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 thoughts on “Prove That NIS Is Sound Before Investing In Four Seasons

  1. So on what basis is the Minister of Finance making the grand assertions about the integrity and financial soundness of the Fund?
    The worst thing a government can do is to “cook the books”! Look at what has befallen Greece?
    IMF and other International lending agencies might be looking on.

    • Obviously the NIS has internal financials which are shared with the minister.

      We know them to be unaudited however which as we all know raises the issue of the integrity of the numbers.

  2. David | November 21, 2011 at 1:35 PM |

    So what’s so secretive and confidential about these financials? If they are prepared based on accepted accounting principles and good enough to attract ministerial reliability then what is wrong with making them available on line (to save costs, of course) with the clear warning that the financials are interim and have not yet been approved by the Board. This proviso would indicate that the accounts should not be relied upon as a true and fair view of the Scheme’s financial position. But at least it would put to bed the rumour mongering and misinformation that are currently in circulation especially in light of the many loan requests and investment proposals before the NIS.

  3. The NIS is financially sound. Wunna ain’t overstand that yet. There is nuff nuff money in there to fund Four Seasons. There is no risk and bajans do not have to worry the government knows how best to spend we monoey. After all the only ones gine in four seasons in the ones with nuff nuff money too—wuh lawds I wonder who!!

  4. I am a little lost here, if this project is so viable why hasnt the majot land development players in the Private Sector jumped on board? What ever become of Bizzy Williams Association with this project? wouldnt this be ideal for Williams Industries in view of the fact that they have all the necessary resources (equipment and financial) to execute this project along with their joint partners? What about Mike Pemberton didnt he benefit originally? what happened to funds paid in by clients as stage payments for the construction of the houses? I dont know i am loss somebody tricking me

  5. Indeed lost. If is so viable why are they depend on government/nis money to finance ? As for NIS the peak collection year according to central bank was 2007 it was went down in 2008 and much more drastic drop in 2009. wonder how 2010 and 2011 fearing

  6. “What does the Act say about declaring the financials?”

    Is the Act accessible on the NIS website? NO!!!!!!!!! If Yes please confirm!

    But all statutory bodies are required to submit to the Minister or Ministry responsible for that body audited financial statements for the previous financial year just ended no later than 4 months after the end of the previous financial year. For example if the financial year ends March 31, then by July 31, financial statements approved by the Board should reach the Ministry and by extension the Minister.

    For which financial year has the NI Board last met this legal requirement? And this is a management team we can rely on to invest our hard-earned contributions! If the NI scheme was based on voluntary contributions for employed persons then this sort of lax performance would be dealt with by the voluntary members like say a credit union. But given the mandatory regime we would expect employees, employers and indeed the management of the scheme to fulfil the requirements of the law.

  7. David | November 21, 2011 at 3:30 PM |

    What a sad state of affairs for a country that boasts of its high level of education and its major asset being the massive investment in human capital!
    Paradox of the highest order!

    • More spin, this time in The Barbados Advocate. Note the author of the article gives no time to the economics of the project and the myriad of other questions which merit answers.

      Four Seasons a worthwhile investment
      FOUR SEASONS Hotel and Resorts would be a welcome addition to the tourism product of Barbados.
      Barbados boasts of being a premier destination. Tourism is also our main foreign exchange earner. However, when we look at the hotel compliment in Barbados, we have very few five-star or five diamond properties. We also have very few brands which are known internationally and have marketing capacity. Four Seasons has both qualities – five diamond standard and brand recognition.
      Four Seasons is the world’s leading operator of luxury hotels and resorts. Since the opening of the first Four Seasons Hotel in 1961, this Canadian-based company has grown to 85 hotels in 35 countries. For nearly 50 years, Four Seasons has transformed the hospitality industry by combining friendliness and efficiency with the finest traditions of international hotel-keeping. In the process, Four Seasons has redefined luxury for the modern traveller. It is one of the most recognised luxury brands in the world. With the opening of the Four Seasons Hotel in Barbados, Barbados would be one of two Caribbean territories which would be able to boast of having the brand as part of its tourism product

  8. it is clear that NIS is not sound, otherwise there would be no need for pension reform like raising contributions and raising the age of retirement. if it were sound then all could be paid without changing a thing.

    Also the case of investing ad infinitum in paradise beach is madness, all that i have heard is tine and again they need Millions more, but what about revenue. After the last multi million dollar investment how much further along is the project. can anyone say how many bags of cement or blocks have been used since? was a single building completed? Debts were paid and the Pailing repaired and painted but what else?

