-Caricom General no longer involved
By Nicosia Smith
In the absence of a duly constituted Board of Directors, the Linden Enterprise Network (LEN) was given the responsibility of collecting the outstanding loans issued under the Linden Economic Advancement Fund (LEAF) that ended in June 2009.
LEN takes this mandate from the Caricom General Insurance Company, which was originally awarded the execution of the LEAF programme, and to re-collect the $465M disbursed to it by the Guyana government and the European Commission and repay same, keeping the interest and fees.
This newspaper understands that the collection of the loans by Caricom General caused a stir among the elite debtors of LEAF and this influenced the return of the loan collection responsibility by Caricom General to the Finance Ministry, who then handed the loan collection to LEN.
LEN, which was expected to operate a loan scheme, from the principal that Caricom General would have handed over to the government, is now tasked with the collection of outstanding LEAF loans, plus operating a loan scheme, once it has a fully constituted board. It is not clear what level of financial resources LEN has to manage the loan collections and if their current sources of income will be able to support this. It also means that a considerable amount of government resources will have to be put into LEN, since it is mainly a government entity.
On August 6 and August 11, Caricom General handed over the files, bills of sale, computers and other equipment, including a vehicle to the Finance Ministry, relinquishing its last hold on the LEAF programme.
A lingering question now is whether Caricom General has any further legal responsibility as it relates to monies it may have to hand over to the government. It is not clear if any other payments were made since the $50M was paid mid-last year by the insurer as part payment on the $465M principal.
Linden’s Interim Management Committee Chairman Orrin Gordon is asking what Caricom General did with the monies they collected. In addition, it is his view that Caricom General should have been allowed to wrap up the programme according to its original mandate, giving back the government the principal in full.
Gordon emphasized, as he did previously, that LEN should be a public-private entity but instead it is solely a government body.
He again contended that the government did not have consultations with the community to select a board to govern LEN and he is peeved at the fact that everything is being done in the city.
Collecting the millions owed Caricom General it is understood, according to one source, had approached each indebted client with the intention to collect. The insurer had disbursed over $700M in loans.
Some loans that were classified as bad debt by the then LEAF, it is understood, were re-opened under Caricom General since the company deemed that the normal system or legal requirement of classifying a loan as bad debt was not followed.
Therefore a number of persons had very large interest payments and fees. Some persons were even threatened with court action by the company, causing these clients to begin repaying their loans.
In addition, some loans were rescheduled and some were re-calculated by the company. It is not clear if these changes will stand now that management hands have been changed.
However, Caricom General decided to advise their General Manager in Linden Leonard Forde to hand over the loan collection to LEN, so that it will then be responsible to the government for the collection of the outstanding LEAF amounts. This will include, it is understood, the principal sum as well as the fees such as interest. “We are now not collecting,” said Forde last week, clarifying the Caricom General position on the loan collection.
Forde noted that Caricom General felt it was fitting for LEN to handle the collection. He explained that collecting the loans proved difficult as well as getting clients to adhere to the contracts.
He is hoping that LEN will be better able to collect from certain major clients who had not been responding.
Forde said they are concentrating instead on making the business viable and to employ strategies that will ensure this. He says “of course we are going to intensify on what we are doing,” referring to the added competition that they will face with LEN planning to give micro loans.
No Board
Observers said it was felt that a first priority would have been to get a functioning board in place before the documents changed hands to collect the LEAF loans, to ensure that a board will be able to monitor and approve fully the activities of LEN.
It was expected, however, that at some point the government would have allowed it to manage a loan programme similar to that of LEAF.
During a visit to Linden over a month ago President Bharrat Jagdeo had stated that a board will be constituted to operate LEN but this has not happened.
LEN General Manager Valarie Sharpe confirmed that indeed they had begun the collection of loans issued under LEAF. Sharpe formerly managed the LEAF programme.
“We have commenced interviews for persons desirous of having loans,” she informed this newspaper. She too confirmed that the files, bills of sale and other documents were handed over to LEN, together with computers and one vehicle that is not working.
This newspaper understands that Caricom General will be making an application to the government to buy back some equipment owned by LEAF at reduced prices, such as air conditioning equipment, a vehicle and telephones used in its Linden offices.
According to the LEN manager, the people of Linden recognize that if the loan programme begins, they will be able to apply for loans. She explained that apart from loans, refinancing will be given and rescheduling of loans as well. But it all hinges on the board being constituted, namely at least five board members from the nine-member body.
Currently the two names that seem to be confirmed are Lindener Andrew Forsythe and Tarachand Balgobin, head of the Project Cycle Management Division (PCMD) at the Finance Ministry.
Marvin Burns, the newly-elected President of the Linden Chambers of Industry, Commerce and Development said that they “welcome the current move by the Ministry of Finance to have the LEAF loan recovery programme transferred to LEN.”
According to Burns, “…it is extremely important that the full board of directors and other necessary components be put in place so that full credit services can become available to the business sector in this region.”
“Linden businesses must not be stagnated because of lack of access to financial services,” he says.
LEN’s credit facility is still absolutely essential, he believes, since even though some of the banks are introducing interesting new credit initiatives they are still not particularly accessible to Linden businesses.
Burns admitted that LCICD has perhaps not always been sufficiently vocal on a number of pertinent issues.
However the new executive is serious about its intent to focus on making the Chamber more visible and pro-active, being directly involved in developing initiatives for events and activities to promote Linden businesses.