The agenda to derail the privatisation of Bahamas Telecommunications Company (BTC) for political gain and to protect vested interests

Propaganda and the pending BTC privatisation
By LARRY SMITH



AND now class, today we are going to talk about propaganda. Does anyone know what the word means?

It derives from the Latin for propagate, which means to multiply, reproduce or transmit. In this case, we are talking about spreading information.

What kind of information? Well, that is often hard to say. The key point to remember is that the information being presented will have an agenda. And in order to judge the value and quality of the information, you need to determine what that agenda is.

In a nutshell, propaganda uses loaded messages to produce an emotional response in support of an often hidden objective. And ever since the 1930s (when German and Soviet propaganda promoted state-sponsored genocide) the term has acquired a strong negative meaning - for good reason.

Journalists are supposed to be trained to give their audiences a reasonably accurate background and analysis of the subject at hand. Advertisers use an overt form of propaganda to persuade people to buy their products or services. Public relations lies somewhere in between, often presenting itself as journalism in support of a proprietary theme, which is not necessarily nefarious.

What sets propaganda apart more than anything else is that it seeks to influence public opinion through deception and confusion, rather than by encouraging genuine understanding.

According to Nazi Propaganda Minister Joseph Goebbels, "The most brilliant propagandist technique will yield no success unless one fundamental principle is borne in mind constantly - it must confine itself to a few points and repeat them over and over."

What points instantly spring to mind in the local context? No turning back (to white rule); stop, review and cancel (good economic initiatives); Hubert "the dictator" Ingraham; selling our birthright (to white foreigners), the plantation economy (enslaves blacks).

But it's not just about repetitive slander. As British wartime propagandist (and later cabinet minister) Richard Crossman said: "The art of propaganda is not telling lies, but rather selecting the truth you require and giving it mixed up with some truths the audience wants to hear."

This is what we are seeing today with the (currently) one-sided debate over the pending privatisation of BTC.

Let's look at the recent constructs of a massive conspiracy to corruptly engineer the sale of BTC against the interests and wishes of the Bahamian people. Evidence for this is said to rest on a series of conflicts of interest, and was recently given credence by retired Tribune journalist Nicky Kelly, who now writes a column for the Punch.

"One has to ask why the PM is so motivated to pursue a deal that is so suspect, and the machinations of its participants so obvious, that they exhaust credulity," Kelly wrote.

In this view, a small group of unrelated people began moving chess pieces years ago to achieve the present result - the sale of half of BTC to Cable & Wireless Communications, within a regulatory environment developed and controlled by former CWC employees.

The inference is that the plot was hatched by CWC, with the support of leading Bahamian politicians and technical advisors, to save its future Caribbean business prospects. Or maybe it was the other way round, and our top politicos and bureaucrats simply planned to enrich themselves from CWC. In either case, the full background to the story is largely ignored and a massive corrupt scheme is offered as the obvious reality. The clear agenda is to derail the privatisation of BTC, both for political gain and to protect vested interests.

The full background to the story includes the fact that there were no less than three public bodies responsible for decision-making - the cabinet, the privatisation advisory committee, and the privatisation working committee. There were also two sets of financial advisors - KPMG Bahamas and CITI, a major international bank - as well as two legal advisors - Charles Russell, a British firm specialising in communications law (which also advised the Christie administration on regulatory reform), and local law firm Higgs & Johnson.

In short, there were significant checks and balances. And with so many separate groups of advisors it would be very difficult for a specific conflict of interest to flow through to a final sale. It also has to be acknowledged that the goal of liberalising the communications sector and finding a major strategic partner for BTC has been the accepted policy of both major parties for years - even more so in the case of the FNM, which launched the process in 1998.

And what about those conflicts of interest that have been selectively ignored by the conspiracy theorists. Conflicts like the participation of some of the major antagonists in the current debate in the earlier sale that was agreed by the Christie administration with Bluewater Ventures - a foreign firm with uncertain ownership and no operating history.

It has been suggested that some of them were heavily involved when that deal went down - together with some of the leaders of the same unions that are now so critical of the current process. What chess pieces were these players moving?

The Christie administration cancelled the original privatisation process launched by the FNM after rejecting existing bids, and then proceeded to negotiate solely with Bluewater from 2005 until the general election in May 2007. How is this any different from the Ingraham administration rejecting bids received in the current process, and then talking to CWC?

And let's not forget to take into account the stark contrast between Bluewater, an unknown private equity firm, and CWC, a major international telecoms provider with a long and publicly reported background in the field.

In fact, almost all of the bidders for BTC throughout this long and complicated process were private financiers who saw an opportunity to make money. Digicell and CWC are the most obvious telecoms buyers in the region, but Digicell (which decided not to bid in the last auction) is purely a cellular operator. CWC is one of the few entities that does everything BTC does throughout the region and has a strategic reason to invest for the long-term. And since CWC has been interested in the Bahamas for the last 15 years, how can it suddenly be suspicious when they step up to the plate?

It is easy to research a large global business like Cable & Wireless, which may have problems in some areas but a very healthy balance sheet overall. In fact, CWC is a leader in all regional markets except Jamaica where they are second. It should also be noted that, although declining to participate in the most recent auction due to an internal reorganisation, CWC eventually went through the same entry process as all other bidders.

