The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An irate Bank of the Bahamas shareholder yesterday questioned why it is seemingly “comfortable” lending money to buyers in a real estate project that has links to the web shop industry.

Michael Lightbourn, president of Coldwell Banker Lightbourn Realty, told Tribune Business that other commercial banks “would not touch” lending funds to persons seeking to purchase property in the Venetian West development.

He added that he, and other shareholders, had wanted to question Bank of the Bahamas’ Board and management about this and numerous other issues at the recent annual general meeting (AGM), but were either prevented from doing so or received no satisfactory answers.

Mr Lightbourn described the AGM as “a hoax and a sham”, given prior promises by Paul McWeeney, Bank of the Bahamas, managing director, that the Board and management would be “upfront” and detail “everything” about the institution’s future plans.

Mr McWeeney, though, has rebutted similar allegations voiced by other minority Bank of the Bahamas shareholders, telling this newspaper in the AGM’s wake: “That’s just not the case at all.

“We were open and transparent with everything we are doing.”

Mr Lightbourn, though, ranks among those minority investors distinctly unimpressed with the AGM and its outcome, following a 2014 financial year in which Bank of the Bahamas’ ordinary shareholders suffered an almost-$69 million net loss.

The well-known realtor told Tribune Business that among the key outstanding questions he had was whether the bank, which is 65 per cent majority-owned by the Government, is accepting deposits from the web shop industry.

And Mr Lightbourn said he was especially interested in Bank of the Bahamas’ partnership with Brickell Management Group, which has seen the BISX-listed institution provide an “exclusive” financing package for buyers at the Venetian West development near the Old Fort Town Centre.

“What I wanted to know is this,” Mr Lightbourn told Tribune Business. “Brickell Management were selling those condos out west. The other banks would not touch lending money to buyers of those condos.

“What information did they [Bank of the Bahamas] have to make them feel comfortable to lend money to buy those condos?”

Bank of the Bahamas unveiled its arrangement with Brickell, the management group for Venetian West, just days after it unveiled its record net loss and the associated $100 million ‘bail out’ by the Government.

Following an ‘open house’ after the “exclusive” financing arrangement was unveiled, Brickell said some 177 persons had signed up to buy real estate at the project. Bank of the Bahamas staff were on-site to take applications, and offered other products and services.

Mr Lightbourn’s concerns stem from the fact that Brickell appears to be affiliated with the Island Luck web shop chain. Both companies have the same principal in Sebas Bastian, with Brickell managing other “sister company” developments in the Venito West, Aventura Plaza on JFK Drive, the Bellagio Plaza on Madeira Street and the former City Markets building on Rosetta Street.

Bank of the Bahamas’ links with Brickell have thus revived concerns harboured by Mr Lightbourn and others over the potential negative impact on correspondent relationships with foreign banks, and the consequences of accepting deposits from even a legalised web shop industry.

Numerous observers have privately expressed concern that with all other Bahamas-based commercial banks refusing, or deeply reluctant, to accept web shop deposits, the Government may use Bank of the Bahamas as a policy instrument and force it to accept such business to further its goal of legalising the industry.

And others, including DNA leader Branville McCartney, have suggested that web shop industry players might have enough capital, and be interested enough, to bid to acquire Bank of the Bahamas from the Government.

Tribune Business understands from well-placed sources that some web shop industry operators do harbour such an interest.

And the recruitment of Julian Francis, former Central Bank governor, and Barry Malcolm, ex-Scotiabank (Bahamas) managing director, to the Board of Island Luck’s parent company is being seen by some as designed to create the credibility needed for such a move.

Mr Lightbourn, meanwhile, indicated he was preparing to write a letter to Mr McWeeney to seek answers to questions unresolved from the AGM.

“We had a lot of questions. What level of loans went to Board members? We wanted to know if they’d given overdrafts to people subsequent to them going into default on their original loan. Who was responsible for agreeing to those overdrafts?” Mr Lightbourn told Tribune Business.

Bank of the Bahamas appeared to be experiencing a major problem with its overdraft facilities, as 82 per cent of these were “subject to specific provisions” at year-end 2014.

The bank’s financials showed that out of $81.41 million in overdrafts ($60.089 million business, $20.32 million personal), some $63.936 million were “related to certain non-accrual mortgage and commercial loans.

The latter figure was a more than 100 per cent increase from the year-before figure, and raised major questions about the soundness/riskiness of Bank of the Bahamas’ lending practices, and whether it was throwing ‘good money after bad’ in extending overdrafts to troubled customers.

Mr Lightbourn, meanwhile, said other questions involved why Bank of the Bahamas closed its Coral Gables branch in Florida, and the status of its defamation action against The Punch tabloid newspaper.

“The meeting was a hoax and a sham,” Mr Lightbourn told Tribune Business. “They should be ashamed of themselves for saying they were going to answer all questions relating to the bank.

“There was no transparency. If you can’t get information out of a public bank where people own shares, and are entitled to transparency, how the hell are you going to get information out of the Government without a Freedom of Information Act?

“When we brought legitimate questions, they didn’t want to know. Dionisio D’Aguilar said that under normal circumstances, the directors would resign or not even run again.”