holders. That is what it boils down to and I ask the question: do they too have constitutional rights? They have a constitutional right to good roads, water, electricity, beds in the hospitals, police stations in their area. They have a constitutional right too, and the State must act with equality and with a sense of equanimity. That is why in effecting this plan we have devised a methodology and a formula that will give as much as you can—almost 80 to 90 cents on the dollar—and we are saying to everyone else, “Doh hold us to ransom, to extract the full pound of flesh because there are many, many arguments for and against.” 524 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. THE HON. A. RAMLOGAN] We hear your cries, we have listened to them and we are responding to them, but, for God sake, do not tell us—do not be ungrateful—that we having listened, we having done the best we can with the inherited state of our coffers, that “yuh should do more, yuh should give meh everything.” There are many people who would live off their interest or the money would roll over. There are many people who have gotten back the principal by virtue of the withdrawal of the interest every year, but we are not about to go there because this Government is not against the policyholders. We are not against the EFPA. We empathize with them. We identify with their pain and their distress, and we have come to stand side by side with you and say, “Let us help to rebuild not just you, but to help you to rebuild yourself so that you can help us to rebuild Trinidad and Tobago.” This is a partnership with the people and I think the people understand that. 8.25 p.m. Madam Vice-President, when you look at what was taking place in CL Financial, it is like you are using about 10 credit cards and you use the first credit card to withdraw money from your account, and then you use the next credit card to withdraw money to pay off that and you are going right around. It is the same money spinning but you are just stretching it, but, of course, every long rope has an end. You see, they used money from one to pay the other until they have used up all of their credit card facilities, and then when it all exploded, they came cap in hand to the Central Bank and the Government to pay back their debts because they have overleveraged their assets. A substantial amount of money was diverted into a number of, not ventures but adventures, and they strayed from their core business. So, when you look at their statutory fund, what is shown as assets in the form of receivables from other companies was really meaningless, it meant nothing, but it was there; it counted. It took into account receivables from the parent company, and even then there would have been a shortfall. Now, Madam Vice-President, much has been said about the political involvement of Clico, and I do not wish to go there, but the fact of the matter is that whilst Clico was skating on very thin ice and the people‟s interest was being jeopardized—while that was taking place, moneys were being siphoned out of it to fund political campaigns; that is the reality; and whether they like it or not, that is what took place. So, part of the bleeding was due to a political knife and that political knife was wielded by the former administration; that is the reality. 525 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Of course, I would not want to mention anything about any former Minister of Finance or anybody, those matters are with the Integrity Commission and the DPP, but what I do wish to say, Madam Vice-President, is that their plan when they speak about—I heard Members opposite speak about the inequality in this plan, that some people will get back all their moneys and others would not get back all; they take a little haircut. Perhaps they forgot their own history. When they had initiated intervention, their proposal addressed the plight of only the local investors who were supposed to be covered by the statutory fund. Approximately 4,000 investors in the mutual fund and EFPAs reside outside Trinidad and Tobago. They did not take them into account at all, at all. So Trinidadians who were patriotic and lived in New York, Miami and London who would have bought these products, or our regional neighbours in Caricom where Clico had a base, or you had overseas agents who bought these products, once you did not buy it in Trinidad and Tobago, you were not covered by the statutory fund, and that amounted to over 4,000 persons. The plan they put in place did not even consider, it was nowhere within their contemplation these 4,000 persons. So, in other words, the guillotine would have fallen on them and that was it for them. They saw no inequality of treatment in that, but they raise inequality of treatment with the slight haircut that is required for those who have over $75,000. You see, they speak about legitimate expectation and they speak about us not honouring contracts. You know, if we honour every contract entered into by the former administration where there is no legal or political or social justification, then this country would go bankrupt. We are very proud of the fact that we have, where appropriate, in the public‟s interest, rescued Trinidad and Tobago from some of the commitments that they were about to tie us into. Because what they would have done is to mortgage the very future of our children by grandiose ambitions; delusions of grandeur; OPVs consistent with all the megaprojects that they had—skyscrapers and Tarouba stadiums and this and that, consistent with that kind of largesse delusions of grandeur, wild spending, megalomaniac tendencies—consistent with all of that. We would have honoured all the contracts, honoured all of that. I want to say where contracts were legally binding and there was no political or legal justification where there was no legal basis to extricate ourselves, the Government as a responsible Government, the State of Trinidad and Tobago, we have respected and honoured those obligations. But where we found a way out legally and where it was not justifiable in the interest of the people, we came out of it and we make no apologies for coming out of it; none whatsoever. [Desk thumping] 526 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. THE HON. A. RAMLOGAN] When they seek to castigate the hon. Prime Minister about reneging on a promise, perhaps they forget. But, Madam Vice-President, when they made initial injection into Clico, they said that this would solve the problem and everybody would get their money and they made all of those very promises and assurances. But, you know what they did? They did that on the basis that what they had before them and what they were looking at and what the insider information was from within Clico, within the Government—remember they had a treasurer of their party who was on the board. They had a Senator—he is not here with us today—on the board. So, there was an interlocking political relationship. Remember Mr. Monteil got the money to buy the shares for Home Mortgage Bank from Clico Investment Bank. He got the money from there. Madam Vice-President, the point is that the assurances they gave that they now seek to criticize us for not upholding were made on an entirely false premise, and it was on a false premise because, one: there was, in fact, no up-to-date audited accounts; none. That is a fact. There were no up-to-date audited accounts so that they blindly went into it and they mouthed off—you see, that is their style. “Talk cheap”, so they could say anything they want, but the reality is that when the hard numbers are crunched, it is either poor people suffer so we could effect their plans or we behave as a responsible Government in the interest of all concerned. You see, in a transaction of that nature, when the State is entering that transaction, it was necessary to have some form of due diligence done. Had they done proper due diligence before pumping that money into Clico—and I want to say pumping or dumping—what would have been revealed is that the assets that were being reflected on the balance sheet were so encumbered to lending institutions that the very assets they were taking and expecting that they could get repayment for the Government and people from, the assets were so encumbered in reality, it did not belong to Clico.

All the banks in the US have a first charge, and a charge, a mortgage, a debenture is a registrable instrument and everyone knows that when you are buying a piece of land, you go and do a title search to see if the “thing mortgage.” You are buying a car, you go and do a search. The man in the street knows that but the PNM did not know that; they did not do due diligence to see the extent of the encumbrance on the assets, and instead they entered into an arrangement expecting to be repaid out of it when, in truth and in fact, there was nothing to repay them from, and that is the reality. 527 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