    As nice as a project looks if it costs more than it brings in it is a disaster. Let us recognise this is not another expenditure like sherbourne, the gymnasium or the oval which ( unlike how advertised) are expenditures in social development and not business ventures where a financial return on investment is expected. A hotel and condo project is not social development and is clearly a buisness investment that needs to be a private sector venture.

  9. There quite a few villas around that do offer the same service standard and quality as four season. it fallacy to say we don’t have much we have much 5 star/diamond properties what is true is we don’t have lots of hotels and for good reason so. sandy lane and what ever other 5 start properties you might include don’t have 100% occupancy. only time it approaches that is Christmas/new years. we have not yet gotten how to saturate our limited markets. will the end result of four season opening just be the moving of current guest from one hotel to the next. until they can show that four season actually drives new markets will four season hotel make sense ?

  10. So if the 4 Season is so attractive to investors where are they?
    No one is against the project per se. As a matter of we all want to see it restarted. But where is the private sector? They are always decrying government for getting involved or encroaching on their briar patch. The GEMS project comes to mind!
    From this article in the DLP mouthpiece it can be seen that the spin is being advocated that the NIS investment is a done deal.
    If things go wrong the hotel plant can always be used as an annexe to the main Black Rock Institution to cater for the massive influx of middle class guests that would be going off their “rockers’ when they find out that they have to work to 70 to get a little piece of mind before meeting their Creator.

  11. David | November 21, 2011 at 4:36 PM |
    “Given that our credit rating has been revised down by Standards and Poors where does this put us now?”

    Unfortunately, we can’t borrow from overseas private lenders cheaply without special measures under the watchful eyes of the IMF.
    This would put significant pressures on foreign reserves, starting with a flight of capital by the banks and numerous applications from the foreign owned multi-nationals to remit profits.

  12. “Given that our credit rating has been revised down by Standards and Poors where does this put us now?”

    Drifting Out in the Atlantic Ocean in a Moses with a broken engine, no fuel no flares and no fresh water. With no ship in sight on the horizon.

  13. technically it not a degrade david. the outlook been revised to negative meaning a degrade may come or may not. End result is that think we will be getting worse in the short term but as with all things in the future they just don’t know for sure other .

  14. @ anthony | November 21, 2011 at 4:51 PM |
    I know you like to look on the “bright side” of things economic.
    But anthony, given what’s going on locally and in our international trading markets do you think that the search lamp might need a new battery or bulb? You strike me as an accountant by training or in-depth exposure so you ought to be a bit more conservative in your outlook on this current economic landscape

  15. @ David:
    This topic is so crucial a person with a sound background in Economics and Finance should comment under a separate thread.

  16. Honestly without the restart / start of major infrastructure projects is not going to happen. Tourist can coming in more number but spending less. what we need is for them to spend more that unlikely to happen in the short term. If we hit oil we could be save but it still take a couple year for any operation to start getting returns but it would be huge investment in infrastructure in the meanwhile.

    • @miller

      It is the people with sound economic and financial credentials who landed us in this mess to start with.

  17. I trying to be optimistic because have pessimistic view we can easily end up in greece position and begging for money. Many of the loans government take out have investment grade clause where if we fall below it the interest goes up. These clauses can mean that we end up paying anywhere from an extra 10%-30% on interest payments. it all add up quite quickly. with the downgrade in outlook that also mean any foreign financing would be receiving points increase on their rates.

  18. @ islandgal246 | November 21, 2011 at 4:45 PM |
    “Drifting Out in the Atlantic Ocean in a Moses with a broken engine, no fuel no flares and no fresh water. With no ship in sight on the horizon.”

    So who is in charge to shout for SOS? Or has everybody jumped ship and started swimming to shore for a rescue landing at Bats Rock?

  19. @ anthony | November 21, 2011 at 5:18 PM |

    It follows from your optimism that you would recommend a new captain for the drifting ship. A captain that knows how to map a course to the nearest and safest port where no IMF welcoming party is awaiting!

  20. @millertheanunnaki

    of course the captain(s) at the helm don’t seem to know what they doing and should be court martial and thrown in the brig.

  21. I just can’t wait to hear what the minister has to say about this “realignment'” of Barbados credit rating.

    I suspect he and the likes of CCC and other DLP Fractured apologists will keep rather quiet (stay under the radar) on this one hoping the discussion would drift away soon. Don’t expect any write up in the Advocate unless it is in the form of spin like this is just a temporary oversight by S&P which will be reviewed and adjusted accordingly.

  22. guess central bank will put out release tomorrow stating that the outlook change was totally uncalled for or it was re-evaluation of the current S&P rating with the new rating criteria..

