THE HOYOS FILE: Learning to love our chains
Republic Bank’s offer of $5 per share for the remaining shares of its majority-owned subsidiary, the former Barbados National Bank, provides us with a good example of how you deal with a country that needs foreign exchange so badly it hurts.
You know you offered $5.50 two years ago, and that the local bank, whose shares you are seeking to acquire (mainly from the Barbados Government and the National Insurance Scheme), has continued to churn out profits in the intervening years.
Now, those profits may not have been as wonderful as you might have liked them to be, due to the economic “downturn”, but you also know they are likely to increase as we emerge from recession.
This is how it feels when you are no longer the economic masters of your own country.
ANSA McAL has also got the government in a Half-Nelson, thanks to that sweetheart deal of a BOLT which the Barbados Water Authority (BWA) is said to have signed with Innotech construction company to build its new headquarters at the Pine.
The financier of the deal, which taxpayers will be re-paying at goodly rates for many a year, is ANSA Merchant Bank.
Barbados is so broke right now that this is not the time to sell anything. But we need the money just to keep going, so the temptation to enter contracts not in our best long-term interest is immense.
It was the Barbados Labour Party (BLP) which got us into that horrible prison deal, another Build Operate Lease Transfer (BOLT), which the present government made a big fuss about a year or two ago.
But it was also the BLP which persuaded Cable & Wireless in London to give up its monopoly on telecommunications ten years early (can you imagine waiting until this year, 2012 for that regime to go away?).
The BLP had to undo the terrible problem the Sandiford Administration had created for us by giving C&W another 20 years of monopoly in return for its buying out of the government’s stake in the then-BET in the early 1990s, when we were in a similarly broke position, although we have foreign reserves now, which will buy us some time.
Now the Dems are going ahead and signing up similar deals for the BWA, the proposed marina in Bridgetown, the new terminal at the Port, and who knows what else?
Please note the liberal sprinkling of criticism on both sides of the political fence in the preceding paragraphs. The Minister of Finance, Chris Sinckler, told me the other night at a cocktail party which I was covering as a reporter that I am pounding him every week in my columns.
He needs to know that I am an equal-opportunity critic.
When I attended the BLP Forum a couple of weekends ago, I heard so much airy-fairy talk about how to get Bajans to invest in stocks that I felt the need to remind them of the non-purchase of shares by the local public, including credit unions, when BNB and Insurance Corporation of Barbados Limited were originally floated.
I said there that the BLP did not seem to be ready in terms of privatisation, as its ideas sounded woolly and somewhat crazy to me. They were very polite, but I am not holding my breath about getting invited again.
I will go to my grave not being in any political camp, but I hope it is not soon.
My worry about where we are today as a country is that, instead of operating from a position of strength as we look to privatize many government-owned and operated companies, including, but not limited to, the airport and seaport, CBC, the Transport Board, LIAT, and possibly the QEH, we may find ourselves having to take the equivalent of Republic’s $5 offer.
Because we are desperate. And when you are desperate you will agree to very bad ideas which are not in your interest.
So I am not blaming Republic Bank, nor ANSA McAL’s merchant bank, nor any of the Canadian banks operating here – the latter famous for only lending you money when you don’t need it, and refusing to when you do – because that is what they have to be about. Making money from money. If they didn’t, they would be reclassified as government departments.
By definition, merchant banks are even more mercenary, because they take more risk and lend bigger amounts. In our little economy, they take the place of “angels” or venture capital. They are anything but, however, as their risk-taking never goes as far as the possibility of real loss, except in the most unusual circumstances, while the angels and venturer vultures can and do lose sometimes.
We are finding our economy swept down the river of mismanagement into a lagoon infested with alligators and out into a sea full of sharks.
The only thing that stops politicians from attacking these financier sharks is professional courtesy (sorry, a poor paraphrase of an old joke about lawyers). They know the score, but they have the country’s books to balance, well, at least theoretically.
And with our credit rating in the pit, where it was thrown by hubris, we really have little choice in the matter, unless we choose to collectively take off our blindfolds and see what is going on all around us. It is not a pretty sight.
• Pat Hoyos is a long-standing journalist and publisher of the Broad Street Journal.