You see, when they injected that money, they did so without any thought and without any plan, and I am making this point in the context of this debate because had that money been properly managed with a strategic plan, perhaps we would not be here today. But what they did is, without any strategic plan, without any vision; without a vision, they simply dumped it in. There was no timeline for payments. You notice in that first set of money, there is nothing to tell us what is the timeline for payment for EFPA holders. What is the criteria? How did they expect Clico to spend this money? Nothing of the sort. So, you know what happened? All of the influential and rich were able to get their moneys out by exerting a certain amount of leverage—political and otherwise—they were able to get their moneys out. So that the money that was paid in, it did not alleviate the suffering and plight of the poor, what it did was to help certain friends and family, and even, I dare say, people in the Government. That is what happened. A lot of people got back their money, they withdrew it, but on what criteria, we do not know. But all of that money simply vanished, poof into thin air. It just disappeared. Madam Vice-President,—[Interruption] I am hearing a voice in the wilderness crying out for help. You see, Madam Vice-President, my learned friend is reminding me that they voted for that. They did and they did vote for that. The people voted for change and they voted for an honest Government. That is why we are here to come clean; so he is right. They need to hold that all the time and remind themselves that the people voted for this because they voted for this kind of Government, not where we will promise them the world and say we will give you back everything and we will do this.” No, no. Could you imagine what would happen if we do not take these steps? If one judgment creditor levies or attempts to wind up, then what you will have is a feeding frenzy on the corpse of Clico; a feeding frenzy on the corpse of Clico where the stronger will be able to bite the bigger slice out of the flesh. I heard on the Independent Bench, my learned friends made mention, in particular Sen. Dr. Balgobin, about the fact that something needs to be done and we agree; something needs to be done. And that is why the Commission of Enquiry was launched by the Government and that Commission of Enquiry, rest assured, when it is completed, if wrongdoing is found, action will be taken against those culpable—rest assured of that. [Desk thumping] They did not appoint a Commission of Enquiry. They were quick to take money and dump—because that is what they are good at, spending—it in Clico without any regard to what precipitated this crisis, whether there was any wrongdoing involved, nothing of the sort, but we took a different approach. We wanted to find 528 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. THE HON. A. RAMLOGAN] out what the facts are in terms of wrongdoing, we appointed a Commission of Enquiry. We wanted to find out how to protect those at the lower rungs of the socio economic ladder. What did we do? We are trying to isolate the traditional insurance part of the business and at the same time, prevent a systemic risk from occurring by stabilizing the entire Clico by having this plan. 8.40 p.m. Bear in mind, do not forget, through the Central Bank, we have in fact initiated action. There is an action before the courts right, arising out of this Clico matter, so we are moving on that front. If we simply take all this money and pay it back, lock stock and barrel, we go do down the road of Jamaica and other countries where, when a fiasco of this magnitude and proportion occurs, you take taxpayers‟ money and you just pay back everybody. “Yuh taking money from people dat doh have tuh pay back who had. Fuh ah man to put money in Clico, he have tuh have money in de first place.” But you have to take money from people now to repay that. When they did that in Jamaica, the economy was so crippled it never recovered. In other countries in the world, when they adopted and followed the PNM formula for this kind of financial emergency and problem, the economy was crippled and paralyzed beyond recognition. That is the reality. Madam Vice-President, it is not as if the people do not understand. They understand that we empathize with them and we sympathize with them and that is why, as of September 09, 2011, the $75,000 or less, that payment has been made to 8,184 Clico investors and 1,631 BAT investors, resulting in total payment of $301 million. That is 89 per cent of the allocated $340 million. That means that the response from the policyholders and the response from the EFPA holders in this regard has been over 83 per cent to date. With respect to the others, we have approved 455 cases of compassionate applications totalling $94 million. I heard Sen. Browne make a point about: how will the banks finance this $10 million bond to purchase the 20-year bonds? I think it is a valid premise to launch the argument to say there is not that kind of excess liquidity that needs to be mopped up in the banking sector to extend that $10 billion. I think the point he missed is that it is not just for the banks but also the insurance companies as well. And, that is where the slack will be picked up, so the $10 billion will in fact be raised. There is no doubt about that. It will. Hon. Senators: In shares. 529 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Sen. The Hon. A. Ramlogan: Exactly. The risk caused by litigations is a very real one and we have to act responsibly and quickly. The judgment debts carry interest at the rate of 12 per cent and 10 EFPA investors have been awarded a judgment of close to $60 million. What that can do is precipitate an avalanche of litigation by all. If Clico is forced into liquidation, I do not think people understand what that means. If someone is allowed to enforce that judgment, what you will have is a situation where two people benefit. There is a picture that some people who love lawyers always look at, with not so much fondness. It is the picture of the cow. On the one hand you have someone holding the cow by the ears and pulling in one direction and on the opposite end you have someone pulling the cow by the tail and pulling in the opposite direction and underneath there is a lawyer sitting with a bucket, milking the cow. I want to tell you, if Clico goes into liquidation or receivership, that is what will happen. Because there are only two people who will benefit from the “lil bit ah money Clico really have.” The liquidator or receiver will benefit and the lawyers will benefit, no one else. “By de time dey finish, it is because all de milk from the cow gaarn. All garn. All done. Yuh go pull out de ears, fall backwards. De next one go pull out the tail and fall backwards and two ah dem go fall in two pot ah gobar! Nothing else!” That is the stark reality. Could you imagine if Clico goes into liquidation? My learned friend, Sen. Hinds, is inching up to get his bucket already. Could you imagine the fire sale that will take place when you have this forced sale on MHTL, RBL, 235,000 traditional policyholders among them, pensioners and people covered under the group health plan? They will suffer losses. The credit union movement and the trade union movement have in excess of $700 million invested in Clico and these are institutional investors, but they represent the poor and hardworking citizens. They will be affected. State enterprises, that means the Government, have money invested. We would lose. The recovery of approximately 4,000 non-residential EFPA holders and investors and our Caricom neighbours, they will suffer losses. I want to say for all loud and clear that one of the most responsible and one of the most just things the Government has done is that we have not ignored the plight of those 4,000 non-residential holders. All our Caricom brothers and sisters who have invested in Clico; all our Trinbagonian brothers and sisters who live in New York, Miami, London and elsewhere who invested back into their country, we are protecting them. 530 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. THE HON. A. RAMLOGAN] The first plan did not even mention them. They were nowhere on the radar, but this Government, the People‟s Partnership Government, is extending its hand to protect them. Major local institutions have exposures and this could threaten the very stability of these institutions. But, there will be a domino effect on other banks and insurance companies and, of course, there would be the fallout from employees. One of the criticisms I heard from my learned friends had to do with the fact that the stay is one that, unlike legislation in other countries, is not imposed by the court. Of course, my colleagues would have dealt with that to point out that this provision is not particularly unique to Trinidad and Tobago. They have it in Canada, the United States of America, Barbados, Australia, New Zealand, the United Kingdom, Singapore, Jamaica and the list goes on and on. We are playing catch-up. The provision should have been to allow and permit some form of regulatory stay. But, the criticism was made that, whereas you can have a stay granted by the court, in our case here the stay was being granted through the Central Bank and that was of some moment. It was being said that the Government was guilty of the worst form of mismanagement and depravition of citizens‟ rights. I found it strange, because that which fell from the lips of my learned friends from the Opposition, they may have forgotten when they were in Government they passed the Bankruptcy and Insolvency Act. That Bankruptcy and Insolvency Act that they pushed for and passed contains an identical provision where a stay is imposed by execution of the law itself, by automatic operation of the law itself. Permit me to read from the Hansard debate of Tuesday, September 18, 2007 because they seek to accuse us of doing something so wrong, something so bad, that they would never countenance it and it could never ever be within their contemplation. The reality is, on Tuesday, September 18, 2007, my predecessor, Mr. John Jeremie SC, this is what he had to say in his contribution on the Bankruptcy and Insolvency Act: “With respect to the stay granted by the court in clauses 55 and 57, it is an automatic stay for a limited period of time. I will not spend any more time on that. With respect to creditors and the difficulty of postponing credit to other persons, the real difficulty there is a constitutional question. We are not tampering as yet with fundamental property rights.” 531 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Sections 55 to 57 of that law, unproclaimed, provided that a stay of proceedings against a debtor and his property will arise upon bankruptcy of a debtor and upon the filing of a proposal. The creditor has no remedy against the insolvent person until the trust has been discharged or the insolvent person becomes bankrupt and these stays were thought necessary to allow the trustee to properly administer the bankruptcy or to allow the debtor to restructure the business, which is the identical rationale here. It is the identical rationale. 8.55 p.m. So they did it, not in this kind of context, where it is absolutely critical and vital for the survival and stability of the financial sector, but they seek to make it out as if this is some earth-shattering thing we are doing that could never be countenanced. Madam Vice-President, permit me to spend some time on the Purchase of Certain Rights and Validation Bill before us, to explain, this is not about taking away people‟s constitutional rights. I do not know why that is coming up. What you are doing is you are purchasing—it is a voluntary thing, but the State is purchasing your EFPA, and inherent and innate in that is your right to sue. It is called a chose in action. But we are purchasing your EFPA, and with that comes your right to sue, and we are purchasing that. We are offering a price to pay you for it and it is either you sell it to us or not. Now, it is not a case of the Government saying you have to do it. And it is not a case of us saying you must give up your right. You can accept our offer, because you know what the converse situation will lead to, and if you accept it, so be it. Now, the question has been asked: what about those who did not accept the offer? Would they not benefit more? Because they will remain with a larger pool, because you have to subtract out of the equation those who accept our offer. And the answer is, no, they will not be any better off. Because when we purchase the EFPA, when we purchase that chose in action in law, we step into the shoes of the investor, and we inherit all the legal rights, obligations and duties and responsibilities, but most importantly, all of the legal rights now come to the Government. So that we will, and we can, if needed, assert those very legal rights, because we now step into the shoes of the investor, so that our claim on that pool remains the same as if all of the EFPA holders were there. Madam Vice-President, the Central Bank supervision and the amendment there is absolutely necessary. It seeks to strengthen the effectiveness of the Central Bank to do what is necessary and to protect the officers of the bank, because you cannot send someone out into the battle zone without protective gear. That will be gross negligence if we do that. Madam Vice-President: Hon. Senators, the speaking time of the hon. Senator has expired. 532 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Motion made: That the hon. Senator‟s speaking time be extended by 15 minutes. [Hon. E. George] Question put and agreed to. Madam Vice-President: Senator, before you do continue, I would like to just advise that dinner in available and you can stream, again keeping the quorum throughout the proceedings. Thank you. [Desk thumping] Sen. The Hon. A. Ramlogan: Thank you, Madam Vice-President. You see, Madam Vice-President, I suppose the recent court judgment would have crystallized the severity of the problem that we face, and the need to address the situation would have become critical, because it became life-threatening. What that judgment shows is that if action is not taken by Parliament, the policyholders, which will include the EFPA holders, will be entitled to recover from Clico moneys due under the policy which were deposited at very high rates of interest, in excess of what was the market norm at the time, and they are entitled to get 12 per cent on those judgments on top of that. Clico simply does not have the wherewithal or the resources to make those payments at this point in time, and the failure by Clico to do so will result in inevitable and inescapable liquidation, and that would lead to a fire sale. The implications of Clico going into liquidation are catastrophic for the financial system. Madam Vice-President, it is in those circumstances that the Government has moved boldly to rescue the financial system and the economy in the interest of all citizens. You may recall the Central Bank had no hesitation in exercising its emergency powers in 2009 when the true financial picture was starting to emerge. Today, the Government must now implement a financial solution to the problem that is Clico, and in so doing, it must protect Clico and its assets, whilst implementing that solution. I mean, this is about giving us some elbow room, some breathing space; give us a little window of opportunity to try and effect the rescue mission. The financial solution that meets the needs of Clico will, one, include the following: (1) Meeting most of the obligations towards its policyholders in a responsible and fair manner. (2) Restructuring and reengineering the entity to make it financially viable. And, perhaps, most importantly: (3) To recover on behalf of taxpayers, all of the taxpayers‟ money expended on behalf of Clico from the assets of Clico. 533 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Our failure to protect the assets of Clico will, in effect, be to surrender for all times billions of tax dollars, which have so far been expended and that we cannot and ought not to do, Madam Vice-President. The current structure to the legislation permits the Central Bank to intervene and take control of an institution that threatens the financial system. This allows for the Central Bank to attempt to rescue the institution, so that it no longer poses a threat or a risk to the financial system. But there is no protection that the legislation currently affords to the Central Bank, which allows for the implementation of a financial solution, or financial strategies without hindrance, the aim of which is to rehabilitate the ailing company. It makes no sense whatsoever that the Central Bank can intervene in the affairs of an institution—because they can right now, as they have done. But it makes no sense that they have the right to intervene in the affairs of an institution that is failing, in an attempt to save it, that it can provide financial support whilst at the same time allowing that very institution, which is ailing, to come under attack from creditors. It makes no sense. It is like a beached whale and you are feeding it with a bottle of milk on the one hand, but there are “corbeaux” around coming to pick at it. It makes no sense. It cannot happen. It will never be able to survive. Should such an institution not be afforded the protection it deserves, it will be a useless exercise in futility, and a waste of financial resources to try and administer any kind of assistance to save it. Another argument raised, of course, is whether this legislation can be said to be reasonably justifiable in a democratic society. And, Madam Vice-President, I do not think that too many persons raised it, because I think it is self-evident that it patently is. The risk involved to the financial sector is one that has such far-reaching and wide- ranging implications and consequences that if we do not act, and if we do not make this Bill law, what will happen is that the financial sector, it will be a tsunami and you will have a ripple effect. You will have a ripple effect and it will spread and keep spreading. Most importantly, public confidence is a very fickle thing. The whole financial system and the whole banking sector is predicated on the one simple idea that everybody who deposits money in a bank will not go at the same time to simultaneously withdraw their money. That is the whole premise. And that is what the public confidence is about. And if we do not act now to protect and ensure that there is some stability to the financial sector, then that public confidence will be affected, and there will be a run on many institutions. And then we will be here debating several other bailout packages, except we will have no money to effect the bailout with. And that is a reality. 534 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. THE HON. A. RAMLOGAN] So is it constitutional? Yes, it is. Is it reasonably justifiable in a democratic society such as ours? The answer is, yes, in this current scenario, it most certainly is, because it is simply a matter of financial life and death. We are in the ICU room. So, Madam Vice-President, if I may turn briefly to the Bill and the actual clauses: The Central Bank (Amdt.). Without amendment to the Central Bank Act to allow for a stay of proceedings whilst we take control, any proposed restructuring of CLF and its subsidiaries to facilitate enhanced payouts to depositors and policyholders will be rendered futile. This is so because, as I indicated, the Central Bank legislation at present does not provide the required tools or special mechanisms to deal with the orderly resolution of distressed, but systematically important, financial institutions and non-regulated holding companies, or a financial crisis in the interest of all stakeholders. In fact, Madam Vice-President, resolution strategies introduced by the Central Bank during the period of emergency control can be unravelled, or indeed never bear fruit, as the institution remains constantly at risk because it is exposed to judgment creditors. Judgments can be executed against the assets of the institution or you can have creditor-driven winding up petitions commenced whilst the Central Bank is still coming to terms with the problems. Now, Madam Vice-President, the risk of orderly resolution being undermined has, in fact, become a reality now. That is why—and that is evidenced by the leave, the application for leave to be granted by the High Court to wind up Clico. That is why we must act now, because whereas people may get 80, 90 cents on the dollar, if we do not act now, they may end up getting less than 10 cents on the dollar. So we must act now. We must perform this emergency, financial surgery, whilst the patient is still in ICU, lest people have to go down by the morgue to cry and say, “Well, better we did take it”, because that is the reality. [Desk thumping] With respect to the purchase of the rights, as I indicated, there seems to be a misconception that we are assuming the death of Clico. That is not the case. We are not assuming the death of Clico, and that is why we are not responsible for paying everything. You see, Madam Vice-President, we are doing things the proper way. And there is a proper and legal way to do this, and that is by coming to the nation‟s Parliament. You see, they sought to do this and they tried to do it by way of an MOU, and that MOU was fundamentally flawed. When moneys—[Interruption]—I hear my learned friend, Sen. Browne, saying that he agrees with that. 535 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Sen. Browne: I did not say that at all. I said, let us say, for the sake of argument, we agree with that. Sen. The Hon. A. Ramlogan: He says, let us say for the sake of argument that he agrees with it. I think he means to say that he agrees with it, but he is a bit gun shy. You see, Madam Vice-President, whether he agrees with it or not, the MOU they signed with Clico was fundamentally flawed, because they were dumping money into Clico, telling the people they will get it back without realizing that they had completely misdiagnosed the problem and was treating the patient for the wrong symptoms. They were treating the wrong symptom and expecting the patient to get better. That is the reality. Whilst they were treating the patient for the wrong symptom based on a mistaken diagnosis, what was happening is that the cancer was spreading, and the money they put into Clico was not going to alleviate any structural problem in Clico. What it did was to pass through Clico like a dose of salts, whilst a few friends and selected people were able to withdraw their money and get it out of Clico. That is the reality. “I wonder how much the man in the street profit from that first money.” Five billion dollars? How much the man in the street; how many people who had their pension in Clico got back their money? How many people who had less than $75,000 in Clico got back their money from that first $5 billion payout? We never heard anything about that. Sen. Browne: You have all the records. You could know. Sen. The Hon. A. Ramlogan: You see what we did—you are right. Sen. Browne is saying we have all the records, and he is correct; we do. And that is why we passed it to the Integrity Commission, and they have taken action. [Desk thumping] And I want to tell you as well, I have no money in Clico or any of its subsidiaries; none. Madam Vice-President, when moneys are to exit the Consolidated Fund, it must be done via legislative action. The Minister of Finance ought not to dip into the Consolidated Fund to make payments without the blessings of the people, and that is done through Parliament. At the end of the day, all moneys in the Consolidated Fund belong to the people of this country. And the irony is, we are here to try and tighten up and clean up what they did, to put legislation in place for what they did. Because when the moneys were injected into Clico under the first bailout, there was no parliamentary sanction for it. And that is why you will see in this Bill, there is a clause to validate that act. 536 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. THE HON. A. RAMLOGAN] When they speak about constitutionality, what they are not telling the people of this country is that they acted in an unconstitutional manner, when, without parliamentary sanction or approval, they dumped money into Clico and did not have any resort or reference to the nation‟s Parliament. They did not seek any parliamentary approval. [Desk thumping] That is why we now have to come, out of respect for the Constitution, the concept of sovereign parliamentary democracy and the rule of law to seek parliamentary approval for what they did. So you see, Madam Vice-President, we have come to Parliament with clean and open hands, because we have nothing to hide, so much so that we have prepared and brought draft regulations that will be made under this Act and laid in Parliament to you. Clause 7 of the Bill provides that: “The Minister”—of Finance—“may make Regulations for carrying out the purpose and provisions of this Act including but not limited to the— (a) denomination of bonds; (b) transfer of bonds; (c) form, issue and recording of bonds; and (d) method of holding bonds.” I want to announce that these regulations have already, in fact, been prepared. Subclause (2) of 7 seeks to have regulations made under an Act laid in Parliament and we recognize and maintain Parliament‟s oversight in these matters. In closing, Madam Vice-President, permit me to say that in winding up the Minister of Finance will elaborate, but we have listened to the contributions, the erudite contributions from the Independent Bench in particular, and, of course, the enlightening contributions from our learned friends on the Opposition Bench, and we recognize that there is merit in the point made by Sen. Drayton, that the Limitation Act poses a problem if the State captures the commencement of proceedings. And the Minister of Finance will announce in due course, but we are prepared to give an undertaking to come back to Parliament to make an amendment to the Limitation Act, to ensure that time does not run, and we thank you for your contribution in that regard, Ma‟am. With those few words, Madam Vice-President, I thank you for your time, and I thank Senators for listening. Thank you very much. [Desk thumping] Sen. Pennelope Beckles: Thank you very much, Madam Vice-President, and I join this debate just after nine o‟clock, and I am advised that this might be the last time I am speaking in this honourable Chamber, so that I guess it ought to be, for me, a very special delivery. 537 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

I must say that listening to the Attorney General, if I did not know him better, I would be very frightened by what he has said, because I got the very distinct impression that—he got very passionate about it, you know, but I almost got the sense that when he used the words, “financial life and death, emergency financial surgery, better you take it or leave it, going to the morgue”, I am sure some people are very frightened, but I am not frightened. I am going to try and make sure I keep focussed. But he led me to decide to say certain things, which I did not initially intend to say in relation to this debate. And like several of my colleagues, I would like to declare that I am an EFPA policyholder. Because of some of the statements that have been made, I am forced to say a little more than I intended to say. Madam Vice-President, I have been listening to a number of persons, and if we are not careful, especially for the EFPA holders, you know, there is this view of a number of persons that persons who have EFPA policies, who are EFPA policyholders, were very greedy, in that, you had choices, people wanted very large interest on the moneys invested. Now, my policy is probably about 20 years old, and I have over a hundred thousand plus. And that information is, in any event, in the Integrity Commission, so it is in the public domain. The reason I decided to say exactly what that figure is, is because, you know, the more I listen to the debate, I get the very distinct impression that a number of people are of the view that those—many of the people who have EFPA policies made a decision basically because of the interest that was attractive. That is not why I decided to have an EFPA policy. I did my research, like a number of other persons, and saw it basically as a savings and a policy, first and foremost.

[MR. PRESIDING OFFICER in the Chair] So when people keep saying, you know, it is only a few people who are getting all these millions or billions of dollars, some people decided to be conservative and take their 2 and 3 per cent, and others wanted 17 and 18 and 21, I take strong objection to that, you know, because a lot of people are saying that those people who made the decision to get involved in that particular package, on the one hand they describe you as being greedy; on the other hand persons who did not withdraw their moneys at a particular point in time, people describe you as being stupid, because people say to you, with all that was going on, you left your money there. And then there are those who say that those who took out their moneys, it was insider trading; it was dishonesty. 538 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. BECKLES] I am so happy that I left mine right there, and I decided whatever happens, having made my decision, I will live with it. Because when you hear a lot of what is being discussed, a lot of people are being discriminated against, because there are some people who have substantial amount of moneys in there, and therefore everybody, to a large extent is being painted with the same brush. It is quite likely that something similar could happen again—not at such a large scale, but as we talk about the regulatory framework, particularly for the credit union movement, and those of us who have been monitoring what has been happening in the credit union movement over the last couple years, we know that a number of credit unions have gone under for one reason or the other. So that, you know, the Attorney General made the point that this Government does not have any moral responsibility to pay any of the EFPA, or probably any of the persons. I agree with that. I agree with that save and except the fact that having regard to the MOU, there is a legitimate expectation of a number of persons who were led to believe, by very reputable organizations and institutions, including the Central Bank, that the moneys invested in Clico and several of its subsidiaries were guaranteed. My colleague, Sen. Basharat Ali, spoke about whether or not the EFPA is a short- term deposit investment or whether or not it is a policy, and I just want to read into the record a few letters in my possession. Government of the Republic of Trinidad and Tobago February 2003 Re: Approval of Executive Flexible Premium Annuity Reference is made to all correspondence on the subject matter at caption ending with your letter dated 4th February, 2003. I wish to advise that approval is hereby granted for Colonial Life Insurance Company (Trinidad) Limited to market the Executive Flexible Premium Annuity Policy. Supervisor of Insurance And that was 2003. April, 1999. Approval of Foreign Currency Policies: Lifetime Advantage, Flexible Premium Annuity, Executive Flexible Premium Annuity: Reference is made to all correspondence on the caption subject ending with your letter dated 31st March, 1999. 539 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

