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NBS made some poor decisions that cost it money
– President Jagdeo
All investments locally and overseas have some amount of risk but many people in Guyana only look at the ‘upside’ of investments, Head of State Bharrat Jagdeo said on Friday.
During an interview on Friday the President said that when persons invest their monies they believe that they will always benefit but that is dependent on the type of instrument they invest in.
Markets, he said, has ‘upside risk’ and ‘downside risk’ pointing out that when persons are investing their money the need to weigh those risks.
President Bharrat Jagdeo
“People in Guyana feel that you must only benefit from investments but you can also lose.”
Addressing the issue of the New Building Society and its financial decisions over the years, the Head of State said that the previous directors for the company, among whom was chartered accountant, Christopher Ram, made bad decisions.
Recalling the preliminary investments in the Berbice River Bridge, the Head of State said that during the initial stages of putting together a concretion to build the bridge, two feasibility studies were conducted.
A French company, at a cost of over US$1M, carried out one of the studies and the Inter-American Development Bank did the second.
The Head of State noted that many financial companies and private individuals thought that it was a good investment and they put their money in the bridge.
“The New Building Society (under the previous management) chose to park its money abroad and kept its money in treasury bills rather than invest in the bridge and I think it was a loss in income and narrow sightedness.”
President Jagdeo said that under that previous management, a decision was taken to have Ramon Gaskin do a study.
“He is no financial analyst…his study for a couple of weeks overturned the study done by international consultants for months looking at technical and financial feasibility studies.”
The board at that time chose Gaskin’s report over those studies and according to the President that was a bad decision.
“I see Mr. Ram, who is leading this break off group, has indicated that this is a bad investment in the bridge…it was Christopher Ram from his tenure I gather, who put the money abroad when he was on the board at NBS, who chose to invest the pounds aboard.”
In a statement issued late last week the NBS announced that the society recorded a profit of $288M for the year 2008.
It could be noted from the statement, 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 the year 2008 would have been $488M.
The company said 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.
President Jagdeo added that Ram also caused the Globe Trust depositors not to get their money because he and the Directors, who had taken up a lot of the money in personal loans, blocked the liquidation.
“So, there is a track record to this about running down financial companies and their track record is a dismal one.”
He added that the investment in the Berbice River Bridge will earn the company at least $120M per annum.
“(If) I had money I would have put the money in the bridge. New Building Society has billions of dollars invested in government treasury bills; it is sitting there…they get three or four percent per annum on that.”
The Berbice Bridge investment, he added, is a safe investment, apart from it being insured, Government will never allow a bridge of that nature to fail, the Head of State said.
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