Not So Fast Justin Robinson!

BU has not had the opportunity to thoroughly review the delayed release by government of the 15th Actuarial Review of the National Insurance Scheme. It is a very important fund- a safety net and lifeline- hence the reason BU has been uncompromising in our calls for transparency in the management of the fund.

The inability of the fund to publish audited financial statements in recent years highlights a level of incompetence that is informed by a separate blog. To be fair to the NIS management the unacceptable situation has straddled both political administrations and mirrors the wider state of public sector poor financial management. See a decade of Auditor General Reports.

In response to the findings recorded in the actuarial review the Chairman of the National Insurance Board Justin Robinson felt duty bound to release a statement to the traditional media. Unfortunately our resident actuary Walter Blackman appears to have been silenced after receiving a ‘pick’ with the government owned and controlled Caribbean Broadcasting Corporation (CBC). It seems BU will have to forego his analysis of the actuarial review in this forum. We hope not!

BU’s comment on the Chairman’s response is anchored in commonsense. Chairman Justin Robinson admits what we know, the government is unable to earn adequate foreign dollars to effectively and efficiently manage the issue of portfolio diversification i.e. accept the recommendation to reduce local holdings from 75% to 50%.  What his explanation confirms is that the NIS Fund is under threat from the risk of heavy local concentration in the domestic market, especially government paper, an anemic economic performance and concomitant low yield on investment.

The public relations tactic of the Chairman will satisfy the political partisans, however, independent minded Bajans AND vested actors remain unappeased.

 

Statement from Chairman of the NIS Justin Robinson

99 comments

  • Below is a statement from Deloitte’s Fairness Opinion on the $2.86 offer for Cable & Wireless Barbados shares. Some of those shares are owned by the NIS. Did the NIS accept the offer?

    “Deloitte has relied upon the completeness, accuracy and fair presentation of all the financial and other information, data, advice, opinions or representations obtained by it from management of CWB and through materials obtained in the public domain (collectively, the “Information”). The Fairness Opinion is conditional upon the completeness, accuracy, and fair presentation of such information. Deloitte has not attempted to verify independently the completeness, accuracy or fair presentation of the information;”

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  • @Alien

    Besides the issue of probing the low offer by CW and the negative impact on pension and other funds in Barbados if the transaction is consumated are you also questioning the fact Deloitte’s

    relied upon the completeness, accuracy and fair presentation of all the financial and other information, data, advice, opinions or representations obtained by it from management of CWB and through materials obtained in the public domain (collectively, the “Information”).

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  • I am questioning the value of an opinion where “… Deloitte has not attempted to verify independently the completeness, accuracy or fair presentation of the information;”. For the basic annual audit, independent testing is conducted – why not for such a significant transaction?

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  • It is good to know all these details about the history of NIS, indeed. These details are very important for future investigations about criminal and civil liability.

    However, two figures are politically responsible for the whole mess:

    Sinckler as MoF and Blackett as Minister of Social Care.

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  • @Alien
    “Deloitte has relied upon the completeness, accuracy and fair presentation of all the financial and other information, data, advice, opinions or representations obtained by it from management of CWB and through materials obtained in the public domain (collectively, the “Information”). The Fairness Opinion is conditional upon the completeness, accuracy, and fair presentation of such information. Deloitte has not attempted to verify independently the completeness, accuracy or fair presentation of the information;

    You have forced me to expose my ignorance in these matters… So what did this company do “just add up and subtract numbers provided to them”. Just a rubber stamp?

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  • @ Bush Tea September 9, 2017 at 6:44 AM
    “It is even less for auditors….. because they do it, not by commission, but mostly by omission.”

    Maybe that explains why the Bajan NIS is unable to publish audited accounts and annual reports for so long a period.

    There maybe more in the ‘payouts’ mortar than the ‘contributions’ pestle of possible fraud and financial infelicities to which the auditors might not wish to cover up as in the case of CLICO and lessons learnt by their international parents.

    After what has been highlighted by the Auditor General’s reports over the years you should not put past you the high probability of the pervasiveness of such financial improprieties existing where large sums of money are flowing in and out of a government organization saddled with incompetent and weak managers and supervised by a board of cowards loyal only to their political masters and the monthly stipends as their spending money to feed their conspicuous consumption style of living.

    It boggles the mind how a country so ‘superfluously’ endowed with technocrats in the field of finance and accounting could allow such a state of pure incompetence to exist for so long with a national financial institution on which so many honest and hardworking people depend for support in time of sickness, unemployment and old age.

