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Clico Liquidator Gets Leave To Move Over ‘Fraud’ Action

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

CLICO (Bahamas) liquidator this week obtained Supreme Court permission to serve legal claims, alleging “fraudulent breaches of fiduciary duty”, against two of the insolvent insurer’s former principals in Trinidad and Barbados.

Newspaper notices published yesterday revealed that Craig A. ‘Tony’ Gomez, the Baker Tilly Gomez accountant and partner, was given leave on Tuesday to serve Claude Dacon and Karen-Ann Gardier outside the Bahamas.

Permission has also been granted to serve Ian Garcia, a former director of CLICO (Bahamas) ultimate Trinidad-based parent, CL Financial, who is also understood to be a close sidekick of the group’s ultimate principal, Lawrence Duprey.

Mr Gomez is gagged by the Supreme Court from speaking publicly on the CLICO (Bahamas) liquidation, but sources familiar with the situation said the trio would be served via publication of the relevant notices and legal documents in the Trinidadian and Barbadian media.

This is because Messrs Dacon, Gardier and Garcia are all understood to have successfully avoided to-date attempts by Mr Gomez and his process servers to serve the legal documents on them personally.

“These guys are playing hide and seek,” one source told Tribune Business. “The process servers are going to their homes, and everyone there is claiming they don’t know these guys.”

None of the trio targeted by Mr Gomez is likely to return to the Bahamas, and place themselves within the Supreme Court’s jurisdiction, giving the liquidator the likely opportunity that he will be able to apply for a default judgment once they have been served.

The writ and statement of claim against them, which was filed with the Supreme Court on February 23, 2015, alleges that Messrs Dacon, Gardier and Garcia committed “fraudulent breaches of fiduciary duties, or alternatively breaches of fiduciary duties; breaches of statutory duties and gross and wilfull negligence and fraud” during 2003-2009. CLICO (Bahamas) collapsed into insolvency in February of that final year.

Their fellow two defendants in the same action, Mr Duprey and his partner, Sylvia Baldini, are already understood to have been served in Florida. They, too, are unlikely to come to the Bahamas to fight the action.

It is important for Mr Gomez to move the litigation forward, as it represents a potential recovery source for CLICO (Bahamas) creditors, and also provides reassurance that he is trying to hold someone accountable for the pain endured by thousands of Bahamians.

CLICO (Bahamas), at end-June 2015, had a $46.876 million solvency deficiency, with $33.399 million in assets dwarfed by $80.275 million in liabilities.

The Government last month prevented the cancellation of medical insurance for hundreds of Bahamians by confirming it had finally approved a ‘rescue plan’ for CLICO (Bahamas).

The Cabinet has approved a plan to transfer all the insurance policies - life and medical - to a newly-created special purpose vehicle (SPV).

Tribune Business revealed in November 205 how Mr Gomez planned to cancel all CLICO (Bahamas) medical policies on New Year’s Eve if the Government failed yet again to deliver on its resolution promises.

He held off until the New Year so that hundreds of Bahamians and their families were not greeted with bad news over the festive period, but the cancellation notices were due to be issued to policyholders this month.

Mr Gomez said he had little choice but to cancel the medical insurance policies unless the Government came through because high claims payouts were eroding the $11.893 million in CLICO (Bahamas) bank accounts. This undermines his duty to preserve and maintain the asset for the benefit of creditors.

Figures supplied to Mr Gomez by insurance actuaries, Morneau Shepell, showed that since CLICO (Bahamas) was placed into Supreme Court-supervised liquidation in February 2009, group medical claims payouts to policyholders exceeded premium payments by 40 per cent up until end-2014.

Over that six-year period, Mr Gomez had ensured CLICO (Bahamas) paid out $4.191 million in medical claims, yet only received $3 million in premium, creating an unsustainable health claims ratio of 140 per cent.

The report contrasted the 140 per cent group health claims ratio with the 60 per cent payout ratio for all other medical and accident claims.

“Upon the completion of the actuarial valuation and the actuary’s analysis of CLICO (Bahamas) current state, and along with the obvious financial impact of the medical policies on the insurance operations and available cash, and providing that a government guarantee is not received by the official liquidator shortly, the actuary advised that the medical policies should be discontinued immediately,” Mr Gomez had written in his last report to the Supreme Court. “I have scheduled the discontinuation date at December 31, 2015.”

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