NBS members must be given a proper explanation

Apr 15, 2009 Letters

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DEAR EDITOR,
NBS is once again in the news and this time around it concerns its questionable purchase of CLICO’s bonds in the Berbice Bridge Company to the tune of approximately $1.5 billion when surely the Directors of NBS knew that CLICO GUYANA was in serious financial difficulties, having flouted the law by over extending itself in investments in CLICO BAHAMAS, which is in receivership.
From the outset, NBS was requested to invest $2 billion in the Berbice Bridge Company but the then Board was cautious and invested only $350 million, having regard to the net worth of NBS, despite strong lobbying by some Directors for $2 billion.
In the latter part of 2007 another $350 million was invested in the Bridge Company for a total of $700 million, which was the maximum amount NBS could have invested in compliance with the specific guidelines for Financial Institutions under the Financial Institutions Act. So why then did NBS invest a further $1.5 billion?
Two weeks before NBS’s purchase, there was a run on CLICO because certain powerful persons who had substantial investments in CLICO got wind of the parlous state of CLICO and wanted their moneys back. But CLICO had no money and time was running out as the appointment of a Judicial Manager was imminent.
As a result of NBS’s purchase, many powerful persons got their moneys back, also the NBS pension scheme which had investments in CLICO. But the ordinary people and other pension schemes did not get their moneys back. This is a blatant case of insider trading and makes the Martha Stewart case in the USA pale into insignificance. Remember that Martha Stewart was imprisoned for her involvement in insider trading. The Judicial Manager must publish the names of all who benefitted. Did anyone also benefit from a commission for facilitating the sale and/or purchase at such short notice? This will be a national scandal.
NBS has clearly over extended itself in the Bridge Company just like CLICO GUYANA did in CLICO BAHAMAS. Just imagine there was no physical meeting of the Directors to discuss the pros and cons of this major investment.
The members of NBS must act at the next AGM to be held on 25 April, 2009. Failure to act would result in an increase in their mortgage rate and or a reduction in their savings rate in the not too distant future, given the large investment in the Bridge which may not be repaid, plus a capital investment of close to $1 billion, inclusive of fixtures and fittings and a new computer system in a new head office building.
Although the notice for the next AGM was signed by the Director/Secretary on 31 March, 2009, it only appeared in the Stabroek News on 7 April, 2009. Why did the notice not appear in the Kaieteur News, which is the most widely read newspaper in the country? Is it because this newspaper has exposed the CLICO/NBS debacle?
If this is the first publication of the notice in a national newspaper, then the notice is inadequate in accordance with the rules which provide for 3 weeks notice. The AGM is schedule for 25 April, 2009 at a School (yes a school, Cotton Tree Primary) on the West Coast of Berbice. Isn’t this a backward step for the third largest financial institution in the country?
Of note, item 8 of the agenda is to approve that the mortgage ceiling be increased from $10 M to $12 M and such other sum as decided by the Board and approved by the Minister of Finance. This motion if approved by the members in its entirety would have serious consequences for NBS. The proposed increase in the mortgage ceiling to $12 million is commendable given the escalation in construction materials and labour but to give the Directors the authority to approve sums in excess of the ceiling is unprecedented and would open the flood gates for irregularities.
A reliable source has indicated that multiple loans totalling in excess of $80 million have been granted to certain housing developers who are friends of powerful persons. Such loans regarded as commercial loans should have been accessed from the Commercial Banks, especially since NBS is a tax exempt institution. The motion should be amended to read – ‘To approve that the mortgage ceiling be increased from $10 Million to $12 Million. FULL STOP. Members must not give Directors such absolute and wide ranging powers
Members especially those in the rural areas should exercise their rights as Members and do all within their powers to save this once prestigious institution. They should make every effort to attend the AGM and cast their votes to protect the institution. They should not be lured into signing proxies by the Branch Managers who do so under duress because they fear losing their jobs. Members also must not fall prey to the politics and race game. The interest of NBS must come first.
The Directors have not responded to NBS’s involvement in the CLICO debacle and give the impression that they have much to hide. The Members of NBS must at least be given a proper explanation on these and other related matters, failing which the Directors should do the honourable thing and resign.
Name and Address Withheld

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