Non-Arm's Length Transactions in the Eastern Caribbean
A comprehensive investigation into the governance failures that led to the CLICO collapse, proposing a new legislative framework for financial stability.
Abstract
This doctoral thesis examines the systemic vulnerability of the Eastern Caribbean financial sector to Non-Arm's Length Transactions (NALTs), using the collapse of CLICO International Life Insurance Limited as a primary case study. The research reveals how the absence of robust fiduciary standards allowed "shadow directors" to exercise informal control, stripping assets through undervalued transactions that bypassed regulatory scrutiny.
By analyzing the legal gaps in the current Companies Acts of Eastern Caribbean states and comparing them with frameworks in the UK, Canada, and Australia, this study proposes a comprehensive legislative reform plan. The findings demonstrate that without expanding the definition of "director" to include those exercising informal influence, and without codifying strict fiduciary duties for public officials, the region remains exposed to future financial crises.
Regional Impact
The collapse of CLICO was not an isolated event but a systemic failure that exposed deep vulnerabilities across the Eastern Caribbean Currency Union. Explore the interactive map below to see the impact by jurisdiction.
Hover over markers for a quick summary. Click to view detailed impact analysis.
Regional Impact Data
Select a jurisdiction on the map to view detailed impact analysis.
Cross-Border Contagion
How NALTs facilitated the rapid spread of financial distress from Trinidad to the OECS, bypassing national regulatory firewalls.
Economic Exposure
Quantifying the 15% GDP impact on small island economies and the long-term fiscal drag of bailout costs.
Regulatory Arbitrage
Analysis of how complex corporate structures were used to exploit gaps between different national legal frameworks.
Methodology
Forensic Case Analysis
Detailed examination of transaction documents, court filings, and liquidator reports from the CLICO judicial management process.
Comparative Legal Review
Analysis of corporate governance legislation across the Commonwealth (UK, Canada, Australia) to identify best practices.
Stakeholder Surveys
Quantitative and qualitative data from 150+ legal practitioners, regulators, and financial professionals in the region.
Legislative Drafting
Development of specific statutory language for the proposed "Six-Point Reform Plan" ready for parliamentary consideration.
Global Regulatory Heatmap
Visualize the "Governance Gap" between developed markets and emerging economies. Our interactive map tracks adherence to OECD standards across key jurisdictions.
Governance Standards
Global Analysis
Explore the "Governance Gap" between developed markets and emerging economies. Click on a jurisdiction to view its RPT risk profile.
Global Case Law Database
A searchable repository of landmark rulings on Tunneling, Propping, and Self-Dealing from Delaware, the UK, and the Commonwealth.
In re Southern Peru Copper Corp.
Established 'Entire Fairness' standard for controlling shareholder transactions.
Bhullar v. Bhullar
Strict liability for directors diverting business opportunities.
Standard Chartered v. Antah
Piercing the corporate veil in single economic units.
Hollinger Inc. v. Hollinger International
Prevented controllers from selling 'crown jewel' assets to themselves.
Re Hydrodan (Corby) Ltd
Defined the test for 'Shadow Director' liability.
CLICO International Life v. The State
Judicial management order for insurance giant.
The NALT Canon
Our curated bibliography of essential reading on Related Party Transactions. Download the full list or contribute your own research.
Partner With Us
Submit to the NALT Canon
Join our global network of scholars. We accept papers on corporate governance, forensic accounting, and insolvency law.
Key Findings
The "Shadow Director" Loophole
Current laws fail to capture individuals who exercise controlling influence through informal channels (family, political connections), allowing them to direct company actions without legal accountability.
Systemic Undervaluation
Assets in the CLICO case were routinely sold at discounts of up to 48% of their appraised value to related parties, directly eroding policyholder funds.
*The CLICO Douglas Estate transaction involved a 48% discount.
Policyholder Impact
Every dollar discounted is a dollar lost from the statutory fund reserved for paying insurance claims.
Total Loss Value
$14,880,000
Effective Sale Price
$16,120,000
Source: Judicial Manager's Report (2012), Section 4.2 - Valuation Discrepancies.
Regulatory Capture
Regulators lacked the statutory independence and resources to intervene effectively, often deferring to political pressure rather than enforcing compliance.
Download Center
Access the complete suite of research materials, educational resources, and forensic tools developed for this project.