– Investment in Berbice Bridge on agenda
The $1.5 billion investment into the Berbice River Bridge by the New Building Society (NBS) is among the thorny issues to be discussed when the Committee of Concerned Members of the Society meets today.
The Committee has decided to hold a general meeting of members after discussing developments at the society, including the Bridge investment, the performance for the year 2008 and the Annual General Meeting (AGM).
The AGM is fixed for Saturday at the Cotton Tree Primary School, West Coast Berbice. This is the second time that the AGM has been fixed for a Berbice venue.
The Committee, in a press release yesterday, said it has noted with concern that the Annual Report which members will be called upon to approve has not yet been made available.
“This is particularly troubling in light of the reported substantial reduction in profits and an exchange loss of more than $200 million,” the Committee stated. It added that the performance of the Society could not be separated from the quality of governance “which is at an unprecedented low level.”
The Committee said it believes the Board is taking advantage of its own refusal to be licensed under the Financial Institutions Act, which would have brought some financial discipline to the Society.
“The disclosure that the Board proposes to fire the long-serving auditors have added to fears that that Board wishes to operate with as little sunlight as possible, with the most recent and costly example being the purchase of $1.5 billion of bonds in the Berbice River Bridge Company from Clico, the failed insurance company,” the Committee stated.
The Committee wants the Bank of Guyana to bring the society under statutory regulations and, towards this end, it has written the Governor of the Central Bank asking for an early meeting to discuss matters of concern to the members.
Today’s meeting of the concerned members of the Society is scheduled for the Saint Stanislaus College, Brickdam.
Chartered Accountant Christopher Ram, who plans to be at the meeting today, said when financing for the bridge was first sought, the Society was approached by Head of the Privatisation Unit, Mr. Winston Brassington for a $3B investment.
In a column posted on his website (chrisram.net) Ram said independent consultant Raymond Gaskin questioned both the lawfulness and the viability of the investment and it is understood that on a split-decision the board, with Mr. Moen McDoom as Chairman, accepted the advice and rejected the approach but went for $350M, a sum it was “prepared to lose.”
Just over one year later, the board with Dr. Nanda Gopaul as Chairman reversed and, according to the financial statements, bought bridge bonds with a face value of $1.5B. Regrettably, Ram stated, the financial statements do not disclose the price paid for those bonds, but it is believed that they were bought at face value. More controversially, he suggests, not only did the board reverse itself, but from all reports it did so by way of round-robin, that is, without a physical meeting of the directors.
In his column, Ram also raised the concern about the non-supervision of the Society by the financial regulator, the Bank of Guyana.
According to Ram, the Central Bank does not dispute that the Society carries on financial business as defined by the Financial Institutions Act which requires it to have a licence issued by the Bank of Guyana, “yet it has inexplicably failed to enforce this provision.”
“Such laxity by the regulator can have serious implications for any financial institution, let alone one that is subject to the control of persons with strong political affiliations and no private sector experience,” Ram charged.
He said, without such a licence the Society does not operate within the Act, which among other things provides for single borrowers’ limits to minimise the impact of a failure of a single loan or investment.
Ram suggests that even if the Bridge Company investment were lawful, had the law been applied to the Society then it would have been prevented from investing more than approximately $1.2B in the Berbice Bridge.
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