Prove That NIS Is Sound Before Investing In Four Seasons

Caswell Franklyn, Head of Unity Workers Union

Government was advised, by an actuary, to take steps to protect the National Insurance Fund because they had calculated that the NIS Fund would be in trouble by 2035 if pensions were continued to be paid at the then existing rate. They reasoned that Barbados was an aging society, and with current life expectancy and a declining birth rate that there would be too few persons contributing and too many persons receiving pensions for the scheme to remain viable. The Government had several options to ensure the fund’s viability, and this is what they have done so far:

  1. Increase the pension age with the hope that more people would die before attaining pension age;
  2. Increase contributions;
  3. Change the formula for calculating the pension, resulting in a much smaller pension; and
  4. Give people the opportunity to receive a reduced pension if they applied early, and an enhanced one if they deferred applying for their pension. They guessed that there would be a neutral effect on the fund because the people who opted for early pensions would somehow be offset by the numbers who deferred. Unfortunately, hundreds opted for early pensions and less that 10 deferred as yet according to my information.

The corrective measures clearly show that the NIS Fund is under stress. It is inconceivable that the fund is as healthy as the Minister of Finance is telling the country. For the sake of argument let us assume that the Government is correct in their assertion that the NIS Fund is healthy. Then they must also explain why they thought it necessary to sell off the NIS shares in the Barbados Light & Power Company which were paying handsome dividend yearly, and projected to do so for the foreseeable future. If they needed cash so badly that it forced them to sell off assets, how can they justify the gamble of putting $50 million in the Four Seasons apparent white elephant.

In whose interest is the NIS Fund being managed? Everything that the Government has done to date to protect the fund has proven to be detrimental to the individual interest of persons who contribute to the fund. On the other hand people like the Canadian company Emera, CLICO and now Four Seasons are reaping the sweets of the labour of Barbadian workers.

The Minister maintains that the fund is healthy, and I sincerely hope so, but how can he make this assertion without the benefit of audited financial statements for a number of years. Where did he base that conclusion?

The National Insurance Office is in a very poor state in terms of the management of the fund. I challenge them to deny, with proof, that the NIS fund is so poorly managed that they were unable to detect an ongoing embezzlement for years which resulted in the loss of millions. The only became aware of the embezzlement when a commercial bank brought it to their attention.

Some Years ago, I was representing a lady who NIS accused of receiving a benefit in duplicate, which she denied. I well remember, at the meeting to resolve the matter, I identified, by job functions, the persons that were embezzling NIS money. Rather than deal with the matter, I was threatened with a lawsuit for defamation. Years later and millions of dollars later, I was proven correct by the arrest and confiscation of assets of one very junior employee from the area that I had identified years earlier. So don’t tell me that the fund is sound; you just don’t know, you might be counting money that had already been embezzled.

147 comments

  • David Thank you , you were on the ball .It is that pathetic idiot hater from barbados blogwatch who lurks here. His blog is pure crap and he can’t find anything constructive to write about. His blog is such a BORE with very little traffic that he has to come and lurk here.

    Like

  • Peninsularwoman why don’t you go drown yourself. You are such a pitiful piece of cat shoite! That piece of crap you call a blog is useless and boring. You need to go work on it!

    Like

  • @Justin and Anthony

    what youboth said make sense to me. Althought i thought nis should not have sold it shares, a return of 4% was not enought, thus it was better to realize the capital gain.

    I dont understand why the pundits want to preach doom and gloom for barbados, who will suffer, the little unskilled person like myself. We need to offer solutions to our problems in the global context.

    Caswell you are implying something fishy went on with the nis sales, if u cant provide facts you should desist from intimating corruption/thiefery

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  • Nobody can question the NIS Board making the decision to realize the capital gains, in forex to boot. What the same people are questioning is why wouldn’t minister of finance Sinckler have vetoed the sale against the background that BL&P is considered by many a strategic asset.

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  • millertheanunnaki and Anthony
    I sat back and had a good laugh at your incredible dexterity when discussing Barbados vis vis any other economy. You challenge Justin Robinson about the Bermuda strong favorability with the discredited Standard’s and Poor’s that let Madoff and other rip off artists nearly crippled the strongest economies in the world.

