Keith Rowley's Glorious Moment

By Dr. Selwyn R. Cudjoe
July 31, 2017

Last Sunday, Jonathan Fenby, author of The General: Charles de Gaulle, suggested that Emmanuel Macron, President of France, was following closely in the footsteps of Charles de Gaulle, founder of the Fifth Republic, by using his office with the same majesty, grandeur, and decorum that de Gaulle did. He clarified: "Both are (or were) very well read, formally courteous and with an attention to detail. Though not as rousing an orator as the general, Mr. Macron uses speeches, as his predecessor of a half a century ago did, as instruments of pedagogy, notably with his address last weekend on the 75th anniversary of the round-up of Jews in Paris, when he did not hesitate to criticize de Gaulle by name for the pretense that the French authorities were not responsible" (Financial Times, July 22).

The emphasis here is on the use of oratory "as an instrument of pedagogy." Most prime ministers and presidents are at their best when they use their speeches to their publics to instruct, explain and to get them to understand the essence of the public issue that is being discussed. This is exactly what our Prime Minister did with such aplomb at his post-Cabinet meeting on Thursday afternoon.

Anyone who listened to the prime minister could not but be persuaded by the cogent manner in which he offered his government's rationale for the action it took with regards to CLFinance/CLICO. This was the prime ministerial leadership the public has been waiting for.

I was a director of the Central Bank Board when the issue of CLICO came up. There was always much obfuscation on CLICO's part when the issue of its management was discussed. . The company was unable (or did not want) to provide the bank's inspectors with the information they needed to conduct its due diligence functions or to abide by regulations/instructions issued by the Regulator.

CL Finance/CLICO was always two steps ahead of the bank's inspectors. They knew what was required (and presumably what to hide) so as to keep the inspectors off their case. The Bank's cumbersome requirements and the inadequate legislative framework (which had changed little since the Insurance Act was promulgated in the 1960s) prevented the bank instructors from ferreting out the information it needed to do its job.

The company did not always act in a responsible manner. There was too much intra-company commingling of funds between CLICO, CIB and CLF companies. When the bailout occurred, members of the CLICO board and senior management felt vulnerable. They were receiving large stipends and were not always operating in accordance with accepted fiduciary practices. According to one knowledgeable financier: "CLICO behaved so badly that it is a miracle that not one director has gone to jail for malfeasance."

The CLICO business model was in shambles when it appealed to the Central Bank for assistance. CLICO owed a lot of money to its creditors and needed the government's financial assistance to meet its obligations. The government provided the necessary assistance with the explicit written understanding that CLICO and its parent company CLFinance/CLICO would repay its debts, even if it meant selling off its assets.

Eventually, the Central Bank took direct control of CLICO as was provided for in the Central Bank Act and the government signed agreements with CFL, which, inter alia, provided that the government would have majority representation on the CLF Board. Any responsible lender would want to be sure that it had oversight over a company to which it had loaned a considerable amount of monies.

Over the last eight years my views of the company and its social role have changed. Although its directors acted in a fiduciary irresponsible manner, one needs to keep in mind what the company means to black people, particularly in light of Mario Sabga's recent statements and the dominant hold his companies have on the economy.

Although CLFinance/CLICO conducted its affairs in an irresponsible manner, it owned the world's largest (or the second largest) methanol plant. Its purchase of Lascelles in Jamaica (at a considerable sum) made it an important company in rum production. Although these and other purchases placed the company in a precarious financial position, its accomplishments meant a lot to black people and contributed to their ethnic pride.

It is not entirely true, as the Prime Minister suggested, that the business before us "is not about black, blue white or yellow." He said his major concern resided in "the tax payers getting back the S15B owed to them" by a private entity. It is unwise to downplay the deep sentimental attachment many black people have about Duprey's achievements.

When President Barack Obama rescued the US auto industry, he did so for the significant economic, cultural, and social value it possesses for the American people. When Ford installed the first assemble line for the mass assembly of automobiles in 1913, it sparked "a radical transformation of both manufacturing and society" (Daily News, October 7, 2013). Saving the US auto industry went way beyond the dollars. Correspondingly, saving CLC goes beyond the dollars.

This observation should not detract from the bright, shining moment when Keith Rowley explained why his government did what it had to do. He must be congratulated for this. One only hopes that he uses more of these occasions for the pedagogical purposes that this country so badly needs.

Professor Cudjoe's email is scudjoe@wellesley.edu. He can be reached @ProfessorCudjoe.

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