NBS denies bailing out CLICO

Apr 24, 2009 News

Public statements being made by ‘concerned members’ of the New Building Society are described as slanderous, libelous, misleading and mischievous.
The Board of Directors of the company, in a statement issued yesterday, said that the entity has always and will always act in accordance with the Rules of the Society and good governance practices.

Speaking for the first time about the $1.5B bonds that were purchased in the Berbice River Bridge from Colonial Life Insurance Company (CLICO), the Directors said that bonds were bought at face value.
According to the company, the investment is in the Berbice River Bridge and not with CLICO.
The acquisition of the Bonds, the company stated, is in the interest of its members and the society as a whole.

The statement noted that the bridge investment is a merely five percent of NBS total assets.
Of the other 95 percent, the company said that 54 percent with an equivalent value of $19B is invested in mortgage loans, amounting to 7,819 in number.
The company stated that its maximum exposure in any one security until recently was $8M.
The investment therefore in the bridge is sound, justified and is the most lucrative investment opportunity currently available to NBS, it stated.

Pension Scheme Funds
The Society’s Pension Scheme currently holds a Flexible Annuity Policy of approximately $111M with CLICO.
The statement added that contrary to speculations contained in the April 15 issue of Kaieteur News, and also on the Business page of the Stabroek News, that the Society may have negotiated redemption of its Pension Scheme Investment in CLICO at the time of purchase of the Bonds for the Berbice River Bridge,
the directors noted that there was ‘no trade off or insider dealings’ in this matter as suggested by ‘so-called concerned persons’.

Profit
The Society recorded a profit of $288M for last year but this profit was less than the previous year when less money was earned.
The statement issued yesterday noted that had it not been for an exchange loss of $200M as a result of the depreciation of the pound sterling due to the Global Economic meltdown, the total profit for last year would have been $488M.

The investment in the UK is guaranteed by the Government of the United Kingdom, it stated.
Of interest to members, the company said that it should be stated that the investment in Britain has been there for decades, inclusive of the period when a self-styled ‘concerned member’ was a member of the Society’s Board of Directors.
The Society’s profits over the years had the benefit of significant increase in the value of the pounds sterling. Therefore, the $200M in losses for this year will have to be measured against those massive gains in previous years, it stated.

Present financial status
The Society stated yesterday that it has always been and continues to be very sound financially.
According to the statement, the company has surpassed all of its key financial indicators, strategic goals and operational targets in achieving record earnings despite many challenges during the year.
The statement noted that in 2007 there was a sinister plot, which was designed to undermine the Society by the same ‘so-called concerned members’ who predicted the downfall of the NBS.

Financial Reviews
The company said, yesterday, that the Bank of Guyana conducted three inspections of the Society’s records, two of which were done in the last three years.
Accountability of the Society is under the purview of the Minister of Finance, who has power to examine or cause to be examined the books of accounts of the Society.
The Society added that it received a nomination for an Auditing firm to be appointed Auditors for the year 2009 in accordance with the Rules of the Society.
As required by the rules, the NBS informed the current Auditors and its members.