NBS slated for BOG regularisation under proposed legislation

Oct 04, 2009 News

Head of the Presidential Secretariat, Dr Roger Luncheon, on Thursday last announced that the New Building Society (Amendment) Bill is among the priority Bills for the House when it resumes sitting later this month.
Under the proposed amendments it is expected that the New Building Society (NBS) will now be regulated by the Bank of Guyana (BOG).
BOG Governor, Lawrence Williams, when contacted recently as it relates to the non-supervision of the NBS by that entity, said that they were awaiting the necessary amendments to the NBS Act.
When contacted for a response to the announcement by Dr Luncheon, eminent chartered accountant and member of the NBS concerned members, Christopher Ram, said that as a long-standing member and former director of NBS, “I welcome any serious and meaningful effort to reform the Society.”
He pointed out, however, “Naturally we have to await a copy of the Bill before we can comment on it.”
According to Ram, in the past they “have heard so many times that the NBS is coming under the BOG that one could easily believe that the Bill was ready. All we have again is another promise that an Amendment Bill will be among the priorities for the next session of the Parliament.”
Ram stated that in the past there have been promises about amendments so often that one would expect that the Bill has already been prepared.
“I would add that if the Government and the Bank of Guyana take reforming the NBS seriously, they would consult with the members and not only the Board of the NBS, which has used the proxy system and the venue of Annual General Meetings to secure their political control of the Society.
Ram added too that he is surprised at the continuing reluctance of the Bank of Guyana to take any initiative to deal with the financial sector, in which it is bound by law to supervise the participants in the sector.
Williams, ever since April last, had announced that the bank has already taken steps to bring the NBS under its direct supervision, even as some “management issues” had been uncovered.
According to him, the action taken by BOG has been endorsed by the authorities and the necessary legislative changes to give effect to a prudent regulatory regime were being drafted.
Williams, when he made the disclosure, was at the time responding to queries by Cyril Walker, Chairman of the Concerned Members of the NBS, in response to concerns raised by that group.
The group through its chairman, raised concerns about the NBS not being licensed under Section 3 (2) of the Financial Institutions Act, which would have placed the Society under the supervision of the BOG and suggested that the NBS had taken advantage of this.
The group said: “Taking advantage of this failure to register, the society has been conducting its affairs in a manner that we consider dangerous to the members and the financial sector generally.”
The group cited the example of the society’s $1.5 billion purchase of shares in the Berbice Bridge Company from the financially troubled CLICO Company.
It said that such a purchase is “inconsistent with the Single Borrower Limit of the FIA but pointed out that “it may have been done in a manner that could be deemed inconsistent with the NBS Act and Rules.”