    He responded with an article from Bermuda which did not paint that rosy picture of Standards and Poor’s and now you start to back pedal to find a different argument.

    I was speaking to an economist from the Caribbean who works in the USA and he was of the opinion that these rating agencies operate with a political bias. In fact Clyde Mascoll said on the radio to forget about the lending agencies and do what you have to do.

    Was it a coincident that Barbados was being discussed in Washington this week as having better roads and bridges that the USA (which to me is a joke) and the rating agency warning. I think Barbados was 22 and the USA 23.

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  • I’m not the most brilliant academic,don’t have a bachelors degree, but Barbados is currently number 10 in the world with regards to debt % to GDP (2011). Our expenses have been more than our revenues and that includes grants. (since 2000 wiki). Obviously there would be negative deficit which balloons every year. Our food import bill was more than 1/2 billion. China, India and Saudi Arabia have gone to Africa and grown food cheap to export back to homeland and sell on world market. USA, Europe buys and by the time the product gets to us there is considerable markup. Belize grows own corn and soybeans. I think that Government needs to stop pussy footing with the land for the landless programme and get a growing crop schedule going with serious farmers (esp youth).

    Next there are lots of land available by the 1000 acres by lease or sale in south America including Belize and Guyana. Numerous properties are actually near good enough infrastructure. Maybe the government could meet with serious farmers and secure land in these countries by financing. The cost of imported raw goods must be below international competitors, thus making it easier for manufacturers, thus encouraging business. GOB could have a share in the profits of these farming companies, making money from sale of products back to Barbados and export to other countries. We could then gradually substitute wheat flour with breadfruit or cassava flour by testing customers response, then switch entirely, needing only to import wheat in small quantities in case of lack.

    Government should then use the money for renewable energy program including sponsorship for research for our country’s scientists. ( I know that some “scientists” in USA say it would be costly but we have to keep in mind that America’s billionaires and government lob-biers are oil tycoons. Therefore I would rather trust my local, smart scientist and engineers.
    If it cost us $100 a barrel to import and we sell at $110 we would make $10 profit, but customer has to pay $110. If we produce for $30 and sell for 60 we would have made $30 profit and customer cost is almost half. More money made less stress on customers. When this is achieved, we could look at rigorously exploiting tourism. To me first thing is to secure survival,(food) next is to enlarge the borders, then diversify in money making ventures, not artificial economy,( borrowing to create jobs from projects that will eventually add to the debt and reduce monthly cashflow? not good business. Spending $300,000 on a tournament is not good. We must think about our country and stop in this hedonistic lifestyle(once it is pleasurable it is the right thing.)

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  • This piece by Caswell is too important to be bogged down by discussions about rating agencies; if the trained economist and justin want to indulge i that debate post something. Shall many now who hold the view that their NIS pensions shall support in their later years be disappointed. Has there been a consistent policy of bad investments by both administrations. I find it very funny that the indian man who is investment guru in europe can not find two red cents to rub together to invest in the four seasons project, but expect all Barbadians to agree to squander their pensions on this project. People the quality of our old age is at stake here.

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  • Thanks Lemuel.

    You must realise that they have bogged this post with extraneous matter because they do not want the issues that I raised discussed here or anywhere else. No one is talking about the embezzlement of NIS funds and worse yet there are no prosecutions when the crooks are discovered. Rather we have Trained Economist trying to put a good face on the sale of NIS shares in BL&P to Emera. The facts are really simple: the shares were sold because Government needed foreign exchange. Why would NIS sell shares that would be guaranteed to pay a dividend in perpetuity at a rate of 4%, as he said, and then put the money in the bank to get 2% interest. By selling those shares, government was killing the goose that laid the golden egg

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  • millertheanunnaki

    @ Clone | November 22, 2011 at 8:45 PM |
    “He responded with an article from Bermuda which did not paint that rosy picture of Standards and Poor’s and now you start to back pedal to find a different argument.”

