By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The identities of the 13 ‘bad’ borrowers who sank Bank of the Bahamas (BOB), and caused its $100 million taxpayer ‘bail out’, can be revealed by Tribune Business today.
Documents lodged with the Registrar General’s Department by Bahamas Resolve, the entity to which these ‘toxic’ loans were transferred, reveal the delinquent borrowers as:
Philip Lightbourne, Premium Food Services and H&B Investments
Kingsley Enoch Edgecombe Jr and his wife, Cheryl Jane Edgecombe
Dr Donald Leon Cooper and his company, DLC Investments
John H. Bain and Idena C. Bain, and their company, Bain Investments and Development
Kendal Robert Williams and Kendal Williams Construction Company
Franklyn Morley and Longside Investments Ltd
North Andros Food Services Ltd and Jerome Rofeno Forbes
Campbell’s Electric Company and Stanley Gustavious Campbell
Lock Resorts ltd, Datavu Ltd (guarantor), Brenda Carolyn Lockhart and Laverne Rudolph
Philip Lundy and East Street Investment Company
Landstar Concrete Products
Malv Investments, Sea-Ban Products (Bahamas) Ltd, and Ruiz Edmund Munnings and Ingrid Munnings
Anthony Erasto Albury and Anthony Edward Albury
The documents do not reveal how much each individual borrower owed to Bank of the Bahamas at the time these loans were transferred from its balance sheet.
However, they do disclose that:
- Despite the ‘bad’ loan portfolio being transferred to Bahamas Resolve on October 30 last year, it took almost eight months to properly record the transaction by lodging the documents at the Registrar-General’s Department.
Deloitte & Touche (Bahamas) did this on June 26, 2015, with the associated Stamp Tax due to the Public Treasury paid two days earlier. The law firm that handled the transfer was Sharon Wilson & Co.
The security transferred to Resolve Bahamas includes a variety of instruments, including first and second mortgages, debentures, further charges, upstampings and rent assignments.
- For students of politics, nine out of 13 (69 per cent) of the ‘bad’ loans were originated under the first Christie administration between 2003-2007 , at a time when the Bahamian commercial banking industry was lending aggressively prior to the 2008-2009 ‘credit crunch’.
There is nothing in the Registrar General’s document to suggest that any of the loans were politically motivated, with one set of transactions (the Malv Investments/Munnings loans) originating as far back as 1987.
But one source, speaking on condition of anonymity, told Tribune Business: “It appears that there was some attempt to divide up the debt among persons of differing political persuasion, although I would hardly think it correct to say that there were ‘no political loans’ among the portfolio ….only no members of the House [of Assembly].
“It’s hard to accept that, if this was an arm’s length transaction, BOB can consider its ‘$100 million asset’ as secure when the bank accepts a note from Resolve, a newly incorporated company with no ‘assets’ other than the ‘bad debt’ acquired from BOB unless there was some form of guarantee from the Bahamas Government.”
The source added that Bahamas Resolve has yet to file an annual return since it was incorporated last year.
Prime Minister Perry Christie previously promised to disclose the Bahamas Resolve loan portfolio, and its composition, in the House of Assembly but has yet to do so.
Disclosure should be imperative, given that the transaction lumbered the Bahamian people/taxpayers with a $100 million liability for collecting/realising on this bad credit - something that Bahamas Resolve’s chairman recently admitted to Tribune Business.
James Smith conceded that Bahamas Resolve was unlikely to recover the full value of the collateral assets, or the $100 million ‘promissory note’ that the Government injected into Bank of the Bahamas in a bid to restore it to financial health.
“I don’t think there’s any way to get dollar for dollar,” he told Tribune Business. “There’s going to be a gap between market value and whatever we realise. There’s going to be a gap between what the Government put into the bank and the provisions that came over.
“The market determines that. The Government made the decision once it handed over the promissory note. That set the upper limit, and we’re trying to rid the portfolio at the best price we can, or work the portfolio where Deloitte acts as a receiver for those with business connections.”
Mr Smith added that the primary objective of the Bahamas Resolve transaction was “to remove the toxic loans off the balance sheet” of Bank of the Bahamas, and ensure it was returned to compliance with regulatory capital ratios. The transfer of such liabilities to the taxpayer was thus a secondary consideration.
Mr Smith also revealed that “the majority” of bad loans transferred from Bank of the Bahamas related to “high-end homes” and condominiums, rather than commercial credit as initially thought.
The Resolve transaction saw Bank of the Bahamas exchange a net $45.4 million worth of ‘bad’ commercial loans with the Government-owned Bahamas Resolve vehicle in exchange for $100 million worth of promissory notes (government bonds).
The benefits from that deal, which allowed Bank of the Bahamas to ‘write back’ $54.6 million in provisions and accrued interest, are already being eradicated by its continued losses.
If those $100 million worth of promissory notes are excluded, Bank of the Bahamas was barely solvent at March 31, 2015. Ignoring those notes, its total assets of $730.769 million exceeded $727.76 million in total liabilities by just $4 million.
Bank of the Bahamas’ $17 million-plus net loss incurred to March 31 has already wiped out the $54.623 million ‘retained earnings’ write-back from the Bahamas Resolve transaction. That is now overshadowed by the $57.348 million accumulated deficit sitting on Bank of the Bahamas’ books.
Comments
asiseeit 8 years, 8 months ago
I would not offer a shareholder of BOB .50 cents per share. Another glaring example of politicians and their policy's hurting the citizens of The Bahamas. The politicians in this country are toxic and are killing the very thing that sustains them, The Bahamas.