I am pleased to advise that permission is granted to market in a foreign currency the Lifetime Advantage, the Flexible Premium Annuity and the Executive Flexible Premium Annuity products. In this regard I shall appreciate your providing us in due course with any relevant marketing material. And indicated that there was no evidence at that time that the Flexible Annuity Premium was actually registered. The last letter is dated March 1990: Executive Flexible Premium Annuity I am directed to acknowledge receipt of your letter of the 15th March, 1990 to the Supervisor of Insurance and to advise that the Executive Flexible Premium Annuity Policy is approved for marketing. That is from the Supervisor of Insurance. And, of course, there are other letters from the Central Bank and the Ministry of Finance. And that is why these matters must be decided in a court of law. Because here it is, it is clearly referred to as a policy, and in the event there is any doubt, all one has to go to is the Insurance Act that makes the EFPA a policy. I am sure, Mr. Presiding Officer, you are familiar with it. I do not want to spend too much time, but the bottom line, it says very, very clearly that EFPA is a policy. But here we have the Government talking about it as a short-term investment, some people receiving letters calling it a short-term investment, but the Central Bank and the Supervisor of Insurance and Clico and people who have bought these things have been told they are policies. So as we debate these Bills, there are a number of things that must be cleared up. I just wanted to start with that first of all and get that out of the way as a matter that is clearly controversial. So that, you know, when you listen to the debate, and you listen to a number of persons speaking, you know—and I want to go to the speech of the hon. Chief Justice delivered today. And he says at page 8: “Trust is important in strained economic times when we ask citizens to endure hardship. Trust is important for effective policing otherwise citizens will not cooperate and share information. Undoubtedly there are times when vigorous action must be taken in the face of a real threat.” You see, there are some of us who are very comfortable to beat our chest and say, “Well, I did not have any. I have no this, and I have no that.” And some of us, like myself, as a Trinidadian and Tobagonian for an institution that I know was indigenous to this country, I took my decision to invest, and I am proud of that. The fact that it has collapsed, and I am not proud of that, and I may have 540 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. BECKLES] done something else with my money, and we may not have had to debate this today, that is a different matter. But, you know, to hear people talk as though they are doing you a favour because you made a mistake and a wrong decision and a wrong choice, I have a problem with that. Having said that, Mr. Presiding Officer, I want to move on to another matter, and that is, again, the issue of what we may consider inconsistency in statements that lead people to wonder what is really the truth. Because from time to time we debate things in the Parliament, we approve things today and then we hear something else on another day. Now, for those of us who recall the budget, and, Mr. Presiding Officer, the budget actually was voted for one year ago—to be exact, on September 17, 2010, and here we are on September 16 debating a decision that was taken. We voted for the budget and took a decision as to what should happen to Clico. But today we are not following that decision that we took one year ago. I just want to read certain things into the record about the decisions that were taken. “1. We will separate the insurance business from short-term investment and mutual funds to protect the insurance policyholders and the obligations of 225,000 policyholders will be honoured, backed by the statutory fund. We will restructure and merge the traditional insurance business of Clico and British American and prepare this merged business for divestment. 2. To depositors in the short-term investment and mutual funds, the Government will make an initial payment of a maximum of 75,000. This is intended to bring immediate relief to small depositors. This will fully pay off approximately 40 per cent of 25,000 investors in these products, including more than 140 credit unions and 15 trade unions. 3. Short-term investment and mutual fund depositors whose…principal balances exceed 75,000 will be paid through a Government IOU amortized through over 20 years at zero interest.This Government IOU would be structured in such a way that it could be traded on the secondary markets, thereby creating a measure of immediate liquidity for the depositors. 9.25 p.m.

4. The Government will conduct a detailed review of CL Financial and its subsidiaries and will introduce measures, including the divestment of assets, to reduce CL Financial‟s debt and recover public funds. 541 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

5: The Government will engage a firm with relevant local and global expertise to assist with the restructuring of the CL Financial Group.” One year ago we voted and we agreed this is exactly what the Government is going to do. [Desk thumping] And you know what, Mr. Presiding Officer, the People‟s National Movement voted for it. So today when they are criticizing and so they seem to forget that they gave a proposal and we voted for that proposal. But today and—then a few months later an interministerial committee was appointed under the hon. Mr. Vasant Bharath. Now, to his credit he had widespread consultation, and when you listen to a number of the policyholders they were quite satisfied, at least that is the impression I got, as to the manner in which his consultations and meetings took place and the agreement following the meetings and the decisions of the interministerial committee. Mr. Presiding Officer, the decisions as recommended by the hon. Minister of Food Production, Land and Marine Affairs―I got it right this time—those decisions, some of them were not implemented. The question I asked myself today as we debate these two particular Bills, whose decision is it? Is it that they looked at the budget speech and the recommendation? Is it that they looked at the recommendation of Sen. The Hon. Vasant Bharath? And is it that the World Bank, the IADB and the IMF were not happy and therefore the Government had to make changes? But we will wait to hear from the Minister of Finance as it relates to that matter. Mr. Presiding Officer, the Government having voted on the direction of Clico in the budget, is now in contempt of Parliament, and so too is the hon. Minister of Finance, [Desk thumping] because you cannot come and have a debate, vote and say this is the directive, you do not come back and explain anything as to why you have made the changes here, but you come with a totally different proposal; but we will deal with that at another time. Mr. Presiding Officer, there is another matter which I wish to deal with, and I think Sen. Dr. Balgobin and Sen. Ramkhelewan raised that issue, and that is the issue of reporting to the courts. I cannot find the exact section; if anybody finds it whilst I am talking they can—clause 7? Okay, thank you very much. Now that is a very important section—17? Or 7, right. “The Bank shall report quarterly to the High Court on...” And this is under the Central Bank (Amdt.) Bill, 2011— 542 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. BECKLES] “(a) the proposals to restructure an institution in relation to which a notification has been published under subsection (1); and (b) the progress of the proposals referred to in subparagraph (a)”. Now, you know, Mr. Presiding Officer, I must share with you that for the years that I have been in the Parliament, one of the things which concerns me is sections of legislation which we pass which have no teeth, no penalty and are totally ineffective; you are just going to report. Now, when are you to report, at what date? We talk about quarterly. If you do not report, what is the penalty? What is the penalty for failure to report? Mr. Presiding Officer, I want to read for you―there is a section in the Constitution of the Republic of Trinidad and Tobago, section 66D and it refers to bodies listed at (A) to (D) in 66A(1); and those bodies are Government Ministries, Municipal Corporations, Statutory Authorities, Service Commissions and so on. It says and I quote: “A Body listed at (A) to (D) in 66A(1)(a) shall submit to the President before 1st July, in each year a report on the exercise of its functions and powers in the previous year, describing the procedures followed and any criteria adopted by it in connection therewith, and the President shall cause the report to be laid within sixty days thereafter in each House.” This is in the Constitution of Trinidad and Tobago, it is not in an Act, it is not in a report. Mr. Presiding Officer, the majority of bodies referred to in (A) to (D) in 66A(1) do not comply with the Constitution. There is no penalty, no penalty! I had the opportunity to chair the Joint Select Committees of Parliament, and I met with several permanent secretaries. The majority of them were not aware of this section. Last year when we met, there are many Ministries which had never complied with this section, but we are putting here a section supposedly to comfort people that there is a role for the High Court in this matter. This section is a total and absolute waste of time. [Desk thumping] If they do not comply with the Constitution, would they comply with a report to the High Court; no penalty? I want to go a little further, the hon. Attorney General was at pains to tell us that you know this is not a situation where they are taking away persons constitutional rights, and he referred to the Insolvency Act where he says that we brought a similar section in relation to a stay. I was hoping that the hon. Attorney General would have pointed out to me exactly where the hon. Attorney General got section 4; and this is how it reads, and this is the Bill to amend The Central Bank Act. It says, and I quote: 543 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

“no creditor, shareholder, depositor, policyholder or any other person shall have any remedy against the institution in respect of any claim, and without prejudice to the generality of the foregoing, no creditor, shareholder, depositor, policyholder or any other person shall commence or continue any action, execution or other proceedings or seek to enforce in any way whatsoever without limitation in Trinidad and Tobago, any judgement or order obtained in Trinidad and Tobago or any other jurisdiction, against the institution or its successor or the transferee of the whole or any part of any property, assets or undertaking of the institution for the recovery of any claim or in respect of any other liability, until the publication of a notification under section 44G(1) in relation to the institution...” And then he goes on. And I do not want to spend too much time, but you see it is very, very important that persons understand—because this is not a section which he referred to, and I would have liked the hon. Attorney General to share with us some other jurisdiction which had this identical clause. Because he spoke about Australia and New Zealand which had clauses in relation to the stay, but he has not shared with us one single country which has a similar section that purports to oust the jurisdiction of the court. You know, I was so happy that―again the hon. Chief Justice made some very, very, very important comments today which I would like to read into the record. Page 19, speech of today, Mr. Presiding Officer, because a lot of us are confused and sometimes it is because of the badgering, it is because of how persons speak to us, that persons are beginning to develop a culture where they do not know what is right and what is wrong. When certain persons speak, because they speak with a kind of authority which says this is not unconstitutional, that is not for you to decide, that is for the court to decide. [Desk thumping] You cannot come and tell the Parliament it is not unconstitutional, and that is to influence persons to believe that it is unconstitutional. I want to read what the hon. Chief Justice said: “Fellow citizens, I find myself addressing you in extraordinary circumstances. We are in the midst of a state of emergency… Contrary to opinions expressed in uninformed circles, the Constitution has not been suspended. As a matter of fact, His Excellency the President has issued a proclamation of a state of emergency pursuant to the Constitution. It sounds a little obvious when one states it but clearly, the Constitution cannot suspend itself!” [Desk thumping] 544 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. BECKLES] “Those provisions of the Constitution that protect and preserve fundamental rights have not been suspended or pushed aside. What it does mean is that there is some temporary and limited restriction on the exercise of some of those rights.” Now, he would have said it today, but I need to put it into the record of the Parliament. “Section 13 of the Constitution makes it clear that any Acts or Regulations passed during a period of public emergency that are inconsistent with the fundamental rights provisions of the Constitution shall be effective only so far as they may be reasonably justifiable for the purpose of dealing with the situation that exists during that period. So the exercise of emergency powers is subject to the constitution. Ultimately, the courts are the arbiter of what is constitutional. [Desk thumping] [Desk thumping] The judiciary continues to stand ready to perform its constitutional function as it always has. [Desk thumping] We are committed to maintaining balance and the rule of law. [Desk thumping] I would not wish you to entertain any unnecessary doubts or apprehension on that score. Citizens may continue to have access to the courts for the protection and vindication of their rights”. Can I read that again? Sen. Hinds: Yeah! Sen. P. Beckles: “Citizens may continue to have access to the courts for the protection and vindication of their rights.” Because you see, the way this Bill is sounding, as you would say, “Take it or leave it, go to the morgue, financial life or death. [Desk thumping] All of you who wanted plenty money, you did not want 2 and 3 per cent and now, you want taxpayers just to fork it out and hand it to you.” Sen. Hinds: Greedy! Sen. P. Beckles: And finally he says: “Now is a time for restraint, careful thought, and measured action and response. We only have this last chance to fix this nation.” Well, this may be our last chance to fix Clico, CL Financial [Desk thumping] and everything else. 545 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

“Let us not allow it to slip from our grasp.”— Sen. Hinds: “Call the election now, leh we fix dat”. Sen. P. Beckles: “Let us pray for wisdom for those who have to make the tough and critical decisions that would determine our future, including our judicial officers. May we in our individual lives exhibit balance, compassion and love so that healing may begin.” [Desk thumping] 9.40 p.m. You see, Mr. Presiding Officer, this is sensitive, complex and controversial. It is a matter that affects probably every Trinidadian and Tobagonian. While we talk about policyholders, the credit unions and those who have less than $75,000, in essence, it probably touches every family. Every family, I am sure, has persons who are members of the credit union and who have some money somewhere in one of the institutions. Mr. Presiding Officer, this is a matter that had to be dealt with in many countries in the Caribbean and, as Sen. The Hon. Bharath said, some countries in the OECS, in particular, had to deal with both the Stanford and the Clico collapse at the same time. Fortunately, in Trinidad and Tobago, save and except, I think, the cricketers, when they received their money having won that cricketing event in Antigua, I think it was, those who had invested in his bank lost it. I do not know—you probably know a little more— but I got the distinct impression that most of them did not invest it in Stanford and brought it home to Trinidad. A lot of the other OECS cricketers invested because of the interest they offered. Can you imagine living in Antigua, St. Lucia, Grenada and those places where Stanford was king? Minister of National Security, I am sure you have visited Antigua. As you land in Antigua, you did not see the Prime Minister‟s picture. You recall that? Whom did you see, Minister of Public Utilities? A big picture of Sir Allen Stanford. [Interruption] When you land in the airport, you did not see a picture of the Prime Minister first, you saw a picture of Sir Allen Stanford. If you go there now, you are not seeing a picture of him. They want to see him in person; they do not want to see a picture of him. When you talk about the PNM doing nothing and that it took a position of just dumping money without doing the requisite checks, [Interruption] the PNM, yes, $5 billion, I am advised, emergency funds. Action had to be taken and the fact is that Lindquist was contracted to do the necessary works in relation to a lot of the ills that may have taken place and today—at the same time. 546 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. BECKLES] The hon. Attorney General talked about dumping $5 billion, but could you imagine if we had not dumped $5 billion at that time. He is saying that if they do not do what they have to do now, the economy will crash. How is it, 18 months later, we are still able to maintain an A grade? How is it that it did not crash? I want to say to the hon. Minister of Finance who, like many others—whether or not I agree with everything he has said—and to Sen. The Hon. Bharath, both of whom, in essence, would have been given the responsibility by Cabinet to come up with some proposals, for whatever it is worth, I want to put on record that I congratulate you for your genuine efforts even if I may not agree with everything. The bottom line is that you had a very difficult task. Despite that we may not agree with everything that you have said, let us be reasonable, mature and forthright that your efforts are genuine efforts to come up with a proposal to deal with a complex and controversial situation. That does not mean that we ought not to have the right to criticize. At the end of the day, when I am finished, you will give us whatever share of criticism you think we deserve. This scenario that is taking place in Trinidad and Tobago affected almost the entire Caribbean. As a matter of fact, I would just share with you briefly how some countries dealt with it. We know that on February 22, 2009, an injunction was obtained by the Central Bank and Clico against CL, preventing CL from selling, pledging, assigning, mortgaging, charging, disposing, alienating, transferring, divesting and otherwise diminishing the value of any assets of Clico howsoever held, or to use and/or vested in CL. In relation to Barbados, on February 21, 2009, it was reported that the statutory fund of Clico had been in deficit for a number of years and, on March 01, 2009, the Government of Barbados announced that as part of their remedial measures, the life insurance arm of Clico could be sold. In relation to the Bahamas, the High Court of that country ordered, on February 24, 2009 the liquidation of Clico (Bahamas) Limited, formerly British Fidelity Insurance Company Limited, after it was found to be unable to pay claims of US $.26 million in the Turks and Caicos Islands and its liabilities were found to exceed assets of US $9 million. The winding up of Clico (Bahamas) was issued following an application by the Minister of Finance. The Government of the Bahamas also indicated that since 2004 Clico had begun making excessive cash advances called loans to subsidiaries of Clico Enterprises and it appeared that Clico (Bahamas) never had the “no objection” from the Bahamas registrar of companies. 547 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

In relation to Belize, Cayman and Turks and Caicos, similar actions have been taken by the Governments of Belize and Cayman Islands, either to place the local operations of Clico under judicial management or otherwise restrict their operations. You notice that to date I have not referred to any country which has taken any directive to oust the decision of the court. In relation to Guyana, the High Court of Guyana placed Clico under judicial management and appointed a commissioner of insurance as the judicial manager in accordance with their Insurance Act. I was hoping that was the kind of information the Attorney General would have provided. In relation to Guyana, the Government indicated that they would take all necessary steps to ensure that there would be no financial loss to any policyholder of Clico and to secure the investments made by NIS Clico (Guyana), and to guarantee savings, pensions, investments and insurance of all investors, depositors, policyholders and contributors of Clico. I thought I would just share some of that information as to how some of the countries in the Caribbean actually dealt with this matter. A lot of what I provided there was information from the then President of Guyana, who actually read that particular statement into the record of the Parliament. I know that you, in doing your research, would have realized that this issue is what they call “Clico shock”. We are talking about Caricom taking a decision that there is need for closer collaboration among supervisory authorities, whereby information can be shared regularly to address cross-border financial issues. I would be so happy if the Minister of Finance would probably say in his winding up what is to prevent another Clico collapse at this point in time. The hon. Minister of Finance has been the Governor of the Central Bank and, as I said last week, he has had the opportunity to liaise with many a regional and international institution and he is aware that our regulatory framework is in a bad shape. We are asking the Central Bank, in essence, to do a number of things and, in order to ensure that there is not another Clico collapse, it means that the country needs to be assured that efforts are made to have the kind of human resources in place which can properly deal with the issue of regulation. That matter is not only a matter for Trinidad and Tobago; it is a matter for Caricom. This issue that we are dealing with here today has affected the entire Caribbean region and I would be really happy if I could get some sort of comment from the hon. Minister of Finance on that matter. 548 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. BECKLES] In relation to regulation—and I am talking about the BBC now, they indicated that regulators now acknowledge the inescapable fact that those large significant institutions must be subject to even further stringent regulation. I am certainly not comfortable that any pieces of legislation that we are debating today has, in any way, dealt sufficiently with the issue of regulation.