    If you were a manager in a reputable investment house and 2 applications for funding for a large tourism project (or even a hospital) came before you- one from Bermuda and one from Bim – for US $ 400 million. Your boss said you can only finance one project either from Bermuda or from Barbados. Tell us, which one would you choose bearing in mind similar prevailing economic circumstances in both countries as mentioned by Justin Robinson?
    Answer, please or no year-end bonus for you!

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  • Lemuel, caswell maxe the point that the shares were sold beacuse of cash flow problems at the NIS and a need for forex.

    According to my calculations at a 4% return, it would have taken at least twenty years to realize the same return the NIS got by taking the emera offer. The simple ppint is that the decision seems defensible on purely investment grounds.

    The NIS had held 23% of the shares, by selling 13% and keeping 10%, they also acted in the national interest by not giving emera enough to force all other investors to sell their shares and the 10% holding allows the nis to retain a seat on the board.

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  • millertheanunnaki

    @ Caswell Franklyn | November 22, 2011 at 9:47 PM |
    “Why would NIS sell shares that would be guaranteed to pay a dividend in perpetuity at a rate of 4%, as he said, and then put the money in the bank to get 2% interest. By selling those shares, government was killing the goose that laid the golden egg”

    What an excellent point! They say education ain’t commonsense but you sure didn’t waste your time at Cawmere!
    Now let’s see if Justin Robinson (who is very close to the action) or Trained Economist can spin their way out of that googly!

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  • I agree with caswell the broader issue on the NIS financials is a critical one. There was some discussion on this recently and we would benefit from an update about the status of the financials.

    It certainly is interesting to watch these economic issues play out in a real world context. The NIS financials fell way behind over ten years ago, but no questions were asked. Funds went into the Hilton, Fund access and enterprise growth fund with no discussion.

    In “good times” every one is optimistic, all sorts of speculative investments are undertaken with very few if any questions asked. Any neegative voices are dismissed as nay sayers or not getting it. When things trun sour every and anything gets questioned, and any voices not engaging in gloom and doom are in danger of being shut out.

    Such are the animal spirits of man as described by Keynes.

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  • Trained Economist

    The NIS Board is appointed to look out for the best interest of the persons who pay contributions into the National Insurance and Social Security Scheme. Was the sale of the BL&P shares in the best interest of the contributors to the scheme? Is the proposed investment in Four Seasons in the best interest of the persons who contribute to the scheme? If it is not the board should say, “NO”. However, that would not necessarily be the end of the matter, the Minister who is elected and appointed to act in the national interest could then overrule the board, but at least, the board would have acted in the interest of the people that they were appointed to serve. To do otherwise, the board would be making a political decision in an effort to protect the Minister in the event of a loss of these funds. That is not their job.

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  • @ Trained Economist | November 22, 2011 at 10:14 PM |
    “When things turn sour every and anything gets questioned, and any voices not engaging in gloom and doom are in danger of being shut out.”

    Well you have a cadre of very competent people on board since 2008 including the past Chairman Ince. Don’ you think that 3 years is sufficient time for a band of professionals to produce the financials for at least 2009?
    Do that and shut up the cynics and prophets of doom and gloom.
    The faintest ink is more convincing than sharpest mind! Figures are more important that long talk when it comes to business decisions.

    Like

  • I agree with you. The board should always act in what they view as the best interests of the fund and its beneficiaries. Thats why i think they sold the BL&P shares and I await their verdict on four seasons.

    Of course reasonable people can disagree on what is in the best interest of the fund.

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  • What a breathe of Fresh air ! Good responses from Trained Economist!Miller you have been outwitted on this one, I will continue to watch from the gallery binoculars in hand

    Like

  • WHY is it that Bjans are not out protesting these things everynight , everyday, on soap boxes, everywhere ???

    Soft cowardly bajans ???

    When will it happen ??
    Never you say ??
    Do I say Shame on spineless, gutless , ball less Bajans ??
    Jerkers ??

