The CITIZEN, the STATE and PUBLIC ASSETS…Barbados Hilton Sale
The following is an interesting Editorial from today’s Barbados Advocate newspaper [17/12/2017].
“…Where a purchase is made from a poor and ignorant man at a considerable undervalue, the vendor having no independent advice, a Court of Equity will set aside the transaction.” Per Lord Denning MR (1975)
The recently rumoured sale of the Barbados Hilton Hotel brings once more into sharp focus the need for a resolution of the precise nature of the relationship between the citizen and the state with regard to the disposition of the national patrimony. We say “rumoured” because the transaction in question has neither been confirmed or denied by any of the parties to it, although we are fully aware that there is in Barbados an existing precept that the failure immediately to deny a published rumour leads inexorably and miraculously to its public conversion into truth.
This is not the first time that a national asset has been disposed of without reference to the beneficial owners, the taxpaying public. The Barbados National Bank, the Insurance Corporation of Barbados and, had the arrangement providing for its disposition been more compliant with the laws of fair competition; the BNTCL, would have all been unilaterally transferred to private entities by a governing administration without the express or, we may argue, even implied permission of the populace.
Our perception of the matter varies significantly from what has hitherto been seemingly the state practice. First, while we understand that there may be a need on some occasions for the state to unload a number of its commercial enterprises to the private sector, these should be clearly identified and subjected to vigorous reasoned public debate.
Second, the mode of their acquisition should be as transparent as reasonably practicable, both with regard to the selection of the intended purchaser and the terms and conditions of the acquisition, including the sale price that should be, if not the best obtainable, at least arrived at after an independent valuation of the asset.
Third, it seems to us necessary too that, unless it is entirely impracticable in the specific scenario, the state, in the public interest, should seek to retain either an actual or vicarious interest in the enterprise by an insistence on the retention of a golden share that would maintain an element of control at the level of policy or through a stipulation on public participation in the acquisition by the requirement that the purchaser should issue a public offering of shares in the novate enterprise at a reasonable time after acquisition and on terms favourable to as wide a public participation as possible.
The relationship between the citizen and the state in connection with the ownership of national assets appears to us to be one of a fiduciary nature whereby the state holds the property as trustee for the beneficial owners who financed its original acquisition, the taxpayers. It seems only fitting therefore, that any sale of the asset should be authorized by the beneficial owners and at a fair market price.
Of course, there will be some public assets that appear to be wholly unsaleable, either because of the inherent obligation of the state to maintain control of that aspect of the economy in a progressive developing democracy, or because the asset itself might appear unattractive to potential purchasers. While the Caribbean Broadcasting Corporation might be an example of the latter, the Transport Board, especially given the configuration of the market in which it exists, might fit comfortably into both camps.
However, in respect of those assets that might prove more alluring to private buyers, we must seek always to ensure that potential purchasers do not unconscionably take advantage of our current economically precarious position.