  23. anthony | November 21, 2011 at 5:18 PM | … Many of the loans government take out have investment grade clause where if we fall below it the interest goes up. These clauses can mean that we end up paying anywhere from an extra 10%-30%…

    and the Minister of Finance knows this?

  24. Can the Minister really not do any better or are we being pushed to the edge for other reasons? Can another 8% cut solve this problem?

  25. “So who is in charge to shout for SOS? Or has everybody jumped ship and started swimming to shore for a rescue landing at Bats Rock?”

    MillerA…… captain frighten and ent gotta clue, some of de crew dun jump ship and de first officer trying to push de captain overboard to tek charge. Dem ent gine mek it back to land because dem lost de compass and doan know how to let the North star lead dem. Dem gine down like de 16 men and long John Silver wid a bottle of rum. Ho Ho Ho

  26. PM, let us do this – decide what we need to do to correct the GOB finances and do it.

  27. David

    So far I haven’t seen anyone comment about the large scale haemorrhage of NIS funds through embezzlement. Despite all of this the Director got promoted to be CEO of the Financial Services Commission.

  28. “PM, better a little medicine now than a coffin later | November 21, 2011 at 8:04 PM |”
    “PM, let us do this – decide what we need to do to correct the GOB finances and do it.”

    First step to road of recovery is to stop the lying!
    Like an alcoholic who needs help the GoB must admit there is a major problem and come clean with the people whom you proudly boast of as your products of free education up to tertiary level and you would rather suck salt than make the capstone of your social project earn its way!
    This act of admission and contrition would endear you to the people who would be prepared to make great sacrifices to save the ship of state and their hard earned fiscal and monetary independence. (Friend of all, satellite of none! What’s your mirror image?)
    This is the second bulletin warning of an oncoming tsunami!

  29. Let me tell you, in harmony with Dr. Roosevelt. O. King, who has something to do with Bango, HOW SICK THESE WOMEN ARE.

  30. Deeply, Deeply Creepy Little Man Who Keeps Pretending to be Chinese and Who is OIviously Frightened of Women on said:

    De intelligent agent say: first bush and den D. teas. Heah? Peninsularwoman247, heah!!!! Honey chile!!!!

  31. Dear PM, we also need some long-term strategic goals to aspire to. Let us move to reduce the GOB. Privatize all state-owned enterprises that may be privatized. Simplify the tax code by eliminating income tax and having VAT and/or revenue taxes only – no room for manipulation of income to avoid or evade tax. Adopt a no-nonsense attitude towards fraud and similar practices. For example, implement technology to transfer VAT electronically as it is collected. Use technology to force residents to comply – electronic ID cards, which may be coded as NIS, debit, credit… cards all in one. No more physical cash. You may call it InterLink – I call it BarLink. Watch the world look on in awe.

  32. “So far I haven’t seen anyone comment about the large scale haemorrhage of NIS funds through embezzlement.’

    Fill us in on this please ……We know that where there is money there will be thieves. Lawd dem tiefing from Central Bank, Inland Revenue, De Registry, De Customs, De Police, and De NIS Wha leff fuh dem tah tief from? Shoite eff ah stan tah long pon de computer dem gine tief from muh. Lemm go and check round muh house wid de dawgs. Good nite all.

    Waaaait …..BONNY PEPPA….girl chile ah miss yuh baddddd. Hope yuh gud.

    • So far nobody has addressed the struggling Four Seasons Hotel in Nevis which is a little closer to home in comparison.

  33. The BL&P dividends were far from handsome. However, much profits BL&P made, the dividends remained pretty much the same.

    I was not aware that NIS sold BL&P shares due to cash flow issues. My understanding was that they saw it as a chance to extract value from an investment that was generating little in terms of returns due to the tiny dividend and the absence of capital gains.

    • Trained Economist

      You must know that your last comment is totally untrue. Emera could not achieve controlling interest in BL&P without the NIS shares because the other shareholders wanted to hold on to their valuable asset. Maybe you should tell us, since you seem to know so much, what under-the-table deal, if any, took place in order to get the NIS to sell its shares. I really small something fishy in that deal but I can’t say what, so tell us!

  34. There is an option, offer to sell the remaining BL&P shares, this time at $33/share, and use part of it as venture capital in 4S

  35. I agree with you it wasn’t cash flow. Government need fx funds to shore up the reserve. as for seeing return think they had the third best return on purchase price. bnb first with valuation of equity 367% of the orginal value. next was sagicor with 205% then bl&p at 203%. the emera price offer would carried the valuation to 430% of orginal purchase price. quite a good return especially when you think they getting back the cash in us to shore up the fx reserves.

  36. which part was untrue caswell.