[MADAM VICE-PRESIDENT in the Chair] The Attorney General spoke about the fact that the economy would be crippled if we do not agree with this piece of legislation we have today and indicated that the countries that followed the PNM model, that is to say, the position we adopted in 2009; those countries have suffered considerably. In saying that, he has not mentioned one single country and that is why I said that that is to badger and to frighten people; you cannot make such a statement and say that countries have followed us. I have given examples of all these countries that have followed us. I have not seen one of the countries put in place the kind of draconian legislation this Government is purporting to put in place in this Bill we are debating. I am quite happy that Sen. Hinds was able to provide us with the historical data that indicated that when this legislation first saw the light of day, that the hon. Prime Minister indicated that they would not use their majority for the purposes of passing this legislation. The question I ask today is: what has caused the Government to make a 360-degree turnaround? The hon. Minister of Finance, when he was speaking, talked about the issue of credibility. He talked about the fact that you want to maintain the right of any group to raise their voices; to raise their disaffection—and I wrote it down specifically—and also the right of the Government to deal with the whole issue of monitoring. If you agree that you want the right of any group to raise their voices, why do you want to pass legislation to deny those persons the right to go to court? I have not heard any answer that will satisfy. 9.55 p.m. Madam Vice-President: Hon. Senators, the speaking time of the hon. Senator has expired. Motion made: That the hon. Senator‟s speaking time be extended by 15 minutes. [Sen. T. Deyalsingh] 549 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Question put and agreed to. Sen. P. Beckles: Thank you very much. MadamVice-President, one of the things the Attorney General said is that the PNM dumped all this money into Clico and did no due diligence. And I heard the hon. Minister of Finance talk about the difficulty in terms of getting data and figures. But the fact is, therefore, that even as we speak we have not really been provided with information, audited statements and the kind of due diligence of which the Attorney General spoke. So he is accusing us of having made a decision without proper information, and here it is he is coming to the Parliament—[Desk thumping]—and also making it clear that they themselves do not have the kind of information with which they are comfortable. [Crosstalk] Badgering! You know, he again is saying to us, here you had a situation where people were going for a certain kind of percentage that was way ahead of what other banks were offering. At the time, as I understand it, Republic was paying 7 per cent; Clico was paying 9 per cent. One of the concerns that a number of people have, quite frankly and justifiably so, is that taxpayers are being asked to fork out all these millions and billions of dollars. There is no measure of comfort that there are certain assets in Clico that are revenue earning and revenue generating that are doing fairly well. I just want to say that the income from methanol, which I understand is as much as $500 million a year, can be used to pay off policyholders. Our Government has not really made any comments on that. Also, the ammonia, urea, melamine plant at Point Lisas, which is majority owned by Clico and is expected to earn some $300 per year, in addition to the $400 million already being earned for methanol plants; those moneys are also available. So I think that it is one thing for us to keep harping on the fact that taxpayers are asked to fork out all of this money and there is no indication that there are revenue generating assets of Clico and CL Financial. MadamVice-President, that to me is important because you really want to bring a certain balance to the debate, and I think it is, in my humble view, a certain level of irresponsibility to give the impression that this thing is in such a bad, hopeless way that a lot of us will end up in the morgue. I think that is really, really, very, very irresponsible so that I certainly do not subscribe to a number of the things that the Attorney General has said and I hope that—I do not know if the Minister of Finance will simply adopt all that he has said, but I certainly hope that the Minister of Finance understands that he is in a totally different position as the guardian of the Treasury. 550 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. BECKLES] Therefore, when he spoke about confidence and credibility, he must recognize that the statements that he makes, notwithstanding the fact that we are trying to deal with a situation here today, are going to impact not just on our own investors but regional and international investors who are listening to this debate and are waiting very patiently for some of his statements in terms of the Government‟s plans to move this particular situation forward. Whilst we await word as to whether the court is going to decide whether the Act is constitutional, whether it is not constitutional, the point about it is that we have to make the kinds of statements so that the rating that has continued, the A rating, we do nothing to lose that A rating which is so very, very important. You see, Madam Vice-President, we are debating this Bill at a time when the rights of individuals, to a large extent, have already been taken away. The Government, therefore, by its proposals in this particular Bill, is continuing to take away people‟s rights. If we are not careful, sometimes the signal that they are sending is that Trinidad might very well, at some point in time, end up being described as a totalitarian State. [Crosstalk] Sen. Hinds: “Ooh gooooood”! [Desk thumping] Sen. P. Beckles: Madam Vice-President, Sen. Dr. Rolph Balgobin spoke about the issue of persons who have substantial moneys that are asking the Government to in some way assist and give them a comfort, in terms of, you know, returning some of those moneys in some form. He spoke about the issue of those persons paying tax, and there be some due diligence by the Minister of Finance in relation to that and I want to say, I support that. I support it because the hon. Minister of Finance put in place efforts to recover taxes earlier this year and he was able to recover some one point—was it two—1.9 billion— Hon. Dookeran: One point nine billion. Sen. P. Beckles: But if I recall correctly in your budget debate last year, the total figure was seven or 13 billion? [Crosstalk] Taxes owed generally? Sen. Hinds: Thirteen. Sen. P. Beckles: Let us say seven billion, right? Sen. Dr. Henry: Interest and penalties. Sen. P. Beckles: Interest and penalties—if you say interest and penalties, I think it goes all the way to 13 because we had a motion—[Interruption]—include interest and penalties. 551 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Sen. Hinds: Include interest and penalties. Sen. P. Beckles: So, clearly we have a scenario where $13 billion is being owed to you. Any of these large depositors owe you part of that $13 billion that there may be a write off? That is something that should be considered. It does not matter whether it is 1,000 or whether it is 50 million because at this point in time in the country‟s history, people cannot be owing almost $13 billion to the Government and come cap in hand asking the Government and taxpayers to pay and you owe the Government tax. So I am sure that the Minister of Finance can find some way when this matter is eventually resolved to ensure that you send a signal to those persons that that $13 billion that is owing, they need to continue to pay up their taxes. Madam Vice-President, as I close I want to say that it is very important, particularly in this particular climate in which we exist of a state of emergency, that we are very careful we do not send a signal that people‟s rights can be taken away willy-nilly. I support the view stated by the Minister of Finance of the right of any group to raise their voices. I also say that I support the right of the Government to deal with the silent majority and to put in place principles and programmes that they feel are in the best interest of the people of Trinidad and Tobago, always being mindful of the rights of all the citizens because we are seeing some patterns developing that can sometimes send some very confusing signals to the population of Trinidad and Tobago. Sen. Moonan who is from San Fernando—and who would have been—I would say probably a little older than I was when there was the 1970s and the 1990s to which he refers—knows of what I speak. There is a scenario where the regulations that the Government has put in place, and maybe he can guide them, that putting in place the 1970 regulations which were extremely draconian and it had to suit a particular era to put those same regulations in place, lock, stock and barrel when there is no coup in Trinidad and Tobago is scandalous. [Desk thumping] We just have to look three seats away, and they could have sought the advice of Sen. Abdulah, you know, because I am sure if they had sought his advice they would not have put those regulations in place. As much as he is a part of the partnership, and that is his right, I am sure he would have advised them that there was no need to be so draconian so that when his brothers visited Tobago yesterday to do the work of the trade union movement—his comrades— Sen. Hinds: “De same Cocoyea broom turn „round and whip him”. 552 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Sen. P. Beckles: —that they would not have denied them the freedom of movement which they so guaranteed on the Sunday on which the state of emergency was announced, that the trade unions were free to march. [Desk thumping] [Crosstalk] Sen. Hinds: That it is when you negotiate with a crocodile. Sen. P. Beckles: A word to the wise. So I am just putting a plug that they utilize the services of people like Sen. Abdulah who can write a chapter and make sure that some of the mistakes that the Government is making now, that they do not make them because some of us who have made those mistakes are paying a dear price. [Desk thumping] Right, Sen. Abdulah? Good. [Crosstalk] Sen. Hinds: “That is what does happen when yuh want to play smooch- woochy with a crocodile”. Sen. P. Beckles: So as I close, Madam Vice-President, I just want to say that, for me, this is a very, very important debate. Some of us say that it is only in 2009 that this collapse started but there are a number of us who are aware that it is way when the UNC was in office the last time that the then Attorney General Ramesh Maharaj said since that time, almost 10 years, ago that Clico was insolvent. It was not a debate now, it was a debate then. [Crosstalk] And whilst they are criticizing us for not taking the kinds of decisions that we should have taken a year or two ago, if they had accepted the advice of Ramesh Maharaj, the then Attorney General of Trinidad and Tobago, we may have already dealt with the Clico issue. Madam Vice-President, I thank you. Sen. Hinds: What did they do? [Desk thumping] 10.10 p.m. Sen. Prof. Harold Ramkissoon: Madam Vice-President, I have until this moment steered clear of the Clico issue for the simple reason that I am an EFPA policyholder. I want to assure my good friend, Sen. Dr. Balgobin, that, however, I am not what he called “a high flyer EFPA policyholder”, and thanks to Sen. Pennelope Beckles, all EFPA policyholders are not caught up in the culture of greed. [Desk thumping] Having confessed to the committing of a cardinal sin, being an EFPA policyholder [Desk thumping] and seeing, hopefully, the light at the end of the tunnel with respect to the Clico issue, I would now break my vow of silence and make a contribution to this debate, and I do so, Madam Vice-President, with your kind permission and the permission of fellow Senators. 553 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Madam Vice-President, I want to go a bit back into the past, but I do not want to go too far into the past. Clico was once a well-established and well-run company. It was synonymous with local success in business, and I have respect for its founding father, Mr. Cyril Duprey. He was a visionary and, to me, one of the first prominent local businessmen. Clico was a household word, and one did business with Clico without asking too many questions. Up to this day, I do business with one of the associated companies Colfire, and I must say that doing business with Colfire has been a pleasure. I am a happy customer of Colfire. Unfortunately, today Clico is going through some very, very difficult times, and it is going through these very difficult times because of the mismanagement of the company bordering on recklessness and irresponsibility. The Hindu Credit Union is also going through some difficult times, and mainly for the same reason, but the recklessness and the irresponsibility in the Hindu Credit Union is less sophisticated, but of a much higher order. In addition, Clico got caught, as we heard earlier, in a period of major economic downturn that followed our second boom. Clico had the potential of becoming the perfect storm. This has caused tremendous hardship for a number of people in this country. Let me give you an idea of the magnitude we are talking about, and somebody alluded to this. If I said there are 250 policyholders of one form or the other with respect to Clico, and if you assume there are two dependent persons on each policyholder, you are talking about approximately 750,000 people being affected by the Clico crisis. That is at least one in every two persons in Trinidad and Tobago has been affected by the Clico issue. So Madam Vice-President, the fallout was far in its reach. I looked at the hearings of the Commission of Enquiry into the Hindu Credit Union, and I am sure, Madam Vice-President, you probably looked at the hearings too, and I was very saddened with what I saw, the stories of lives that have been wrecked; of health that has been wrecked; of homes that have been wrecked; and I am sure that the suffering of those affected by the Clico issue and crisis was even of a greater magnitude. It is easy to say that people have their own fate in their hands. That is true. It is easy to say that they took the risk and they should pay the price. That too is correct. What it is not easy to say and not easy to ask is, where was the Government and its institution to protect these investors, who are very vulnerable, from these unscrupulous individuals? 554 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. PROF. RAMKISSOON] History has a habit of repeating itself. In the bust that followed the first boom in the 1980s, one had a similar experience in this country. During that boom, we saw the collapse of the Kirpalani‟s empire, and somebody also alluded to that. We saw the collapse of a number of finance houses such as the International Trust Limited, the Commercial Finance and Submit Finance in which thousands had invested then too, many suffered. People lost their properties; people lost their life‟s savings. I remember one particular individual getting a heart attack, and this leads me to the first question. After the first bust in the 1980s and with the collapse of so many companies, why were adequate regulatory and monitoring systems and relevant legislation not put in place to protect investors? That is the first question. Madam Vice-President, before I turn to the Bill, which puts forward a proposal to deal with the Clico issue and, in particular, the controversial EFPA policyholders, let me remind fellow Senators and the public of the following sequence of events. Firstly, the last administration had promised to honour all commitments of Clico and, in fact, had started doing so. Some people received full payment; some people received partial payments; and some people received letters of commitment in which a schedule of payments was given. It was rather interesting to hear Sen. Browne give reasons for thinking that this, in fact, was the best course of action for any Government to follow. Secondly, the Central Bank issued a statement assuring EFPA policyholders that they had nothing to worry about and, consequently, some reinvested their money. Thirdly, the current administration is now advancing a proposal as to how they plan to deal with this problem which includes partial settlement for, what I call the over 75 EFPAs; those receiving over $75,000. They will receive about 90 per cent of their principal. While this offer is much more attractive and more humane than the original proposal, the whole chain of events raises some fundamental questions: questions of trust; questions of confidence and questions of credibility. Will people trust future Governments? Will people trust those who invest their savings? Will they again trust our institutions like the premiere regulatory body in the financial sector of our land, the Central Bank, which in the first place failed miserably to monitor Clico? If the Central Bank was doing its work, we may not have to be here today. Madam Vice-President, the country is experiencing a major credibility problem. 555 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

