The Bahamas Government to Rescue Bahamas International Securities Exchange (BISX)

Gov't To Rescue BISX Again

By Candia Dames

candiadames@hotmail.com

03/02/2004

The Cabinet plans to rescue the Bahamas International Securities Exchange (BISX) if its shareholders agree to match the $450,000 the government intends to provide it through the Central Bank, the Journal has learnt.

 

This financial shot in the arm would come nearly two years after BISX asked for $2 million in public funds.

 

A committee that was appointed to look into the affairs of BISX recently recommended that the Government of The Bahamas through the Central Bank "commit to continue its financial support of BISX for an additional amount of $450,000 over the next three years."

 

It also recommended "it be proposed to the existing and prospective shareholders of BISX that an additional minimum amount of $450,000 to match the government's support be subscribed for by way of a rights offering."

 

Minister of State for Finance James Smith said Monday that Committee Chairman Julian Francis "was told to go back and speak with the private owners [of BISX] and see if they are in accord with the recommendations [of his committee]."

 

A Bahama Journal source close to the matter said Monday that "the switch has already been flicked and things are beginning to happen for BISX."

 

Recognizing the great need for an institution like BISX to the country's developing economy, the committee, recommended late last year that the exchange receive help.  This would not be the first time that BISX would be receiving financial assistance from a government-related agency.

 

In 2002, the Central Bank gave BISX $150,000.

 

Start-up costs and losses experienced during the first two years of operations resulted in BISX approaching the government in mid 2001 to provide substantial financial assistance to support the continued functioning of the exchange.

 

When the government announces the decision to help BISX, it will surely be met by some criticism from members of the private sector, some of whom argue that the government should not be in the business of bailing out private companies.  Even an official in the Ministry of Finance seems to share this view.

 

In observations presented to the Minister shortly after the latest report on BISX was released, she wrote, "The recommendation for a further $450,000 of government financial support is divergent to the mandate of BISX being capable of operating without government subvention.  It is hoped that with the restructuring of BISX along with the implementation of the other aforementioned recommendations that BISX would become a more efficient, fully operational exchange that requires no government subvention."

 

The BISX report indicated that the existing shareholders in BISX are unwilling to inject any new capital in the exchange.  But it said that existing shareholders and new shareholders might be willing to support the exchange if certain changes were implemented.

 

An earlier Journal story on the committee's findings revealed that lavish spending on items such as furnishings compounded the exchange's financial problems.

 

The report also pointed to a number of reasons why BISX faced financial troubles, including the exchange's cost structure, significant cost overruns on management consultancy fees and the lack of anticipated public policy support.

Bahamasair Board plans to sue Shell Bahamas Limited

Bahamasair Suing Shell

By Candia Dames

candiadames@hotmail.com

02/02/2004

Bahamasair's board plans to sue Shell Bahamas Limited, claiming that the oil company has been unfairly charging the airline for use of its pipeline needed for refueling planes at the Nassau International Airport.

 

The Journal has learnt that the airline's attorney, Damian Gomez, recently presented a writ to commence the action against Shell, but the board was not pleased and asked him to strengthen the document.

 

An airline official said that should the board be successful in its actions, "the fuel bill would go down considerably."

 

The airline continues to pay Shell for fuel as well as for use of the pipeline or hydrant system that provides the fuel.

 

An earlier Journal report that revealed details of the dispute points out that the development of the hydrant was initiated by the former government in an attempt to reduce congestion on the ramp, caused by all the service vehicles around an aircraft at any given time.

 

This development reportedly was supposed to offer multiple fuel pits at each gate with an extension around the Family Island pier having small fuel carts at each gate eliminating the need for huge fuel trucks maneuvering around the aircraft.

 

The fee was introduced by the members of the consortium Esso, Shell and Texaco in 1995 after the redevelopment of the hydrant system at Nassau International Airport. Initially it was referred to as a hydrant fee, intended to recover the investment of $2.8 million spent to develop the system.

 

But Bahamasair officials say that they should not have to pay this refueling charge because Shell has already recovered the investment. They claim that the airline has been charged wrongfully to the tune of at least $1 million.

 

The airline official said, "It's important that we do anything we can to cut costs."  He claimed that the fee actually amounts to about $600,000 a year and Bahamasair should not continue to pay it.

 

But a Shell source pointed out that the gas company has to continue to pay maintenance charges for the airport facility.

 

"Bahamasair fails to understand that Shell has to make a profit," he said.  The board will undoubtedly face strong opposition from Shell as it proceeds with its action.