DonAnthony 8 years, 8 months ago
Bank of the bahamas shares are for all intents worthless. The bank was in violation of the central bank's minimum liquidity requirements for months before this bailout with resolve occurred. Without the bailout the bank would have been insolvent. The govt has paid the interest on BOB preference shares for the last year otherwise they would have defaulted. And there is no end to the red ink in sight. It has too many branches, has too many employees, neither of which it can reduce because of political interference. It was grossly mismanaged, and still retains for the most part the incompetent board responsible for this fiasco. There has been zero accountability save the eventual force out of its incompetent former director. This is why governments should not own any bank shares. The only saving grace for shareholders is that the govt will not let the bank go bankrupt, so the shares will meander for years where they are, never reaching zero but no chance of appreciation. As for the poor bahamian taxpayer that is another matter, we will be lucky to get 40-50 cents on the dollar for the 100 million bailout.
jackbnimble 8 years, 8 months ago
"The law firm that handled the transfer was Sharon Wilson & Co."
So why is the President of the Senate denying any involvement?
sheeprunner12 8 years, 8 months ago
But didnt Frankie Wilson cash in his $4 million worth of shares prior to Resolve???????? Did he know BOB was going belly up long before the ordinary shareholder????? This is just another blackeye for PLP cronyism
ItsNegotiable 8 years, 8 months ago
I hope this is not the same Kendal Williams Construction Company in Grand Bahama that was awarded some recent Government Contracts!! And when will BoB or Resolve disclose the amounts owed by each Company/Debtor. The Resolve Board needs to be held to a standard as well... Too much of the peoples money has been given away!
The_Oracle 8 years, 8 months ago
Where is Obie and Pleasant's Grand Bahama venture? Or was that written off long before the liquidity issue?
TalRussell 8 years, 8 months ago
Comrades while I think it's the PLP government who are the ones expected pay to a greater degree at the 2017 General's polls for these bad loans, the red shirts will also have a price to pay for the bad loans made under their terms in office.
This may account for when I do the math it tells me there are a solid 10 to 15 constituencies with no clear majority support for either the PLP or red shirts. My calculations accounts for the small percentages votes the fringe parties are expected to receive - there will be no fringe party spoiler, so you go put that theory to sleep.
I see nothing visibly forthcoming from ether of the two parties to make me think much will change after the 2017 General's bell be rung.
TheMadHatter 8 years, 8 months ago
We can only pray that Branville keeps his promise to hold his convention open to the leadership for all members to have a chance.
If the DNA could have a new, trusted leader - with Branville playing a supporting role - they might possibly win the election - and perhaps we can stop our backward slide into the abyss that is the Jamaican way of life.
TheMadHatter
jus2cents 8 years, 8 months ago
Why stop here? Why not call out all the delinquent people/businesses etc. that don't pay Property Tax, BEC, Water & Sewerage or any other government entity. Must hold people accountable and prosecute, particularly if it's a large amount that's owed.
asiseeit 8 years, 8 months ago
Start by calling out the politicians and their minions who owe, I am sick and tiered of them acting like royalty while us mere citizens catch hell. It is time to put a fire under their corrupt ways and hold them accountable.
TalRussell 8 years, 8 months ago
Comrade Asiseeit. Corruption is here to stay, regardless which party and leader is elected. There is no way to rid any nation's government of corruption, when leaders come out of a system which is a corrupt and unjust.
Just take a look at the list of aspiring leaders and upon closer examination you soon discover that if not yet showing the gray signs of done tempted - still they remain in power untested. You see, the system is so designed and encouraged to be used as the excuse that always brings out the worst of its targeted.
banker 8 years, 8 months ago
I would hate to think so, but I think that you are right. Hoping that can change though. I was talking to a gentleman who was working with African banks, and he was telling me about the "brokerage" culture & economy in Nigeria. What it is, is a cultural norm that if I get you a job, you are indebted to me for as long as you hold the job, and that indebtedness manifests itself in many ways. Some ways are (1) you have to vote for my man (2) you may or may not owe me a portion of the salary that you get (3) you do not hire anybody who is not my friend (4) if I go down, we all go down and (5) you know nothing and speak nothing about these 'arrangements' -- ever !! -- or else !!
Does it sound familiar? This is inbred in their culture, and there is no way to change it. I am hoping that a few thing inbred in Bahamian culture change -- to whit: partisanship, corruption, sweethearting, xenophobia, homophobia, and unquestioning corruption in religiosity.
TalRussell 8 years, 8 months ago
Comrade, as a Banker you would have to agree that if the Royal, or Scotia banks were to use the same accounting systems as all Bahamaland governments have applied, they would not only be soon bankrupted but have become an incubator for thieves and receivers from the proceeds of misappropriation funds and corruption.
In the case of governments it is always the taxpayers monies financing their schemes.
How long can a chartered bank expect to survive, if it operated like a government controlled bank, a control that should be the responsibility of the Governor of the Central Bank, not a political party's cabinet?
Comrade Banker, do you see the problem as I do, that the system in place, is too corrupted for any party's leader take a chance on?
asiseeit 8 years, 8 months ago
If Government was serious and wanted to stamp out corruption it can. Corruption hurts EVERYBODY, even the corrupt, Birdie take note. There should be a section of the police force dedicated to claims/cases of corruption. Jail one politician for corruption and they will take notice. The problem is there is a culture of slackness and corruption in this country, We all know that it hurts us but we are to slack to do anything about it. Why do you think we have the crime problem we have, it is all connected. Look at our reaction to the Disney mockumentary, We all know that what they are saying is TRUE, but instead of trying to fix the problem we try and shoot the messengers, smart right? This country will be strangled and continue to go backwards until the powers that be get serious. Will it take a revolution for this to happen? Will it take violent protests? What will it take for our leaders to come to their senses, because the way it is going today, just is not sustainable. Keep it up and go the way of Haiti, Jamaica, or even a failed African state, is that what our supposed leaders really want for their children and Grand children?
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