I now want, Madam Vice-President, to make some additional comments and seek answers to some questions. My first comment is, the current administration is putting forward a proposal to deal with the Clico issue and, as I said, it is a more humane proposal than the original proposal, and it is going to deal with the issue with no audited accounts for the years 2008, 2009 and 2010 and, to me, this seems like putting the cart before the horse, because if you do not have a fairly complete picture of what the current Clico is, how are you going to put forward the best proposal in dealing with the problem? Now, I understand the problem, it is difficult as they claim to get some of these figures but, again, if you do not have updated accounts, it is difficult to come up with the best possible proposal. That is for argument‟s sake. Look at the worst possible scenario. Let us assume that at the end of the day when the accounts come in, it is found that Clico is in a terrible shape that not even a heart transplant will help it, then you ask yourself the question: the $10 million or $11 million invested this year, will that be money put into a black hole? Some details are lacking in the proposal here. Here I want to commend the hon. Minister of Finance for his intention to circulate questions that many may want to ask, and answers to the Opposition I understand and, thus, the public. Madam Vice-President, assuming the Bill is passed, what are the possible dates of implementation? These are the questions that people outside there want to know. The hon. Minister of Finance stated again that things are in place, and they are just waiting approval from the Senate, but we need more exact information. When will the NEL holding company be set up? If it is going to be set up, will it be listed on the Trinidad and Tobago Stock Market? If the answer is in the affirmative, how long will it take to set it up and have it listed on the stock market? I come to the board of directors of the NEL company. I think Sen. Dr. Balgobin talked about the composition of the board of directors. I think he suggested that we should have non-political appointments on that board, but I would also want to suggest that we have a representative from the EFPA policyholders group on that NEL board. You see, it is important for us to answer some of these questions, because it is in the interest of all of us to have the Clico issue settled as quickly as possible, and to put it behind us. The Clico problem has been around for too long. Madam Vice-President, I understand from a source, probably not very reliable, that the Government had an alternative solution in mind, the alternative solution being that for the period, the eleventh year to the twentieth year, they 556 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. PROF. RAMKISSOON] were considering floating bonds—I think the sixth year and eleventh year bonds. [Interruption] I think the suggestion was that they were going to float bonds, and this was a more direct way of raising the $5 billion they would need. If by chance they were considering that proposal, the question is, why was it abandoned? My friends here on the Independent Bench say that it did not quite make sense, so the source was not very reliable. [Laughter] Madam Vice- President, I would leave that out, as they say, I would not pursue this any further, but I want to look at some of the lessons to be learnt from the Clico debacle. I think the first lesson to be learnt is that Governments must level with the people. [Desk thumping] The people want facts; they want information and not misinformation, and they want the truth, otherwise you would not win the confidence and trust of the people. [Desk thumping] 10.25 p.m. The second lesson as I see it, Madam Vice-President, is that institutions like the Central Bank must protect their integrity. They must act in a responsible and timely manner and must not find themselves being accused of gross negligence. When people expect protection from the Central Bank, and the Central Bank fails them, the question is, to whom will they turn? The third lesson as I see it, when we are trying to solve a problem particularly of great magnitude, do not only consider the hard, cold arithmetic of the problem, examine the social cost and implications and advance a solution that is humane. If Government had advanced this proposal last year, a year ago, it is my feeling that the proposal would have been accepted. To me it is a more acceptable proposal that we have now before us. And if the proposal was accepted then that legal action taken by a group of six, probably, would not have been taken. Madam Vice-President, I want to bring my contribution to an end by firstly commending the Government in trying to honour the same—in some form— commitment of the last Government. As they say, Madam Vice-President, the king is dead, long live the king. Sen. Beckles: I hope you understand that. That is a serious thing. Sen. Prof. H. Ramkissoon: Well, I will explain it further. The tradition, Madam Vice-President, of honouring commitments of previous Governments must be maintained. It is the hallmark of a civilized society. Secondly, by stating that, in my view the proposal put forward by the Government seems a reasonable one. And thirdly, Madam Vice-President, with respect to the Central Bank 557 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

(Amdt.) Bill, I do share the concerns of some of my colleagues, and in particular, the concerns of Sen. Drayton, and I do hope that the hon. Minister of Finance when winding up will try to address some of these concerns. I thank you very much, Madam Vice-President. [Desk thumping] The Minister of Energy and Energy Affairs (Sen. The Hon. Kevin Ramnarine): Madam Vice-President, I rise to make a brief contribution on this Bill. We have been debating now for 12 hours and 28 minutes, and I do not think anything I say would be able to, you know—what has been said has been said. Quite a lot has been said on both sides, I think we have had 14 speakers already for the day, so I would not be long. Having said that I just want to say that I support these two Bills before us today and— Sen. Hinds: I beg to move. Sen. The Hon. K. Ramnarine: I will beg to move in about 10 minutes. What is fundamental with respect to these two Bills, Madam Vice-President, are three issues as I see them. One is the general health of the economy of Trinidad and Tobago which has been under question for over two years now, because this matter has been before the country since January 2009, so it is two years going on three years. Secondly is the issue of confidence in the economy and as a previous speaker pointed out, an economy really runs on trust and confidence and in particular its banking and financial sector. And the third reason I think these Bills are critical, and it is something that Sen. Dr. Balgobin mentioned, I think it presents an opportunity for the average citizen in this country to participate in the widening and deepening of the local capital market. And this is a point I made a few days ago at the Arthur Lok Jack Graduate School of Business when we launched the Global Competitiveness Report for 2012. What is clear is that there is a disconnect between the country‟s major sector, the energy sector, and the local capital market, and that point was brought home by Sen. Dr. Balgobin. I would not deal with issues of solvency versus liquidity; I think we have heard that several times tonight. I will not talk about the diagnosis and the misdiagnosis of Clico in January 2009. I will say, however, that it seems that the Government in 2009 got it wrong and left us with a situation where the distinguished Minister of Finance—and I want to really congratulate him because he has been going at this since two weeks ago now. [Desk thumping] Last week he was, of course,—[Interruption] 558 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Sen. Hinds: [Inaudible] 16 months ago. Sen. The Hon. K. Ramnarine: I am speaking about his contribution last week with respect to the increase in the borrowing limits, and, of course, this week in Parliament dealing with these two Bills. So he has really been putting out quite a lot of effort, and what you are seeing here is really the presentation. There is a tremendous amount of work that is going on in the Ministry of Finance, and I am aware of that because I wish to state for the public record that since I have become Minister of Energy three months ago, we have had an extremely close and good working relationship. [Desk thumping] I am across in the Ministry of Finance at least once per week. Sen. Hinds: [Inaudible] Is he arranging lectures on the Titanic? Sen. The Hon. K. Ramnarine: Madam Vice-President, as I said, I would not be very long. This matter of course is a matter which the Minister of Finance has now sought to comprehensively deal with. I believe the previous administration was really applying Flashband to a leaking roof, whereas the Minister of Finance has sought to totally change the galvanize on that leaking roof by coming forward with a comprehensive solution to solve this issue once and for all. [Desk thumping] Madam Vice-President, when we look at what has happened in the world there are many lessons to be learnt with respect to regulation. There is a very good documentary which I will recommend to Sen. Hinds, it is called Inside Job, and it won an Oscar last year for best documentary. It deals with the fall of Lehman Brothers and the collapse of Wall Street in 2008, and it is narrated by a very famous actor, Matt Damon. What they said essentially is that for almost a 30-year period in the United States, there was a progressive loosening and relaxing of the regulatory framework as it relates to the financial sector in that country, and that led to an increase in the biodiversity of financial products in the US, and that system eventually collapsed on itself. So, in Trinidad and Tobago, we have had a similar failure of regulation and I hear the criticisms coming that this was known to the UNC administration in 2000. Well if it was known to the UNC administration in 2000, and you all knew about it, you all had nine years to do something about it and nothing was done in those nine years. So, Madam Vice-President, I also want to add that the IMF in 2005 came to Trinidad and Tobago and pointed out to this country that there were serious gaps. As far back as 2005, the IMF came here before the eruption of this crisis and 559 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 conducted an assessment into the health of the financial system and that assessment said that the financial system had some critical gaps that had to be dealt with, and those findings of course were not dealt with in 2005. So we arrived at the problem that we have, that emerged in 2009. Madam Vice-President, as I said, I would not be too long. This problem has been around for a long time. Clico has substantial assets, Clico and CL Financial both have substantial assets in the energy sector, and that sector of course was therefore impacted and related to this crisis, and I heard talk about the relationship between this contagion effect and the rest of the Caribbean. It had impacted upon Barbados, it had impacted upon the Bahamas, it had impacted upon the Eastern Caribbean where it accounted for approximately 17 per cent of Eastern Caribbean GDP, it impacted of course upon Guyana, Belize, Surinam and the Cayman Islands, so it was not limited to Trinidad and Tobago. And tonight we heard that there are also EFPA holders who are living outside, in the United States and so on. In closing I want to say I support these Bills and I support the excellent work being done by this Government to bring some sort of sanity to the financial system of this country, and I support the efforts being made by the Minister of Finance to put this economy on even keel. Thank you very much, Madam Vice-President. Sen. Corinne Baptiste-McKnight: Madam Vice-President, I thank you for the opportunity to intervene. It had not been my intention to add to the discomfort of my colleagues, but having listened intensely to this debate, I think there are still a few points that I would like to make. Now we have heard the history of this issue tonight on both sides, more or less from its inception, we would like to think. And we have heard the reasons why both Governments took the decisions that they did, culminating with this present Bill, and on balance, I think that I can live with this decision. In fact, I should add that whereas I have no holdings in EFPAs or anything of the sort, I do have two normal Clico policies of very little value, and my car is insured with Colfire, so I hope that that continues to exist. But because I think that this is about as good as it gets, I really would plead with my colleague, the Minister of National Security, that perhaps he could intervene with the CoP to have a permit issued to the representatives of these Clico people so that they could come to the square and thank the Minister for saving their money for them. I think they ought to be happy with this, quite frankly, because I know that there is a sizeable population of taxpayers who really are not too happy about people being rewarded for what—with hindsight you might say it might be bad judgment, or just being unlucky, but I think it is important for us to recognize that the failure of 560 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. BAPTISTE-MCKNIGHT] financial institutions is nothing new in this country. This is the latest of a long line and I am sure that there are going to be others. So that it is extremely important that this is handled in such a fashion as not to establish a precedent for how other failures will be expected to be treated. People must not use this to assume that they have a right to be repaid for losses on investment. 10.40 p.m. I think that in order to obviate this, it is going to be extremely important for the Government to catalogue the reasons this intervention had to be done; not in the language of what is systemic risk and implications of financial catastrophe. It has to be done in language that every taxpayer and every aspiring taxpayer could understand. There are some of us who would want to know that it started out as possibly 20/25 per cent of our GDP, and what the result of that would be. Further to this, I am not so sure that the ouster clause—I get the strong impression as a layperson that it is going to be challenged. [Desk thumping] I feel that it is going to be helpful if there is on record someplace where the Judiciary, the judge, whoever is going to be involved in the case, can go to this authoritative source and see exactly why it was deemed to be necessary to prevent people from doing it. It is all well and good to keep saying from the balcony that it does not exist, but there must be a reason, and I feel that reason can and must be documented. There is still time for this reason to be presented, articulated—that is a nice word. I feel, judging from the presentation that I was privileged to have earlier this week, that the Ministry of Finance together with the bank and Clico have the capacity to provide this proper, plain, simple documentation. The taxpayers who are providing this buffer have to be involved in this. They need to understand not only why it was necessary, but what measures are being put in place to obviate this happening again. It has been hinted that we are going to have legislation shortly that would strengthen the Central Bank‟s authority to deal with these things. It is not good enough just to state this. We need to have your legislative calendar, so that people will see this is being given priority, these things are coming to us in a timely fashion. [Desk thumping] Clico remains a problem. The people out there, and many people outside and inside this House, have called for publication of the 2008—2010 audited reports. It is important that people see that things are being done, and that this information is being shared with the people who have to pay for it. I think this is only fair. 561 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

I think it is also extremely important that you share with both the taxpayers and those who have been victims of this company what measures are being put in place to deal with the wrongdoers. Trinidad and Tobago seems to be the only country in the world where crime is only blue-collar. This is an example of the most egregious kind of white-collar crime. If this goes unpunished and taxpayers have to pay for it, I think someone is going to reap the whirlwind. My people have a way of meting out punishment to whoever is available, not necessarily the people who deserve it. I just have to ask you to bear those few things in mind, and let you know that I wish you the best of luck with both of these Bills. I thank you, Madam Vice-President. Sen. Terance Baynes: Thank you, Madam Vice-President, for the opportunity at this ungodly hour—[Crosstalk] [Laughter] Sen. Deyalsingh: This is normal. Sen. T. Baynes: I suspect you understand what I mean. We have been here so long, and so much has been put in this firmament today regarding this matter. I sat here and listened to the various contributions across the floor, and I felt that to be a successful person in this hallowed place you have to be almost like a God, because you do not have the luxury of changing your mind, or when you say things, they have to remain said. Even if a circumstance arises down the road that requires you to change, you are not allowed that because that is going to come back to bite you in this place somehow. I am impressed with what the hon. Minister of Finance has been doing. [Desk thumping] If I had to choose from the last three Finance Ministers—we had a geologist, we had a lawyer and we have an economist; that is a no-brainer to me. [Desk thumping] [Laughter] But in all seriousness, the hon. Minister‟s head has been whitened by efforts, just trying to fix the problem before us. I think he must be commended. I know that has been said, but it needs to be said again, that he must be commended for what he has been trying to do. I heard in another place statements made as if to try and ridicule him. I know we have this back and forth, but I really think that this season in which we find ourselves requires strong governance. Strong governance does not always mean popular governance. You have to make some hard choices. This present matter we are discussing, when you think about the corporate excesses that some of these so-called— I cannot even find a good word to describe them—have engaged in and have put the masses at risk, I agree that they must be made to pay. As long as we can find them, they must be made to pay. 562 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. BAYNES] At the same time, those of us who are in the seat of governance must govern. Although it may not be popular, I believe that we have come into the governance landscape in Trinidad and Tobago for a time like this. If you subscribe to the philosophy that promotion does not really come from the east nor from the west, it comes from God, he sets up and pulls down, I suspect that we will govern well, until God decides to put somebody else in the seat of governance. [Desk thumping] I would want to conclude by simply saying that I support the actions of the hon. Minister of Finance. I must also say too, I was a little disappointed when the Senators opposite did not attend the session organized by the Minister of Finance. I know Sen. Deyalsingh gave an explanation. I am still not clear on the explanation. I felt as if there was a political mandate and being present might have gone contrary to that mandate, in terms of what may be the Opposition‟s strategy. I am not sure and I am still open for clarity on that matter. But I felt if they were there, it would have given them a greater appreciation for what has been done and what we are trying to do. That being said, I agree with what is taking place and again I must say that the Minister of Finance must be empowered and encouraged and given all the support that he needs so that we could try to fix this problem. We have found ourselves in a precarious political environment, and we have to try to fix it, and fix it we will. [Desk thumping] We will fix it. With those few words, Madam Vice-President, I thank you. Madam Vice-President: On behalf of all Members of this honourable Chamber, I congratulate our senatorial colleague from Tobago, Sen. Terance Baynes, on his maiden contribution. Well done. Sen. Shamfa Cudjoe: Madam Vice-President, I also would like to congratulate my brother, Pastor Terance Baynes from Tobago. I did not plan on entering this debate tonight, at this 13th hour of the debate, but I have three quick issues, one that I did not hear anybody mention before. I fall into the third group that Sen. Ramkhelawan spoke about earlier; that is the group that has no interest in Clico. I have never been interested in any kind of business like that, insurance business. I found it strange that if the market was offering 5 per cent, how were you able to offer 10 per cent. I never entered anything like that, so I fall into the group, a taxpayer who now has to come up with the money to pay for this thing. 563 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

