By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Ingraham administration failed to provide the $39 million financing promised in the privatisation process to cover the original Bahamas Telecommunication Company (BTC) pension fund deficit, Prime Minister Perry Christie last night alleging this had caused the shortfall to balloon to $62 million.
Closing the Mid-Year Budget last night, Mr Christie blasted his predecessor’s handling of the 2011 privatisation, saying it had “not helped” the Government’s precarious fiscal position.
He argued that the costs involved in the process that ultimately saw Cable & Wireless Communications (CWC) acquire an initial 51 per cent stake in BTC totalled “near $100 million”.
And Mr Christie also complained that with CWC’s March 2012 financials showing that $59 million worth of cash was left on BTC’s balance sheet post-privatisation, CWC had effectively spent $148 million in buying majority control.
“Rough estimates place the cost of the exercise by the FNM administration on the sale of BTC majority shares near $100 million. The negotiations under the PLP to take back 2 per cent cost around $12,000,” the Prime Minister said, in a questionable comparison.
“In addition, Mr Speaker, the Prime Minister’s [Mr Ingraham’s] statement to Parliament on 8 February, 2011, the date on which he inked the deal to sell the 51 per cent stake, categorically stated that any sums in excess of $15 million left in BTC would be turned over to the Treasury.
“Again we rely on CWC’s consolidated financials of March 2012, which reflect that $59 million was found in BTC after the takeover, resulting in CWC only having to make a net cash payout for BTC of $148 million.”
But a non-political source familiar with the 2011 privatisation’s terms last night questioned both assertions.
They were unsure what Mr Christie was including in the $100 million cost figure, but presumed it included the $39 million earmarked to cover the pension shortfall, plus costs associated with the “downsizing’ and restructuring of BTC’s workforce.
The source said every single BTC bidder had asked the Government to cover that pension deficit, and added: “Anyone who thought BTC could carry on without major restructuring is deluding themselves.”
The source added that the Government and BTC each bore a proportion of these restructuring costs, determined by their equity stake. And they pointed out that it was a one-time, upfront cost that would likely result in greater profits in future years.
They added that the Prime Minister’s comments on BTC’s cash position were “completely wrong”, as the privatisation referred to ‘net cash’ - total cash and deposits, minus debt.
With CWC agreeing to take on BTC’s debts, the source said BTC’s post-deal balance sheet would probably have shown $50 million in cash and $50 million in debt.
Meanwhile, in a further criticism of his predecessor, Mr Christie said: “The FNM also agreed that after privatisation, BTC’s obligation to the BTC employee pension plan would be reduced from 20 per cent per employee to 10 per cent.
“The Agreement provided that the balance of the obligation and associated risks would be assumed by the Government, which undertook to guarantee any shortfall in the BTC pension plan through the establishment of a trust, which was to be endowed with an initial amount of $39 million.
“The trust was established but the $39 million endowment was never made. At the date of privatisation back in 2011, the BTC pension fund had a surplus. By the end of 2012, it was running a deficit of $35 million, which has since grown to $62 million.”
However, Tribune Business’s source said that the CWC deal was better than all previous offers where the pension fund was concerned, given that it did not - as all other bids - want to close the existing defined benefit plan and place all BTC employees into a new defined contribution variety.
So existing employee benefits were not impacted, the CWC deal closed the existing plan to new hires, who would be switched to the new version.
The source added that the deal would see BTC/CWC and the Government share the burden of covering the former pension plan, where staff received annual payments up to 20 per cent of salary. 50/50 - rather than the Government assume 100 per cent liability in previous deals.
Comments
proudloudandfnm 10 years, 8 months ago
Man just get the committee formed and les see what the investigation brings. Seems like the PLP are scared to get this going. They'd just rather throw out accusations....
