At the press conference of January 30, held in Trinidad, and discussed in last week’s column, Chairman Duprey of the CL Financial Group had indicated that the credit squeeze caused by German bankers refusing the company credit was a main reason for its troubles. Just prior to that, however, his statements in regard to the effects of the global economic crisis on the group’s business were very boastful. Duprey claimed there were very good business opportunities arising from the global economic crisis. 

As promised last week, this week I begin a review of the CL Financial Group meltdown. I shall start with a broad description of the company structure and main operations just prior to the meltdown. 
Structure and operations

In this week’s column I shall conclude the discussion on Stanford Financial Group started last week. Following that, over the next few weeks I shall undertake a review of the CL Financial Group, Trinidad and Tobago. As we shall see, like in the case of Stanford Financial Group, there are many important lessons to be learnt from the Guyana standpoint in that firm’s financial meltdown. 
Lessons to be learnt

Smelling the stench
In recent years, individuals who have had their ears close to the ground in Caricom’s financial, accounting, business, professional, and other expert circles, could not avoid being aware of the sordid doubts and deep misgivings swirling around corporate governance at the Stanford Financial Group. Even if some persons were inclined to give the group the benefit of the doubt, certainly there were enough misgivings around for prudent persons to exercise caution when dealing with the group.

Recap 
In last Sunday Stabroek  I had started a discussion on what I described as the “crisis of credibility” facing actions by the government and its functionaries on economic matters. This credibility gap runs throughout the entire gamut of economic matters, from review and analysis of the current situation and recent trends to the setting of targets, framing of policy proposals/programmes/projects, and the efficient execution of these.

No easy remedy 

Moral hazard
When a sectoral regulatory authority, in this instance for the insurance sector, takes the position that regulatory intervention as prescribed by law would be prejudicial to a party that is involved in regulatory evasion and abuse, because such intervention “would have precipitated the demise of the company to the immediate detriment of policy holders,” it means one of two ghastly things, both of which reveal a deeply flawed legal-regulatory-institutional oversight framework.

Recession proof!
The grimness of the global economic environment is so intense that those who shout “make-believe” economics will sooner, rather than later as the saying goes: “have to eat their words.” Last week, (SN February 22) I expressed incredulity that the 2009 National Budget could be so much in the land of “make-believe” as to predict (target) a rate of growth of real GDP for this year at 4.7 per cent.

‘Voodoo economics’

In last week’s column I had introduced the first of eleven economic shocks/challenges that rocked the Guyana economy in the second half of 2008. That was the “financial crisis and credit crunch” which erupted in the United States during September-October 2008. The epicentre of that first shock/challenge was the bursting of the US private housing market bubble. In retrospect, we can now observe that early signs of this untoward development passed virtually unnoticed as far back as the latter half of 2007. Remarkably, this shock/challenge continues to worsen.