By LAMECH JOHNSON
Tribune Staff Reporter
THE FNM yesterday demanded that the government reveal the names of all politicians whose delinquent debts may have contributed to the government’s proposed $100 million bail out of the Bank of The Bahamas (BOB), a move the party dubbed as nothing more than continued political cronyism.
The government is the major shareholder in the bank.
“The government is throwing ‘good money after bad’ in a framework of continued political cronyism and lack of accountability and transparency,”
FNM Leader Dr Hubert Minnis told reporters at a press conference.
“It is also the view of the opposition that the names of all politicians or politically exposed persons, whose unpaid and delinquent debts have contributed to this financial calamity should be revealed. Any conflicts of interest presently obscured by bank secrecy laws should be brought to light forthwith.”
“There should be full disclosure. Those politically exposed persons should be revealed to the Bahamian people,” Dr Minnis added.
On Friday, Prime Minister Perry Christie announced a plan to help the struggling bank by establishing Bahamas Resolve Ltd, a new state-owned and controlled company that will assume liability for $100 million of BOB’s non-performing commercial loans. The government also plans to hire an accounting firm to pursue the outstanding debts. On the same day BOB released its end-of-year figures which showed a net loss to investors of $69 million, the third successive year it has incurred losses.
This came eight months after reporters pressed Mr Christie on BOB’s financial status – at the time the Prime Minister said “there is absolutely no reason for any fear or concern” about the bank.
Mr Christie said his administration took this route after the Central Bank advised it of an emerging risk stemming from BOB’s outstanding loans.
The government believes the establishment of Bahamas Resolve will mitigate against bad credit risks, improve the bank’s revenue prospects and enhance its shareholder value and financial condition.
In a statement released on Friday, the government said it has “provided liquidity support to BOB through deposits of approximately $65 million.”
Mr Christie said no funds from the Public Treasury and the National Insurance Board have been used in connection with the assignment of the loans to Bahamas Resolve. He added that BOB is now compliant with capital and liquidity requirements of the Central Bank and international standards because of the implementation of Bahamas Resolve.
In the past, BOB has been accused of giving out multi-million dollar unsecured sums to politically-connected Progressive Liberal Party (PLP) supporters.
However, BOB Managing Director Paul McWeeney said on Friday that none of the troubled commercial loans that will be assigned to Bahamas Resolve involve “politically exposed” persons.
He said loans given to politically exposed people are a small fracture of outstanding debt.
Officials blamed BOB’s troubles on the 2008 recession, which caused numerous borrowers to experience difficulty repaying their loans, thereby affecting the profitability of the bank.
Yesterday, the FNM leader said that the need for a bail out “now casts serious doubts upon the prime minister’s earlier words of assurance.”
“The prime minister, as minister of finance, either knew or ought to have known the true state of affairs at the Bank of The Bahamas. If he knew the facts in February, then his assurances were false. If he did not know,then he was in dereliction of duty,” the Killarney MP said.
The party leader also denied the prime minister’s claim that the opposition was consulted about the formulation of the bail out plan.
“The FNM supports the concept of providing necessary support to prevent the collapse of the bank but only upon terms which involve stringent oversight of its operations, accountability for all managers and directors who are responsible, full transparency and the highest ethical and business standards,” Dr Minnis said. “This cozy arrangement announced by the PLP government does not and cannot inspire confidence that millions more in tax dollars will not be wasted by throwing good money after bad management,” he concluded.
For months, FNM Chairman Darron Cash has raised alarm about the state of BOB which had prompted several assuring responses from the government.
In a statement last month, Mr Cash said: “The fact that BOB could not hold a prescribed annual general meeting more than one year after the financial year ended and now wants to ‘double up’ with a two-in-one AGM ... this is failure on a grand scale.”
“The current revelations about the bank’s failed corporate governance and previews of continuing financial losses serve as renewed confirmation of the case that the FNM has been making for more than two years – that the PLP government cannot be trusted to honestly and effectively govern publicly owned and controlled corporations. They believe that the people’s money is their own to do with it as they please. That is why there is never any sense of urgency to demonstrate accountability. This attitude starts at the top with Prime Minister Christie,” Mr Cash said.