 

The board also reportedly wants fuel prices to be reduced, but the airline source said the main action at hand involved recouping the money Bahamasair paid to Shell that it should not have paid.

 

In an earlier interview with the Journal, Shell's attorney, Campbell Cleare, said that Shell would probably have been willing to reduce the cost per gallon of its gasoline to the airline by one or two cents. But he said at the time that Bahamasair was demanding as much as a 10 cents per gallon reduction, which would result in a loss to Shell of over $1 million per year.

 

Mr. Clear told the Bahama Journal then that, "This is not price gouging. The prices are reasonable. Shell deserves to make a reasonable profit. There's absolutely no other carrier that's complaining. Bahamasair is trying to squeeze Shell into an unfair position."

 

Bahamasair officials declined to go on the record late last week regarding their planned action before the courts.

 

The board has been taking a number of measures geared at saving the cash-strapped flag carrier millions of dollars. The battle against Shell is seen as one avenue for helping to trim expenditure and ease Bahamasair's burden on the taxpayers' purse.

Bahamas-Haiti Relations Cordial

Bahamian-Haitian Relation's Cordial

 

By Gladstone Thurston

Bahamas Information Services

BahamaSeaWeed@groups.msn.com

01/February/2004

 

 

Kingston, Jamaica - Relations between the Bahamas and Haiti remains very cordial, Ambassador Dr Eugene Neury said.

 

He insisted there were no anti-Bahamas or Caricom demonstration outside the Bahamas' embassy following last week's meeting with Haitian President Jean-Bertrand Aristide in Haiti.

 

Dr Neury also denied reports that Haitians were unhappy that the Bahamas and Caricom were "interfering" in their internal political affairs.

 

"On the contrary", said Dr Neury, "the average Haitian is happy that people care enough for them to (mediate a settlement to the political impasse that has threatened to send Haiti into civil war)."

 

Dr Neury was a member of Prime Minister Perry Christie's delegation to the third in a series of talks aimed at saving the fledgling Haitian democracy.

 

Also from the Bahamas were Foreign Affairs Minister Fred Mitchell, Education Minister and Attorney General Alfred Sears, Ministry of Foreign Affairs undersecretary Carlton Wright.

 

Five Caricom prime ministers, and representatives from the United States, Canada, the OAS, the European Commission, and the European Presidency hammered out a series of political reforms with President Aristide during their meeting at Jamaica House in Kingston on Saturday.

 

Dr Neury said Haitians "love the fact that people are paying attention to try to help them get out of this predicament. They feel that this is what neighbours do. A friend in need is a friend indeed."

 

Following the third meeting - the first in Nassau and the second in Haiti ¯ "there are good reasons to look with optimism to the future", said Dr Neury.

 

"If the president can achieve the things that he has committed himself to then I think the whole region, especially the Bahamas, will benefit."

 

Haitians admire the Bahamas as a successful neighbour "very much", he said

 

"The average Haitian does not want to come to the Bahamas", Dr Neury added.  "That's a Bahamian perception. However, the Haitians would like for their country to be like the Bahamas in terms of the economic success.

 

"Most Haitians in Haiti have a very serious perception of the integration of their brothers and sisters in the Bahamas.  The presence of Haitians in the Bahamas has economically helped the Haitian population back home.

 

"It is very much like when the people in the days of the project in the United States sent money back home to the Bahamas. Haitians send back literally hundreds of thousands if not millions of dollars from the Bahamas to Haiti every year.

 

"But that's earned money. It isn't as though they went there and took the money. So Haitians admire the Bahamas. It is wrong to think it any other way."

 

Dr Neury described Bahamians as "a very accommodating people.  In percentage terms, the Bahamas probably more than any other country in the world has successfully integrated thousands of Haitians and their families without any bloodshed and without any violence."

 

Dr Neury said the gathering of thousands of Haitians on the park opposite the Bahamas' embassy in Haiti had nothing to do with any ill-will towards either the Bahamas or Caricom as was earlier reported.

 

"There was no confrontation", he insisted. "I was at the embassy."

 

He denied that his vehicle was jostled by the angry crowd.

 

"My car never stopped for one moment and in fact the leaders from the opposition groups opened the way for my car", said Dr Neury. "There was some misinterpretation of what people were seeing.

 

"It is insulting to suggest that the people from the opposition were not aware that the Bahamas' embassy including its gate is a foreign country and that to attack a foreign embassy is to attack the country which that embassy represents."

 

Except for Haiti, no other country stands to benefit more from these negotiations than the Bahamas.  After three meeting Dr Neury was asked for a prognosis.

