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UK investment volatile but now not a good time to repatriate
– NBS Chairman
Chairman of the Board of Directors of New Building Society Nanda Gopaul.
While agreeing with chartered accountant Christopher Ram that the New Building Society’s investment in the UK’s Pound Sterling is volatile, Chairman of the Board of Directors, Dr Nanda Kishore Gopaul, says that the time is not right of repatriate the investment.
He noted that at the time of the Annual General Meeting the Pound Sterling was worth US$142 but at present it has climbed back up to US$162 thus allowing the company to recover some $20M of the $200M it lost during 2008 on that investment.
Dr Gopaul, in an interview, yesterday, said that over the years the investment had been made. NBS had been earning significantly.
His explanation came in the wake of a contention by Christopher Ram, that NBS had reneged on a decision taken at the annual general meeting to repatriate the investment in the Sterling.
He said that Ram, who is now criticizing the decision to halt the repatriation of the funds, said that as chairman, he opted to take comments by Ram aboard and invited him to be a part of the decision-making process.
Ram was seen as valuable by the Chairman and he was asked to make any technical expertise available to the board. Gopaul stressed, “Like him, I believe that the investment in the Pound was dangerous.” He added also that given the risk involved in the Pound Sterling he had argued for some four years to the society while he was an ordinary member of the Board.
Gopaul said that he had argued that the British currency could not sustain itself at that level for long, “it was a risky business.”
Gopaul did point out that during the period the company was making a profit but it was the sudden depreciation of the currency that resulted in the loss.
He did point out that no one has sought to examine the returns made on the investment over the five years prior. “We have tripled that amount by virtue of the investment in the Pound Sterling in terms of the movement upwards of the rate.”
Gopaul did indicate that when the society lost the money on 2008, “it bought home the point of the vulnerability of the investment…therefore we all agree that it is something that should be examined.”
The Chairman noted that when someone were to assess the movement of the Pound Sterling just one week after it was agreed that Ram be allowed to prepare a repatriation mechanism, the pound commenced a rise in value. He emphasized also that at NBS there was no immediate liquidity problem, hence there is no need for a rush to repatriate the money given, that with the upward trend the company was recovering some of what was lost. “Why would we now at this point in time when the pound sterling is rising over the US dollar, take the decision to repatriate the Pound? We want to capitalise on the best rates…the prognosis is that the pound will continue to rise.”
The Chairman pointed out that the Board would continuously assess the situation and choose the appropriate time to repatriate the money. This, according to Gopaul, was relayed to Christopher Ram.
“At this point in time we are not contemplating breaking our investment,” said Gopaul and explained that to do so would cause the Company to lose money.
On May 28, last, some 33 days after Ram was asked to prepare the terms of Reference of the repatriation process, NBS wrote to Ram informing him of their position.
The document stated, “…with regards to the Society’s Pounds Sterling Investment and repatriating within three months, it was the consensus that we should not tie ourselves up to these timelines, as the society does not have a liquidity problem, and in light of the sensitivity and upward movement of the exchange rate of the pounds sterling, the board would review this matter at a more opportune time.”
Ram subsequently forwarded his Draft Terms of Reference adding, “When I agreed to prepare a TOR I had anticipated a greater level of co-operation from the Society so that the document could reflect the circumstances and needs of the organisation.”
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