By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Government's capital spending budget took an $80m hit after it was determined that just 20 percent of Bank of the Bahamas' toxic loans were recoverable.
KP Turnquest, unveiling the 2018-2019 budget in the House of Assembly yesterday, said the government had been unable to realise its projected capital expenditure savings after being forced to change the accounting treatment relating to the BISX-listed bank's bail-out.
He explained that the government had initially treated the toxic loans transferred to Bahamas Resolve, the bail-out vehicle, during the first "rescue" in October 2014 as receivables. As a result, they were considered "investment assets" for accounting purposes.
However, "conservative" estimates of Bahamas Resolve's prospects for collecting on the "bad loans" had resulted in a significant write-down of the $100m in promissory notes (bonds) issued to Bank of the Bahamas in exchange for the toxic credit.
"By treating the toxic loans as receivables, they were considered investment assets and, as such, the payments were not considered an expenditure item," Mr Turnquest said. "Based on Resolve's own conservative estimates for recoverability, it now would be more appropriate to treat only 20 percent of the loans as assets.
"As such, $80m of the full payment of $100m has been reclassified as a capital expenditure. Consequently, the outturn for capital expenditure in 2017-2018, at $233m, is largely in line with the budget projection."
Capital spending was initially forecast to come in at $153m. Obligations due to Bank of the Bahamas are also responsible for $25.85m of the $172m in unfunded arrears payments that the government will now attempt to finance and settle.
Of that sum, some $8.805m relates to interest due to Bank of the Bahamas on the promissory notes. Bahamas Resolve is unlikely to be able to finance this itself due to the difficulties in liquidating the toxic loans.
The $17m balance relates to "settlement of a contingent liability" related to Bank of the Bahamas.
Comments
proudloudandfnm 5 years, 10 months ago
What about overdrafts? Like the millions in overdraft two PLPs used to start a sham distribution company in Freeport in 07 - 08?
Well_mudda_take_sic 5 years, 10 months ago
Minnis repeatedly promised on the campaign trail that, unlike Christie, he would govern with great transparency....."after all" he said, "it should be the people's time." Yet Minnis and Turnquest have continued to cover up all of the outright theft that occurred at Bank of The Bahamas (BoB) by corrupt PLP and FNM politicians, and their cronies. Over $500,000,000 million of taxpayers dollars and national insurance contributor's funds plowed into BoB by Christie, Minnis and Turnquest combined, and still no transparency about who got the benefit of all of this money that was, for all intents and purposes, stolen from the Bahamian people by corrupt PLP and FNM politicians and their cronies. And BoB continues to incur large loan losses. Where's the transparency that was promised by Minnis? Could it be that Minnis and/or Turnquest are among those who personally have something to be kept hidden here?!
bogart 5 years, 10 months ago
THE VALUATION OF THE LOANS IN ..RESOLVE ... WAS CLEARLY ...POINTED OUT BY ...THE FORMER .? PLP HEAD OF RESOLVE ....JAMES SMITH .....no less a former Central Bank Governor...and an international accounting firm....?.....further public announcents..?alarm...was also raised by ....Hon. Hubert Ingraham....former Prime Minister............FOR THE GOVERNMENT ....OR INDIVIDUALSTO HAVE .?Continuef to ....throw .....TAXPAYERS MONEY?......TO PROP UP A MONEY LOSING ENTERPRISE ..?.where clearly the ....ASSETS WORTH ONLY 20 %....IS UNCONSCIENCIABLE....especially when Bahamians are suffering as never before.....WHO WOULD..... OVERPAY ..80%..... FOR.... ANY ASSET????????...$80,000,000. Dollars ???....even declare a few million dollars profit???....!!!
INVESTIGATIONS ARE NEEDED BECAUSE.....in order to balance the books..... there.... must... be BOB account holders who have been squeezed illegally by...... other.bank errors not corrected ......victimized perhaps fraud commotted agsinst them....in efforts to bring as close.?oas possible...r ?balance the books ....COMMON SENSE ..SHOULD INDICATE THAT THIS ONE GLARING .?ERROR.....DID NOT LEAD TO BOB CHALLENGES....it would seen that .... APART..FROM...... from massive govt injections.....account holders may have been victimized by not having errors shortfalls corrected to balance the books.....this is not a one error causation !!!!!!!
TalRussell 5 years, 10 months ago
Ma Comrades, by treating the toxic loans Bank at the Bahamaland as credit worthy receivables - just proves why KP's accounting accountability is all Fuc#ed.
Neither is KP willing to explain to people public - how in hell could a publicly-traded, publicly-owned and audited bank end up granting such toxic loans and mortgages to the extent of $100 million...... why hasn't those responsible granting the toxic bank loans being made to publicly answer why they should not be personally held accountable?
Did the borrowers really present accurate and truthful list assets on their loan applications... If ever a Royal Commission of Inquiry is called for - it's the toxic $100 million that left the vaults BOB empty cash.
