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Misuse Of Urca

EDITOR, The Tribune.

ON Wednesday, October 7, four days after the exit of Joaquin, The Utilities Regulation and Competition Authority (URCA),

issued a press release headed “URCA donates over $1m to Hurricane Joaquin Relief”.

Given the collective national shock at the devastating aftermath of  Joaquin, few persons paid any attention to the media

announcement and the televised press conference at the office of the Prime Minister, likely dismissing it as a generous gesture on the part of URCA. This “gesture” however, for those who appreciate the purpose and functions of a regulator, amounted to a wholesale misuse of the proper purpose of the utilities regulator.

On March 25, 2015, URCA in its Order, fined BTC a total of $1,581,384.61.The fine was a penalty against BTC firstly, for its 22nd March 2014 15-hour island-wide mobile and landline networks outage and secondly, for BTC’s refusal and/or failure to comply with another URCA Order of March 7, 2013, related to the network outage in June 2012, which required BTC to take certain specific remedial maintenance actions.

BTC paid one third, $527,128.00 of the fine in cash. URCA then ordered that BTC make a proposal to URCA on the remaining

$1,054,256.41 of the fine to show how the fine could be used to benefit consumers directly.

Fast forward to the post-Joaquin national disgust with NEMA for its poor performance in advance of the hurricane and its muddled molasses like response thereafter. Given the massive ground swell mobilisation for the hurricane relief effort by the private sector, it probably became apparent very quickly to the powers that be that no one was likely interested in donating anything to NEMA, which was probably not properly funded by the Government for the hurricane season in any event.

And so, I surmise, the OPM went looking to see who they could influence into donating urgently needed monies to NEMA. And, of

course, the first line of sight was the self-sustaining financially independent coffers of URCA.

In August 2009, the Government of The Bahamas introduced a new modern robust and transparent regulatory framework designed to encourage competition in telecommunications in anticipation of a privatised incumbent and a fully liberalised mobile sector. URCA was established under the Communications Act 2009, and the URCA Act as a multi-sector (Telecommunications, communications/broadcasting, water and electricity) converged regulator and competition authority with far greater powers than its predecessor, the Public Utilities Commission.

The new legal structure of the regulator and its funding by the regulated industry was to ensure that its independence and autonomy

would be free of external interference, in fact, URCA was modelled after the legal structure of the Central Bank of The Bahamas.

This separation from the government was also deemed essential to give foreign investors the assurance that they need that

their multi-million dollar investments would be free of political interference and whim.

URCA opened for business on August 1, 2009, as an independent regulator according to international best practices.

Shortly after URCA’s inception, however, opposition political operatives, in 2011, attacked the Foreign Director of

Regulation and Policy and hounded him out of the country primarily because he had terminated the “wrong” staff member. URCA as an organisation was maligned as being too powerful by persons who in their ignorance failed to understand URCA’s mandate. A prestigious institution was reduced to public odium and distrust by the slanderous attacks and one questions whether URCA ever really recovered its standing.

And since this administration came into office in 2012 it has meddled with and thereby diminished the authority and stature

of URCA. It has interfered with URCA’s original financial structure by amending the URCA Act to have all surplus monies after the external auditor’s reconciliation of the URCA budget paid into the Treasury/Consolidated Fund rather than credited to Licensees for the next fiscal year. It has also ensured that Spectrum licence fees, which are collected by URCA on behalf of the Government have been significantly increased, and it has influenced URCA to amend and redefine the meaning of a Licensee’s “relevant turnover” upon which the licence fee is calculated to further gouge an excessively taxed and overcharged industry.

Additionally, the failure to fill the third URCA board seat, 15 months after it became vacant, thereby depriving URCA

of expert advice at a crucial time in the sector, speaks to a serious dereliction of duty on the part of the Minister responsible and sends a message that URCA’s business is not a priority. In fact, as URCA’s non-executive members are appointed solely by the Governor General, perhaps the Board can take a courageous stand and select an appointment within the confines of the URCA Act for approval, given the Minister’s failure to act!

And now we have the Press Conference of October 7 where it was announced that URCA, with BTC’S “co-operation” determined that it would donate the balance of the fine money of $1,054,256.41 to NEMA – an apparent decision of the URCA Board, according to its chairman.

As I have previously pointed out, URCA is an autonomous regulator. The inappropriate press photographs of the Prime Minister,

BTC’s CEO and URCA’s executive members sets a disturbing precedent for the prestige of the office of the regulator in the circumstances.

I question BTC’s presence at the press conference. BTC was heavily fined and penalised by URCA for egregious breaches of its licence conditions. Why then would BTC be brought to the table to showboat and give the appearance of some godsend financial benefactor deigning to agree to allow URCA, its regulator, to make a financial contribution to NERA with BTC’s money?

The $1,054 million balance of the fine according to the Order  was to be used by BTC to benefit consumers/customers directly, for example, by applying free cell minutes or credits to customers’ bills. URCA chose not to collect the additional cash from BTC but to appropriately ensure that those affected by the outages were compensated, using the balance of the money. Under what authority

then, is this $1,054 million being sent to NEMA? Certainly, the Board’s “...(mindfulness) of the devastation to our brothers and

sisters...” is insufficient reason. It is exactly to prevent this type of manipulation of URCA’s finances or worse, that an autonomous

regulator was created.

URCA is NOT a government agency or department or corporation. It is a body corporate and a public authority which is

funded by the sector it regulates and it is accountable for those monies in specific and transparent ways. URCA is not to be interfered with in its business operations and URCA’s accounts are not a piggy bank to be used to assume the government’s financial responsibility for funding NEMA. Indeed, URCA’s bank accounts are for the purpose of supporting URCA’s financial independence from the government and to efficiently and effectively function as a regulator.

And, if URCA’s Board and staff are so moved to contribute to the hurricane relief then, respectfully, they should contribute out of

their own pockets or hold a fundraising event. Legislation, regulation and policy can set all of the necessary standards, guidelines and objectives for an institution. At

the end of the day, however, it is the persons leading that institution from within and their appreciation or lack thereof of the

role of the institution who will determine for a large part, the standing of that institution and the consequent degree of respect with

which that institution is regarded by the community in which it operates.

This administration, whether deliberately or in ignorance, is eroding the esteem and independence of URCA in its refusal to

acknowledge the special conventions attached to URCA as a regulator of an important sector.

I implore this administration to leave URCA alone to function as it was intended to function. A regulator that is perceived

to be in the government’s back pocket will not bode well for any potential foreign investment. Investment money which this government does not have to take this sector to the next level and beyond.

I encourage URCA, respectfully, to guard its autonomy and independence jealously. URCA is more than equipped legally with what it needs to operate with minimal reference elsewhere. URCA, like the Central Bank is self-contained.

I cry shame on those who misuse and those who allow the misuse of URCA. The price to be paid by all of us for this misuse will

ultimately be a costly one.

FELICITY L JOHNSON

Nassau,

October 23, 2015.

Comments

Economist 2 years, 11 months ago

Let us not forget that one of the first things this gov did was change the URCA legislation to require all excess funds to go to the Consolidated Funds. So URCA has not been independent of the government since then.

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Well_mudda_take_sic 2 years, 11 months ago

The Chairman of URCA (Randol Dorsett) has lost all of his credibility with the Bahamian people and should be made to resign and reimburse the public treasury for the $1,000,000 payment he has allowed to be illegally misdirected from its lawful intended purpose.

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