 

"This is the first time that any international group has been able, on such a sustained even short period of time, to achieve what has been achieved in the last two weeks, and the whole international community benefits from this."

 

But, unless the opposition in Haiti accepts the reforms including the release of political prisoners and police protection for opposition demonstrations, and compromise on its insistence that President Aristide steps down, then there will be no movement.

 

"You have to understand the Haitian mentality of bargaining", said Dr Neury.  "Haitians are masters at bargaining."

AES Corp. Clears Hurdle For LNG Pipeline

By Candia Dames

Nassau, Bahamas

candiadames@hotmail.com

23/01/2004

The AES Corporation has cleared another important hurdle in its bid to lay a liquefied natural gas pipeline between The Bahamas and southeastern Florida.

 

The U.S. Federal Regulatory Commission on Thursday gave the company final approval for its Ocean Express pipeline project, Reuters News Service reported.

 

Now AES has to secure the go-ahead from the Bahamas Government before it could begin the project.

 

But that could take some time.

 

Two months ago, Keod Smith, Ambassador to the Environment and Chairman of the Bahamas Environment Science and Technology Commission (BEST), urged the government to move "very slowly" before making a decision regarding the three proposals for LNG projects before it.

 

Mr. Smith said that the necessary legislation is not in place to guard against possible environmental impacts.

 

His comments came after the BEST Commission viewed the environmental impact assessment for the proposed AES project.

 

That assessment said that laying a liquefied natural gas pipeline from Ocean Cay, near Bimini, to Florida presents the greatest potential for impact to marine resources, as it will cause temporary disturbance to the ocean floor.

 

But the EIA also said that the $550 million project is not expected to impact critical habitats of any endangered or at risk species.

 

The report said the development of a LNG gas terminal and desalination plant on Ocean Cay would provide economic and social benefits to Bimini and the Bahamian government as well as providing a much needed additional supply of natural gas to South Florida and potable water and natural gas to Bimini.

 

The 54-mile pipeline would transport up to 842 million cubic feet of natural gas a day. The pipeline would connect with the Florida Gas Transmission Co. pipeline system in Broward County, Florida.

 

The Ocean Express pipeline would connect with, and receive natural gas transported by a 40-mile Bahamian-jurisdiction pipeline, which is owned by another AES affiliate, that extends to Ocean Cay.

 

Ocean Cay, a 90-acre man-made industrial island, would be the site of a liquefied natural gas storage and re-gasification facility that would receive LNG from foreign suppliers.

 

The AES pipeline would deliver natural gas to markets in Florida and over the interstate pipeline grid to other parts of the country. AES has said it plans to have the pipeline start delivering gas to customers by November 2005.

 

AES Project Director Aaron Samson has said that The Bahamas is the single best place in the world to bring LNG into southeast Florida and has continuously promised that his company is adhering to the strictest environmental standards.

 

Two other companies, El Paso and Tractebel North America Inc. also propose to establish liquefied natural gas pipelines between The Bahamas and Florida.

 

But Trade and Industry Minister Leslie Miller has said that it appears that El Paso is out of the race given that it has been reporting financial troubles.

Fortis Fund Services (Bahamas) Limited, formerly Mees Pierson - The Fund Administrator of The $257 Million Collapsed Oracle Fund Settles with Investors

But The Details of The Settlement with Fortis Fund Services (Bahamas) Limited and The Investors in the Collapsed Oracle Fund  are being Kept Confidential

Investors Settle Mutual Fund

By Candia Dames

Nassau, The Bahamas

candiadames@hotmail.com

23/01/2004

Wealthy international investors who lost millions of dollars in the failed Oracle Fund have reached a settlement with the fund's administrator, bringing to a close another chapter in the much-publicized debacle.

Attorneys representing the investors were before the Supreme Court this week seeking to recover millions of dollars in losses suffered as a result of the collapsed fund.

The announcement of a settlement between the Hong Kong Shanghai Banking Corporation (HSBC) and Fortis Fund Services (Bahamas) Limited, formerly Mees Pierson, which administered the fund; and another settlement between Union Bank of Switzerland (UBS) and Fortis was made before Justice Hugh Small Thursday afternoon.

But details regarding the settlement are being kept confidential.

The case is set to continue in the Supreme Court next Wednesday as Hunter Douglas, a home products corporation, another major investor in the fund, continues with its action.

The $257 million Oracle Fund was registered on February 26, 1997 as an authorized mutual fund but collapsed in 2000, with the blame resting at the feet of Fortis.

The investors accused Fortis of "misrepresentation and breaches of statutory duty" which allegedly resulted in the fund losing a substantial amount of money.

