…seeking meeting with central bank governor
The group known as Concerned Members of the New Building Society has expressed concern at the manner in which the Society is being managed and cites latest developments in the affairs of the Society which it describes as “dangerous to the members and the financial sector generally.”
The group recently raised some of its concerns with the Governor of the Bank of Guyana Lawrence Williams through a letter written by its Chairman Cyril Walker. No official response has since been received by the Committee.
In the letter the group stated, that the NBS has not been licensed under Section 3 (2) of the Financial Institutions Act which would have placed the Society under the supervision of the BOG and suggested that the Society has taken advantage of this. The group said: “taking advantage of this failure to register, the Society has been conducting its affairs in a manner that we consider dangerous to the members and the financial sector generally.” The group cited the example of the Society’s $1.5 billion purchase of bonds in the Berbice Bridge Company from the financially troubled CLICO company. It said that such a purchase is “inconsistent with the Single Borrower Limit of the FIA but pointed out that “it may have been done in a manner that could be deemed inconsistent with the NBS Act and Rules.”
The letter provided further examples of what the members of the group considered to be “examples of actions that raise serious concerns about the manner in which the Society has been managed.”
Among these, is the decision made over the last two years to host the Society’s Annual General Meeting (AGM) outside of Georgetown. The group said “that decisions on the venues for annual general meetings outside of Georgetown is motivated not by an embrace for democracy but to shut out perceived opposition to its actions by our group.”
Another issue raised was in regards to the notice convening the upcoming AGM, which the group said seemingly contains an item that appears to remove all limits on loans. This could place the Society at considerable risk which even the banks are not allowed, the group added.
The letter highlighted the fact that there was no accountant on the Board and pointed out the absence of a governance committee in the Society.
Concerns were raised about the resignation of Clement De Nobrega, a professionally qualified accountant, who was elected as a director in April 2008. According to the group he resigned some five months later, apparently dissatisfied with the way the Board conducts the business of the Society.
Meanwhile, the group held a meeting yesterday afternoon in the auditorium of the St. Stanislaus College and several dozen members turned up.
During the meeting Chartered Accountant Christopher Ram as well as Consumer Activist Ramon Gaskin addressed the gathering on issues relating to the Society.
Christopher Ram pointed out that while the Society was not under any liquidity strains (the Society has $4.2 billion in cash reserves) it still needed to be monitored carefully. He put this in context of the $103 million decline in profits for the past year. The major reason for the decline in 2008 is an exchange loss of $200 million, arising almost entirely on UK Government Treasury Bills which are denominated in pounds sterling, the exchange rate of which declined relative to the Guyana dollar by more than 20% between December 31, 2007 and December 31, 2008.
Gaskin, meanwhile, dedicated a significant part of his time questioning the purchase of the bonds in the Berbice Bridge.
At that meeting, concerns were raised about the motion to have the current auditors of the Society replaced. The motion seeks to have Solomon, Parmesar & Company replace current auditors Jack Alli, Sons & Company. Jack Alli & Sons has reportedly been auditing the financial statements of the society for more than 30 years.
At the meeting yesterday committee member Ram said that if such a decision was to be made, the Accounting Committee of the Society, which is comprised of Moen McDoom and former Police Commissioner Floyd Mc Donald had to present a good reason for requesting such a change and they have not done so.
Another concern was raised about the exposure that the society may have had to CLICO. In the Notes to the Company’s Financial Statement it was stated “that the Society’s retirement benefit plan held a flexible annuity policy with CLICO Life and General Insurance Company SA Limited amounting to $110, 938.” Ram said that there was some ambiguity in the language in which this was expressed and suggested that this needed to be properly clarified.
Meanwhile some members of the audience called for an aggressive campaign by the group. The group plans to attend the AGM which is slated for this Saturday at 1:30 pm at the Cotton Tree Primary School, West Coast Berbice, where it will seek to make some form of representation.
There were also calls for legal action and this avenue is being seriously considered this newspaper was told.
In a press release issued by the group last week, the body expressed its concern that the Annual Report which members will be called upon to approve was yet to be made available. The group said “this is particularly troubling in the light of the reported substantial reduction in profits and an exchange loss of more than $200 million.” The committee believes that the performance of the society cannot be separated from the quality of governance which is at an unprecedented low level, the statement added.
