Young Man’s View: Bank Of The Bahamas Fiasco Highlights Social Inequality
The Bank of the Bahamas (BOB) fiasco is a national disgrace and rational, reasonable Bahamians cannot help but wonder how that BISX-listed institution’s loan portfolio could become such a shameful mess with the accrual of hundreds of millions of dollars of non-performing loans. The bank can only be likened to an asue where everyone withdraws and drops out once they have got their share.
I had intended to begin this column by initially looking at immigration, but the situation at the BOB is so downright mind-blowing that it had to be tackled out the gate. The fact that the government has decided to commit $100 million in taxpayers dollars to bailout—transferring $100 million in “bad” credit to the so-called Bahamas Resolve “bad bank”—leads one to question, firstly, why the government would want to retain its 65 per cent majority stake in that bank and, secondly, how many instances of interference by high-ranking government officials might have likely contributed to the astounding debt the bank must now contend with. Reportedly, the BOB had to curtail its commercial lending activities, with the bank purportedly having had to withdraw from lending to Bahamian businesses.
Bank of the Bahamas effectively has had little choice but to exit the commercial loans market. Around 51 per cent, or $107.443 million, of its $207.084 million commercial loan portfolio was non-performing at June 30, 2014.
The $107.443 million was a 142.3 per cent increase on the previous year’s $44.341 million in “bad” commercial loans. And loan loss provisions for “bad” commercial (business) loans increased almost five-fold in 2014, from $14.92 million the year before to $69.222 million this year.
There has been an apparent dereliction of the fiduciary responsibilities of successive boards of the BOB and of that bank’s management, so much so that the bank is to the point where it is now forced to shove a bill in excess of $100 million down the throats of the Bahamian people and no one—not the bank’s officials or the government itself—has the courtesy to inform the public as to the individuals who have benefitted from the public purse and not repaid.
This entire affair is nothing short of shameful and this, believe it or not, is the biggest story of this week.
Heads should roll at the BOB, starting with most—if not all—of the board and a large number of the upper managerial staff. The only mitigating circumstance would be if the management and directors of the board were instructed by powers greater than themselves to bypass normal banking requirements. Frankly, it is highly likely that no professional banker would have allowed such a gross deterioration of the bank’s balance sheet to occur unless they were instructed to do so.
And so, what is Bahamas Resolve? Seemingly, the government has decided to flush more monies down the pipeline and formulated a special purpose vehicle to take the toxic liabilities/loans off the books of the BOB and place them in a company. This will now become a part of the national debt of the Bahamas, a debt that must be and has been guaranteed by the state. What’s more, persons or an accounting firm must now be hired to manage these bad loans and for taxpayers, we will pay a price since these debts have now become a contingent liability of the Bahamas government.
So, who are the persons who benefited from these non-performing loans? What happened to their assets? What remedies do the people of the Bahamas—viz-a-viz the government—have? How can we be certain that these individuals are not continuing to rape the public treasury?
This is obscene.
The credit rating agencies—Standard and Poor and Moody’s— will examine this BOB deal and no doubt factor it into whether or not our credit rating will once again be downgraded, which will likely force the extraction of VAT—from taxpayers— to become an even greater urgency on the government’s part.
Prima facie, the bad loans appear to those that probably shouldn’t have ever been granted or could also be reflective of the likelihood that the appropriate interventions on the BOB’s behalf could have been stopped by the political directorate.
In recent times, Prime Minister Perry Christie has demonstrated his willingness to intervene with a credit facility on behalf of former VAT lead spokesman Ishmael Lightbourne. Did he feel comfortable in approaching the management of First Caribbean Bank on behalf of Mr Lightbourne because he, or any other high-ranking member of the political directorate, had already gained an ease with such interventions over time by intervening in similar fashion at the BOB?
Does any member of the Christie Cabinet owe the BOB large sums of monies, either approaching or eclipsing one million dollars, but has been unable to repay that bank and has therefore possibly contributed to the malaise we see today?
Relative to the loans, were these unsecured lines of credit and overdrafts? Were these bad loans not secured with realizable, liquefiable assets? Could it be that due to special calls and political favours, persons were allowed to guarantee loans with grants of crown land situated somewhere on a far-flung Family Island, pieces of land that likely has no immediate realizable value in the short term?
Here we have what could be an example of the haves abusing the have-nots! This is the perfect example of George Orwell’s truism, enunciated so clearly in his seminal work “Animal Farm”, where we see—in this instance— that some Bahamians are more equal than others. Though some who imagine themselves to be among the preferred few eat steak and caviar and tell the masses about how much they love them during political campaign cycles, they are really screwing the people and sacrificing them on the altar of political expediency.
The managing director of the BOB, Paul McWeeney, finds himself in an interesting conflict. Can he hide behind the fact that he may have been given instructions to facilitate certain loans? Mr McWeeney enjoys a generous compensation package and he should have the testicular fortitude to stop the gravy train, that is, if such existed.
