This case study will look to critically analyse the events that transpired with CLICO Barbados. The origin of the company will be highlighted, and the state of the company before its collapsed. Significantly, the actions or decisions that led to the collapse will be stated, and further analysed to pinpoint any weaknesses that may have aided in the downfall of this organisation. This will include highlighting any issues such as: weak internal controls. The roles management and auditors played will be further analysed. Lastly, we will discuss if the auditors should be held responsible for not preventing the demise of the company.
Extract from Wikipedia: ‘Cyril Lucius Duprey (1897-1988) was a Trinidad and Tobago businessman. He founded the Colonial Life Insurance Company (CLICO, now part of the CL Financial Group) in 1936, the first locally- owned insurance company. The company was expanded into the CL Financial Group, which is run by his nephew, Lawrence Duprey. In 1956, Duprey was awarded the Order of the British Empire. His nephew is now the chairman of CL Financial.’
CLICO also grew regionally and by the year 1946, it had operations in various Caribbean countries such as Barbados, St. Vincent, Guyana and other Caribbean countries. (Dassrath 2009)
CLICO Barbados was part of a Financial group called CL Financial Group and was the largest insurance company in the region. They mainly focus on insurance but partook in other businesses such as financial services and real estate development among other activities (Charles-Soverall 2012). The graph below shows the organisational structure of the CLF and its associated countries.
Source: (Charles-Soverall 2012)
Overview of Operations
CLICO Barbados sold many types of policies to customers willing to buy insurance. These range from various types of life, property, health insurance. CLICO Barbados played a role in property improvement in Barbados, this took the form of property redevelopment and various housing projects. An example of a housing project was the $60 million housing project found in Clemont, St. Michael, and an example of property redevelopment was the $140 million redevelopment of the country’s historic site, Sam Lord’s Castle Hotel (Branford 2010). Furthermore, CLICO Barbados had many investments in other sectors, such as agriculture. CLICO Barbados had helped one of the country’s biggest industry, sugar, by purchasing many sugar plantations, with one located Todd’s Land, Henley, Pool and Wakefield in St John and another plantation in Christ Church, Graeme Hall. However, some of these investments yielded little to no earning, and these investments were highly liquid, which could cause troubled in the future (Today 2018). Moreover, the education sector also benefited from CLICO Barbados. The University of the West Indies gained a quality of life improvement, in the form of the CLICO Building added to the campus.
Significant participants affected/involved in the fall of CLICO Barbados:
Chairman of CLICO Holdings Barbados Limited, Leroy Parris and management
Regulators: Supervisor of Insurance and the Ministry of Finance.
Although the parent company in Trinidad and Tobago had fail, the Chairman Leroy Parris assured its policy holders that CLICO Barbados was not affected as the company is independent and its financial statements are separate from its Trinidad and Tobago counterpart. He further highlighted that CLICO Barbados is regulated differently from CLICO in Trinidad and Tobago, to further calm policy holders (Branford 2010).