There are three things that rest on my mind. I am not going to go back and forth, speaking about which political party was responsible for this or which political party was responsible for the meltdown. But what I find particularly interesting is the way many of the speakers spoke about the crisis that has happened. They said it erupted and the financial system did not work out. Madam Vice-President, at the end of the day, the financial system did not operate on its own. There were some dishonest or reckless persons involved in all of this. We need to find a way to bring these people to justice. Something has failed us, someone has failed us. Our regulatory framework did not work, and the people who were supposed to be supervising and overseeing the affairs of the country were not doing what they were supposed to. Whether it was PNM, UNC, Tobagonian or Trinidadian, what was supposed to be done was not done. 10.55 p.m. Madam Vice-President, I am interested in finding out, creating, developing the necessary framework and the legislation to ensure that this kind of thing does not happen again. So, as I browsed a couple of documents—not to prepare because I did not plan to—I came across the Financial Crisis Inquiry report from the US and in the conclusion of the report it states, and I quote: “The crisis was the result of human action and inaction, not of Mother Nature or computer models gone haywire. The captains of finance and the public stewards of our financial system ignored warnings and failed to question, understand, and manage evolving risks within a system essential to the well-being of the American public. Theirs was a big miss, not a stumble. While the business cycle cannot be repealed, a crisis of this magnitude need not have occurred.” Madam Vice-President, Shakespeare said, “The fault lies not in the stars, but the fault lies in us.” [Desk thumping] So, Madam Vice-President, while it is well and good to say it flopped and it erupted, we have to remember that somebody did not do their job well. So I hope that when the Minister is winding up we can make a commitment to come back to this place or to get together in some committee to find ways to strengthen and to improve and to examine our regulatory framework so that those who are responsible for having us in this position here today can be brought to some kind of justice, because while we are here trying to figure out a way to come up with the money to sort this thing out, somebody is having a nice time building condos in Miami and purchasing land in Tobago. Madam Vice-President, we cannot as taxpayers, as people who work hard, allow these people to slide. 564 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. CUDJOE] Another thing that crossed my mind is, there is a need for educating the public because Clico policyholders had a field day encouraging people to take their money out of the banks and other financial institutions and put it all in Clico. So we need to find a way to—like in Tobago we have a financial educational system—I think it is run by the Central Bank—I think they have it here in Trinidad too. You will learn that you do not put all your eggs in one basket. And I listened to some of the stories from some of the policyholders and some people put everything into Clico and did not have a cent in other places. So, Madam Vice-President, I think there is a need to educate the public as to what this kind of business involves, so that when something like this happens you do not think, well, you have to get back every single cent. Some people gamble, some people know that they were gambling, while some people really went in there and put their savings for pension and so forth expecting to use it up later in their lives. So those were my two main concerns. We have to remember that with getting high rewards you are going to be facing higher risk. Madam Vice-President, when the Minister of Finance and the other speakers spoke today, especially the speakers from the People‟s Partnership, he did not mention what new legislation will be brought to the Senate to treat with the issue of making sure that this kind of crisis does not happen to us again. And I wish to bring to the attention of the Senate, page 8 from the budget speech where the Minister of Finance mentioned the fiasco was caused by reckless corporate governance and the glaring failure of our financial regulatory institutions. He went on to say that this crisis was caused by an absence of risk management, excessive borrowing, internally and externally to fund high-risk, speculative investment and wrong financial reporting. Madam Vice-President, we knew what the problem was before we came here today. And I think that it is critical that even if we do not come to a solution tonight—we will not come to a solution tonight as to what regulatory framework we are going to put in place, but we need to make a commitment to come back here to establish some kind of body, some kind of committee to see that through. I think that there is need for [Interruption]—repeat that— Sen. Bharath: Do you support the Bill? Sen. S. Cudjoe:—[Laughter]—I think that there is need, as Sen. Beckles would have mentioned before, for us to form a committee or some sort of network throughout the Caribbean, because this Clico fiasco has caused much difficulty not just for us here in Trinidad and Tobago but also throughout the region and the 565 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 sharing of information and economic and financial intelligence is critical to ensure that these things do not happen. You had policy agents in Jamaica offering 35 per cent. Now, any sane person would know that is not possible. So, Madam Vice-President—because if the market is offering 5 per cent, explain to me how you are going to give me 35 per cent on my premium. I think that there—I cannot find the rest of my notes right now, but the two main things: the people who have us in this place here today, they need to pay. We need to find a way to make them come out, because it is not fair to the taxpayers, it is not fair to the people who put all their money in and I do not care, PNM, UNC, whoever they are, this is unfair to us, so we need to come up with the regulatory framework and we need to find these people and bring them to justice and do whatever is critical, whatever is necessary to ensure that this kind of thing does not happen again. Madam Vice-President, I thank you. Sen. Dr. James. Armstrong: Thank you, Madam Vice-President. I would like to start my contribution really by looking at the memorandum of understanding. In doing my research I started there and I looked at the memorandum of understanding and I think everyone agrees that this is where the problem really started, because I am not a financial expert, but I do not see really how anyone in their right mind could have really, sort of agreed to a number of things here and there are still several outstanding matters or certain concerns that I have that I would like to briefly mention.

In the MOU it makes reference, for instance, to the need to protect the interest of depositors. That is fine. It also makes reference to the sale of assets and so on, full disclosure by Clico. I am not sure, Madam Vice-President, that we are really talking about a big hole. This thing is large. This is serious, and we are not at the bottom of this as yet. I am not even sure that we have identified all the assets. I am not sure that assets were not moved a week before or a month before this agreement was signed, because somebody must have decided, “We are having a problem, let us go to the Government, go to the Central Bank and if we are going to do that then let us do (a), (b), (c) or (d),” and that is a concern that I have on page 1, for instance, 1(a)—(d) and whether these things that are here can really be done. So I mention this because I really believe that we need to do some further investigation in terms of the nature of Clico, the nature of that problem, because I do not think we are at the bottom of that as yet. 566 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. DR. ARMSTRONG] Getting to the Bills, Madam Vice-President, the major concern that I have with it is that we are really suspending the rights and so on of citizens. The particular problem that I have with that is that it is being done after there was a judgment of the court. That is the major problem that I am having. Not so much that we are seeking to suspend rights and to protect investments and so on, but that there was actually a judgment, in other words the judiciary was involved and now you come to the Parliament and we are doing something to circumvent that, and that is a major problem that I am having. In fact, I must commend the Minister for the technical presentation that was given and that certainly enlightened me a lot more because I did not have that kind of information before and one of the questions that I raised then was that very point and I asked the lawyers to really explain what the implications of that were. However, having said that, I think what we are asked to do really is to make a judgment between private good and the public good. In that case I think it is the responsibility of any citizen really to weigh in on the side of public good as opposed to a private good. It is a very, very hard choice to make. As my colleague, Sen. Baptiste-Mc Knight indicated, there may very well be challenges to what we are doing and I trust that the Government would be in a position to deal with that. But it is a very, very—it is like, you know, being between a rock and a hard place. The understanding is that if we do not act, there could very well be a run on the financial institution. We may very well destabilize the economy and so on. One has to be concerned about that. In talking about a public good vs a private good, what I would, perhaps have liked to hear from the Minister, and perhaps he can touch on that in winding up, is what public good might be displaced by us supporting this Bill. In other words, clearly by doing this, by supporting this Bill, it means that there are certain things that are going to be displaced. And some colleagues mentioned, for instance, whether it is schooling and hospital or whatnot. And there are some big ticket items I know that the Government is sort of contemplating and we have not heard the budget as yet, but I am sure that you might be able in order to convince us even more as to what you think what might be displaced. The other concern that I have is with respect to the regulatory framework and the responsibility there. Clearly someone has failed and failed miserably and I am wondering what measures are being put in place to deal with that situation. Has the regulatory capacity or oversight been addressed? Because that was a major failure and it is something that I certainly would like to be assured is being addressed. 567 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

11.10 p.m. We have also put in place an executive, or we have put in place managers to handle the new Clico. I would also like to be assured that these are the right people because, clearly, what happened initially, it seems to me, was that you had very astute operators in the private sector dealing with people who were not very clear on what was happening, and that Clico business, to me, it is a sort of a special type of operation, and if you do not know what you are doing and you do not have the business sense, the business acumen, the capability, you might very well go in there and not be able to turn this thing around. I heard that, for instance, they have done about $10 million in business, but I would like to know the premiums being paid. Is this thing really being serviced? It is something that I would like to be advised of. What happens if the people who are in place now make the same mistakes as some of the people who were there before? How are we going to safeguard against that? What are the penalties for that? That brings me to my next point. Within the Bill, it really exonerates, in clause 4(5)(a) on page 3, where it talks about “no creditor, shareholder, depositor, policyholder or any other person shall have any remedy...”, and it goes on. That provision seems to be too broad for me, Minister, in that what it does, really, is prevent anyone from taking any action against Clico, even outside of the matter that we are discussing. In other words, let us say you are a staff member of Clico and you have a problem with the company and you want to take action, this provision here really prevents anyone from taking any action whatsoever against the company, and that bothers me, really. I think it is a little too wide. I could understand if we are trying to prevent someone—you have an EFPA policy and so on and, okay, you want to keep that person at bay, but this is a very wide net, and you are catching everybody in here. I would like you to comment on that, because it is a concern that I have, really, that it is a very wide net where claims against the company cannot be made, where it talks about, “any other person”. So I would like you to comment on that in your winding up. The other problem that I have is with respect to (c) on page 5. It also protects the bank or persons appointed by the bank. Again, it means that people can go in there and really not perform, or it can be various types of transgressions that we would not be able to address. So that provision again, I have a slight problem with it, but perhaps the Minister, in winding up, can comment on that; can elaborate on that because it is really a little too wide for my liking. 568 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. DR. ARMSTRONG] In fact, I understand that it is not possible to entertain any amendments at this point but, perhaps, some undertaking could be given that this would be addressed in some way; perhaps not through legislation but through some other form of oversight. Mention was also made by Sen. Drayton of the business of any litigation being time-barred and so on, and I understand that the Government has undertaken to address that. That is another concern that I had, and I would like to hear the Minister in winding up also comment on that. Reporting to the courts, I think it has been mentioned. That was a concern of mine, that there should also be reports to the Parliament, and I would like that to be given as an undertaking, that this would also be addressed. I had a note here, also wondering whether, in fact, we could not put some sort of time frame for the turnaround of the company. In other words, if you are putting a manager or whatever, you say, “Look, I am putting you in there and I want you to turn this thing around in two years, three years”, and within that time frame that you would then allow this provision to expire, so that there is some sort of sunset clause, as far as that is concerned. Now, whether that is possible, I do not know, but it is something that came to mind. Should we really put a time frame on the new management to turn this thing around within a given time? Otherwise, if it is left up to the Central Bank it could go on for five years; it could be 10 years, and they say, “Well, look, you know, the thing has not turned around as yet.” So after 10 years you are still in the same position. Apart from that, those are the concerns that I have. As I said, given a choice between a private good and a public good, I would have to lean towards the public good, but I would be convinced after I hear the winding up of the Minister, and if he can address some of the concerns that I have. Thank you very much, Madam Vice-President. [Desk thumping] Sen. The Hon. Embau Moheni: Thank you, Madam Vice-President, for the opportunity to make just a few comments with regard to the two pieces of legislation at hand. First of all, we need to look at Clico as an institution, because this financial institution grew out of the oldest local insurance company in this country. So that when one talks about investing in this company, it is different from investing in a recently established company. 569 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

If I should establish a company in the morning and offer 20 per cent interest, then you could say it is high risk, but when someone is investing in a company like Clico, they are not going to expect a company like Clico to fail in its payments, a company that is regional and global in its scope, with billions of dollars in assets, and which has been a household name in this country, and in this part of the world since we have been little children growing up. [Desk thumping] So that those investors who put their money in Clico, whether as depositors or otherwise, were investing in a company that had a sound, solid track record and years of historical experience behind it. So I would not say that those investors would have seen that investment as high risk to begin with. That is one. Secondly, you are talking about a company which, in collapsing, has affected possibly about 20 per cent of the population of this country. So it is not simply a question of a few individuals being affected; it is almost as if the national community is at risk and, therefore, our view and our perception of this has to be different. It is almost as if you are talking about a type of operation where almost the nation is involved, because even though you are talking about 20 or 30 per cent directly affected, their family, friends, their companies, that could take it to another 20 or 30 per cent. Sen. Ramlogan: The whole country. Sen. E. Moheni: The whole country. Sen. Browne, in his contribution, spoke about constancy, predictability, certainty and all these nice terms, and he spoke about foreign investors being affected or deterred from investing where there is failure to show that level of certainty and constancy, and what have you, but we have to realize that there is a different global environment today, whereby the United States and Western Europe are in serious economic problems, and no investor, no individual or no economist will judge us outside of the economic environment in which we function today, which is one of stress, strain and pressure and financial—[Desk thumping] What is most important will be the manner in which we handle this crisis, so that at the end of the day they would say, “Yes, Trinidad and Tobago was faced with hard decisions; they stood up; made the right decisions; took the bull by the horns; they passed the necessary legislation and they pulled the country through the crisis.” [Desk thumping] I was saddened by the cheap political mileage of our friend on the other side there when he came brandishing this newspaper and talking about our beloved Prime Minister, the hon. Kamla Persad-Bissessar, when she made reference to the fact that we would not use our special majority in the Parliament to deprive citizens of 570 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [SEN. MOHENI] their right of access to the courts. That statement shows the concern that the People‟s Partnership Government has for due process and the protection of the rights of our citizens, but when your national community is endangered, you need to take positive action— Hon. Senators: Yes! Yes! [Desk thumping] Sen. E. Moheni:—regardless of what people like Sen. Hinds would come and say. Cheap politicking! [Desk thumping] We have to stand up for what is right, and when I say what is right, I do not just mean in terms of how you may define right and wrong. We are here to protect and preserve the welfare and well-being of the national community. On that score, I stand and I support these pieces of legislation and I am proud of the stand that the Minister of Finance and our Prime Minister have taken. [Desk thumping] 11.25 p.m. The Minister of Public Utilities (Sen. The Hon. Emmanuel George): Madam Vice-President, I rise in advance of my colleague, the Minister of Finance, to bring a close to the debate, simply to do something I think is necessary for two reasons; one, I am Leader of Government Business in the Senate; [Desk thumping] and it is something that has been done by most of the speakers here this evening and, that is, to declare my interest in Clico. I have a document here with me, and to be very accurate it is a life insurance that I have taken out with Clico. You can see its age and so on. It is dated September 15, 1986. There is a policy number, a monthly premium and so on. A very small monthly—[Interruption] Sen. Ramlogan: A modest sum. Sen. The Hon. E. George:—premium—a very modest sum. Even though it was something that was taken out as a requirement when I purchased my house which was financed by Clico, that house is completely paid for and I do not have to pay for it anymore, but I still continue to pay it religiously every month by what you would call a deduction—[Interruption] Sen. Karim: Standing order. Sen. The Hon. E. George:—a standing order deduction at the bank. So, it is still current. If I depart this life my children will benefit from it, so I continue to pay and leave it there. So I have that interest in Clico. So, having said that, I will now take my seat. Thank you very much and I can vote safely. [Desk thumping] 571 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

