The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

The BAHAMAS Development Bank (BDB) has over the past three years more than doubled the volume of litigation launched against delinquent borrowers, its managing director yesterday emphasising there are “no sacred cows” among defaulters.

Arinthia Komolafe said family and political connections would not protect borrowers ducking their obligations to the BDB, and added that legal actions launched against non-performing accounts had increased by 115 per cent between 2012 and 2015.

She added that the number of cases where a court judgment had been handed down had more than tripled over the same period, rising by 250 per cent, suggesting that the BDB was moving aggresively against bad borrowers.

Mrs Komolafe was responding to suggestions by Free National Movement (FNM) chairman, Michael Pintard, that ‘political interference’  and ‘cronyism’ was preventing the bank from operating effectively.

   Mr Pintard, in a previous statement, had claimed: “Reported political interference into the daily operations of the Bank of the Bahamas and the Bahamas Development Bank has resulted in substantial financial losses to the Bahamian people.”

Citing one example to back up his case, Mr Pintard referred to a construction company which, despite allegedly receiving between $2.5-$5 million for work on Government projects, was in arrears on its BDB loan to the tune of $250,000

“Needless to say, huge outstanding debts like these are having a critical effect on this institution that is already in need of recapitalisation,” Mr Pintard said. 

Mrs Komolafe hit back, saying: “We reject the assertion that BDB ‘still operates under the PLP ‘cronyism’ philosophy’ insofar as it may have the effect of tainting the character of the hard-working professionals of this institution, who value their integrity over and above partisan politics.”

    She added that the BDB’s challenges were well-documented, and said: “I have made no secret of the urgent need for policy direction for the Bank, recapitalisation and amendments to the current legal framework.

“It has also been stated on numerous occasions that the governance structure of the institution can be improved. That being said, since taking on the role of managing director of the bank, we have made the difficult but right decisions to put the institution on a better footing.

“We have enhanced the risk management framework, updated policies and procedures, implemented a more stringent lending policy, aligned the provisioning policy with best practic,e and restructured the bank’s operations to meet the challenges of 21st century Bahamas.”

Mrs Komolafe said the BDB’s Board approved all loans, based on recommendations from its credit cmmittee and management.

“I wish to state categorically, as I have indicated in times past, that when it comes to clients’ honouring of their obligations to the BDB, and the recovery of the Bahamian people’s funds, there are no sacred cows,” she added.

“This approach is applied consistently in the credit adjudication, delinquency and recovery processes. In the first instance, we seek to work with our clients to ensure that they meet their obligations, but we will not hesitate to take legal action against individuals or companies as a last resort in accordance with established policies.

“This is evident in the significant increase in delinquent cases in litigation and recoveries over the last two years. Between the financial years 2012 to 2015, the bank has effected a 115 per cent increase in litigation against non-performing accounts, including a 250 per cent increase in matters arriving to at least judgment status in the courts.

“All of these have been achieved in spite of the many constraints the bank faces, and the challenging economic environment.”