    1. the dividends per share have remained the same at forty cents per share for well over a decade. whatever the level of profits light and power paid the same dividend. With a then share price of around $12 per share, the return was around 4% a year. How is that a healthy return?

    2. In light of that dividend policy why not take the large capital gain and extract some value from your investment?

    3. Emera already had a controlling interest. If NIS had sold all their shares emera would have gotten enough to force everyone to sell. by holding on to the amount it has held on to the NIS has extracted some value from its investment, while preventing emera from getting enough to trigger a forced sale by all shareholders

  37. why do we have to find a conspiracy or government angle to everything.

    if you own an asset that is not giving decent returns, and an opportunity to get a proper return arises, which you think might not come around again soon, why not take it. why do we need this angle about government needing forex.

  38. very easy reason to suggest that. between jan and feb of this year cbb foreign reserve inceased by 72 million this is much larger than normal historical increases. even taking into account conversion from one set of foreign securities to another. we still have 50 million which is way in excess than normal year. the 25 million us from emera for share sales makes the numbers work back to normal levels.

  39. S&P has affirmed the current ratings, there has been no downgrade, but the outlook has been changed from stable to negative, which implies that a downgrade is possible within the next twelve months.

    A change in the outlook to negative does not surprise me given the negative turn in the global economy over the last four months or so, and the more agressive stance of the ratings agencies generally as they seek to re-establish their credibility..

    A reading of the six page report suggests that the outlook change is driven primarily by the dramatic slowing of the global economy in the third quarter and the negative outlook for our trading partners. S&P seems to be pointing to two risks:

    1. While the current fiscal consolidation programme has brought down the deficit there is a risk that as we move into an election season there might be a relaxation of some of the measures. They specifically point to March 2012 when the VAT increase is scheduled for review.

    2. In light of the slowdown in global growth and the negative outlokk for our trading partners, debt reduction is not expected to get much help come from an increase in GDP. Deficit reduction measures (increased revenue and/or reduced spending) would have to bear a greater part of the burden.

    To my mind, the change in outlook seems to be saying that in light of the slowdown in global growth in the third quarter of 2011, the fiscal consolidation measures implemented since Nov 2010, may now be inadequate and further action may likely to be needed. However, such action may be politically difficult.

  40. We have really wasted our opportunities. A small population of reasonably well educated people, we had an opportunity to be a model country – 100% literacy, zero poverty, no racism, but we squandered it – selfish, greedy people, with no love for each other. Everyone wants something for nothing – do as little as possible for as much as possible and exploit who you can on the way. No time for the children – primary school, secondary school and still cannot read.

  41. Government is set to shore up $40Million in borrowings by CBC.
    This is the lone TV station, making much revenue from commercials and MCTV, especially now that the Dream Boxes have been zapped for good. Why must taxpayers money be used to bail out these organisations that are capable of financing themselves if they are more efficiently managed,and if they get rid of the dead wood among its staff.
    And we complain of the Barbados Light and Power .

  42. Colonel Buggy | November 22, 2011 at 12:19 AM | Government is set to shore up $40Million in borrowings by CBC.

    PM, we need to see some decisions that indicate a change in direction – this is the same old approach. Talk to STARCOM or LIME about a deal, where CBC is acquired in exchange for shares in OCM or LIME – GOB already getting smaller, some debt gone.

  43. ”So what’s so secretive and confidential about these financials? If they are prepared based on accepted accounting principles and good enough to attract ministerial reliability then what is wrong with making them available on line (to save costs, of course) with the clear warning that the financials are interim and have not yet been approved by the Board”


    Which makes the point that many of us have been making for the last five years. That all public bodies and statutory corporations should have free access to significant document,s including statement of expenditures (detailed) and financial statements on a quarterly basis, at our convenience.

    It is not hard, it is not wrong, it is our right as citizens. But for some reason there are those who do not want this access to data allowed.

    I wonder why? This goes to the root of transparency and accountability that this government promised in its manifesto, this part nothing at all to do with Ministers private funds or anything, but public data beloning to the public!

  44. Tell me. Government has NIS sell its shares in BL&P, sells off shares in BND, noth profit making ventures, talks of selling off the GAIA, another profit potential.

    BUT, we are told that the Four Seasons would be a good investment and income generaiton for the NIS! Which they had as noted in the first tow ventures above and sold.

    Lol. Lookie, you must be the three card man on the street corner.

    Basically and this is the nitty gritty, the Government is interested in the Four Seasons project for the one and only reason that it will provide construction jobs and (if it works) operating jobs and in the construction phase jump start some economic activity.

    Bugger the investment.

    THAT is the nitty gritty and any other talk is padding.

    Nuff said!