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  • When estimates are made, the end result is usually a set of possible outcomes with varying likelihoods. An expected value, along with higher and lower possible outcomes, is determined. I assume that Deloitte used the data provided to calculate the possible outcomes, which are only as good and the data used. If the range is from say $2.85 to $10.00, as $2.86 is within the range, it is considered fair.

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  • This was also the case for Light & Power, where the indicated value was from about $25.00 to about $33.00 and the fairness opinion concluded that the offer of about $25.00 was fair. Fair to whom?

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  • An alternative approach to measurement that seeks to capture changes in asset and liability values over time. The International Accounting Standards Board (IASB) defines fair value as "… an amount at which an asset could be exchanged between knowledgeable and willing parties in an arms length transaction".

    Fair Value Accounting Definition from Financial Times Lexicon

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  • C&WWI is offering $2.86, which it represents as fair, for the remaining shares of C&WB. Would C&WWI accept $3.00 for its C&WB shares from another equally knowledgeable party, such as Digicel? By C&WWI own analysis, $3.00 would be above the fair value and represent a more valuable asset than the C&WB shares.

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  • Maybe Mr. Robinson should approach other potential major investors to join the NIS and make a bid for all C&WB shares?

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  • It is time for the NIS to act like a $5 billion lion in the market and stop taking leftovers like a scavenger.

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  • @fortyacresandamule September 8, 2017 at 11:23 AM #
    Does the NIS still has a positive net flow? And if yes, how long before it turns negative?

    I am catching up on my reading. According to the IMF report, expenditures exceeded contributions in 2013. The prior Actuarial report has estimated 2024.

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  • What is the news on the “debt re-profiling” mentioned by the MOF in the budget? This means lowering the interest rate paid by the GoB, and since 75% of the NIS Investments are in GoB instruments, this would lower the revenue to the NIS (which takes some of the air out of BC’s argument of higher returns).

    The MoF also referenced something to the effect, this interest reduction would reduce the “outstanding arrears” amount owed to the NIS. Another prime reason we need an Annual Report, for he admits the GoB has been tardy in paying the NIS (something suspected all along).

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  • @ Alien
    Maybe Mr. Robinson should approach other potential major investors to join the NIS and make a bid for all C&WB shares?
    ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
    Which Mr Robinson Boss….?

    Name ANY single attribute that he has EVER demonstrated …that would suggest that he is capable of initiating such a common sense move….

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  • The challenge for Justin Robinson is that in his role at the UWI, Cave Hill he has to approach some of the same entities to try an secure sponsorship and donations. -aconflict of interest perhaps?

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  • “Unfortunately our resident actuary Walter Blackman appears to have been silenced after receiving a ‘pick’ with the government owned and controlled Caribbean Broadcasting Corporation (CBC). It seems BU will have to forego his analysis of the actuarial review in this forum. We hope not!”

    David,
    I am not in Barbados at the moment. Do you have access to a copy of the 15th actuarial review of the NIS? I searched the NIS website – in vain.

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  • @Walter

    No, we asked but a few copies we understand were shared with a select few in the traditional media.

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  • David,
    Thanks. I will reserve comment until I have seen and read the report.

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  • @Walter

    The plan by government to do a debt swap by reissuing government paper at a lower interest rate merits your input until we get our hands on the actuarial report? Come on Walter we need your expertise here. Wouldn’t reducing interest rate as proposed adversely impact fund yield AND cash flow? Let us hope the recent actuarial report factored the latest Sinckler plan. If you should want to write on it send an email for next rotation.

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  • “Wouldn’t Reducing interest rate as proposed adversely impact fund yield AND cash flow?”

    Sorry, what is this? Are we talking about the NIS?

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  • @Blogmaster
    the MoF didn’t say ‘debt swap’, he said “debt re-profiling”, which without specifics has been taken to mean a haircut to existing debt holders, which would include the NIS. The MoF also made some mention of (my words from memory) ‘this re-profiling decreasing the current owing to the NIS’; thereby hinting there was some tardiness/arrears in payments to NIS.

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  • @NO

    Thanks for the correction, the mind automatically attached debt to swap based on the MoH’s mouthing as quoted below taken from his budget delivery:

    “possible swap programme where they and government can reissue some existing securities in their portfolios at lower interest rates agreed by the parties,” this would save the government a whole lot of interest.”

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  • Pingback: Who is Dr, Justin Robinson Trying to Convince? | Barbados Underground

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