Ian Carrington, Director of the NIS
Following my last column about the National Insurance Scheme (NIS), several people, who were having problems with that government department, sought my assistance. Today, I would like to share the experience of two persons since the troubles, they were forced to endure to get unemployment benefits, show up fundamental problems with the processes at NIS.
They were informed verbally that they did not qualify for the benefit because the NIS records show that they were not insured under the scheme for a year. Both of them had been working for the same employer from 2013 to July 2017, approximately four years. NIS contributions were deducted from their wages but were not being paid in. As a matter of fact, the employer registered the business some time in 2016 and only started to pay in the contributions to NIS at that time. All along the workers claim that they were not aware that their contributions were not being remitted to NIS.
Every employee, who earns a minimum of $21 per week or $91 per month, is required to pay NIS contributions. Private sector regular employees are supposed to pay 10.1% of their insurable earnings, and the employer is required to pay an additional 11.25% on the worker’s behalf. Section 15 of the National Insurance and Social Security Act mandates the employer to make the deduction and pay the money over to the NIS Fund. The employee has no control over that process and in most cases might not even be aware that the employer has not complied with the law.
My greatest concern is that these workers were told that they were not entitled to receive unemployment benefits since they were not insured for 52 weeks. That information might prove to be correct but it was improper to make that determination and orally communicate the decision to the claimant. Whenever a person makes a claim and it is disallowed, the Director of NIS is required, by Regulation 8 of the National Insurance and Social Security (Determination of Claims and Questions) Regulations 1967, to inform the claimant, in writing, of the decision and also inform him of the right to appeal. From my experience, appeal forms are not readily available and it seems as though officers take offence when their decisions are challenged.
However, if the appropriate procedure were implemented: the claimants would have been able to produce their payslips to show that they were employed for the required period; and that NIS contributions were deducted from their wages, even though that is not absolutely necessary to qualify for the benefit. If the employer failed to pay in the contributions, the claimant only needs to show that he was employed and that he did not make any arrangements with the employer to avoid paying the contributions in order to qualify and receive the benefits.
It is then up the the Director to go after the delinquent employer to recover the contributions. When I worked there in the 1980s that is how we operated, and we did so in compliance with Paragraph 6.(1) of the National Insurance and Social Security (Contributions) Regulations, 1967. It states:
Where a contribution payable by an employer in respect or on behalf of an employed person is paid after the due date or is not paid, and the delay or failure in making payment thereof is shown to the satisfaction of the Board not to have been with the consent or connivance of, or attributable to any negligence on the part of the employed person, the contribution shall, for the purpose of any right to benefit, be treated as paid on the due date.
Arising from this case, I am told by the remaining employees that the employer is making deductions from their wages to recover NIS contributions that were supposedly not deducted when due. Workers should be aware that it is contrary to Regulation 18.(2A) of the Collection of Contributions Regulations to do so. It states:
Any employer who fails to deduct an amount that is required to be deducted from a payment of remuneration to an employee, may not deduct that amount from any subsequent payments of remuneration made to the employee for the pay period for which he had failed to deduct.
Too many workers are being disadvantaged by officers of the NIS department who are unfamiliar with the regulations. Maybe, it would be better if NIS administration require its staff to qualify in its regulations rather that in academic degrees that have no relevance to its operations.
https://beta.theglobeandmail.com/globe-investor/class-action-trial-a-caribbean-headache-for-manulife/article4092529/?ref=http://www.theglobeandmail.com&
“In a typical class action, a plaintiff sues a defendant or a number of defendants on behalf of a group, or class, of absent parties.” In this case the “class” are all those shareholders in C&W B’dos who are not C&W entities.
The courts are not being asked to value anything. The valuation, or fairness opinion, will be provided by professionals so trained. The court will be asked to determine what represents a “fair market valuation” transactional price. That is, which fairness opinion is “most accurate”.
It is notional mistake, to assume the market in Bim (BSE) determines value. The BHL scenario is firm proof it does not. Nor is the most recently traded share prices any guide to valuation. You may recall, BHL shares had been trading at $2.50, when Massey accepted $4 from Ambev/SLU and KPMG concluded in a “fairness opinion” $4 to be “fair”, while pegging the FMV between $4.90-$5.60. The final price after Ansa stepped in was $7.10. WIRR also sold at a premium to last traded share price.
I will contend the “fairness opinion” rendered by D&T is “poor”. Unlike the BHL opinion, it gives no numerical arguments, simply an exhaustive list of factors considered, and the subsequent conclusion that $2.86/share is fair. The question is “fair to whom”?
Now Barbadian law may not allow for “class actions”, I am not a legal expert. However, this would be the preferred method, as all the minority shareholders stand to benefit from any increase in the transactional price. You live in the UK, I am unfamiliar with laws there. However, in Canada, a former colony located next to the USA, both test and class actions are allowed.
Northern Observer,
I am not a lawyer either. But, since 1999 the law in England and Wales allows for a limited number of class actions. So far there have been one or two cases, literally. What the law also allows are what we call super complaints, but only certain organisations can bring super-complaints ie Which? and the Child Poverty Action Group. To do so they must get permission.
You will note that both are in the consumer protection area. A casual group of disaffected consumers cannot just grab a lawyer and bring a class action suit.
As to the market, that comprises more than the stock exchange; all 300000 people and corporations in Barbados can buy the shares, if the NIS will sell them to them, at whatever price. That is how the market works. Expert witnesses may give a personal view, but in the end fairness is determined by the seller and buyer.