Reality_Check 10 years, 8 months ago
Like Snake, he is now nothing more than a pathological liar!
sheeprunner12 10 years, 8 months ago
Hubert Ingraham's decision was a longterm benefit for the country........... this 2% facade is for PLP brownie points. Thats the difference between HAI and PGC
birdiestrachan 10 years, 8 months ago
Mr, Ingraham's sale of BTC was a very bad deal for the Bahamian people. The street vendors lost a means of putting bread on their tables. He refused to sell the Company to Bahamians . it puts a drain on the foreign reserves. CWC takes their profits out of the Bahamas. So many persons lost their jobs at BTC. And the Service is worst than it has ever been.
Mr. Ingraham did try to get 2% back, but he was unable to do so. CWC must have seen him coming; Just grinning and grinning.
concernedcitizen 10 years, 8 months ago
@birdie under CWC the Bahamian treasury has been getting double the revenue it did when we owned it outright , ph cards are not flying out the back door and we no longer have the highest minute rates in the region ,,ONCE AGAIN THE TREASURY ,THAT US THE BAHAMIAN PEOPLE ,ARE GETTING DOUBLE THE AMOUNT OF MONEY ,,I KNOW YOU WILL DISPUTE IT ,BUT THOSE ARE THE FACTS ,,,
asiseeit 10 years, 8 months ago
Demand FREEDOM of INFORMATION from these blood sucking Politrickans. They have no morals have no ethics and are in it for them and theirs. The Bahamas is doomed until WE, the people can hold them accountable and know exactly what they are doing with our money and our country. I want to know how we (the people) can put them before the courts and jail them for breaking their own rules (lack of public discloseure)? They want us to play by their rules yet they do as they please! This will not stand!
proudloudandfnm 10 years, 8 months ago
CWC deal been tabled yet? So is the deal still on? Or are they afraid to show the details on the ZNS aspect of it?
birdiestrachan 10 years, 8 months ago
I have a serious problem with any one who says Bahamians need not apply, and they are not as good as others to own anything in the Bahamas. Maybe it is because I come from a long line of proud Bahamians, hard working ambitious and honest. So I find it impossible to believe that persons from across the sea are any better than I am . Sorry But I have those values ingrained in me.
ThisIsOurs 10 years, 8 months ago
I have a serious problem with anyone who says you're entitled the the post just because you're Bahamian. My god even Flowers is saying he has to weed out the dummies.
concernedcitizen 10 years, 8 months ago
@birdie no one ever said Bahamian need not apply ,,find me one article ,one video ,one piece in the newspaper where the previous PM ,who had his faults ,ever said "no Bahamian need apply " youv,e said it over and over birdie ,find it ,download it and show the proof >>>>>>>>>>>i ,ll bet my last wrinkled dollar you can,t ,,he may have said Bluewater shouldn,t apply ,some mysterious company domiciled in the British channel islands ,,
Emac 10 years, 8 months ago
@concernedcitizen If I remember correctly, Ingraham did mention Bahamian companies need not apply. However, I believe birdie misconstrued what the then prime minister meant. He was referring to the Blue Water crew who was tryin to do under the table deals to take over BTC, along with their cronies, just before general election.
sheeprunner12 10 years, 8 months ago
BIRDIE..........................Ur a Pingdomite...a bloodsucking sellout to the post 1967 merchant class and foreigner investor (neo-massas)
SP 10 years, 8 months ago
Don't even try blaming Hubert Ingraham!
He was a self declared "one man band" with jelly bellies for a cabinet and a backbench full of yes men and leaches incapable of independent thought.
PLP MP's better remember and learn from their FNM predecessors not to allow themselves to be led to crash and burn along with a blind leader that ignores to the electorate.
sheeprunner12 10 years, 8 months ago
SP, based on your analysis we can see why Doc Rollins, Greg Moss, Lez and the others are so vocal in their opinions against the PGC policies??????????? For what its worth................ they all gonna lose in 2017................. regardless
birdiestrachan 10 years, 8 months ago
Former PM Ingraham stood on the house floor and said "Bahamians need not apply they will mess BTC up in two years." Full stop. Are you aware the owners of The Nassau Guardian wanted to buy BTC. He said they were greedy. Also Mr. Darron Cash wrote a great article on the empowerment of Bahamians in regard to the sale of BTC; You must pay attention It is important to pay attention.
Mr. Cash is a brave man.. .
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