  45. Like Greenland – jobs, but useless end product. It is more desirable to build an asset that will perform. If you are going to spend the money, spend it wisely. Otherwise, simply write welfare cheques and save the environment. Same old bullshit from the 90s, 80s, 70s, 60s – with 98% literacy.

  46. “Smiley | November 21, 2011 at 10:31 PM |
    50 posts ,almost three quarters by miller and anthony makes one wonder what the 279,998 real Barbadian”

    Smiley …Do they have access to a PC? Do they blog? One wonders if they know how informative these blogs are or at least where they can have their say.

  47. Quoting Smiley “Smiley | November 21, 2011 at 10:31 PM | 50 posts ,almost three quarters by miller and anthony makes one wonder what the 279,998 real Barbadians think.”

    Dear Smiley some of us wonder why the principals of Four Season and their principals do not make an Initial Pubic Offering (IPO) of shares. Barbados has a workforce of about 80,000, let us say that each of these 80,000 were to invest $500 in the Four Seasons project, the principals would have $40 million Barbados right there. And don’t tell me Bajans don’t have money. In a few weeks a shopping spree will start, and the average Bajan will go out and will spend far more than $500 buying Christmas goodies. And I must admit that I will be one of those people buying $500 or more worth of Christmas goodies. And all of these Christmas goodies would have been purchased using foreign exchange, so don’t tell me tha we don’t have the foreign exchange either. I see school children with $500 to $580 Blackberries. If Bajan families are willing to “invest” in the Canadian company Research in Motion, surely we are willing to drop $500 or so in another Canadian company, Four Seasons. But you know what the principals of Four Seasons havn’t given us the opportunity to invest. Why not? I hope it is not the old fashioned racism that has been endemic in the hotel industry, where the principals in the hotel sector want to keep poor black people away except we are there to clean toilets, and serve food.

    I challenge the principals of Four Seasons to offer us the opportunity to use our own money (not the NIS which we have set aside for our pensions) I challenge the principals to offer us a piece of the Four Seasons action.

    I would love to invest in the hotel sector.

    I have my $500 waiting.

    Just ask and its yours. If you don’t I’ll “invest” in RIM, because I don’t have a Blackberry and I could certainly use a new piece of bling.

  48. @ Random Thoughts

    And it would be the last time you see that $500. Would be better to break that $500 into quarters and put them into slot machines, or ever on the nose of horse at the Garrison on a Saturday.

  49. Random I totally agree with you, I have $500.00 to $1000.00 invest too. As I have said before they wouldn’t want us Bajans to have shares because that would give us Black people too much say. Come on Four Seasons we DARE YOU to offer shares to locals.

  50. If the investment in the 4 Seasons project is made up mainly of private local shareholders how would the parasitic consultants and corrupt pols get the cream off and kickbacks. The principals would have to give an account of their stewardship and management of the capital invested.. They will be opening themselves to lawsuits and possible other risks if evidence of fraud and corruption could be established!
    But then again we have CLICO as a precedent!

  51. @ Justin Robinson

    You know full well that the problem is more than economic outlook it is that this gov’t flunked the expenditure cuts test required. Otherwise every single country would get a downgrade. The fiscal deficit continues to widen, S & P says, and the evasive manoeuvres are insufficient and the real work of expenditure reduction has not taken place. They want to tax their way out will minimising cuts, further slowing the economy and exacerbating their own revenue position. Cuts – the first on the chopping block cannot be essential services, it has to be unnecessary spending. The issue is about management of the economy – what is happening in Greece, Spain and Portugal is about generally bad management made worse in a bad crisis. You cannot go crazy and borrow, borrow 2b in 3 years and call that good management. Why do you not speak about that? Thompson and Sinckler hurt the credit rating. Bahamas and Trinidad were downgraded but not at junk level.This gov’t cannot manage this crisis, they are hurting Bajans and want to throw the blame on the crisis alone, aided and abetted by those who do not know any better .

  52. This gov’t does not know what the hell they are doing. Their only concern is how to keep the gov’t. They have no vision, no strategy, no knowledge and no fortitude to manage the situation. 350,000 in a tournament now when it is unnecessary. Planning to borrow some more today. We out here smelling hell, can’t pay bills and these jackasses pretending all is well and growth on the horizon. What are they doing with all that money they borrow? Anybody with a grain of honesty would realise by now that this is the wrong gov’t at the wrong time.

  53. @Random Thoughts

    Now there a solution everyone could live with. On top of that since it local IPO it would fall under the tax emption rules allowing up to $10,000 to be bought as a tax deductible. also 75% or 7500 whichever ever less of person yearly bonus payments. If 10,000 people invest in just the first option that would be over 100 million. People are looking for ways to ease their taxes this year. If the rest invest in vary amount project could prove to good. but as millertheanunnaki said the people who want to skim can’t then so they would never offer that..