    JUST ASKING
    JUST ASKING
    JUST ASKING

    Like

  • @ ac | November 22, 2011 at 10:44 PM |
    Continue to star gaze. But you should note I don’t look back and seek to blame the past administration for almost everything under the sun and use it as an excuse for current inaction or poor decision making. I deal with the present and the future; but of course learning from the past but not dwelling therein.
    Enjoy!

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  • Bravo Miller ! Bravo!, This programme will continue after the commercial. Back to you Trained Economist!

    Like

  • Bajans living in Canada should buy shares in Emera.

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  • @ David

    Does the proposal from Mark Maloney for the Empire Theatre include:-

    1. A Microbrewery?
    2. Slot Machines?
    3. Movie Theatre?

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  • The artistes of Barbados have not been forced to demonstrate yet but for the Empire site to be used for the purpose you suggest may trigger a response from them.

    Where can we read the proposal?

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  • the Accusation of alleged Embezzlement is cause for concern in any organization.There will be some difficulty to identify and quantity this hence the promotion of the former Director to another organization maybe maybe a good tactic, if it is followed by an investigation by an accounting firm We will have to watch carefully.

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  • @ David

    I don’t gather the artist are minded to demonstrate. Agitate yes, but not demonstrate.

    God help Barbados the day that beer and slot machines are put in the Empire Theatre to justify its restoration and God help the political party in power at the time when such decision is taken.

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  • Is it just me or the young people are sounding wiser than the old people?

    In the face of a crippling global recession Owen and Frendel are saying that Barbados can [retty much maintain all that it used to offer in much the same way. Owen suggests that he can find new growth streams to fiance the status quo. Freundel just says the status quo remains.

    Sinckler is prepared to do some tough things, while Mottley seems to have some clear dieas about reforming the nature of public services. It seems to me that its a pity neither is party leader.

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  • @ Old School

    In the collective-responsibility style of Cabinet government (or politics) its a bit disingenuious for you to attribute the tough choices to Minister Sinckler.

    That not withstanding, what else besides taking so-called tough choices, has Minister Sinckler done to be leader of the DLP administration and by extension, Prime Minister?

    Barbados is in turbulent waters, this is not the time to experiment with youth and exuberance especially when one of them have plumbed the debt of the water and demonstrated an inablity to swim much less captain a ship.

    Like

  • The social gains made by this Country can be wiped out if we are not careful. The middle class, having pulled themselves out of poverty by the boot straps of education risk being sent back to the starting point.

    Like

  • millertheanunnaki

    @ Antz | November 23, 2011 at 9:00 PM |
    “The middle class, having pulled themselves out of poverty by the boot straps of education risk being sent back to the starting point.”

    The existence of a viable but dependent “middle” class in a small but fairly well off developing country is a creation of the State. Its nanny type protection and cuddling of this social buffer would always come under threat once the “freeness” social regime is seriously compromised by a major fiscal imbalance sustained over a period of time.

    This is one pseudo structure that will “Cave” in under the weight of bureaucratic and academic overload from on top of the Hill! Free Hill will not be a pit stop to the working poor house of refuge at Black Rock.

    Like

  • PM, better a little medicine now than a coffin later

    Old School | November 23, 2011 at 8:50 PM | Sinckler is prepared to do some tough things

    Such as? http://www.nationnews.com/articles/view/sinckler-no-job-cuts/

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  • I believe in yesteryear…

    Yesteryear, all our worries seemed so far away||Now today we have to pay||I believe in yesteryear

    Suddenly, life is getting hard for me||Will I survive this day||How I yearn for yesteryear

    We did something wrong for too long||And we did not care||Lets examine yesteryear

    So much time has passed||Now I fear||We can’t go back to yesteryear

    Like

  • Captain, the ship is sinking
    Captain, the seas are rough
    Shall we abandon ship?
    Or shall we stay on it
    And perish slow?
    We don’t know, we don’t know.
    Captain, you tell we what to do.

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  • millertheanunnaki

    @ Self Test | November 24, 2011 at 8:00 AM |

    How can the ship be sinking when the ship’s bursar who is, in the eyes of the media, always at the helm steering the stable ship carefully to the IMF port despite warnings from the moody forecasters known for poor standards of very bad weather of cyclonic proportions lies along the current shipping lane mapped by the deck hand pretending to be captain?

