THE BANKS HOLDINGS AFFAIR has taken over centre stage from the CLICO debacle – both making one wonder “whom to trust, what to believe”? Minister Donville Inniss encourages Barbadians to invest in local companies, and to take an interest in the happenings within those companies.
A recent NATION editorial also encouraged us to invest in local companies, saying that “if we want to keep these companies in Barbadian hands, then Barbadians must use some of the massive savings lying in the commercial banks and invest in the combined ownership of these companies. We must put our money where our mouths are”. On the surface this seems reasonable, but recent events raise grave doubts.
In 1961 when Banks Breweries was launched in Barbados, numerous Barbadians, including my parents, supported the company and enthusiastically bought shares. Things went smoothly for decades, with shareholders receiving their dividends like clockwork, and many attending annual general meetings.
Although some couldn’t probably understand the details of the proceedings, they relied on people like Mr Charles Tibbitts, who was well versed in such matters and (possibly to the exasperation of directors) didn’t hold back on the questions.
But, as with everything these days, all of a sudden there’s chaos, with earth-shattering changes occurring literally overnight. I don’t know about companies, but small individual shareholders seemed to learn via the media the morning after the fact. Some brokers claimed they had been “caught” in the happenings of the previous day and sold shares at a price well below that currently being offered. The Stock Exchange didn’t help by not halting all sales under these unusual circumstances.
I don’t think the intention of small shareholders is to “play the stock market” but rather to earn dividends from solid companies, and be able to sell their shares at a fair price if or when they need or desire to do so.
Wouldn’t it have been reasonable to expect the Stock Exchange to halt buying and selling of shares in light of the “cataclysmic” happening of September 22? Why have they now emerged from their slumber and made the call at this late date? And why has the Fair Trading Commission waited until now to have its say? Wasn’t lack of regulation a big part of the CLICO problem? Haven’t we learned?
Almost every day we’re seeing some new offer in the Press and circulars from the Banks Holdings Limited (BHL) board. No wonder concerned shareholders issued a paid advertisement headlined Shareholders At A Loss, which questions why the BHL board thinks it’s in the best interest of shareholders to accept a lower offer than is currently on the table, adding that this action makes them question whether the board truly has the best interest of the shareholders at heart.
The private sector has often asked for transparency in Government. But can the BHL board convince shareholders that they acted transparently in this situation? The BHL chairman is reported as saying that an airtight agreement with LCF might have become a $132 million albatross around BHL’s neck. There has been much debate on whether this agreement was explained to shareholders.
Therefore, directors must clear the air and present documented evidence that this was in fact done and, in so doing, dispel rumours of corporate mischief, conspiracy and all those other ghosts.
And do the actions of both Massy and Mr Hadeed demonstrate any real interest in Banks and Barbadians? How can small shareholders, especially, feel comfortable investing in companies if they lose trust in what goes on in boardrooms? I am a proud Barbadian but in light of recent events I can count on the fingers of one hand the local companies I would trust. I confess that I do look at the management ability of businessmen more critically than when I was much younger and more gullible.
We’re now between the devil and the deep blue sea when trying to invest our hard-earned money.
The Government has allowed banks to “do dixie” with interest rates, Government paper could be described as “tenuous”, our confidence in companies has been shaken, entrepreneurship is a minefield you have to have “the stomach” for, credit unions seem to be hamstrung, real estate seems to be the realm of a few and agriculture is being killed by praedial larceny, among other things.
So, what to do?
• Dr Frances Chandler is a former Independent senator. Email fchandler@caribsurf.com.