The Minister of Finance (Hon. Winston Dookeran): Madam Vice- President, for some time there has also been a conversation in the country as to the value and utility of the Senate in our parliamentary system. The value and the utility of the Senate in law-making, has been under some kind of scrutiny over the years. This evening, I believe Members of this Senate have proven that the value and utility of this Senate are indispensable. [Desk thumping] Sen. Beckles: I will drink to that. Hon. W. Dookeran: I must say to all those who have contributed to this debate from whatever sides, I sense there is only one side here and, that is, the side of Trinidad and Tobago. [Desk thumping] I want to thank all those who have made words of encouragement to the Government, and I want to make it absolutely clear that what has been brought here to this Senate are the policy and programme of the Government of the People‟s Partnership, led by the hon. Prime Minister, Kamla Persad-Bissessar. [Desk thumping] Madam Vice-President, I believe there are many, many issues that have been raised. Many issues of merit that require answers, and I seek your indulgence to attempt to respond to some of those answers, notwithstanding the lateness of the evening and the length of the session. I do not think I will able to do total justice because my notes of which I took careful notes were quite long, but one of the things that emerged is the need for educating the public. I believe it was Sen. Baptiste-Mc Knight who, in her contribution, said that legislation of this nature has to be anchored in public information, and it was said also by Sen. Cudjoe and a few others. I think they are quite right, that since we are hoping to begin the closing of a chapter that has bedevilled this country for some time and more pronouncedly for the last two years, it will be more than appropriate to account to the population in the way that Members opposite in the Senate have requested. I just want to give you the assurance which I gave to the Lower House when we debated this, that already the Ministry, along with the Central Bank and Clico, have begun the preparation of a public document—many questions that are still to be answered—to provide the necessary information. In addition to that, we did present to the hon. Senators, for those who afforded us the opportunity to accept our invitation, a document that is in the vicinity of 57 pages as of now, outlining all the necessary information that led to the story that assess what is the current challenges and why the proposals to go forward have been put forward. This 572 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [HON. W. DOOKERAN] document, I assure you, along with the questions and answers, will be converted into a simple, easy to read, hopefully, document for the sake of establishing that this Parliament has mandated us to put this as an anchor document for the purposes of evaluating our performance in the future. So this evening, Madam Vice-President, I give the assurance once more that we will as we had already decided to do, elaborate on that because public information is clearly important. There is also a call which was made generally for justice because it was felt that a system did not operate without wrongdoers working that system, but I believe the hon. Attorney General has already dealt with that issue. Within the rule of law, which is what we all uphold, I am sure the processes will take its course, and hopefully will take its course in a speedier manner. I believe Sen. Cudjoe was very passionate in her call—in really a speech from her heart I sense this evening—saying that this is something wrong and has to be corrected. The third area in which I have sensed a certain amount of agreement is that the regulatory system that we have needs to be fixed wherever it is weak, and the operations of that system need to be monitored wherever it is not monitored, and to some extent I will address some of that this evening but not all. Those were issues I sensed that were raised and ventilated in this honourable Chamber with great eloquence, with substantial depth, and in some cases with passion, because an issue of this nature that had rendered this country in this painful exercise must generate passion. Sometimes the passion was based on invoking fear that what we were doing is likely not to work, and even if it were to work, it is going to deny what were some of our cherished freedoms in our country. But more often than not, I sensed that the passion was really being one that was generating a sense of hope, a sense of relief, a sense that we as a country, in spite of our difficulties, have now come to a point where the society will feel a sense of relief and so too will the legislators. Therefore, I sense that this evening we have to marry both the answers for those who wish or those who seem to have a continuing fear, and to encourage those who have a sense of hope. I say that not to ever suggest to this honourable Chamber that the problem is over. There are still many pieces of this jigsaw puzzle, if I can use a very mild word to define what was a disaster waiting to happen, still to be dealt with. There are still many issues that are to be dealt with in terms of the resuscitation of the company in whatever form, in terms of the completeness of the exercise that will allow us to handle the offer of payment that we have now proposed in 573 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 completeness, but I believe from a legislative perspective we have begun the closure process and that is a sign of relief, and those of us who have participated in this here this evening must clearly feel that sense of relief that from the legislative side we have cleared the hurdles. What really were the challenges that were before us to require that kind of legislation? Throughout the discussion, it was felt that the legal challenges were really emerging from the policyholders, and I believe Sen. Dr. Armstrong did make reference to the point that he was concerned that we were taking this action with respect to the amendment to the Central Bank Act perhaps in response to a court judgment. I want to assure him that that was never our motivation. In fact, this very legislation, as was pointed out by Senators opposite, with some amendments, were laid a year ago or thereabouts. So it was always part of the framework for our solution. The time was not appropriate then to bring it to this Parliament, and the Prime Minister said at the time, “Let us explore all the possibilities that exist and let us see how this thing will turn out before we attempt to find any way or any legislation that will deny access if not for all times, but even for a short time, if not in all cases, for even in constricted cases” and, therefore, it was part of a long-term plan. The time has come now where we cannot escape the necessity to move forward because the legal threat is not only a legal threat from policyholders—and there have been some—and that is where I agreed with Sen. Dr. Armstrong, that one of the fundamental choices is the choice between the public good and what is perceived to be the private, and that is why legislation like this comes before us. 11.40 p.m. The real legal challenge in my view is not going to come from that source and that is why there is the urgency of this legislation. You will recollect, and I believe it was pointed out by Sen. Dr. Armstrong, that the MOU—whether it was right or wrong or whether it was correct, I will not go into that debate at this point—but it has an end point to it. It is for three years and the three years will be up next year, sometime. So, we as a Government have to be prepared for executing in the interest of the nation the agreements that were put together. Therefore, legal challenges are likely to come from major creditors. Remember we are dealing with an institution that had global reach, not only in Trinidad, not only in the Caribbean, but in the United States and elsewhere. There are creditors in many parts of the world, many of whom might find it appropriate and may not have the same sense of nationalism that we have when I call for the 574 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [HON. W. DOOKERAN] protection of the national interest because they may be not within our graphic boundaries. So, legal challenges from creditors are likely to take place. I am not saying I have any specific knowledge but I know that this is a possibility. But more than that, there are many shareholders involved in this other than the Government. The Government has certain shareholding as a result of the agreement, but as I mentioned, CL Financial is not owned by the Government; they are shareholders. Main shareholders or smaller shareholders, the legal threat from shareholders is real, and we as a nation, if we want to protect this interest of the country, must protect ourselves against those legal threats, not because we want to deny anybody the right to pursue such legal measures that is a right here and elsewhere, but because if these legal threats were to succeed, we now have a higher risk of the liquidation of this company. Everybody agrees here that this was a large and huge problem and everybody has argued that it had far-reaching impact among the population, so I do not have to argue that. All I can say is that the resources that are available to the company will not allow it to withstand a challenge to litigation. And if that were not to succeed then all that Sen. Beckles said will not happen is likely to be on the horizon. So, it is not a false alarm but it is not pressing the panic button at the same time. Sen. George: Well said, well said! Hon. W. Dookeran: It is an attempt to take pre-emptive action to prevent us from having to press any panic button or to be able to experience a false alarm, and therefore, we are taking preemptive action. We do not have much time, the agreement will be over in less than a year, and that legal threat that could happen by itself, that will be dealt with in the law and by the courts, but the implication of that is the possibility of this liquidation of which many Members spoke. But it is not only the liquidation of Clico as an enterprise. If you could have contained it there as large as that was, it would have been less of a risk. There is no doubt that if a challenge of liquidation emerges as a prospect to Clico, then that liquidation would apply to CL Financial. There is no doubt that if it applies to CL Financial, it will then apply to all the other institutions that are exposed to those groups, and we are dealing with a global scenario. So therefore, the whole domino effect could take place. I am not at all saying here that this will happen; I agree with you. All I am saying is it is the responsibility of a Government not to operate behind the curve but to get ahead of the curve, and that is why I am trying to suggest to this 575 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 honourable Senate, which I did to the Cabinet, to get ahead of the curve and take pre-emptive action to safeguard the interest of Trinidad and Tobago, its economy and its people. [Desk thumping] We will do everything that is possible to ensure that that scenario which is a possibility will not happen in Trinidad and Tobago. I believe that we have averted the prospect of that from day one when we began, first of all, to inject liquidity support—I will not go back into that debate— but subsequently, to inject an offer of payout for a substantial group among those affected; and thirdly, to set the mechanisms in place to give the company the wherewithal to move forward. Someone had asked the question about the statutory fund. I said it earlier, but for the sake of clarity, let me indicate that once this enterprise is restructured in the way that we have proposed where we would remove the toxic assets from the balance sheet of the old Clico, and we will introduce some of the shares of the methanol company into the statutory fund— and there are rules that govern that—we will find that the statutory fund will go into the black. That is the simple answer. The Leader of the Opposition in the Lower House sought to make this a big political point. I did not quite answer him because I wanted to get my facts and reconfirm my facts between then and today, which I have done, on that issue. But that is all part of the plan of setting the base for the new Clico to re-emerge. But there is still work to be done because, as I pointed out in my presentation, even though there has been improvement in the asset base of the current Clico by virtue of the increased value of the RBL shares and the methanol shares at this point in time, the company is still in deficit; and I outlined those and I would not take up too much time to go through them again. But notwithstanding that, our expectation is to put the financial structures in place to give it that lease of life, and hopefully, after this legislation is passed and there is a greater sense of certainty—because that has been the problem over the last year. There was an air of uncertainty as to where we are going with Clico and you cannot respond to that air of uncertainty by pious words, you had to respond to it by firm action. [Desk thumping] And that is why as the Minister of Finance I was careful not to speak with any frequency on this issue. I decided to speak when the time to speak has come and that is now, here in this Parliament. But what it will do is create a greater certainty that here, finally this Parliament, through its legislative mechanism, has removed the toxic assets and put them aside, and the Government has taken responsibility to honour those who will lose by those agreements not being honoured. But we will also put some 576 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [HON. W. DOOKERAN] certainty in the minds of many others—in the minds of the policyholders, in the minds of the pension fund managers, in the minds of the workers—not to suggest that all will be business as usual. We have averted a catastrophe and in order to sustain an effort to convert this catastrophe into an opportunity, there will still be need for hard decisions, but if we did not do that, we would have stayed in the valley of catastrophes. So, when my honourable friends say we should have done things differently, I sat back and said, if I were to go back to do the things that were done and did not work, then what is the point of my being in this Parliament? I could have well been in the last Parliament and have lost the election as a result of that. [Desk thumping] So, Madam Vice-President, I wanted to put that context very clearly before this honourable Chamber because I believe Senators have asked questions of great merit, but it is within the context of averting a possibility without saying that it would, in fact, and without hoping, and certainly I feel quite secured that we will be able to avert that catastrophe but I cannot simply expect it to vanish without taking action to make it vanish. I thank the hon. Sen. Deyalsingh not only for nodding his agreement but also for his impassionate plea for the depositors in his contribution, and I understand the hurt and the pain because he knew many people who had to undergo that; and I felt it too. There are so many questions but I will go through some of them. [Interruption] What is the time? Hon. Senator: You have about 40 minutes again. Hon. W. Dookeran: The hon. Attorney General wants to go home early; he is cutting my time. [Laughter] I will just deal with a few of the issues that I think need to be dealt with. I believe it is Sen. Dr. Henry who raised some technical issues, and it is easy to deal with that and he is right, that the discount figure that we have now worked out is highly sensitive to the interest rate environment. And if the interest rate environment were to dramatically change—and that is why I always have to say subject to the yield curve—then things will change but that is the world in which we live. I cannot hold back the world from changing. I cannot hold back the global tremors taking place elsewhere not to affect us. I can only take measures to mitigate against that risk. And therefore, I cannot and no one can. Neither yourself nor myself or anyone can say for certain what tomorrow‟s market dynamics will be. But based on our assessment, the interest rate environment is likely to remain in the area in which it is for some time. 577 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

11.55 p.m. I would not venture to say for how long, but in addition to that, I would quote one paragraph of assurances given to the Governor of the Central Bank from the Bankers Association of Trinidad and Tobago and the Association of Trinidad and Tobago Insurance Companies, because we did not ask them, after our discussions, to give us a piece of paper. This is what they said: Based on the current interest rate yield curve, all things being equal, it is possible that should an EFPA holder discount the proposed first 10 years of Clico zero bonds guaranteed by the Government of Trinidad and Tobago— that is further support of the rate—a discount of 20 per cent should apply thereby giving the EFPA holder 80 per cent of the face value of the Clico zeros. The banking community, in their genuine effort to help out in this situation, was prepared to go so far, and I believe that our calculation is likely to be correct. But, I will urge people to utilize the window of low interest rate as well as they can. An issue that was raised, I believe by Sen. Baptiste-McKnight and others, is— I believe Sen. Ramkhelawan raised the issue about the moral hazard and if I remember it was raised by Sen. Dr. Balgobin as well, in other words, having taken this extraordinary step to bail out a private insurance company, are we now opening the door for other insurance companies to feel that they have a right to be bailed out, or any other financial institutions. That is a legitimate question. But, I want to assure this honourable Senate and this Chamber that we have decided to take this approach with respect to Clico, because Clico had such major impact on the rest of the country. As I have indicated, if we were there at the time this problem expressed itself, we would not have put the entire system at risk. We would have dealt with the issue where it emerged; a cash flow problem in CIB and a statutory reserve risk in Clico and dealt with the problem as it happened. This Government and myself, having the responsibility to deal with the financial stability of the country, will not be utilizing this kind of support at all and we have now begun to deal with the issues of early exit signs for the entire financial sector, and to that end we will be bringing, shortly, the insurance legislation; not the insurance legislation that we inherited, because we had substantial discussions on it subsequently with many, including the insurance companies. Some have asked: “What guarantee do you have that it would not 578 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011 [HON. W. DOOKERAN] happen in the future?” Well, from the legal perspective, the insurance legislation that will come before this Senate during the course, hopefully, of this year, given the legislative agenda, will have many different provisions. I would just go through quickly to assure you.  We will put limits on credit exposure to connected parties.  We will insist on quarterly reporting, as opposed to annual reporting.  We will introduce risk-based capital as minimum capital requirements and will raise it.  The board will be required to attest to the regulator each year on the adequacy of the risk management and the level of compliance with the law. These are things that are not in the current legislation.  Senior management will have to report on external controls and the regulator would now have access to working papers of the external auditors and a standard valuation methodology for calculating policyholders‟ liabilities would apply. We will, of course, debate these issues. But these are measures that we are taking from the legislative point of view to strengthen the legislative framework, so that, at least, insurance companies will now have to comply, not only in the law, but will monitor the operations much more closely. This is not to say that things may not happen, but it is what the legislator can do. So, I hope that is an indication of the steps we would be taking to ensure that the prospects of such a situation arising will be limited. Let me go on quickly, Madam Vice-President, to the issue of the stay, because I think that is where most of the discussion took place. There are some questions that were asked. Will the stay of proceedings deny access to the courts for all times beyond the current Clico problem? Clearly, the automatic stay would only be triggered where the emergency powers of Central Bank, under clause 44D, have been invoked and the stay can be lifted, even if the control by the Central Bank, under clause 44G, remains. You will see the amendment in the Bill to effect that, providing some constraints to it. Sen. Helen Drayton asked: Is the stay of proceedings a suspension or a removal of rights? I do not know if it was you who did it, but I think so, yes. Well, it is not the removal of rights. It is a stay, as was pointed out, I believe, by 579 Purchase of Certain Rights Bill, 2011 Friday September 16, 2011