Losses reportedly totaled at least $160 million.

Investors soon began demanding their money after the Securities Commission determined that Fortis carried on the business of administering the Oracle Fund "in a manner which was prejudicial to the investors and/or creditors of the said Mutual Fund."

There are two actions being heard simultaneously before Justice Small regarding this matter.

In a yet another action, the liquidators in the matter sued the fund's director and administrator and reached a settlement last year.

After the Commission ordered that Fortis discontinue administering the fund, smaller investors joined larger investors from around the world in filing complaints to the Commission.

Several years after the collapse, shareholders were still fighting over some of the money recovered by the liquidators.

The Commission had also issued an order preventing Fortis from licensing any additional funds.  Plaintiffs claim that Fortis did not follow investment guidelines, which led to the Oracle collapse.

The administrator reportedly made poor investments, a source on the Securities Commission at the time of the collapse told the Journal.

The fund was reportedly suspended because there was a problem regarding the valuation of its assets.

Past Journal investigations indicated that Fortis invested in a New Jersey-based company known as the Breen Capital Group, which issued promissory notes.  The company then reportedly bought tax lien certificates with the intentions of fulfilling its obligations to pay off the debt.  But that investment proved to be a bad one, the Commission determined.

The Commission source said during the time of the collapse that regulators had determined that a "financial blow up of monumental proportions" was brewing.

College of The Bahamas (COB) President, Dr. Leon Higgs Struggles to Hold On to His Job

Dr. Leon Higgs is The Fifth President of The College of The Bahamas (COB)

Higgs’ Job On The Line

By Candia Dames

Nassau, The Bahamas

candiadames@hotmail.com

21/01/2004

College of The Bahamas President Dr. Leon Higgs is embattled as he struggles to hold on to his job.

Members of the College Council interviewed Dr. Higgs yesterday, but that meeting turned out to be more of an assessment of his performance as president, resulting in Dr. Higgs becoming angered by the whole process, according to sources within the college community.

The COB president, meanwhile, has been phoning Cabinet Ministers asking them to intercede on his behalf, the Journal has learnt.

Since his appointment in November 1998, Dr. Higgs has faced opposition from some members of his executive team, who had applied for the top post after the resignation of former President Dr. Keva Bethel.

Among those who had sought the position are Executive Vice President Dr. Rhonda Chipman-Johnson and Vice President of Research and Planning Dr. Pandora Johnson.

The Journal has learnt that a recent independent study conducted on the college's staff and faculty indicated several weaknesses in all areas of the institution.

Council Chairman Dr. Franklyn Wilson is said to be playing a large role in shaking the college up as it is being prepared for university status.  In fact, Prime Minister Perry Christie praised Mr. Wilson this week for what he sees as the positive changes that have taken place under the chairman's leadership.

But some faculty members at the college believe that Mr. Wilson may be micromanaging and even usurping the authority of the president.

Dr. Higgs reportedly feels that he is not receiving the support he should be receiving from the Council.

Many others believe that the whole process is humiliating Dr. Higgs as he is being made to explain why he should stay on at the college.

When his five-year contract expired last year, the Council asked him to stay on, but to wait a year before his contract is reconsidered.  According to Mr. Wilson, it was a "courtesy" Dr. Higgs agreed to extend to the Council.

The Journal has learnt that among those waiting in the wings, seeking to become the next president of the college, are Dr. Pandora Johnson, who as mentioned is an executive at the college; and Dr. Norris Stubbs; Dr. Charles Taylor; and Dr. Sidney McPhee, all Bahamian educators residing in the United States.

 

Dr. Higgs was on Tuesday out of office, but in a previous interview with the Bahama Journal he said that he was interested in staying on for another term.

"I believe that there is much work to be done in this institution," he said.  "I think this is an important institution in the life of this country and I would like to continue to be a part of its development."

He also said that there has been some degree of tension between him and other members of the college's executive team who had been overlooked for the position of college president.

At that time, the council was advertising executive positions, including that of president, in local and international publications.  It is the policy of the institution to advertise such positions when contracts expire, even if the incumbents wish to negotiate new contracts.

Mr. Wilson had explained that the college was undergoing a "leadership review."

Some executives of the institution had also threatened to take legal action after learning that they were being stripped of tenure and placed on contract.

The Journal also reported last month that senior managers of the college are in for a shake-up by the middle of this year, if the Council executes restructuring plans that have been mapped out.

The realignment of the college's management is set to take place by July as an essential step in the transition to university status, according to Mr. Wilson.