KP, release all the previous BOB Audits to the people public which should point to who conducted and signed off them have been credit worthy of a whopping $100 million in first place?
sheeprunner12 5 years, 10 months ago
Those assets can be confiscated and sold off by the MOF/Treasury ......... OR used to build public offices for any Ministry ............ OR donated to charities.
How can properties and buildings be viewed as "toxic" ....... Is not the Phil's building one of those BOB assets???????
bogart 5 years, 10 months ago
SIMPLE......on one side is the loan officer...?supervisor......and superior...Credit Risk Manager....?who is overlooked by the BOARD OF DIRECTORS.........on the other side os the Mortgage loan aApplicant presenting a number of mathematical documents...cash flow, 2 years of statements, balamce sheet, web shop voucher
IT IS UP TO THE BANK TO.. FOLLOW......ESTABLISHED BANKING POLICIES ....ESTABLISHED......STRESS TESTS.....GEARING RATIOS.....RISK LENDING RATIOS .REQUIRE OTHER EVIDENCE..TO ...ENSURE...SUCCESSFULL REPAYMENT..?OR DECLINE LOAN..,!!!!....simple and discard crap like shop voucher.
THE MATHEMATICAL EVIDENCE SHOULD BE ON FILE....it is also noteworthy that the Loan Applicant does not have as much mathematocal loan skills as the banker and also pays a BANK FEE FOR THE SUCCESSFULL PROCESSING OF THE LOAN APPLICATION...if a loan is given that was negligently given dpes not meet bank lending criteria....then the Bank is negligent and not acting with due care for the loan applicant...this is where a number of allegations have surfaces inyernationally -------- like sub prime loans ---loan officer fraud to meet sales target ---to win bank bonuses ---bribery to get loan approved ----political interefrance to get friend, family, connected loan approved --- launndering cash ---even middle east case where black magic was alleged ---and others.
IN ALL CASES BANKS HAVE ALMOST IRONCLAD POLICIES, MEANS TO ASSESS...ADJUDICATE....INVESTIGATE....AND COMMONLY ......... ----DENY LOANS.----..THEY HAVE THAT RIGHT ....EVEN....IF EVERYTHING LOOKS PERFECT..but have the slightest doubt of irregularity... WHEN THESE TOXIC LOANS ARE NOT REPAID.....not only do the shareholders suffer....?BUT MANY OTHERS ...... The fact that noone has been held responsible, accountable .?in a situation involving hundreds of millions of dollars....is glaring....
hrysippus 5 years, 10 months ago
So I wonder just how much pension money the Bahamian taxpayers are paying out every month to the former managing director of BOB. Since he did such an impressive job of work, I expect it will be a large amount. But maybe not quite as much as the former minister of finance and one fingered salutes is getting.
sheeprunner12 5 years, 10 months ago
This is the root of the problem ...... These incompetent people F$@K up the country, agencies, Treasury etc. ....... They then retire and get big pensions ..... We are all on the hook for over $2 Billion per year for pensions to mostly people who do not deserve them ....... Does Perry deserve a $200,000 public pension?????
bogart 5 years, 10 months ago
AT ALMOST....ALL..OF THESE MONEY LOSING ...GOVT ..ENTITIES ...IS ..A ..BOARD OF DIRECTORS....WHO RESIGN WHEN THE PREVIOIS GOVT LOSES AN ELECTION...AND THE NEW GOVT POLITICAL PARTY SUPPORTERS ARE THEN APPOIMTED CHAIRMAN AND OTHERS ......WHAT DOES NOT HAPPEN IS THAT IRREGULARITIES?.GROSS MISMAMAGEMENT..VICTIMIZATION..UNFAIR PROMOTIONS ..POLITICAL INTERFERANCE ...FAVOIRITISM.....MISALLOCATION OF AGENCUS RESOURCES,....MANPOWER TO FAVOUR..CONTRACTS GIVEN TO OTHER SUPPPRTERS....ALLOCATION OF RESOURCES TO GET UNSCHEDULED PROJECTS DONE IN CERTAIN AREAS..?TO EMPLOY CERTAIN CONSTITUENTS.........POLITICAL INFLUENCE ...EtcRtcetc.......dey just ...resigns......and the next CHAIRMAN AND BOARD OF DIRECTORS IS APPOINTED by the new incoming govt... made up of the usual accountants, lawyers, counterparts, colleagues, friends, of the previous BOD and its DEY TURN NOW.!!!!!!!....Get their people turn now....!!!!! THAT IS WHY OUT OF ALL THESE GOVT AGENCIES ....... MP ADRIAN GIBSON SHOULD HAVE A STATUE MADE OF HIM...HE HAS THE BALLS TO STAND UP AND ...EARN HIS PEOPLES SALARY...!!!!!!!
Porcupine 5 years, 10 months ago
Why not take the defaulted borrowers to court? Even if the assets pledged for the loan are worthless, most of these people have other assets that can be acquired and sold. But first off, we would like the names of those in default, whom the Bahamian taxpayers are subsidizing.
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