Sen. Dr. Balgobin. It is a stay of proceedings and it is a stay of proceedings which can be lifted and the criteria for lifting it have been identified in the debate as to the risk of exposure and financial risk and the restructuring requirements. That is the rationale for it. If you are going to rebuild a home, you have to ensure that while you embark on that road, you do not allow the roof to collapse on you. So, it is stay while you rebuild that situation. I believe there was a very legitimate question that was posed here, as to whether the Bill puts the Central Bank in a position of conflict of interest to lift or to keep the stay. The Bill makes it clear, as the circumstances under which the stay will take place and will be lifted. While it is up to the Central Bank to publish the notification, there are objectives that are transparent to inform and guide the Central Bank in arriving at this decision and exercising its powers. I think it was Sen. Dr. Balgobin who succinctly put those things down, as he said, in objective criteria and those objective criteria, as to meeting the requirements of the policyholders about establishing the sustainable path for restructuring and ensuring that the companies that are exposed to this risk, outside of CL Financial, are less exposed, and there are companies that are currently exposed. Those are the criteria that will be utilized and will be explicit and measurable. 12.10 a.m. In addition there is the contention that the Central Bank has exercised its decision- making powers in an arbitrary manner—could exercise. Well, I am advised that there is always judicial review in our system. But I also wish to indicate that in order to have a check on the performance of the regulatory system itself, you may recollect, Madam Vice-President, that I had indicated in the last budget presentation that we were exploring the establishment of an independent risk assessment committee to give an oversight of the regulatory system itself. Some work has been done on that, and, as the months move on, I will be able to be a little more specific on the outcome of the work that has been done in that, but would allay one of the concerns raised by Sen. Drayton as to who will guard the guards in a situation like this. And it is part of the strengthening of the regulatory architecture which we are trying to develop in response to this crisis. You see, it is no point for a society like ours to have undergone that trauma and pain and crisis without learning from it. And that is what we are trying to do in a manner that is not only going to be rhetorical; in a manner that is not only going to simply make pious promises. Is that familiar, Sen. Browne—pious promises? It is going to be dealt with, with strong, firm, legislative action and operating principles in order to learn the lessons of the past. [Desk thumping] 580 Purchase of Certain Rights Bill, 2011 Saturday September 17, 2011 [HON. W. DOOKERAN] Madam Vice-President, a question that was asked, whether or not there should be an application to the court for this stay, and whether the stay should be automatically triggered once the Central Bank assumes emergency control of the distressed financial institution. May I just point out that an automatic stay is meant to be—[Interruption] You did not want the questions answered? I want to respect this Parliament. I am only a stranger here. When you ask questions I want to answer them. [Desk thumping] But I also want to answer them for the records of Hansard. [Desk thumping] On the question as to the automatic stay or whether it should be automatic, Madam Vice-President, we have had an experience with this; others have had experience with this, and here in Trinidad and Tobago we have had the experience with respect to our own CIB in the request that dealt with an application to the court, which was made in April 2010 to wind up CIB. It is still in progress. But the rationale for our automatic stay is because there is sometimes an urgency to take action, because there is the prospect of something happening that generates a run on an institution, and, therefore, you need to take action immediately. We are not saying that this will happen in this case, because this is no longer a need for action but it will be the need to take action, and therefore the stay becomes automatic in the sense, once the institution is deemed to be an institution under statutory management. And I am advised notwithstanding the points raised by Sen. Beckles that the Reserve Bank of New Zealand has this very specific provision. Sen. Hinds: You cannot find another one. Hon. W. Dookeran: So too is the UK Bank. [Desk thumping] Madam Vice-President: Hon. Senators, the speaking time of the hon. Minister has expired. Motion made: That the hon. Minister‟s speaking time be extended by 15 minutes. [Hon. E. George] Question put and agreed to. Hon. W. Dookeran: Thank you, Senators, and thank you, Madam Vice- President. Just to complete that point that the legislation before you, in fact, is legislation that is used in other institutions, in other jurisdictions, which has been made before, but I wanted to respond to that point that was made as to why not go through the process. 581 Purchase of Certain Rights Bill, 2011 Saturday September 17, 2011

Madam Vice-President, there are two issues that were raised that I think warrant some kind of immediate reaction on our part, one of which has to do with a point raised by Sen. Browne, and this concerns the CIB injection by the Government through the FCB, and I think he is right, and I think we would take the necessary steps in the Finance Act coming in the budget to correct that situation. [Desk thumping] So I give that assurance. It will take care of that. That is why I said this Senate was very valuable, because it brings in measures and views from people who have a different perspective and a different set of experience to bear on the legislation, and that is one example, Sen. Browne. Sen. Browne did make an assertion that we could have used the Bankruptcy and Insolvency Act yet to be proclaimed. He is right. But I am advised that that Act, first of all, does not apply to the financial institutions, and, therefore, could not be used. And secondly, even if we were to amend it to so do, the processes which that Act uses may not be applicable to our financial institutions. So I just put that to rest. Madam Vice-President, we had a very valuable suggestion being made and echoed by many Senators opposite, and that has to do with the fact that a report with respect to the restructuring and systemic risk exposure will have to be made on a three-monthly basis to the court. And that is one of the arguments we have used to establish public accountability, so that the public will be informed via the court as to the progress of the two issues for which the stay is required: reducing systemic risk and enhancing restructuring efforts. At the beginning I explained what those things were, but there was an additional suggestion, that that report should also be made available to the Parliament, and I consulted with my colleagues, and there is no objection to that, and I give the undertaking that such reports will be also laid to Parliament so that Parliament itself can have an oversight on the progress of the restructuring exercise on a continuous basis. So I thank Sen. Ramkhelawan—Sen. Dr. Balgobin for making that point, and I think it was supported by the other Senators who spoke, and we will take note of that requirement. Madam Vice-President, it has been suggested that the main thrust of the argument is that we will deprive citizens of their right to access the judicial process. We are, indeed, cognizant of the difficulties that will be created as a result of the suspension of those rights for whatever time period with the passing of this Bill. In consideration of these difficulties—and I am prepared to give the undertaking in response the Sen. Drayton‟s point, which was supported by 582 Purchase of Certain Rights Bill, 2011 Saturday September 17, 2011 [HON. W. DOOKERAN] others—that I will liaise with the Attorney General to bring before this honourable Senate an appropriate amendment to the Limitation of Certain Actions Act, Chap. 7:09, to ensure that citizens‟ right of action are not extinguished and that these amendments shall be brought before this honourable Senate simultaneously with the Finance Bill of 2011. I discussed with the Attorney General how this can be done, and it will be done at the time after the budget and the Finance Bill, and give that assurance which was a legitimate assurance that was raised. Madam Vice-President, there was also—I did mention this already—Sen. Browne‟s concern that funding extended to CIB was omitted from the Purchase of Certain Rights and Validation Bill, and the Government undertakes to review the quantum of funding and make the appropriate amendments to that Act in the Finance Bill of 2011. In other words, this Senate is already preparing the budget for 2011 [Desk thumping] by bringing two important measures that will become part of that package, and I think I appreciate and Government appreciates that. There was a very thorny issue that was raised with some passion on the question of whether or not the offer or payout will be an offer without some kind of vetting and scrutiny by the Board of Inland Revenue and by the institutions that deal with financial integrity. I think it is a view that ought to be given consideration, and I will undertake to discuss this with the relevant bodies before I come to any conclusion as to how it can work, if it can work. We cannot want to deny another right, but we believe that this is a proposition that should be looked into further at this stage. So those are some of the assurances that I will like to give to the hon. Senators for the very legitimate questions that were asked. Many were asked, but if people are falling asleep, I do not want to continue to answer all these questions at this time. Let me say that we have taken careful notes of all the issues that were raised, some of which I have not been able to answer here but some of which will be dealt with in the Finance Act, two of which I have made a commitment to deal with and one which to discuss. So I would not want to—and we did talk about public information, and we did talk about the fact that public information is necessary. What will prevent another crisis? I think it was a very valid point raised by Sen. Beckles and echoed by Sen. Dr. Armstrong and others. Well, apart from the legislation that I spoke to you about, Madam Vice-President, we have available to us an assessment of the lessons to be learnt, which I did indicate was done by—not at our request, but independently by staff members of the International Monetary Fund. 583 Purchase of Certain Rights Bill, 2011 Saturday September 17, 2011

The report, I know Sen. Mariano Browne has it, because he corrected me when I said it was for the Caribbean, but it dealt with the Eastern Caribbean, and that report has listed a number of measures that must be taken to prevent such a crisis from happening. Essentially, Madam Vice-President, we can provide the legal framework support, and we will follow a lot of those recommendations to provide that. In the final analysis it will depend on the sense of responsibility of investors. One of the lessons that we should learn, and the country should learn, is that our investment decisions are decisions for which we must pay the consequences of, and as a result corporate governance in our financial institutions must now be called upon to provide the correct information in order for investors to take decisions with information. In that respect, a lot depends on that particular change in attitude with respect to investors, and it was pointed out here today that we really cannot run a country where people invest in financial institutions without regard to the consequences of the risk that they are taking, and when it does not work in their favour, they come to the Government and say, “It is your responsibility.” A point was made by Sen. Dr. Balgobin, and I agree with that. This was a special case. It was a big case, and it was a case that could have put the entire situation in trouble. But from now on, I hope all investors will realize that they must take their responsibility for the investment they make, and they must demand the information from the institutions which offer these investments, and that, in the final analysis, is the best safeguard to prevent the occurrence of matters of this nature. I just wanted to, very briefly, refer to the point that was raised regarding the issue of accounts, and I think I did mention that there were many challenges, one of which was the information challenge, and that putting the account in order was itself a challenge. In this one year we have been able to bring the books from 2007 to 2008, and I am advised that in September 2010 we will have the accounts with respect to 2009, I believe, and with respect to October 2010. That information is there so that those who look for the accounts—but, you see, we cannot wait for the accounts, Sen. Prof. Ramkissoon, to make decisions, because the world is going on. We have sometimes to make decisions with imperfect information, and that is one of the arts that we have to discharge in Government. That is the difference of being in the university and being in the Government. There you can prescribe—you can diagnose without prescription—here we have to prescribe sometimes without all the information in our arms, and that is why we have to move forward. 584 Purchase of Certain Rights Bill, 2011 Saturday September 17, 2011 [HON. W. DOOKERAN] So I think I have come to the end of my time. Let me say once again that I believe we have begun to close this chapter, but we recognize the enormous challenges still ahead of us. We know that the common good will always supersede and I sense that that is so. I urge Senators to give Government the permission to proceed, to take the next step to put this country back in a state of complete financial stability, to get this problem and the troubles it created behind us, and I urge the Senators opposite on the Independent Bench and the Opposition Bench to ensure that we stand up for what is right, we stand up for what is good for Trinidad and Tobago and we stand up for all the citizens of Trinidad and Tobago by giving us the permission to move ahead and let that chapter be history. I beg to move. [Desk thumping] Question put and agreed to. Bill accordingly read a second time. Hon. W. Dookeran: Madam Vice-President, in accordance with Standing Order 63, I beg to move that the Bill not be committed to a committee of the whole Senate. Question put and agreed to: That the Bill be read a third time. Bill accordingly read the third time and passed. CENTRAL BANK (AMDT.) BILL, 2011 The Minister of Finance (Hon. Winston Dookeran): Madam Vice- President, I beg to move, That a Bill to amend the Central Bank Act, Chap. 79:02 be now read a second time. I beg to move. Question proposed. Question put and agreed to. Bill accordingly read a second time. Bill committed to a committee of the whole Senate. Senate in committee. Clauses 1 to 5 ordered to stand part of the Bill. Preamble approved. Question put and agreed to: That the Bill be reported to the Senate. Senate resumed. 585 Central Bank (Amdt.) Bill, 2011 Saturday September 17, 2011

Question put. The Senate divided: Ayes 23 Noes 6 AYES George, E. Hon. Ramlogan, A. Hon. Sandy, Hon. Brig. J. Bharath, Hon. V. St. Rose Greaves, Hon. V. Tewarie, Hon. Dr. B. Karim, Hon. F. Ramnarine, Hon. K. Maharaj, Hon. D. Moheni, Hon. E. Dyer-Griffith, Mrs. N. Abdulah, D. Maharaj, D. Baynes, T. Moonan, R. Ali, B. Ramkhelawan, S. Baptiste-McKnight, Mrs. C. Drayton, Mrs. H. Balgobin, Dr. R. Ramkissoon, Prof. H. Armstrong, Dr. J. Bernard, Dr. L. 586 Central Bank (Amdt.) Bill, 2011 Saturday September 17, 2011

NOES Beckles, Ms. P. Hinds, F. Henry, Dr. L. Cudjoe, Ms. S. Deyalsingh, T. Browne, M. Question agreed to. Bill accordingly read the third time and passed. ADJOURNMENT The Minister of Public Utilities (Sen. The Hon. Emmanuel George): Madam Vice-President, I beg to move that this Senate do now adjourn to a date to be fixed. Relocation of Office of the Parliament to Tower D Madam Vice-President: Hon. Senators, before I put the question, I do have an announcement concerning the relocation of Parliament to Tower D. As many of you may be aware, the restoration of the Red House is due to commence shortly and the offices of the Parliament have to be temporarily moved in order to facilitate restorative activities. I have been advised that the modification works at Tower D for parliamentary occupation on floors 5, 6 and 7 are complete, and, as of today, Friday, September 16, 2011—well, yesterday—the relocation process has begun. The other floors are soon to be completed. This move to Tower D will require the involvement of all members of staff and, as such, the decision has been taken to temporarily close the offices of the Parliament for an approximate period of two weeks from September 19 to September 30 to ensure a smooth and swift transition of all support services to the new accommodation. Even though the Office of the Parliament will be closed for business, telephone contact numbers and email addresses will remain operational and Senators will be kept informed as the relocation exercise continues. I have also been advised that arrangements are already being made to have orientation sessions with all Members of Parliament in relation to a layout of the new Chamber, Committee and Member spaces, as well as the location of the various support services. These sessions will take place soon after the space at Tower D is officially handed over to Parliament. 587 Relocation of Office of Parliament Saturday September 17, 2011

As well, the corporate communications division is in the process of designing brochures to be made available to all Members to assist in this transition. This should, therefore, be the last sitting to be held in the Red House until 2014, and while it may be with regret, indeed, for some, deep regret, that we leave these familiar walls, it is only temporary. It is, therefore, important for us to recognize the necessity of these steps to ensure that the Red House is restored to its infrastructural and symbolic eminence as quickly as possible, and remains the proud and distinctive home of the Parliament of Trinidad and Tobago. Question put and agreed to. Senate adjourned accordingly. Adjourned at 12.44 a.m.