  54. 4 Seasons would not offer shares because the present investors want Government to do so in order to take the NIS money and run.

  55. @ anthony | November 22, 2011 at 8:44 AM |

    Man, that IPO proposal to help finance the 4 Seasons project is such a wonderful but obvious idea given the big talk about black economic enfranchisement and privatization of the economy. But as mentioned in an earlier thread that kind of economic activity is deliberately ring fenced to keep out blacks and other undesirables. But what about the local business owners from East Indian and Middle Eastern backgrounds with loads of savings and capital to invest? The consultants and pols would have to “straighten and fly right’ with these people’s money. You know the black pols scared of Conrad the baku and mafia!

  56. It can be safely said that the talk show host the marshal will avoid any discussion regarding the NIS proposed investment in 4 Seasons project.
    We should be pleasantly surprised if he were to entertain for any length of time discussions from an opposite side in regard to the recent reassessment by S&P credit rating.

  57. ” ..The fiscal deficit continues to widen, S & P says, and the evasive manoeuvres are insufficient and the real work of expenditure reduction has not taken place. .. ”

    Come to Papa, we will take good care of you

  58. @ anthony | November 22, 2011 at 9:38 AM |

    Well done! We know we can always rely on you to spot the light to reveal the true picture! Knowledge is power! Keep the dumb asses in the dark and we can spend their money like Leroy Standford and Parris Madoff!

    It will be interesting to see the transaction trail of the payments for consultancy services from PARADISE BEACH LLP to the consultants engaged on the local 4 Seasons project!

  59. And note that I did not chare a single cent to put the IPO offer out there.

    But first thing I’d do is cut the $40,000 salaries and extensive benefits to something more realistic (say $10,000 per month max); and no gravy for the political boys club.


    Not even a sip.

  60. And I have another $100 that I am wiling toinvest in either or both political parties. They need not skim, they need not suck up t the big boys. If either party asks me I’d give them $100 every year.

    But you know what niether party has ever asked me for a cent.

    Come on political boys (and girls) ask me and I’ll give you $2 per week for the rest of my life.

    And I am sure that tens of thusands of Bajans are willing to do the same.

    The old people knew the meaning of the saying “a sheep head once a day is better that a pig head once a year”

    I am afraid that too many people are looking for hog heads (or whole pork legs) when free sheep heads are knocking dog (but I think that I am mixing my metaphors here)

    I always wonder why my politicians are willing to offer me heaven on earth and yet they are ALL unwilling to take $2 a week from me (for the rest of my life)

  61. @ Justin Robinson | November 21, 2011 at 11:49 PM |

    Dear Teacher,
    Please let us students know what has been S&P’s most recent assessment of the Bermuda economy. We have been informed that Bermuda has a similar economic profile as Barbados i.e. heavy reliance on tourism and international business. So the same international factors that affect the Barbados economy should also affect the Bermudian economy.

    If we are using the right source of information to come to such an analysis and position, please guide us accordingly!

  62. Random we could always wait and let 4 Season die further and then step in with an offer ( 10-20 cents (BD) on the dollar) to take over the project and inject the much needed cash. In fact we could offer shares throughout the Caribbean for Caribbean peoples to share a piece of the pie. There is strength in numbers.

  63. I suggest you read S&P’s report and see what they give as their reasons for changing the outlook from stable to negative. My comments are based on the reasons given by S&P in their statement.

  64. In their last review of the economy S&P affirmed the rating with a stable outlook. In this most recent review they have also affirmed the rating but changed the outlook to negative.

    My perspective on this latest action is to focus on what in S&P’s view has changed since the last review of the economy to prompt a change in the outlook. S&P are pretty clear in their report, that despite significant improvements in the deficit which they attribute to the measures implemented in the 2010 budget, they are now doubtful about the ability to sustain the improvements in light of the declines in the external environment and the likelihood that government may remove some of the measures implemented in the next six months or so.

  65. @ Justin Robinson | November 22, 2011 at 3:48 PM |

    One of the qualities of a good teacher is to practice in the classroom what is preached from the black or white board.
    If you ask a student a question you would expect to get an answer relevant to the question asked in the first place. If the student does not know the answer to the question then an indication along these lines should be forthcoming so as to let the teacher know that the student is in need of help with the answer. An arrogant dismissal of the student’s state of knowledge on the matter is not befitting the character of a good teacher.

    I will pose the question to you again, Sir: Has S &P made a recent assessment of the Bermudian economy and if so what is that assessment?