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  • Sinckler:
    “What S&P is saying is that Barbados needs to stick to its fiscal programme. They’ve not said that the programme is wrong, they say we need to stick to the programme through the next year, ensure that you bring the deficit down, and take whatever additional measures may be required to ensure that you buttress and enforce that fiscal deficit consolidation.”

    Standard & Poors:
    “The downgrade reflects the continuing weakening of the government’s fiscal profile,” S&P said. “In addition, there is an increasing risk that delays in the fiscal consolidation might lead to debt surpassing currently projected peak (61 percent of gross domestic product on a net general government level and 102 percent on a gross central government level) in 2012,” the firm added.

    In sync?

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  • @ enuff

    When you said “in sync” did you really men “in sink”?

    When will the garden gnome at the Central Bank make an appearance and refute S&P?

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  • How many tubs of ice cream a night are these ministers eating?

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  • staying the course not going to be easy because gail force winds ahead which is gonna effect everybody pocket books. S&P has in effect sent the warning! Now Minster Sinkler has to do whatever it takes to avoid further devastation.

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  • @ Self Test…

    They do seem to be getting fatter, don’t they? And we here starving…

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  • OLD SCHOOL

    Selective hearing is your damnation, or ignorance of the highest degree. Sinkler has made it clear, they will strnegthen the safety nets, they will not lay off civil servants, , they ar enot curtting social entitltements, a changed tune from March this year. Arthur has said entitlements if required to be cut hsould be odne ina particular way to preserve the interests of vulnerable and make it possible for the middle to carry their costs. What tough thing you say Sinkler talking bout. Stupse.

    CASWELL
    I would suggest if you have info on embezzlement, you need to speak. Accusations with no evidence is nothing more than Thompson did to BLP – corruption, corruption, blowing smoke because he offered no evidence out of office; in office brought no evidence, in coffin as vocal on it as when alive.

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  • Bajan Truth

    You told “Old School” that selective hearing is his/her damnation, but it seems that selective understanding is yours. Read my post again. You will see that I said that NIS only became aware of the embezzlement when it was drawn to their attention by a commercial bank. Also, if you read further, you will see that someone was arrested and charged for the offence. I am not blowing smoke but I must ask: what are you smoking?

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  • SElf Test has a point what are these ministers eating. Tourism has blown out; when Health sits down the table has to moved to contain his over size trough; Todd’s bush jacket size has changed upwards and a belly is evident. Sinkler only look small the other day in a picture with Terry Bascombe. Only Freundel is keeping trim. People we need a calypso on what are our ministers eating.

    Like

  • ac you continue to show a lack of understanding in these important economic issues threatening the livelihood of the people of barbados. keep out of the conversation less you embarrass yourself.

    Like

  • it is unfortunate that i cannot put my confidence in the economic pronouncements of mr robinson because of his too close association with the ruling party which he tries to defend even when his comments compromises his integrity

    Like

  • unrest in our biggest market.

    Mass strikes began across the United Kingdom on Wednesday, with up to 2 million workers walking off jobs in schools, hospitals and police stations in protest over proposed pension reforms.

    Like

  • balance | November 30, 2011 at 9:26 PM |

    ac you continue to show a lack of understanding in these important economic issues threatening the livelihood of the people of barbados. keep out of the conversation less you embarrass yourself.

    Balance yuh got muh ROFLMAO

    AC …..you still in de gallery wid yuh binoculars? Dere is a muzzle pon the bench wid yuh name pon um next tah yuh …please try it on for size. LOLLLLL

    Like

  • Quoting Self Test | November 24, 2011 at 1:58 PM |
    “How many tubs of ice cream a night are these ministers eating?”

    Hopefully enough that we won’t have to pay them any pension out of the little money NIS will have left.

    Like

  • ROFLMAO…….Random Thoughts I hope you are right about that one…..Good one !

    Like

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    Like

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