Posted on

PETER WICKHAM: Letter and spirit of Mottley-Sinckler saga

Peter Wickham, [email protected]

PETER WICKHAM: Letter and spirit of Mottley-Sinckler saga

Social Share

“Information is being hidden from you in this country and people have business to do and when the Budget was called, if it was called one month later he could not report to you foreign reserves are in good condition because the Credit Suisse loan had to be paid on 18th June and as of Friday it still was not paid, and that was $88 million.” – Hon. Mia Mottley Sunday, June 28, 2015

THE PROMINENT PLACEMENT of the above quotation has less to do with an effort to promote the Leader of the Opposition and more to do with the fact that it lies at the root of the verbal altercation between two (former) pals, Mia Mottley and Christopher Sinckler. 

Mottley’s remarks clearly struck a raw nerve with Sinckler who interpreted this comment as alleging that his government defaulted on one of its obligations, which if true, would have been unprecedented and highly damaging.

The exploration of this issue would perhaps benefit from an objective interpretation of Mottley’s comments which, in fairness is challenging since Mottley is an astute politician and lawyer whose comments can often give rise to two legitimate interpretations. 

Notwithstanding I am prepared to guess that Mottley’s desire was to communicate the extent to which our foreign reserves were under pressure to the point where the date of the financial statement was selected deliberately to allow for a more flattering statement of our foreign reserves. In addition she seemed to want to draw attention to the fact the loan agreement which was approved by Parliament alluded to a payment of $88 million due on the June 18 which was not made.

The foregoing seems clear in terms of the “letter” of Mottley’s comments and one can find neither fault nor intent to mislead with regard to the non-payment of $88 million since to the best of her parliamentary knowledge that was the amount that was due. 

Moreover, Sinckler effectively agreed that this amount was not paid on or before June 18 or since then. The understanding of Mottley’s intentions however become less clear when we look to the “spirit” of her comments and she would be best placed to explain her true intentions as it relates to selection of the budget date and the possible conclusion that government’s failure to pay $88 million by the June 18 implied “a default” as Sinckler suggested.

Mottley’s use of language on this occasion was in my opinion quite clever since she clearly spoke the truth, but it is equally true that those uninitiated in the language of politics could easily conclude that she was suggesting that the loan was “not paid,” which she actually didn’t say.

This type of reaction takes one’s mind back to a recent news story that mentioned the names of politicians next to what appeared to be large sums of money owed for vehicles which the state had financed for them.

The article did not mention the fact that all of these politicians took advantage of a facility to which they were lawfully entitled and, moreover, none of them were in default. 

In such situations the discerning legal or accounting professional understands the reality; however, we lesser mortals could be forgiven for arriving at a colloquial understanding.

Similarly, we could easily forgive the speaker for presuming the listener would appreciate the true scenario or as easily presume s/he was being mischievous.

The true issue therefore rests outside of Mottley’s remarks and ironically arise from Sinckler’s reaction, which could have been avoided if he simply reiterated his contention that government never defaulted on a loan.

He however; chose to go the route of a ministerial statement that has precipitated the release of information that spoke volumes about how little Parliament knew about the management of this loan.

In this regard it is unfortunate that Sinckler sought and released a letter from our creditors which made reference to the fact that the original agreement was amended by reference to the words “as amended” (line 1) and thereafter he himself admitted that government paid $41.23 million by June 18 and not $88 million, which was effectively an admission that Mottley’s initial contention was correct. 

We, therefore, anxiously await Sinckler’s second ministerial statement on the issue explaining the revised schedule of payments due on this loan, the additional cost to taxpayers (if any), along with any extensions to the life of the loan.

It was an interesting coincidence that around this same time the IMF released a statement indicating that Greece had met all obligations to it, although it was well-known that days before Greece was effectively in default.

This type of language is similar to that used by Credit Suisse and those familiar with the business of finance therefore understand the limitation of this type of statement as well as the limitations of a statement of our foreign reserves one week before a major payment is due.

Peter W. Wickham is a political consultant and a director of Caribbean Development Research Services (CADRES). Email [email protected]