Financial Services Commission Chairman Dr Frank Alleyne has questioned some corporate governance practices of financial institutions in Barbados.
Speaking last Wednesday during a seminar on retirement, Alleyne focused his critical lens on issues such as shareholder and customer protection, insider trading and the appointment of directors.
During the event at Hilton Barbados, Alleyne noted that in his personal experience some company shareholder meetings sometimes ended in 15 minutes and directors outnumbered investors.
Moreover, he said decisions were made without the knowledge of shareholders.
“It is an affront to me as a shareholder, never mind as a small shareholder, to make your decision without consultation of the shareholders and then ask me to ratify.
“That is something which we have to fight against in Barbados because poor corporate governance eventually sounds the death knell for an organization,” he said at the seminar hosted by Guardian Life of the Caribbean Ltd and the Barbados Chamber of Commerce & Industry.
Alleyne was also “very disturbed” by the practices of commercial banks, especially relating to credit cards, noting that “unsophisticated users” often agreed to pay only the minimum balance without being informed of the financial consequences.
The former University of the West Indies economics professor suggested that individuals who were not knowledgeable about economics or banking were often disadvantaged in such situations.
“It is my contention that the buyer should always be provided with the truth,” he said.
Alleyne also queried the extent to which there was “discrimination by management of the financial institutions in Barbados between identical classes of borrowers with respect to risk”.
“Is there evidence to support the allegation that potential borrowers with similar risks are charged different interest rates?” he asked.
The FSC chairman also questioned about the extent to which there was insider trading within financial institutions, asking why certain people usually got advance information about opportunities to acquire assets to be sold by financial institutions.
“To the extent that there is evidence to support it, and I suspect that there is evidence, it retards the development of our society and our economy because we are not given the opportunity to give the chance to people who can make a positive contribution to this society,” he said.
Alleyne also suggested that in some instances directors were not selected based on their demonstration of integrity, sound judgement, or the ability to ask tough questions and demand answers.
“I am convinced in Barbados that in some instances the recruitment of directors is a matter of window dressing. When you look at the board of directors and ask what can that person contribute . . . absolutely nothing but a pretty face or some sort of social connection,” he charged.
Alleyne noted that the role of directors was to recognize and balance the interests of stakeholders, employees, customers, suppliers, investors and communities in order to achieve long-term sustained development.
