THE ANNUAL GENERAL MEETING OF THE NEW BUILDING SOCIETY

Apr 22, 2009 Features / Columnists, Peeping Tom

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Last year when a fraud was alleged to have taken place at the New Building Society, a group of concerned members held a meeting to discuss the state of the Society.
I warned them then that this was not the ideal approach because it could send a wrong and mistaken signal to depositors and lead to a loss of confidence in the Society.
I felt then that those who had concerns about the management of the Society should try to meet with the Board or the management. I am told that some attempt was made to do this and I was pleased because unless there are definitive reasons for a challenge to the management or the Board, it is always advisable for matters relating to financial companies to be handled responsibly lest in trying to do a good, concerned persons end up doing the opposite by triggering a loss of confidence in the institution.
It is for each depositor to determine, based on verifiable facts, whether he wishes to continue with an institution. This column has never sought to impose its views on the depositors of the New Building Society even though it has always had confidence in the management.
I have seen nothing so far that is a source of concern. I have confidence in the Board of Directors and trust in the management.
I however am not going to advise anyone to share my view. They must assess the situation for themselves.
However, I will again indicate that any depositor who wishes to publicly chastise the Board or the management of the New Building Society should be mindful of the effect of such public criticism on public confidence in the Society.
I have no problem with any concerned grouping expressing their opinions. After the issue last year, I did not read or hear anything more from this grouping.
Even after I had raised questions about the purchase of the CLICO bonds in the Berbice River Bridge, I did not see anything in the press emerging from the concerned grouping.
I have noted, however, that with the Annual General Meeting slated for this week, a concerned group has emerged and is questioning amongst other things the purchase of the bonds by the New Building Society.
I had hoped that when the issue of the purchase of these bonds was questioned in this column that the New Building Society would have explained the rationale for such a purchase as well as indicate whether it was secured at a discount or at face value.
The New Building Society has not commented publicly on this matter but I expect that it would explain itself at the meeting to be held this weekend in Berbice. I expect that a statement will be made about the purchase of the bonds. I expect also that the Board of Directors would answer whether they think that the NBS is overextending itself when it comes to its overall investment in the Bridge.
The President of Guyana of course had in answer to a question posed during the last press conference he hosted in Guyana, indicated that the purchase of the bonds was a good deal for the New Building Society.
I would have preferred to have heard that from the Board of the New Building Society since I have grave reservations about accepting the opinion of the President when it comes to financial matters.
After all if the purchase of the bonds was such a good deal why did the government not prevent the sale so as to secure the interests of the National Insurance Scheme?
The President did explain that the rate of return on these bonds was higher than what the New Building Society could have obtained through other instruments on the local market. What he did not state was whether this rate of return was guaranteed by the government.
Based on what is being said, it is doubtful whether the bridge is enjoying the traffic necessary to ensure payment of the agreed rate of return to all investors and therefore what needs to be asked is if for example the bridge does not earn significant revenue in its first few years, how will this rate of return be paid.
Is the government going to take taxpayers’ monies to pay to the private investors should there be a shortfall in the anticipated rate of return?
When the bridge was opened last December, it was mentioned that the government could forego its return so that the other investors could have their guaranteed rate of return. This is totally unacceptable.
We are not sure whether the government as part of its contract with the investors in the bridge is going to underwrite any losses so that the private investors get their monies while the funds sunk into the bridge by the NIS remain unrewarded.
The government should therefore lay in the National Assembly the terms of the contract it signed for the construction of the Berbice River Bridge so as remove any doubts about any guarantee it may have issued.

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