In any modern democracy, the interaction between company law and governmental power is critical to a proper understanding of political governance and the social responsibility of the corporate sector; and of the interaction between politics and business.
The continuing saga of the CLICO collapse and the “demise” of the Almond Beach group of companies demonstrate clearly how critical it is for the national well-being that the corporate sector should flourish under proper management and generate profits for taxation by the national revenue, and provide jobs for the people.
Now what is now known as the Almond Beach in St Peter was built as Heywoods Hotel by the Tom Adams Barbados Labour Party (BLP) Government
in 1985 at a cost of $53 million. Adams and the BLP deliberately used their constitutional power to engage in what would normally be “private sector territory” because the national interest demanded that the tourism potential of the island north of the St James’ “Gold Coast” belt be developed; and there was an absence of the private sector initiative for such a project at that time.
Then in 1993, a cash-strapped Democratic Labour Party sold the finished Heywood’s Hotel to Barbados Shipping & Trading Ltd (BS&T) at what was said to be “a give-away price” of $24 million, and the rest is history.
A few days ago, when the chief executive officer of the Banks beer group of companies said the closure of Almond Beach Village would have a major impact on the revenues of his beverage producing company, he had a major point.
But when he also pointed out that if people lost their jobs “the spending power in the community of those [losing their jobs] who support Banks brands would be compromised”, it became crystal clear that those 500 jobs at the Almond Beach mattered, and that they mattered as much as the jobs Owen Arthur saved through the BLP’s Government investment in GEMS in 1994.
We live interdependently in this small society,
and the good or bad fortune of local companies affects shareholders, employees and the community in general. It is a sobering thought that when investors set up a company, their conduct may have so many widespread implications.
It is the due exercise of the governmental power to make laws under Section 53 of the Constitution for the “peace order and good governance” of Barbados that allowed the Barbados Labour Party led by Tom Adams to rewrite and change the Companies Act in 1982 to compel the directors of companies to take into account the interests of the shareholders and (note it) also employees when making decisions in pursuance of their duty as directors to the company.
That duty was obviously present in the minds of the Almond Beach directors, given public statements on how keenly they discussed and tried to solve the financial problems within that company.
An enquiring mind might wonder how that aspect of the director’s duty specifically applies to a company like CLICO, given the unusual mix of policyholders, the EFPA investors and shareholders, especially since allegations surfaced that regulations imposed under the governmental were breached.
Traditionally, Government provides the enabling environment, and the private sector-led businesses get on with providing jobs, and earning profits and paying taxes.
So that the tax incentives given to the emerging solar water heating industry in the BLP regime of 1976 to 1986 sent a strong signal to householders and to the solar energy providers that a policy shift in energy use was being supported by Government, and millions in foreign exchange were saved and local jobs created by the use of solar water heaters.
Now in the wake of the Almond problems I have read arguments that the Government’s energy and land tax policies are not as user-friendly as they should be, if real help is to be given to the hotel industry, and that both energy and land taxes are major costs to the hotel sector.
The validity of the arguments is not my concern here; but if economics is the science of human behaviour, then any democratic Government has to create the correct conditions in which the people and companies can do business without damaging the social fabric of the society with displays of the “unacceptable face of capitalism”.
It is the sensitive interplay in the symbiotic relationship that must exist between entrepreneurs and governments that is the concern of company lawyers and constitutional lawyers alike; because when “push comes to shove”, it is the power of the Government that must be exercised, and if the public interest demands, it must trump private corporate power.
Almond was built as part of an integrated plan by the Tom Adams BLP Government in 1976 to 1985 to bring development to northern Barbados, by building a Highway 2A to spur the development of Warrens and to make for quicker and easier access to the north of the island, with the eywoods/Almond hotel as a catalyst for the resurgence of Speightstown.
Whatever happens, that dream must not die!
• Ezra Alleyne is an attorney at law and former Deputy Speaker of the House of Assembly.
