Dear Editor,
I read with some bemusement the comments of General Manager of NIS, Mr. Terry Thomas (Kaieteur News 8 December 2012). I’m afraid that rather than a consultation exercise, this was more a case of news management by dictating what the ‘talking points’ were going to be. How on earth can he even pretend that we have arrived at this position without making any reference to some of the rather dubious and legally questionable ‘investments’ made by the NIS? This follows hot on the heels of remarks made by Roger Luncheon less than a month ago that the Scheme was ‘currently healthy’ and that any suggestions that the NIS was in dire straits is “total nonsense”. Pray tell me Mr Luncheon what constitutes ‘dire straits’ if not this?
Let’s examine the facts.
In 1989 NIS’s expenditure to income or the monies it spent versus the money it collected was 55.4%, in the year 2010 the expenditures were 96%. Now in 2011, for the first time in its 43 year history, the NIS Fund has experienced its first deficit of $371M. Something has clearly gone horribly wrong and it cannot be explained away by the ‘aging population’ excuse, which is something that any half decent actuary can plan for.
There are many serious issues surrounding the management of the NIS Fund which are best addressed by those much more professionally qualified than me. However as a layman I have three specific questions which Mr Thomas has remained curiously silent about:
Question 1 – Berbice Bridge
Why was $5.7 billion of NIS money invested in the Berbice Bridge? After all private investors in the Berbice Bridge are guaranteed a secure rate of return between nine and 11 percent. For private investors to enjoy such a rate of return two things must happen; revenues must be substantially increased (this has led to widespread protests), and/or capital costs must be subsidised. The latter seems to be the sole purpose of the NIS investment i.e. to guarantee an attractive rate of return for private sector investors. What rate of return has been earned by the NIS on this investment? Who took the decision? What professional advice was received? This advice must be made publicly available.
Question 2
What impact did the loss of US$30M during the CLICO debacle in 2009 have on the fund’s performance? This placed a major dent in NIS’s income but in addition CLICO Guyana invested 53% of funds into CLICO Bahamas in direct contravention of Section 55 of the Insurance Act requiring CLICO to invest 85% of its funds locally. It was the same Mr Luncheon who said in February 21 2009 that ‘the Scheme is not worried about the security of the funds’. Former CLICO CEO Ms Geeta Singh-Knight oversaw the collapse of CLICO and was found by Ms van Beek as having ‘persistently breached the Insurance Act’. Her punishment? She’s appointed Head of the Berbice Bridge Company…only in the twilight world called Guyana can something like this happen. Who took the decision to invest in CLICO? What professional advice was received? This advice must be made publicly available.
Question 3 – Caricom Secretariat
Who forced the NIS to lend the government a 25-year loan of US$4 million for part-financing of the construction of the Caricom Secretariat? It was agreed at 4% in the first 15 years and 5% in the next 10 years. Given the fact that the returns are below average inflation rates, even a fool could have seen that this was very bad business. Who took the decision? What professional advice was received? This advice must be made publicly available.
There is an old Johnny Nash song with these lyrics:-
There are more questions than answers
Pictures in my mind that will not show
There are more questions than answers
And the more I find out the less I know
Clearly, in relation to the NIS Fund, real and searching questions must be asked about the inter-connectedness between PPP politicians and the ‘business’ world. These cannot be swept under the table or left to an official who cannot offer up answers ‘above his pay grade’. One is left with the distinct impression of reckless decision making and a callous disregard for the people whose money it is. This is a major scandal with possible criminal ramifications. I hope APNU and AFC will now act decisively; many thousands of Guyanese are owed and deserve answers.
Yours faithfully,
Colin Bascom
