The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Shareholders and Opposition politicians yesterday urged the Government to do more to restore “credibility and public confidence” in Bank of the Bahamas, urging it to remove the entire Board and relinquish its majority ownership.

Speaking after Prime Minister Perry Christie confirmed that Paul McWeeney, its managing director, would leave the troubled BISX-listed institution this year, one outspoken minority investor said the Government needed to sell its 65 per cent equity interest.

Dionisio D’Aguilar called on the Government to seize the moment and, if it elected to remain a Bank of the Bahamas shareholder, reduce its interest to a minority equity position.

“Perry Christie is not qualified, and nor is the Government qualified, to run a bank,” Mr D’Aguilar, Superwash’s president, told Tribune Business.

“No other bank failed except the one owned and run by the Government. They should use this opportunity to allow the other shareholders to raise the capital, with a very professionalised Board, and step out completely of running this bank.

“Allow the other shareholders to elect a non-political Board that is not padded with political cronies, FNM or PLP. They’re [the directors] drawing these outrageous salaries of $40,000 a year.”

The Government, as 65 per cent majority owner (and with 51 per cent of the ordinary shares voting rights), elects the entire Bank of the Bahamas’ Board.

The size of its stake means these appointments cannot be seriously challenged, and the 35 per cent minority investors have no independent directors on the Board to represent their interests or give them a say in the bank’s running.

Mr D’Aguilar, meanwhile, suggested that in an ideal world the Government should “totally get out of it”, even though this would mean exiting Bank of the Bahamas at its lowest point, with its stake likely fetching a ‘rock bottom’ price.

“This is not an ideal time to sell, and the Government has taken its licks,” he acknowledged, “but it should remove the entire Board of Directors.”

The Government has re-appointed chairman Richard Demeritte, and largely the same Board of Directors, despite a year in which ordinary shareholders suffered an almost-$69 million net loss, ultimately leading to the $100 million ‘bail out’ via the Bahamas Resolve transaction.

Most public companies in a similar situation would have seen ‘heads roll’ at both the Board and management levels, with executives and directors either resigning or not standing for re-election.

K P Turnquest, the FNM’s deputy leader and finance spokesman, also backed a government ownership exit at Bank of the Bahamas.

“I believe it’s time,” he told Tribune Business. “I believe the capital markets have the ability to make that investment to effectively manage it, and the Central Bank has the competence and expertise to regulate it.

“I don’t know why we [the Government] would want to be involved in a bank. It’s inconsistent with what the Government ought to be doing.”

He added that the Government’s 65 per cent ownership stake also created an “inherent conflict” with the Bahamas Resolve transaction, where $100 million in ‘bad’ loans had been transferred to from Bank of the Bahamas in exchange for unsecured government debt.

Mr Turnquest said Bahamian taxpayers still did not know the full terms of this transaction; the identities of the 13 borrowers/loans involved, their security and prospects of collection and recovery; and the compensation that will be paid to Bahamas Resolve’s directors and the Deloitte & Touche accounting firm.

Questioning whether Deloitte & Touche, and Bahamas Resolve, would fare any better than Bank of the Bahamas in collecting on these loans, Mr Turnquest said: “What does that mean in terms of the return for the Bahamian people?

“On $100 million, what can the Bahamian people realistically expect to be the net recovery?”

Mr McWeeney, meanwhile, told Tribune Business he had not resigned from Bank of the Bahamas, despite Prime Minister Perry Christie telling a ZNS interview that he had given notice of his intention to depart at the June 30, 2015, financial year-end.

A game of semantics is likely being played here, as Mr McWeeney implied to Tribune Business that he would be leaving the BISX-listed institution after a 15-year stint as managing director.

“I haven’t resigned, but I did indicate at the AGM that changes will happen this year and the bank is seeking new leadership,” he told this newspaper, effectively confirming his eventual departure.

Mr D”Aguilar, suggesting that the Prime Minister’s version, as majority shareholder, had to be believed, paid tribute to Mr McWeeney as someone who was “eminently qualified” and “a very nice individual”.

“He had many years of success, I won’t take that away from him, but at the end of the day, he failed,” Mr D’Aguilar said. “He had a good run, but it’s now time to go.

“You have to give Paul credit where it’s due; he had success, but it ended in disaster. If you run an organisation that had suffered and sustained the losses they did, and had to be bailed out, you have to go.

“Even if you feel you did nothing wrong, it happened because of the economy, and you feel you are a victim, you have to go.”

The Superwash owner added that the Bank of the Bahamas Board remained “political appointees right down the line”, rather than the tight-knit group, with extensive banking experience, that was needed to rescue the bank.

Mr D’Aguilar said foreign management may be required if the necessary skills could not be found in the Bahamas, adding that it was vital to bolster Bank of the Bahamas’ credibility.

“There are so many rumours out there that you don’t know what to believe. You need to look at what’s wrong and correct that. The perception is, right or wrong, that because of the Government’s influence, this bank failed, and the Government’s influencing of loans led to its failure,” he told Tribune Business.

Picking up on this theme, Mr Turnquest said of Mr McWeeney’s pending ‘departure’: “That is the right move, and honourable thing for him to have done. It’s a shame it’s taken this long.

“I think they should go one step further. The Board of Directors ought to do the honourable thing. The deficiencies listed by the Central Bank could not have gone unnoticed by a Board doing its job on behalf of shareholders.

“They do bear some of the responsibility, and should not have been put up for re-election at the AGM.”

The East Grand Bahama MP added: “The bank needs to restore its credibility and the confidence of the Bahamian people in its operations.

“The only way to do that is to put in a new, independent Board that has the independence and quality to ensure all the prudential requirements and policies of the Central Bank are enforced, and credit policies appropriate for circumstances are enforced.

“Until we have new, independent leadership at the bank, it’s always going to be suspect.”

One source suggested to Tribune Business that Mr McWeeney’s contract with Bank of the Bahamas was due to complete, and coincided with his departure date, but this could not be confirmed.