By NEIL HARTNELL
Tribune Business Editor
An outspoken Bank of the Bahamas minority investor yesterday expressed scepticism over whether investors could successfully sue for compensation via a class action-type lawsuit.
Dionisio D’Aguilar, the FNM’s candidate for Montagu, told Tribune Business it was unlikely that minority shareholders could obtain financial compensation other than potentially through insurance coverage for the bank’s directors and other actors .
“You can sue, but what are you going to get?” he asked. “You could sue the Government as majority shareholder, but I don’t know what the Government is going to give you. They’re putting money into the bank to keep it afloat.
“There’s only so much the Government can do. If they’re using scarce resources to prop the bank up, isn’t that what we want in the circumstances? What do you want them to do?”
Mr D’Aguilar argued that the Government, via the Bahamian taxpayer, had little choice but to support Bank of the Bahamas and continue with its ‘bail outs’, as allowing the institution to fail would jeopardise $600-$700 million worth of deposits and the economy’s stability.
“Bank of the Bahamas is one of those monster bombs that’s slowly exploding,” Mr D’Aguilar told Tribune Business. “It’s on a timer and going to explode. There’s a huge bill coming.
“You can certainly sue, but are you going to get anything? I don’t think so. Put it this way: You can try and sue the auditors and tap into the directors’ insurance if they have it. You will only get money from an insurance company; you ain’t getting money from nowhere else.”
Mr D’Aguilar was speaking after Tribune Business revealed last week that minority shareholders in Bank of the Bahamas are moving to seek financial redress for the spectacular destruction of shareholder value caused by $120 million in losses incurred over the past three years.
Shareholders in the troubled BISX-listed institution met at the British Colonial Hilton last Tuesday to plot their next move, with a class action-type legal action among the options said to be under discussion.
A spokesman for the meeting’s organisers, speaking on condition of anonymity, told Tribune Business then that there was a collective determination among minority shareholders to obtain financial compensation for the dramatic decline in their investment’s value.
Declining to go into detail on how they would achieve this, the spokesman promised that the group would act “properly” and responsibly, and that the shareholders were not seeking to further damage Bank of the Bahamas or the wider Bahamian economy.
Tribune Business reported in September 2016 how almost $70 million was wiped off Bank of the Bahamas’ stock market value in one week, as investors searched for the ‘floor’ following the removal of price movement restrictions.
This newspaper’s calculations show that the BISX-listed institution’s market capitalisation fell some 62.45 per cent in just five days, from $111.645 million to $41.92 million, during its $40 million rights issue.
Mr D’Aguilar yesterday argued that Bank of the Bahamas’ woes stemmed from “fundamental flaws” in its governance structure and model, as all Board directors were still appointed by the Government, which is 79 per cent majority shareholder via the Public Treasury and National Insurance Board (NIB).
“Government needs to get out of the banking business with the quickest of haste,” he told Tribune Business, “and it’s going to cost the taxpayer $300-$400 million for them to exit.
“It’s another example of a government entity gone wrong, and it’s costing the taxpayers hundreds of millions of dollars. This is one of the big ones, and the Bahamian people don’t understand that.
“The Government needs to get out of this bank because it’s going to bleed the Bahamian people dry. The Government should not be in the business of running a business; the private sector should run it,” he added.
“This is a classic example of the Government meddling in a business it should not be in, and costing hundreds of millions of dollars.”
Loretta Butler-Turner, the Opposition’s House of Assembly leader and another Bank of the Bahamas shareholder, raised the BISX-listed institution’s plight in the House of Assembly yesterday.
“We need to know exactly what is happening at Bank of the Bahamas,” she said during her contribution to the Freedom of Information Bill debate.
Mrs Butler-Turner pointed to Tribune Business’s revelations about Bank of the Bahamas’ failure to pay the anticipated year-end dividend to its preference shareholders, questioning whether it was still solvent and if it could be allowed to continue operating.
The Long Island MP also questioned if Bank of the Bahamas’ directors were each being paid $40,000 in fees annually, and whether “managing directors past” - whom she did not name - were receiving annual $500,000 memberships at private members clubs at Old Fort Bay, Albany and Paradise Island.