UPDATE: Please see this post.
The far-ranging effects of the CL Financial failure have now reached Guyana. One blogger has been assiduously following the latest developments…
One of Living Guyana's earliest posts centered around the “breaking news” that “the Guyana Bank for Trade and Industry is in dire financial straits and has applied to the Bank of Guyana for a GY$1billion bailout.” The blogger comments:
There may be much greater troubles below the surface. The billion dollar question, experts say, is whether GBTI lost money in the aftermath of the Stanford or Clico collapse.
This further worsens the catastrophic financial situation beginning to hit Guyana in earnest following the global financial crisis of 2008. This financial devastation will have calamitous knock on effects as more than GY$6billion of National Insurance Scheme money is tied up in Clico and this will certainly affect hundreds of thousands of persons across Guyana.
In another post, Living Guyana confirms that “the Commissioner of Insurance…is in the process of petitioning the Chief Justice…to take over control of Clico Guyana owing to the [company's] dire and grave financial standing following the Clico Bahamas liquidation.” He continues:
Once the petition is granted, as it will be, Clico Guyana will come under the control of the government, meaning that Clico Guyana would have collapsed Wall Street/Trinidad style.
The domino effect of this can be catastrophic and it could be the beginning of a period of economic and financial disaster for Guyana with other companies going under and thousands of jobs being lost.
Not surprisingly, Living Guyana also posts reports of “a major run on CLICO”, even as a motion was reportedly filed to freeze the company's assets. In a recent update, the blogger also says that there has been “an internal rush on Citizens Bank yesterday after news broke of the government takeover of Clico”:
Living Guyana understands that Citizens Bank has some 25% of assets invested in Clico Guyana and staff, worried about the future of their savings, were withdrawing en masse for most of yesterday afternoon. One highly placed source described the activities at the bank yesterday as ‘a mad scramble’.
As if this weren't enough, LG also claims to have been “reliably informed” that “CLICO recently sold its stake in the Berbice River Bridge to the New Building Society [NBS] for some G$250 Million.” The blogger is also critical of the performance of CLICO Guyana CEO Gita Singh-Knight, and thinks that the country's President seemed “defeated and confused” at the press conference on the Clico Guyana takeover:
Stunningly President Bharrat Jagdeo admitted that CEO Gita Singh-Knight ignored local regulations and invested more than Clico should have overseas.
Finally, the blogger posts his impressions about the government's handling of the issue here.