Expressing fear of “irreparable financial damage” to the National Insurance Scheme (NIS), attorney Christopher Ram on behalf of three pensioners yesterday wrote to Chairman of the NIS Board Dr. Roger Luncheon requesting information on almost $1 billion in preference shares in the Berbice Bridge Company Inc (BBCI) for which the scheme is receiving no dividend.
On Friday, Ram had warned of the peril that the NIS faces in relation to the BBCI shares it holds saying that it has been robbed as it has been receiving no dividends. “NIS has bought some dud shares.
Where is the outrage?” he had questioned. He said that the decision to invest in the company was grossly irresponsible and reckless and now the NIS has a financial hole of about $6.5 billion resulting from its investment in the failed insurance company CLICO and now the BBCI. He had pointed out that the BBCI has not filed annual returns since 2011.
In a press statement yesterday, Ram said that he has dispatched a letter to Luncheon requesting information on 950,000 Pre-ference Shares in the BBCI acquired by the NIS from the National Industrial and Com-mercial Investments Limited (NICIL) of which Dr. Luncheon is also a Director.
“My letter was written on behalf of three pensioners of the Scheme who are concerned at the decision to invest $950 million in preference shares on which they claim no dividend has ever been paid since such shares were first issued in 2006.
They are aware that neither NICIL nor any previous holder of such shares has ever collected any dividends and fear the same fate will befall the NIS,” he said.
He had noted that it is also disturbing that Dr. Ashni Singh, who as Minister of Finance has portfolio responsibility for the NIS, is the chairman of NICIL. “The potential for conflicts of interest is therefore huge,” he said.
Ram recalled that one year after the NIS acquired the shares in the BBCI, the General Manager of the NIS received a letter from the company telling her that the BBCI would not be paying the NIS any dividend in 2014.
“To compound this, financial statements have not been forthcoming from the Bridge Company to allow for any further evaluation.
With some $5.2 billion invested and feared lost in CLICO, and the reported undisclosed revenue loss suffered by BBCI in 2014, my clients are concerned that irreparable financial damage would be suffered by the NIS if the tainted transaction with NICIL is not reversed,” he asserted.
Ram said that the information sought from Dr. Luncheon includes the price paid for the shares, and whether the price was ex dividend or cum dividend; dividends received for the years for which the shares have been held; a copy of the valuation report on which the decision to acquire the shares was taken; evidence that the directors in making their decision took account of the potential or actual loss of approximately $5.5 billion which the Scheme has incurred but is still carrying on its books in relation to its investment in CLICO; and extracts of Minutes of the directors of both the NIS and NICIL confirming that he excluded himself from participation in the relevant meetings of the two companies.
Last year the BBCI wrote to the NIS—which apart from the $950 million on preferred shares has $80 million in ordinary shares—saying that it was unable to pay dividends for 2014 as it had not made a profit. The NIS had taken the stake in BBCI in 2013.
The NIS has been in a difficult financial situation over the last few years where expenditure has topped income and it would have found the dividends handy. Analysts have said that the BBCI disclosure raises the question of why the NIS was encouraged to invest in 2013 in the preferred shares when the fortunes of the Berbice Bridge Company were not that bright and a substantial return not guaranteed. Analysts note that the NIS could have parked the funds elsewhere with a guarantee of a return.
With the preferred shares, the NIS accounts for 76% of the shareholding in the bridge, billions of dollars that have not brought any return for last year. Poor investment decisions have long been a problem at the NIS.
Ram had previously attempted to obtain records from the BBCI but the company had advised him that it would be charging him $50,000 per record requested.
The sale of $950M worth of preferred shares by government holding company NICIL to the NIS was only revealed towards the end of 2013 when Ram had begun to raise questions about dividends to the government. NICIL which was holding the preferred shares had forgone hefty dividend payments from BBCI in favour of other private investors in the bridge.
Last Friday, Ram said that the BBCI is in a “parlous state” and is in need of a rescue package and he restated that the only way for it to survive is for government to intervene.
