The Tribune

EDITOR, The Tribune.

Why is it that apathy and/or complacency are so predominant in our society today? Is it like the recent Sideburns cartoon illustration where it was mentioned that the nation has an average “D-” in maths and thus are unable to comprehend VAT? However, many of the issues I raise below are not solely targeted at the uneducated or uninformed – these are issues where the educated middle-class should be hollering

Let me mention a sample of some of them, which are all related to the financial sector which in turn is only a small slice of the economy.

1. Under what pretext does the Government take money out of NIB to “prop up” the Bank of the Bahamas? What authority do they have that gives them that right? NIB is and has been used by Governments as a cookie jar for a variety of ill-conceived and irresponsible notions. Do the people know or realise where NIB gets its money? It is from us – “we the people”. The principal behind NIB was for the agency to act wisely and prudently invest the people’s money to pay pensions, sickness benefits, etc. In other words, NIB was given the privilege of being the Trustees of the people’s money to ensure they would have an income upon retirement. Where is this act of prudency being exercised? How long will it be before NIB will not have sufficient cash resources to pay the people’s benefits?
   

2. Furthermore, NIB would have much more money in its coffers if all the companies and individuals paid the amounts that they are legally responsible for. As has been publicly headlined that there are several prominent companies that have been mentioned for not paying their NIB contributions. The added irony of this delinquency is the fact that these prominent companies have collected money from the employees by way of salary deduction. Why are these delinquents “protected” and allowed to get away without paying this liability? This is a simple case of stealing and such persons should be prosecuted. One of the worst elements of this illegality act is the fact that I am of the opinion a large portion of the relevant employees do not realise or appreciate the impact of these monies being withheld. Most will only discover the relevance of their employer not having paid the monies to NIB when they try to claim their pension and are informed that the benefit is much lower than expected due to the fact that there has not been any money paid-in by the employee. Unfortunately at this stage it is too late to act and seek recompense.

3. The Government is the major shareholder in the Bank of the Bahamas – a bank that has been operated without due governance or accountability. Is this the image that the Government wishes to be known for – i.e. totally irresponsible business people? One of the frequent utterances from the Regulators is “best business practice”. Under these heavily failed circumstances how can it be justified that the Board of Directors and Chief Executive Officer are allowed to remain in power? In most countries in the Western World each one of them would have voluntarily resigned. Why does the Bahamas not follow this standard of best business practice? Why are the directors allowed to continue and the Chief Executive Officer either deciding to resign or think about it for at least another 6 months? This is reprehensible and I feel certain that if this situation occurred with any of the offshore licensees the Central Bank would withdrawn their licence with immediate effect.

4. When the Bahamas started a much needed (?) local stock exchange, several companies offered some of their shares to the Bahamian public. The Bank of the Bahamas was one of those entities which allowed such an offering. What is the position of these individual investors now that the Government keeps pillaging NIB money to “shore-up” the bank? Their shareholdings must continue to be diluted. Why is there no strong representative voice of dissension? These persons, as investors cannot be deemed to be uneducated but why is there no collective voice? Is it because they believe that the major shareholder (the Government) would treat it as a nuisance or simply ignore it?

5. Upon my return from vacation in early November, I read in the news that the Minister of Financial Affairs had agreed for the Bahamas to accept an automatic exchange of information measure with all world governments. The Minister was being complimented for taking an option that would not be implemented until 2018. Whether such an agreement comes into effect or not it is not good news and continues to show The Bahamas yielding to outside forces. In this case, the OECD but the acceptance seems to have been without any apparent resistance or fight back or even any consultation with the banking sector. I find such a position unacceptable especially when it goes against a core human right – i.e. a person’s universal right to confidentiality. Not all people who seek confidentiality are criminals or undesirables. These external pressures are motivated by socialist countries who feed on more and more taxation that are needed to “buy” votes. Such countries make out that persons having accounts offshore accounts/structures, etc., are avoiding domestic taxes in the billions. Such stories invariably use mouth-watering amounts without being called for any substantiation or justification. If one believes that automatic exchange of information will come about then the Bahamas might as well forget about maintaining its position as a financial centre, which in turn will see more unemployment of skilled Bahamians. This is not just theory as it can be witnessed first-hand – (i) UBS Bank and Royal Bank of Canada Private Wealth withdrawing from the Bahamas. Other smaller financial institutions have already departed; (ii) CIBC – First Caribbean International Bank re-organising their Bahamian presence by transferring certain sectors to other island nations in the Caribbean. Voices need to be raised and heard other than just single-handed efforts.