If you bought a Bombardier jet for Can$10m and sold it to me for Can$2m, that is the market value.
https://www.stoutadvisory.com/insights/article/shareholder-disputes-what-appropriate-standard-value
Fair Value is Not Fair Market Value
When the definition of fair value is not clearly defined, parties may turn to relevant case law for guidance. Given its meaningful history with shareholder matters, Delaware case law is often cited in texts covering the application of shareholder level discounts in a fair value context. Opinions in three cases, Tri-Continental Corp. v. Battye,4 Cavalier Oil Corp. v. Harnett,5 and Swope v. Siegel-Robert, Inc.,6 shed further light on the subject. In Tri-Continental, the Supreme Court of Delaware held that “the stockholder is entitled to be paid for that which has been taken from him, viz., his proportionate interest in a going concern.” Further, in Cavalier Oil, the Supreme Court rejected the use of a minority or marketability discount, stating “the appraisal process is not intended to reconstruct a pro forma sale but to assume that the shareholder was willing to maintain his investment position,” and that failing “to accord a minority shareholder the full proportionate value of his shares imposes a penalty for lack of control, and unfairly enriches the majority shareholder.” Finally, in Swope, the Eight Circuit held that, “the marketability discount is incompatible with the purpose of the appraisal right, which provides the dissenting shareholder with a forum for recapturing their complete investment in the corporation,” and that “the application of a minority discount undermines the purpose of a fair value appraisal statute by penalizing minority shareholders for their lack of control and encouraging majority shareholders to take advantage of their power.” These sentiments, which are echoed in various opinions issued by the Delaware courts, suggest that the fair value standard is similar to the fair market value standard without application of valuation discounts (i.e., the pro-rata value of a shareholder’s interest in a company).
Fair value is an accounting term; market value is the price paid for the asset. If you are valuing a company, you use fair value; if you are selling shares you use market value.
Think about it. Current value is based upon estimated net future economic benefits. Traders and analysts use estimates and models to quickly respond to ongoing events that may impact future economic benefits when trading. On the other hand, when a company is considering the acquisition of another, much more due diligence on all aspects of the target company is conducted to determine those future economic benefits. Market value as in trading price in an informed market is a readily available approximation of fair value. Small amounts of shares, inherited or acquired through employee plans, being disposed of for quick cash would hardly reflect fair value.
“If you bought a Bombardier jet for Can$10m and sold it to me for Can$2m, that is the market value.”
That example is of a private transaction between you and me. If me represented 20 owners and you represented 100 owners (shareholders) it may not be so clear, especially if one of the 20 owners selling stood to benefit in a manner the other 19 did not (ie was a significant shareholder in you). What if you turned around and sold the jet within days for $5 million? Has the market value dipped and gained again, or were you able to find a buyer the prior seller could not.
The notion of value in a fairness opinion is very extensive and complicated. And why one set of professionals can arrive at sometimes large differences from another. The key becomes, where within the opinion are the differences? And why.
What is assured, is if I bought into C&W in 2012 at 5.30/share and earning a dividend, and the price tanked thereafter, despite dividend cessation, and the company posting solid profits in 2016, I would be rightfully pissed. My risk for sure. Yet, I think it is possible to get >1 fairness opinions which may place a value in excess of 2.86.
Is it likely that this is where C&W Barbados is heading?
AUGUST 8, 2017 by Nic Fildes, Telecoms Correspondent
Liberty Global on target to spin off LatAm arm LiLAC by year end
https://www.ft.com/content/aecd213c-7c1b-11e7-9108-edda0bcbc928?mhq5j=e6
@Alien
who knows? I believe C&W Caribbean operations fall under LiLac. Suspecting the hurricane damage may delay some of those plans.
Going back to the issue of market determining price in Barbados. Anyone who has observed trading at the BSE over a period of time would have observed the simple tactic of brokers selling high and buying low to ”massage” price over time.
Jagdeo still trying wid Burnham destiny
Jagdeo, that scamp, try to put ee foot in Burnham shoes. He think he binna create ee destiny.
But everybody know destiny is not created by de shoes you wear but by de steps you take. Burnham tek he own steps in ee own shoes and create ee own destiny. He tek some small steps.
Jagdeo try to tek some big steps in Burnham shoes but ee still ain’t create his destiny. Burnham miss jail. Dem boys certain Jagdeo would not be as lucky as Burnham because he created a criminal culture in Guyana. A senior cop station in Berbice get ketch in Berbice selling fuel marker two days ago.
A senior customs officer get send home. A Customs broker and a businessman in custody. A whole wharf of Customs officer get transfer fuh corruption.
Another senior officer lock up cocaine in he office in a suitcase. Nobody ain’t break in but de cocaine disappear.
Lolo Feel from GEE COME get instructions to call in de police pun heself and others fuh de scampishness de others do.
All these things never happen before. Is when Jagdeo tun president that all these skullduggery started.
In 2011 he give he friend Bee Kay a contract fuh drill three well. One deh at Eccles, one was fuh Hope and de odda was fuh Mon Repos.
This man never drill a hole in ee life yet Jagdeo give him millions of dollars to dig a hole. Six years gone; Jagdeo gone and yet de hole nah complete.
De one at Eccles got people bathing at de road corner. De one at Mon Repos got people bathing in de trench and de one at Hope got people still hoping.
All dem residents who waiting fuh water from Bee Kay pipe not happy. But dem boys remember happiness is an inside job. Don’t assign anyone else that power over your life.—Mandy Hale seh suh.
Talk half and wear you own shoes to create you own destiny.
https://www.kaieteurnewsonline.com/2017/10/01/jagdeo-still-trying-wid-burnham-destiny/