On Sunday April 19th 2009 the
Excellent Stabroek news published the Christopher Ram's business page; in it
Ram provides an insight into the operations of the New Building Society over
the past two years 2008 and 2007.
I have no investments in NBS and so have
no personal interest in that company, but if I did I would demand every cent be
It is true that NBS is spawned by
legislation and as such its income is tax exempted and consequently it can and does
lend at a lower rate of interest and it does pay the highest rates of interest
in the local commercial sector.
Nevertheless they are so unsure of the
integrity of their accounts that they have arranged to hold this year's Annual
general meeting at Cotton Tree, East Berbice. I understand that next year's AGM
will be held at Nikerie, Suriname.
A few of the shenanigans identified by
Ram include the fact that when financing for the Berbice Bridge was first
sought, the head of the Privatisation unit approached NBS to invest 3 Billion
Guyana Dollars in the project; the board of NBS however under the chairmanship
of Mr. Moen Mc Doom declined to invest the $3 Billion and instead invested only
Since then four members of the NBS board
have been removed including chairman Mc Doom, apparently they made the mistake
of thinking that they were there to protect the investments of you the citizens
of this country and not risk your money on shaky investments which the IDB had
designated as not economically viable and so did not lend government the money
to build the Berbice bridge, after removing the four non cooperative members of
the NBS board, who dared to refuse to invest your money in this cavalier fashion,
the NBS then hastened to invest 1.5 Billion in the bridge.
Ram has also identified among other
things an area where there is some speculation about a G$110.9 million
investment in a Clico flexible annuity policy, the annual report of the company,
Ram claims, should not "leave investors to speculate whether the society may
have undertaken the purchase of the bonds from Clico on the understanding that
it could deduct the value of the policy from the purchase price of the bonds,
this is a possibility fraught with serious legal implications and requires an
unambiguous statement from the board which despite the public furore over the
matter has not so far even publicly acknowledged the purchase".
This investment in the Berbice River Bridge
leaves NBS "betting" more than 40% of its accumulated profits, your profits, on
the Berbice River Bridge Company which can interfere with the viability of the
society and could prevent it from meeting its annual interest obligations of
about G $800 million.
For the people for whom I write these
comments who, like me, want like their story to be simple let me put this another
way the NBS has been forced to lend G$1.5 billion Guyana dollars to the Berbice
river bridge Company since no on else including the IDB would finance it because
it was seen as a risky investment since the government could not produce a
viable feasibility study, the government has now forced NBS to invest so much in
this bridge that if the bridge project turns out not to be an economically
viable one and they can't pay the operational expenses plus the 800 million
dollars in interest they will have to find each year to service the loans they have
now incurred to invest in building it, NBS could lose 40% of their accumulated
profits; by all accounts including Sunday's newspaper April 19th
2009 the people at Molson creek have not noticed an improvement in visits to
their area pointing to the fact that this bridge could be as big a white
elephant as the Skeldon Project is, and that those who had advocated a shorter
river run from a stelling closer to Blairmont to New Amsterdam using with a roll,
on roll off vehicle ship, were right.
I myself have crossed this bridge at 5
PM on a week day and I was practically alone on it.
At the 2007 Annual General Meeting the
shareholders of NBS were complaining vociferously about a possible fraud at NBS
but the board at that AGM held in Georgetown, denied that there was any fraud
at NBS this was gross misconduct since there was a fraud at NBS to the tune of
73 Million dollars which the society had to make good on, and the next year to
avoid a repetition of the stormy 2007 meeting the NBS, for the first time in
history, decided to hold its 2008 AGM outside of Georgetown.
This year the dissatisfaction according
to Christopher Ram is about the inadequacy of notice and the contents of
Saturday's upcoming meeting. According to the law the notice for NBS AGM's must
be given 21 clear days prior to the meeting this conditionality has apparently
not been met, in addition and far more worrying to the public is the fact that
at this year's AGM NBS is seeking to increase the lending limit from $10
million to $12 million and more, so ladies and gentlemen even as the quality of
the assets to secure lending has been diluted both by practice and by the Berbice
Bridge investment, this higher lending and lower security will lead to higher
provisioning and loan losses.
Also ladies and gentlemen it appears
that the authors of this mutilation of NBS policy have also successfully
de-linked the Bank of Guyana from exercising control of NBS as its financial
regulator to ensure that it operates within the law as defined by the Financial
I repeat if I had one cent in NBS I would
take it out.
All of the above would not have alarmed
me as much as the fact that the person chosen to pilot the New Building Society
through this apparent maize of illegality is none other then Mr. Nanda Gopaul who
is also telling us that he has a plan in place to allow GuySuCo to recover and
prosper. I won't even dwell on the fact that he is the Permanent Secretary of
the office of the President; that alone speaks volumes about what goes on
No plan can possibly be put in place to
allow GuySuCo to recover especially one which visualises cutting capital spending
by 2.5 billion dollars as happened in 2008.
The true picture of the ridiculous
financial situation we find ourselves in today with sugar down, rice down, gold
down, layoffs in the bauxite industry occurring, even as I am speaking here now,
will not emerge in all of its glory for a year or two but I want it on record
that I said that no plan which GuySuCo puts forward can bail this Government
out of the hole they have dug for themselves and the rest of the sugar industry
Nothing that has been put on the table
so far fills me with any confidence that the Sugar Corporation's 2009 plan
would be any better than the disastrous one they presented to us in 1998 which
was a complete and total failure!