The use of the Bahamian people’s “sacred” National Insurance Board (NIB) monies to bail out troubled Bank of the Bahamas has been challenged by an FNM MP, who is calling for policies governing the investment of public monies to be tightened.
Loretta Butler-Turner told Tribune Business that regardless of whether NIB, the Public Treasury or a combination of both were used to take up the BISX-listed bank’s “entire” $40 million rights issue, it did not represent a good investment of the people’s monies.
The Long Island MP said she was especially troubled at NIB’s potential role, given that its $1.6 billion reserve fund was supposed to provide short and long-term financial benefits (including pensions) for the Bahamian people.
“NIB is the social safety net for Bahamians, and it’s supposed to have an investment portfolio that yields returns for the stability of the fund,” Mrs Butler-Turner told Tribune Business.
“With Bank of the Bahamas’ performance, it’s not a good investment for the NIB Fund. NIB funds are supposed to be sacred protection for the future, especially those pensioners. Nor is it a good investment of Public Treasury funds.
“We need to now have some policy positions on how Bahamian funds are invested; NIB, everybody. We know that if the contributions of the workers are not going up, there will not be a fund in 15-30 years to sustain pension contributions today.”
Bank of the Bahamas’ disclosures to-date have failed to identify the source of the $40 million, although most observers suspect all - and at least the majority - came from NIB, given the Public Treasury’s cash-strapped state.
The Government, through NIB and the Public Treasury, is now a 79 per cent majority shareholder in a bank that has lost more than $120 million in just over three years.
NIB’s financials have revealed that it has taken a more than $27 million hit over the past two years $2014 and 2015) on its Bank of the Bahamas investment, with Mrs Butler Turner echoing those who have described the rights issue as another “bail out” of the latter.
However, some, including Dionisio D’Aguilar, the FNM candidate for Montagu, have argued that the Government has little choice other than to stand behind Bank of the Bahamas.
They believe the bank is “too big to fail”, and that its collapse would drag down an already-struggling Bahamian economy, along with thousands of Bahamian depositors (including the Government and web shops).
Meanwhile, Mrs Butler-Turner, who revealed that she was one of Bank of the Bahamas’ 3,000 minority investors, suggested she would use the bank’s travails - and use of the Bahamian people’s monies - to “flip the script” on the Government when the House of Assembly resumes today.
She said the governing party plans to call for a select committee to investigate the Bahamas Telecommunications Company (BTC) privatisation that took place in 2011 under the former Ingraham administration.
Its Christie government successor has accused the FNM government of effectively ‘giving away’ BTC for little to nothing, given that the deficit in the company’s now-closed original pension fund has ballooned to $90-plus million and has to be filled by the taxpayer.
While this ignores the fact that BTC’s privatisation was an essential step to communications market liberalisation, a better deal for consumers and ending the Government’s ‘conflicts of interest’, Mrs Butler-Turner accused the Christie administration of using the issue to distract attention from its woes and “shift the national conversation”.
The Long Island MP revealed that she planned to counter by using Bank of the Bahamas, and by contrasting the FNM’s efforts to develop a ‘shareholder economy’ with the PLP’s economic management strategy.
“I’m probably going to have to look at the whole methodology of how they’ve done business,” Mrs Butler-Turner told Tribune Business.
“We had actually turned Bank of the Bahamas into a shareholding bank for Bahamians, and what we’ve seen over recent years is that the value of those shares has not produced anything for the investors. With the Government doing this bail-out, it’s become a cash transfer station.”
The Government is seeking to sell HoldingCo, the company that owns a 51.75 per cent majority interest in the new mobile operator, Aliv, but Mrs Butler-Turner contrasted this with its failure to follow through on the Ingraham administration’s plans to sell a 9 per cent equity stake in BTC to Bahamian investors.
“The PLP, their interest is not so much in empowering Bahamians and allow them to earn profits on their investments, but to look after the few and make them better off,” the Long Island MP charged.
Mrs Butler-Turner said the former Ingraham administration had sought to create “a shareholder society, so Bahamians could earn greater returns on their investments as opposed to having funds sitting as static savings in deposit accounts”.
As evidence, she pointed to the initial public offerings (IPOs) of Commonwealth Brewery and Arawak Port Development Company (APD), the last two that occurred in the Bahamian capital markets.