Ram to take NICIL, NIS to court over BBCI shares

May 04, 2015 News

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Attorney-at-Law, Christopher Ram has signaled his intention to move to the courts over the $950M worth of preferential shares in the Berbice Bridge Company Inc (BBCI) that was dumped by the National Industrial and Commercial Investments Limited (NICIL) over to the National Insurance Scheme (NIS).
Initially, Ram had chosen to tread along a different route and had written to Chairman of the NIS Board, Dr. Roger Luncheon, who is also a NICIL Director, seeking information on the transfer of shares.
He did so as he expressed fear of “irreparable financial damage,” to NIS. Ram on behalf of three pensioners, on April 22, wrote to Dr. Luncheon requesting detailed information on almost $1B in preference shares in BBCI for which NIS is receiving no dividends.
When Ram wrote Dr. Luncheon, he had requested a response within seven days which would have ended on April 29. However, since Dr. Luncheon refused to respond, the lawyer decided to move straight to the courts.
He made this known during a telephone interview yesterday.
Ram, who is also a Chartered Accountant, said that he was seeking relevant information in the interest of his clients, the pensioners.
NIS acquired preference shares in BBCI at a face value of $950M since 2013 but never received any dividends because the company claimed that it made no profits. NIS had bought those shares from NICIL.
Ram said that his clients are concerned about the decision to make investments since Dr. Luncheon would have been aware that NICIL, the previous owner of the shares had to forego the dividends. His clients are also concerned that no independent valuation was done before a decision was taken on acquisition of the shares.
Also, Ram’s clients are concerned that as Chairman of NIS board, Dr. Luncheon appears to have been in a position of conflict of interest since he is also a Director of NICIL, the seller of the shares.
Ram wrote Dr. Luncheon requesting the date of acquisition, the price paid for the shares and whether it is cum dividends or ex dividends.
He also wanted a copy of the valuation report based upon which the decision was made to buy shares and evidence that the Directors, in making the decision, took account of the potential or actual loss of approximately $5.5B which the scheme incurred but is still on its books in relation to the investment in CLICO.
The lawyer also sought extracts of the minutes from both the NIS and NICIL confirming that Dr. Luncheon excluded himself from participation in the relevant meetings of the two companies on the issue.
Ram also indicated that another client has joined the other three pensioners. While he did not reveal the name, the lawyer said that his new client is a Trade Union.
NIS remains in deep trouble following its investment in two companies that proved to be financially disastrous.
NIS invested an accumulated $6.5B in the Colonial Life Insurance Company (CLICO) and the BBCI ($5.5B in CLICO and the remainder in BBCI).
Experts have said that the absence of proper management on government’s part is what landed NIS in its current financial dilemma.
The negative effects of Guyana’s handling of the collapse of the CLICO and its subsequent impact on the NIS are continuing to be felt some six years later.
With CLICO Bahamas in winding-up proceedings, it is still unclear whether Guyana will ever get back that money. Government has remained largely silent on this investment with criticism still lingering over the manner in which the money was invested in the first place.
But the same Party that has been in government while NIS made these two bad investments has failed to outline a turnaround plan.
The incumbent People’s Progressive Party/Civic (PPP/C) released its Manifesto with no action plan on how it is going to return NIS to financial stability if re-elected.
When asked at PPP’s last press conference why nothing is in its Manifesto with regards to how government will revive NIS, PPP/C General Secretary, Clement Rohee gave all assurance that “something has to be in there (the manifesto) about NIS, I am sure.” However, checks and double checks proved otherwise.
In an invited comment last week, Ram told Kaieteur News that he is not surprised that PPP failed to make such provisions in the manifesto.
He said that he is convinced that the incumbent has “no clue” what to do. “NIS was already in a bad situation after CLICO then they (government) went and made it worse with the investment in the Berbice Bridge.”
Ram said that it seems as if the government just prefers to ignore the dilemma of the Scheme, “but they will not be allowed to ignore it, they will not be allowed to do so at all.”

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