    Please teacher, Sir, please shed some light on the matter!

    “He who can does. He who can’t, teaches.” (GBS)’
    “The real object of education is to leave a man in the condition of continually asking questions.” (Bishop Creighton)

  66. can you share the assessment of the bermuda economy with us?

    I agree that the economic structures are similar but there are some contextual issues that would help in making comparisons.

    Is bermuda independent though? what level of debt did they have around say 2008? what sort of entitlement programmes are offered by the government such as free education, health care and so on?

    Of course its always possible that the bermuda economy is just being better managed.

  67. bermuda rating has remained stable/improved since 1995 when they first got

    Sept. 7, 2010 AA/Stable/A-1+ AA/Stable/A-1+ AAA

    Jan. 29, 1999 AA/Stable/A-1+ AA/Stable/A-1+

  68. The bermuda situation is rather different from barbados, so i am not sure of the comparisons. The most recent data I am aware of states that even though the defcit was 13% of gdp, bermuda’s debt to gdp ratio at 25%, up from 10% in 2008. I have no idea when barbados’ debt ratios were in that zone. There credit rating must be rather superior to Bim’s with a debt ratio like that one. Interstingly their debt ratio has more than doubled since 2008.

    I have included the following artcile from a leading bermuda newspaper:

    Experts predict further job cuts and wage freezes

    12/8/2010 12:20:00 PM

    By James Whittaker

    Bermuda is facing a long and deepening recession that will see more jobs disappear and could see wages frozen or cut for staff in most professions.
    Analysts predict it will be 2012 at the earliest before the gloom surrounding our economic fortunes lifts.

    Economist Craig Simmons said Bermuda’s situation closely resembles that of Ireland, which had to be bailed out by fellow European Union members, resulting in wage cuts across the board to satisfy creditors.

    He said the drop in Gross Domestic Product (GDP) of 8.1 per cent after inflation for 2009 — a record in the last 30 years — is “confirmation” that Bermuda is in bad shape financially.

    He predicts that figure is likely to be equally bad for 2010. Premier and Finance Minister Paula Cox admitted the picture looked bleak.

    But she said projects such as the new Bermuda hospital and several hotel developments would help revitalize the economy.

    She added: “The only way to lift the gloom in tangible ways with significant economic activity.

    “No one can guarantee a magic bullet but clearly there is sensitivity and redoubled efforts being taken to assist in keeping Bermudians in the picture.”

    Mr. Simmons said the recession is likely to last much longer than anyone, including himself, initially predicted.

    He added this means that more jobs will be lost, there will be more mortgage foreclosures and further decreases in spending locally.

    It will also mean a shortfall in tax revenue, potential further increases in borrowing and a raise in Bermuda’s debt to GDP ratio — the index used by investors to determine conditions of loans.

    The significance, said Mr. Simmons, is that Government will become more beholden to the banks it relies on to prop up the economy through borrowing.

    He added: “Ireland is a particularly useful example to Bermuda.

    “Because of their public debt problem their creditors are demanding lower wages to make them more competitive. That will help them recover.

    “Bermuda will have to go through that process as well. I’m not denying people are having a tough time getting by as it is but a foreign lender is not exactly sympathetic to the working poor.”

    Mr. Simmons said it is not overly dramatic to compare Bermuda’s situation with Ireland, which had to be bailed out by loans from fellow European Union governments due to its over-reliance on debt.

    He added: “The Irish got themselves into this problem because of an overheated real estate market fuelled in part by inter-national business.

    “The situation is not that different. The banks in Ireland made some very bad decisions prior to 2008, as did Bank of Butterfield.”

    Mr. Simmons said Bermuda is seeing an increasing number of foreclosures or re-negotiated mortgages.

    He warned the figures show little sign of recovery any time soon. Mr. Simmons said: “We have just lived through 2010. We’ve seen the retail figures and they are as bad, if not worse, than 2009. The numbers for the construction industry show double-digit declines again for 2010.

    “It looks like the recession will go on for longer than many people, including myself, predicted.

    “When this started in 2008, I thought it would be over within 18 months. I was wrong.”

    Mr. Simmons predicts it will be 2013 before Bermuda sees any meaningful rise in GDP, the statistical scale for assessing the country’s economic health.

    He said this affects the ‘cost’ of borrowing — a political cost in the form of greater interference from lenders on public policy and a financial cost in terms of higher interest rates.

    Mr. Simmons explained: “The cost of borrowing is largely based on a country’s debt-to-GDP ratio and more importantly the change in the ratio.

