April 20, 2016
Bank of The Bahamas (BOB) Chairman Richard Demeritte yesterday sought to walk back the impression that during the troubled bank's recent annual general meeting (AGM) on the weekend he confirmed that politically influenced loans had been made by the bank in the past. Demeritte's statement came late in the day, by which time Free National Movement (FNM) Leader Dr. Hubert Minnis had already called for a forensic audit of the bank and "full disclosure by all members of Parliament of any secured or unsecured loans they have received" from the bank.
The institution had hoped to use the AGM to shift the focus from its troubles - three consecutive years of losses in the millions - on its transformation agenda, beginning with changes in the management structure. However, in the wake of the meeting, it was reported by Superwash President and Bank of The Bahamas shareholder Dionisio D'Aguilar that Demeritte had conceded, during a question and answer period following prepared remarks, that there was "no question" some lending decisions had been influenced by politics in the past.
In his statement yesterday, Demeritte said any impression that he had confirmed that politically influenced loans had been made by the bank in the past is "incorrect".
"I was merely acknowledging that I was aware of perceptions that politically influenced loans had been made in the past. I was not, however, agreeing to the truth of the matter. Although the perception persists, I have never seen any credible evidence that politically influenced loans were granted by executive management nor requested or instructed to be granted by any board directors at Bank of The Bahamas.
"In fact, I would like to use this opportunity to set the record straight that when the loans, which are now in the non-performing category were initially granted, they met all of the qualifications for lending. What has changed as a result of the economic climate of recent years is Bank of The Bahamas' appetite for credit risk. There has been, and will be going forward, a fundamental shift in the appetite for credit risk as we restructure and regain our footing on the path to sustainability," Demeritte said.
Meanwhile, and prior to Demeritte's "clarification", Minnis said in a statement that the first steps to restoring confidence and credibility in the bank's operations are "a thorough forensic audit and full disclosure by all members of Parliament of any secured or unsecured loans they have received from the financially troubled bank".
He called firstly for "a comprehensive forensic audit of the bank by a reputable, independent firm".
"Secondly, we cannot have the fox guarding the hen house. Every member of Parliament should provide the people with full disclosure of the nature and extent to which they or their immediate family members have contributed to BOB being in its present perilous financial state. Do they have - or did they receive - a secured or unsecured loans or any other favorable financial considerations from the bank?"
Accusing the government of using the people as its "safety net", Minnis said: "Instead of fixing the bank, they force the people to pay for their mismanagement. Bahamians deserve better, and the first steps to fixing the bank are with transparency and accountability."
He charged that the government, which holds a 65 percent majority stake in the bank, has been forced to bail it out "several times". He cited the creation of Bahamas Resolve Ltd., a wholly-owned special purpose vehicle designed to assume liability for $100 million of the bank's non-performing commercial loans, and the payment by the government of over $3.1 million in dividends to the bank's preference shareholders in the 2015 and 2016 financial years.
K. Quincy Parker
Guardian Business Editor
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