sankaprice@nationnews.com
It appears as if the prime minister there is on a mission to ensure the intended sale of Scotiabank to Republic Bank can only happen smoothly if Scotia’s interests are sold to Antiguan interests. And since the bank is steadfast it is not going to do that, he is doing his utmost to make the bank’s departure an expensive exercise.
Unfortunately, all he seems to be doing is endangering the future employment of the Scotiabank workers, as well as giving his country a bad reputation.
In pursuit of his goal to get Scotiabank to heel, Prime Minister Gaston Browne’s administration went to Parliament in the last week of March to supposedly plug a loop hole in that country’s Labour Code that allowed a company there to change ownership and continue as a going concern without having to pay severance to its employees.
That Labour Code outlines procedures to be followed when an employer is operating a limited liability company and shares are being sold, and there’s no change to the structure of the business.
Browne reportedly said there had been a “loop hole in the Labour Code” that had in the past prevented employees from receiving their severance packages, adding “that’s why it’s important for us to make that change now”.
That moved up the ante between Scotiabank and Browne who has been adamant since news broke last November about the impending sale that he was not going to allow it to happen in Antigua.
Rebranded
The sale announced proposes that Republic Financial Holdings Limited (RFHL) – Republic Bank’s parent company – acquires Scotiabank’s operations in Guyana, St Maarten, Anguilla, Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, St Lucia, and St Vincent and the Grenadines for US$123 million.
As the bank is intended to be sold as a going concern, it was envisaged the assets would be rebranded while the employees’ years will continue under Republic Bank. That is, Republic Bank would take over all the accrued rights and severance liabilities of Scotiabank’s 75 employees and continue their employment at the same level as if they were still with Scotiabank. Thus, the employees would in no way be disadvantaged.
However, if Scotiabank is forced to pay severance to the employees, that would make the sale more expensive to Republic Bank. And if that occurs, Republic would be less likely to re-engage the same numbers of staff when they take over. But this possible repercussion seems to be loss on Browne.
Initially the Antigua-Barbudan leader demanded that Scotiabank sell its assets to a local bank because the spinoff effects would be good for the economy and ordinary citizens alike. He even threatened to compulsorily acquire the bank’s assets.
Changed his tune
He later changed his tune to focus, supposedly, on the workers’ welfare – that’s why he changed the Labour Code. But his initial message is still the same. That is, Scotiabank cannot get the vesting order from his government to finalise the sale to Republic Bank, which as Minister of Finance he would have to sign. This time, they can only get it if they pay the staff severance first.
“We are giving the staff options. The right to . . . taking the severance and continue to work, take the severance and leave, or if they wish to commute their service. The employee must have that right. It’s his labour; it is his fundamental right to determine for whom he works,” Browne said.
The Antigua and Barbuda Workers Union who represents the Scotiabank staff is calling for the same thing as Browne – though less vociferously. The union’s general secretary David Massiah told the Sunday Sun via telephone that they attended a number of meetings with the bank, the last being March 14, and the severance issue is one of the matters that has been raised. He said some staff had raised the issue but his union’s interest was focused on what would be best for the long-term interests of the staff.
On the face of it one may suggest that the Prime Minister’s robust response to Scotiabank does not seem out of place. However, some in Antigua are questioning why he immediately took an active interest in the deal and has not been working with the trade union, the workers’ representative, on the matter to add strength to their voice?
But the real concern is about Browne’s dogmatic style. For him as Prime Minister and Minister of Finance to bluntly declare he was not signing the agreement for the sale even before it came before him was capricious and smacks of a dictatorial approach that would erode investor confidence.
Furthermore, Browne has demonstrated he is willing to change the rules of doing business to achieve his goals. He did so by changing the provision in the Labour Code that will impact the sale of Scotiabank there. If there is no history of other companies making a mischief of the loop hole in the past, then he has no excuse.
Also, Scotiabank had a legitimate expectation to pursue their deal with Republic Bank because the law allowed them to. But this change in law by government, ostensibly for the purpose to stop the sale between the two banks, undermines this legal principle.
As Browne has demonstrated a similar dogmatism in his approach to Sandals and a few other deals, it suggests his methods may become a stumbling block to finding a resolution to a sustainable future for LIAT. Time will tell on that.
