The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE National Insurance Board (NIB) twice came close to missing monthly payments to hundreds of Bahamian pensioners after its chairman revoked management’s authority to ‘manage cash flow’, its director has alleged.

Algernon Cargill, in documents filed with the Supreme Court, claimed that Gregory Moss’s August 2012 decision to remove management’s power to control NIB’s investment portfolio resulted in more than $15 million being left in a non-interest bearing account at the Central Bank of the Bahamas for several days.

The claims indicate just how NIB’s ‘power struggle at the top’ could potentially impact thousands of Bahamians. NIB’s $1.6 billion reserve fund is the largest domestic capital pool in the Bahamas, and as the nation’s sole public social security system, it is responsible for paying multiple benefits - industrial, maternity, sickness, pension, unemployment etc - to hundreds of Bahamians daily.

The natural question arising from the battle between Messrs Moss and Cargill is whether the day-to-day management of NIB’s millions was potentially being neglected, as the personalities at the top struggled for control.

In his affidavit, Mr Cargill alleged that he received an August 2, 2012, memorandum from Mr Moss requesting that no management executive “engage in placing or renewing the placement of any of the funds” belonging to NIB without first getting approval from the Board or its relevant committee.

Mr Moss was alleged to be challenging the authority ‘delegated’ to management to do this, and Mr Cargill further claimed: “This unilateral decision effectively resulted in the revocation of a standard and basic management function (cash flow management) that was originally delegated to management in 1987.”

Mr Cargill replied on August 17, 2012, expressing his concern. Other NIB executives also contradicted Mr Moss’s view, stating that NIB had an approved investment policy that delegated this function to management.

Detailing the alleged consequences of this, Mr Cargill claimed: “On two occasions, had it not been for my intervention, pensioners would not have been paid their monthly pensions, as Mr Moss never responded to the investment recommendations of the Investment Department, and I had to consult directly with Minister Shane Gibson for ministerial approval to ensure that pensioners were paid on time.

“I also advised the Minister that on one occasion, due to Mr Moss’s non-response to a further request from the Investments Department to transfer funds from the non-interest bearing Central Bank account to fixed deposits at commercial banks, NIB had in excess of $15 million sitting in the Central Bank Account earning 0 per cent interest for several days.”

In a September 25, 2012, communication to Shane Gibson, minister of labour and national insurance, Mr Cargill wrote that Mr Moss’ decision had resulted in NIB having “lost our efficiency to not only manage our investment portfolio, re routine placement and-or withdrawal of fixed deposits, and investment in Government of the Bahamas securities, but there are documented instances on file where we have had substantial balances in the Central Bank account earning 0 per cent interest.

“The second concern that we have is that for the past two months, due to delays in receiving approval from the chairman re placement of maturing or new deposits, we nearly missed National Insurance pension payments.

“It was only on your intervention and approval that NIB was able to work with financial institutions to honour pension payments and not embarrass the Government.”

Mr Cargill’s affidavit alleged that another source of tension stemmed from plans to have either Mr Moss or the chairman’s Board sidekick, Patrick Davis, replace him as NIB’s representative on the Boards of Cable Bahamas, Bank of the Bahamas International and Commonwealth Brewery.

All three companies are listed on BISX and, in the case of Cable Bahamas and Bank of the Bahamas International, NIB holds an equity stake of more than 22 per cent and above 25 per cent, respectively. NIB also took a $12 million position in Commonwealth Brewery to ensure that company’s initial public offering (IPO) was fully subscribed.

Mr Cargill alleged that with Ministry of Finance approval, it had always been the director’s role to hold a Board seat on these companies to protect NIB’s and, by extension, the Government’s, investment.

Similarly, he claimed that NIB’s vice-president of investments had been approved to sit on the Education Loan Authority Board, due to its “significant investments” here.

Yet Mr Cargill alleged that he was not re-appointed to Bank of the Bahamas International’s Board, with Mr Gibson informing him that the Government wanted either Mr Moss or Mr Davis to hold the various NIB Board seats.

“The removal of the director from the Bank of the Bahamas Board compromises NIB’s management’s ability to properly monitor its majority holding investment, as operational matters, and likewise, the appointment of any Board member or employee to the Cable Bahamas or Commonwealth Brewery Board places the director in a position of responsibility for investments of which he has no direct oversight at the Board of Directors level,” Mr Cargill alleged.

He added that NIB’s vice-president of investments had also not been re-appointed to the Educational Loan Authority Board, creating “similar investment risks” there.