Central Bank loses appeal in Maritime/Sagicor bid for Clico, British American

IN a majority ruling, the Court of Appeal has dismissed an appeal by the Central Bank (CBTT) which challenged the grant of leave to Maritime Life (Caribbean) Ltd to pursue a claim over its exclusion in the bid for Clico and British American Trinidad (BAT) in 2019.

Maritime Life has accused the bank of acting irrationally, unfairly and unconstitutionally by entering into sale and purchase agreements with Sagicor Life for an undisclosed sum.

In challenging the sale, the insurance firm was granted leave by Justice Devindra Rampersad in April last year. He also granted an interim injunction preventing CBTT from finalising the transfer of the portfolios to Sagicor.

Maritime’s bid for the Clico portfolio was approximately $7.86 billion and for BAT it was $516.8 million. It claimed its bid was some $400 million more than Sagicor’s.

Central Bank appealed the leave granted by Rampersad. However, Justices of Appeal Ronnie Boodoosingh and James Aboud held, in separate but unanimous decisions, that the judge was not wrong and dismissed the bank’s appeal.

Justice of Appeal Peter Rajkumar did not agree and provided his own reasons for arriving at his decision which would have been to allow CBTT’s appeal.

The judges had to determine if the decision to choose Sagicor was strictly a commercial one, preventing it from being reviewed by the courts, and was Maritime excluded from bringing the action because of provisions of the Central Bank Act.

Boodoosingh and Aboud held that the claim introduced a public law element.

“The condonation of a state of affairs over which a body has oversight or control may amount to a decision not to interfere. It may also amount to a decision to turn a blind eye to a flawed process. These are very similar to an actual decision to sell.

“All of these examples involve decision-making. The substantive hearing will reveal which is which,” Aboud said.

“Where, however, public authorities are involved in such transactions, there will be, in some cases, a public interest element to the transactions,” Boodoosingh said. He added, “Where citizens, corporate or individual, are competing against each other in a process overseen or decided by those public authorities, the court, in an appropriate case, will be entitled to review such transactions to ensure that there has been adherence to these principles.”

“…It is all contextual,” he added, with Aboud pointing out, “The intercession of the Central Bank in the affairs of the companies was not an uninvited blitzkrieg operation.”

Both judges pointed out a substantial amount of public funds were invested in the insurance companies, providing a “plant for scrutiny of the decisions.”

“In this case the sale was expected to realise a substantial amount. This money is a recovery of moneys invested by the government to bail out Clico and BAT. There would be a public interest element in trying to ensure the best returns for the public benefit,” Boodoosingh held.

He said while the CBTT was entitled to rank criteria, “one may have expected that if it was going to depart from a substantially higher bid, there must have been some rational reason for doing so.”

Both judges agreed that the questions relating to Sagicor and Maritime’s performance in the bidding process can only be answered at a full trial.

“The powers exercised here cannot be equated with the carrying out of a tender process for a contract for the construction of a building or the paving of a road or the purchase of supplies. The bids here were aimed at the sale of an insurance portfolio worth billions of dollars for the purpose of recovering monies advanced out of public funds, and undertaken as part of draconian powers exercisable by a public institution,” Boodoosingh noted.

In its claim, which also introduces constitutional elements, Maritime alleged Sagicor’s bid was a conditional one yet it was accepted outside the bidding requirements and there was no due diligence over the bidding process.

In opposition to the claim, the CBTT has argued that Maritime was seeking to overturn the decisions of Clico and BAT not to select it.

“It is correct that the Central Bank accepted the recommendations of the Boards. It is also correct that the Boards were engaged in a largely commercial decision.

“However, this misses the point that the ultimate decision maker was the Central Bank after receiving the recommendations of the boards and hearing the concerns of the (Finance) Minister,” Boodoosingh said, adding that the bank’s role was not to adopt a hands-off approach since the boards did not have the power to approve the sale and purchase agreements without approval.

“Ultimately it was the Central Bank’s role, after consultation with the minister, to make or approve the final decisions on these matters and both the Central Bank and the minister are answerable according to public law considerations.

“…The Central Bank must own and take responsibility for the processes adopted by the boards. To use the minister’s description, they were not a rubber stamp,” Boodoosingh said, adding that CBTT’s appeal had not succeeded in demonstrating that Rampersad was wrong to grant leave to Maritime.

Since 2009, Clico and BAT were under the control of the Central Bank as part of the bailout of conglomerate, CL Financial. It was authorised to acquire, sell or deal with the assets, properties and shareholdings of all of CLF’s subsidiaries under its control.

Bidding for the insurance portfolios began in 2015, and after eliminations and withdrawals in the first round, Maritime was left as the only bidder going forward. It did not get the bid, and a third round of bidding was introduced. On September 30, 2019, it was announced that the Clico and BAT portfolios would be transferred to Sagicor Life.

Representing the CBTT were Ian Benjamin SC, Kerwyn Garcia and Elena Araujo while Edward Fitizgerald QC, Fyard Hosein SC, Sasha Bridgemohansingh, Aadam Hosein and Anette Mamchan represented Maritime.

Appearing for the Attorney General was Sean Julien.