The fiasco at the BOB could possibly be the result of corruption, cronyism and nepotism. The BOB has now become the metaphor of how business is done in the Bahamas. It is evidence of the rank failure of Bahamians to strictly regulate the professional activities of other Bahamians and the net effect is that the average, ordinary Bahamian will suffer.
Again, this is nothing short of a disgrace!
THE IMMIGRATION ISSUE
Quite honestly, I support Foreign Affairs and Immigration Minister Fred Mitchell and his plan to implement a new immigration policy. I think such an initiative is long overdue and I believe that Mitchell would bring a measured approach to resolving some of the concerns with illegal immigration that Bahamians are concerned about.
That said, there is a need for a sustained, workable and multi-faceted solution to the problem of illegal immigration and, frankly, we must gather all stakeholders together to discuss and draft a white paper relative to the naturalization of persons born and residing in the Bahamas of foreign parentage. We do not want to have a situation like Sri Lanka where there are two groupings of Bahamians—one of which comprises a marginalized underclass (likely the Haitians) —violently clashing and rioting and having what amounts to a country within a country.
Relative to the new immigration policy, I am curious as to whether greater clarification would be provided for the tenet that seemingly requires all non-citizens to be in possession of their passports at all times. What about when one goes beaching or dinner or some other casual event? Given the challenges of crime in the Bahamas, is it likely that one can assure people who have their travel documents in their possession that those documents won’t be stolen? Is there a grace period for those persons of foreign nationality who reside in the Bahamas to produce their documents, either themselves or having a family member or friend do so before being transported to the Detention Centre? Will there be another holding facility for such persons?
I am pleased to hear that the government has been apprehending and repatriating illegal immigrants so much so that it has absorbed much of its budgetary allocation. I am even more pleased to note that the government has pledged to ensure tougher penalties against people violating the immigration laws and engaging in human smuggling and also employing persons who do not have a work permit. However, why was the 2014/2015 allocation for repatriation cut by 60 per cent from 1.2 million to $500,000? What sense does it make to engage in such exercises when the government reduces the budget—per head 30, line 102600 of this year’s budget—by $700,000?
As it stands, DPM Philip Davis has already announced that for this year, the government has already spent $1.2 million of its $1.5 million budgetary allocation for repatriations.
The 60 per cent decrease in the budgetary allocation for repatriation exercises demonstrates that the government lacks the commitment to put the resources behind its rhetoric. How could $10 million be spent on Carnival, $20 million on Urban Renewal and $100 million on BAMSI when only $700,000 is being allocated towards repatriation exercises, towards what amounts to securing our national borders? How can a new immigration policy be implemented without adequate funding?
What’s more, the new apprehension exercises have a social services component to it, yet the social services budget—in budgetary cycles 2013/2014 and 2014/2015—has only received slight increases, but not to the extent that such increases could compensate for the number of people falling below the poverty line once VAT is implemented and, at the same time, sufficiently handle this new immigration policy which will no doubt have significant social services implications with the displacement of children and the destruction of shanty towns which I have found—first hand—will not only displace illegal Haitians/foreigners but also Bahamians and legal residents who also reside in these boroughs.
So, what are the budgetary provisions being made to counter such displacement? Will the immigration and social services budgets be expanded in the mid-term or prior to?
What is the programmatic preparation being put in place for such “round-ups”? Or is this merely grandstanding on the government’s part?
Our immigration problems must be managed on a daily basis, not one or two days per year and the department must be sufficiently funded!
How will the detention centre manage and would the meagre budgetary allocation for that institution soon evaporate? What will be done to mitigate the PR fallout? How do we ensure the safety of detained women and children? What about health implications of the new detainees?
How will persons get out of the detention centre in a timely basis if there is no money to repatriate them? What happens when it is overcrowded? Has there been an increase in the food and clothes allocation?
Are we going to borrow more monies so that we can continue to carry out apprehensions, but quickly repatriate at the same time to avoid instances of overcrowding and possible outbreaks of disease?
If this new immigration policy is so important, why was this not foreshadowed in the Speech from the Throne or the government’s agenda? Will it be foreshadowed in the impending Speech from the Throne, once the House of Assembly resumes?
I support an immigration policy that seeks to secure our borders and rid our country of persons who refuse to come through the “front door.” However, it must be a holistic exercise that also addresses pressing issues such as naturalization and, frankly, should be set out in a white paper on immigration reform.
There should not be any instance where it can be said that the government is engaging in unmitigated, gratuitous pandering to the masses. Bahamians want to be relieved—as much as possible—of this problem and there must be a sustained, objective and sensitive campaign that has measurable goals and that also accomplishes those goals that have been articulated. Addressing the Department of Immigration’s A Squad graduating class, Mr Davis said because of the number of repatriations and interdictions, the government has nearly exhausted this year’s budget.
Mr Davis also said when the House of Assembly resumes on November 19, the government will announce new changes to the immigration laws “that will toughen the penalties for smuggling and for employing people without a work permit.”
He said the majority of the people repatriated were Haitians, who accounted for more than 70 per cent of illegal migrants apprehended.