6. Further to the above, there is also another move, being promoted, principally but not solely by the United Kingdom, which is to make the ownership of companies and the beneficiaries of trusts known to the general public. Again the rationale behind such a move is to widen the tax net of all these “unknown” persons who are not paying their share of taxes. As this requirement also goes against the core value of confidentiality it is being challenged. I am pleased to report that Bermuda and the Cayman Islands have thus far refused to accept this directive. The Bahamas has not yet declared its position on this issue but it would have been nice to have seen the country as one of the leaders and say “No”.
   

7. One cannot write an article such as this and exclude the “hot” topic re Value-Added Tax (VAT). There have been several articles on this topic and as such there is little for me to add. Without doubt, however, the people on whom this will prove to be the greatest burden are the poorest amongst us. The Government has been warned of such consequences and it has said on a couple of occasions that it will consider the establishment of a “safety net”. Should this happen then it will have two consequences namely (i) that the VAT monies collected will not be used to reduce the Country’s debt which was the primary reason for its introduction; and (ii) any Government “safety-net” invariably means creating a cesspit of corruption as per historical evidence. Will the public stand-up and show its dissention? Based on the above probably not.

8. Bahamas Electricity Corporation (BEC). Another government agency that has an atrocious corporate governance record and financial record. The cost of electricity is unbelievably and unrealistically high – why does the public accept this situation? There have been signs of cracks within the Government relative to differences over the corporation practices. We were told over 12 months ago that BEC was to be restructured and sold to third parties. Did it happen? “No”. With the result the cost of fuel and distribution continues to be rife for exploitation. Employee benefits without any employee contribution continue to exist as a unique situation that must only exist in the Bahamas – it is certainly neither a world standard nor is it a “best-business-practice”. Similarly there is exploitation for employees to work at overtime rates as opposed to regular rates of pay. There is no policy or conception for hedging one of the Corporations highest cost ingredients – fuel. Much of the fuel if not all is supplied by a company where one of whose shareholders is a prominent Government supporter. Why does the general public accept such exploitation? Recently we have learned of bribery money being paid to a Bahamian in order for a foreign company to obtain a contract for new generators. Will this claim be independently investigated? If such an investigation is undertaken will the public learn of the findings? The answer is invariably “no” and the public will accept it.

9. Bahamasair. This government agency has cost the country millions of dollars every year since its inception. Is there a general public outcry requesting details of the benefits of continuing with the airline? Are the employees grateful to be working for the company? – it would appear not in view of the pilot’s sick-out over the peak Christmas period. It is reported that this action resulted in a costs to the Government exceeding a million dollars – but still no public outcry.

I could continue but I am not certain that it will add any further benefit. It is now 2015 and as such one frequently makes New Year Resolutions. It is my wish that the Bahamian public will be motivated to loudly and clearly say “enough-is-enough”. One person alone cannot achieve this goal yet we seriously need to motivate all the public and become patriotic in order to save our country either from becoming bankrupt like Greece or having the Bahamian dollar devalued. Quite simply we cannot continue in a like manner without a disastrous outcome.

LET IS ALL STAND-UP AND BE COUNTED.

FAIR AND BALANCED

Nassau,

January 12, 2015.

(Because of the length of this letter, it had to be divided into parts. The second part will be published in tomorrow’s Tribune. — Ed).