    “Even if we never borrowed another penny, Bermuda’s debt-to-GDP ratio will continue to rise for two reasons — GDP will not improve in a meaningful way until 2013 and, secondly, debt comes from spending running ahead of tax revenue. Since 1996 tax revenue has consistently been around 16 per cent of GDP.

    “Spending, on the other hand, is driven by political forces which can be immune to economic realities.

    “As a result, spending patterns are less flexible because of entitlements, capital projects and interest on the debt.

    “We should see the debt-to-GDP ratio exceed 25 per cent by the end of 2011, up from 10 per cent in 2008.”

    Cordell Riley, who runs Bermuda Profiles, said a statistical analysis of the figures in the GDP report, released last week, would paint an equally gloomy picture.

    He added: “It is the first time in most of our lifetime we have seen anything of this nature. What the figures are telling us is we may not see relief until 2012.

    “With tourism you can clearly see a very steep fall. Tourism and the restaurant industry is sinking like a stone. That is not going to change any time soon.”

    Mr. Riley said the impact is most clearly felt in job losses.

    A drop in GDP means companies across the island are collectively less profitable, making staff cuts inevitable. Between 2008 and 2009 700 jobs were lost, by Bermudians and foreigners.

    Mr. Riley said: “The number of jobs fell from 40,213 in 2008 to 39,520 in 2009.

    “We will probably see that decline continue for 2010 — perhaps not to the same extent but there will be further jobs lost.”

    A “silver lining” that could defy the sober statistical analysis could be provided by the new hospital development and the Park Hyatt hotel.

    Mr. Riley said: “Those projects would provide new jobs and to some extent the money is going to flow through the economy.

    “If it goes into the construction workers’ pockets, they spend it on groceries and other necessities and it flows into other sectors.”

    But Mr. Simmons warned that a Government-financed project like the hospital had limited capacity to boost the economy as the money comes primarily from debt.

    He said it would put money in the pockets of those working on it but warned that their own private spending challenges means they are unlikely to reinvest significant amounts in the economy.

  69. @ Justin Robinson | November 22, 2011 at 4:19 PM |

    Thank you very much for coming off the podium and opening up the floor for discussion and exchange of knowledge and views.
    Much obliged!
    Now that we accept that both Bermuda and Barbados are swimming in the same choppy waters full of sharks there is no need to harp back to 2008 and the level of social entitlements without a contextual picture. Bermuda has a high per capita income. Therefore the need for the role of State to provide social services is greatly reduced. Something Barbadian politicians brag about but fail to recognize that a nanny state approach will lead to a lazy state-dependent type middle class who in “independent” circumstances ought to be the fountain of creativity, entrepreneurship and socio-economic transformation.
    I am putting it to you that the primary reason Barbados is in such fiscal (and soon to be forex) straits is because of below standard management of the country financial and economic affairs over the last 3 years and to a “further” extent 15. The 2008 & 2009 budgetary proposals are classic examples of either financial nincompoops or madmen were at the helm. Imagine introducing a measure such as taxing “pay as you go” mobile phones with a monthly charge of $4.00. Now how in the world can such a specific tax be collected from the phone owners. Now if the proposal was introduced in an “ad valorem” form say, a surcharge of 3 % on the top up (prepaid) or monthly bill where post paid contracts are in place such a scheme would be implementable and would have brought in significant revenue in the form of indirect taxes on discretionary spending (Due & Friedlaender must be turning over in their graves because of the wasted advice given to the GoB over the years). The same thing applies to the taxing of lottery winnings
    Borrowing an additional 3 billion dollars between 2008 to 2011 with little production or infrastructural additional capacity to show for it, only to finance consumption and fuel the current account deficit is economic madness leading to fiscal long-term illness.

    I break for now to allow another student to contribute. Anthony, where art thou? Sitting in the back! Come forward man and tell the teacher like it is!

  70. I can’t contribute pon your level miller, but I know that if this government can’t even formulate or implement that cell phone tax, there is no where in hell that multi-million dollar ‘renewable energy’ initiative gine bear any fruit.

    Any bets?

  71. Enuff…you does mek me laff…and dis time I agree wid yuh. Dat cell phone tax was such a gaff an yuh know dem ent got nuh shame at all. I remember King David proclaiming what he was going to do in that Budget. And yuh remember the look on his face after he proclaimed that? It is one look I will never forget..a look as if the cat swallowed the cream and nearly choked on it.

  72. David you have a trouble maker peninsularwoman247 linking my blog with their handle. Can you please block my link ?

  73. 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.

  74. 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!

  75. @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

    • 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.

  76. 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.

  77. 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.)

  78. 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.

  79. 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

  80. @ 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!

  81. 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.

    • 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.

  82. @ 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!

  83. 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.

  84. @ 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.

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