Serious governance issues plague NBS
Following the Annual General Meeting of New Building Society (NBS) on Saturday, Chartered Accountant and a member of the Committee of Concerned NBS members, Christopher Ram says that there is still a significant number of unanswered questions at the company.
According to Ram there was a huge problem with the administration of the company in that there is bad governance.
“They did not take the question on the governance issue…There clearly are serious governance problems within the society as was found by the Bank of Guyana,” Ram told media operatives.
Ram pointed out that at NBS there is no financial analyst. “We don’t have an accountant, on the board…that is surely irresponsible.”
As it relates to the investment in the bonds in the Berbice Bridge, Ram said that the company at the very minimum should have consulted with auditors. “You don’t make an investment of $1.5B by round robin…We are stuck with a Board that does not have the relevant skills and expertise which a modern financial institution requires in these challenging times.”
Ram added also that the society should demand, very early, a copy of the audited financial statement from the Berbice Bridge even though these are quarterly reports.
He noted that another unanswered question related to the protection of the pension fund.
“They did not answer the question about what happened to the loss of $111M impaired Colonial Life Insurance Company (CLICO) Guyana.
The comments came a day after President Bharrat Jagdeo, chastised some investment decisions made by the NBS.
Addressing the issue of the NBS and its financial decisions over the years, the Head of State said that the previous directors for the company, among whom was 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 consortium 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 NBS 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.