While some senior management positions will be abolished and the responsibilities attached to others revised, the council also intends to create new positions.

Mr. Wilson communicated as much in an extensive statement on COB, which tackled the most pressing issues facing the country's premier tertiary level institution and plans for change.  That statement ran in local newspapers several weeks ago.

Mr. Wilson, meanwhile, has insisted that it is not the council's intension to treat Dr. Higgs unfairly.

A native of Andros, Dr. Higgs was the director of training at The Bahamas Technical and Vocational Institute before being appointed to his present post.

In 1998, he was said to be brilliant during the rounds of interviews and was selected for the presidency over 10 other Bahamian applicants who were all holders of doctorate degrees. In its evening edition on Tuesday, July 7, 1998, the Journal in breaking the story on Dr. Higgs' appointed noted that, "Several lecturers at COB are on record as saying a focused man such as Dr. Higgs comes well qualified for the post."

He received his doctoral degree in administration curriculum and instruction from the University of Nebraska and spent 13 years in top positions at various colleges and universities in the United States before returning home in 1995 to serve as the Assistant General Manager of Human Resources at the Water and Sewerage Corporation.

Dr. Higgs is the fifth president of COB. 

Suisse Security Bank and Trust Limited Appeal The Revocation of Their License by The Central Bank of The Bahamas

Bank Causes Distress

By Candia Dames

Nassau, The Bahamas

candiadames@hotmail.com

20/01/2004

...one of the failings of The Bahamas, as a premier financial services jurisdiction is that parties usually are unable to have their cases heard "in a timely fashion."

The country's financial services sector is receiving a black eye in the international arena with scores of depositors and creditors of Suisse Security Bank and Trust Limited demanding that they receive the millions of dollars they had in the institution.

Their money is being held up as a court matter drags on nearly three years after Central Bank Governor Julian Francis revoked the bank's license on the ground that Suisse Security was carrying on its business in a manner detrimental to the public's interest and the interests of its depositors and other creditors.

The Journal has now learnt that parties involved in the matter are becoming increasingly frustrated over what they perceive to be "the lackadaisical attitude of the court" and a significant backlog of cases in the system that is "slowing down the process of justice."

Meanwhile, Raymond Winder, provisional liquidator in the matter, continues to be inundated by requests from angry clients who are unable to receive any money because the legal matter is still ongoing.

For more than two years, he has faced the task of informing the creditors and depositors that their funds remain frozen.

In one of his reports to the Supreme Court, this one dated August 2002, Mr. Winder said that, "As provisional liquidator I continue to receive an abundance of telephone calls from depositors and creditors of the Bank."

Following the governor's action on April 2, 2001 to revoke the bank's license, Suisse Security filed a notice in the Supreme Court challenging the revocation order.

Last April, Justice Austin Davis dismissed the bank's case, but the bank appealed the decision.

Suisse Security officials responded to last April's ruling saying that it was "most disappointing and an outrage."

The Central Bank, meanwhile, in its response, said it was "pleased that the statutory appeal brought against its decision to revoke the bank and trust license of Suisse Security Bank and Trust Limited (SSBT) has now been decided.  The Bank is satisfied with the decision relating to the appeal."

But no date has been set yet for the appeal.

"We are awaiting a date from the court," said Mr. Winder, a Certified Public Accountant and partner in Deloitte & Touche.  He added Monday that his powers as a liquidator were limited given that the matter has not yet been resolved.

But Mr. Winder pointed out that he could not make any further comments given that the case is before the courts.

As provisional liquidator, he has the power to take possession of, collect, and protect the assets of the bank, but not to distribute those funds until further order.

His task has clearly not been an easy one.

In the report mentioned earlier, Mr. Winder said that, "On the morning of April 9, 2001, prior to receiving the Order of my appointment of Provisional Liquidator, I learned that Messrs. Michel Harajchi, Derek Ryan, Christopher Lunn and Wendell Ferguson had broken into and gained access to the Bank's premises."

He also said at the time that former officials of the bank had reactivated their web page, informing that they could be contacted for updates on what was happening at the bank.

 A source close to the case expressed frustration Monday that the matter has not yet been heard on appeal.  But he spoke anonymously because of the status of the case.

"This sheds a terrible light on [the jurisdiction]," he said.  "The matter is just sitting there."

The source also noted that one of the failings of The Bahamas, as a premier financial services jurisdiction is that parties usually are unable to have their cases heard "in a timely fashion."

Throughout the proceedings, the bank's chairman, Mohammed Harajchi, has said that he plans to reopen his institution, insisting that Governor Francis erred in his decision to shut the bank down.