As for the terms of the CWC agreement, it is a fact that all the bidders required BTC's unfunded pension deficit to be covered by government - including Bluewater. How can this now be "repugnant" to the PLP, when they agreed to pay off the full deficit and close the pension plan entirely. I would suggest that there is no business in the world where employees make zero contributions to their own pensions while the employer pays 20 per cent of salaries into a fund. This obviously has a huge impact on BTC's value.

It is also true that all the bidders - including Bluewater - demanded a management fee in their plans, something which some commentators find egregious. The rationale for the fee that was eventually agreed is that CWC brings a lot of added value to BTC in terms of technology and intellectual property, which will significantly benefit the other shareholder. This is normal practice where a minority partner is involved, and industry benchmarks are used to set the fee scale.

Clearly, connecting the dots selectively amounts to spouting propaganda. It does nothing to help people reach a genuine understanding of the issues. This is known as pinpointing the enemy - simplifying a complex situation by presenting a specific group or person as the enemy in a clear-cut choice between right and wrong. And the better informed you are, the less susceptible you will be to this type of propaganda.

One of the worst allegations in this saga was made recently by PLP Chairman Bradley Roberts (who was the minister responsible for BTC in the Christie administration). He accused current BTC chairman Julian Francis of a corrupt conflict of interest in awarding to Providence Advisors (a financial services company which Francis also chairs) a lucrative contract to manage part of the BTC pension fund.

"As a result of this contract that Julian Francis awarded to himself, he positioned himself and Providence Advisors Ltd to be paid in excess of $400,000 per annum for the past 3 years," Roberts said. "The PLP calls for Julian Francis' immediate resignation and for the police to commence investigations..."

The facts are that efforts to place BTC pension funds with local investment managers began in 2006 under the Christie administration, when Greg Bethel was BTC chairman and also president of Fidelity Bank & Trust - one of the firms chasing the business. Providence, headed by Kenwood Kerr, was also invited to bid, and was eventually approved (along with Fidelity and CFAL) in a process guided by the accounting firm of Deloitte & Touche.

The actual contract was not executed until after the 2007 general election, and Francis (who is not a Providence shareholder) had nothing to do with choosing the investment managers. And Providence's fees over the past two and a half years were less than $350,000.

Statements from political operatives and unsupported extrapolations by sympathetic or thoughtless journalists are not the only forms of propaganda we must watch out for. There are also those entities which pose as legitimate news media. While party newspapers or radio broadcasts may be easily identified and their information taken with a grain of salt, some propaganda outlets try to disguise their true nature to fool an audience into believing they are presenting valid information.

The current prime example locally is the online propaganda outlet known as Bahamas Press, which refuses to even acknowledge that it is financed, owned and operated by real people, although it classifies itself as a "leading news website." An anonymous responder claimed the site is owned "by the people of the Bahamas."

As George Orwell wrote in his novel 1984, "the process (of mass-media deception) has to be conscious, or it would not be carried out with sufficient precision, but it also has to be unconscious, or it would bring with it a feeling of falsity and hence of guilt."

Of course, now that I have waded into the propaganda swamp, I must be part of the conspiracy, right? Well, now you can make the call.

What do you think?

Send comments to

larry@tribunemedia.net

Or visit www.bahamapundit.com

March 09, 2011

tribune242

Bahamas Blog International

The Central Bank of The Bahamas has placed lending restrictions on Commercial Banks to protect the country's foreign reserves from being depleted

Bahamas Commercial Banks Losing Money

By Candia Dames

Nassau, The Bahamas

candiadames@hotmail.com

24/03/2004

 

 

Lending restrictions imposed two and a half years ago by the Central Bank are suppressing government revenue and hurting profits of commercial banks, according to a Cabinet Minister and a group of bankers.

 

But the Central Bank appears unlikely to raise those limits anytime soon.

 

State Minister for Finance James Smith recently blamed disappointing government revenue collections on the restrictions.

 

He told the Bahama Journal that, "If there is no credit growth, then clearly there is no appreciable growth in imports and consequently we have less in terms of customs duties."

 

In September 2001, the Central Bank placed the lending restrictions on banks to protect the foreign reserves from being depleted.  For the entire system as a whole, the restrictions limit the total lending to $3.7 billion.

 

Essentially, banks are restricted from lending more than what they are collecting in loan payments.

 

Central Bank Governor Julian Francis is set to meet with his Monetary Policy Committee Wednesday and wished not to comment on the continued effects of the limits.  The Committee, which meets once a month, is expected to review the present policy.

 

Governor Francis told the Bahama Journal in an earlier interview that, "If the banks became overly aggressive and were imprudent in their lending activity, then the Central Bank limit would come into play.

 

"And those limits are in place to protect the external reserves during a time of relatively slow economic activity when our economy is not generating the level of foreign currency which it would normally generate if the economic activity were stronger."

 

Mr. Francis also explained that if there is more to borrow, it costs less to borrow so more people tend to get loans, which is why the Central Bank restrictions are so important.

 

He has said that the Bank continues to review this policy and would only make adjustments if they were in the best interest of the overall economy.

 

The Governor reportedly told a meeting of commercial bankers two weeks ago that he is not now prepared to raise or eliminate the ceiling.

 

The restrictions continue to create a high level of liquidity in the system and commercial bankers continue to press the Governor to relax his position.

 

According to John Rolle, deputy manager of research at the Central Bank, the surplus stands at around $200 million.

 

One banker told the Journal Tuesday that, "Everybody (commercial banks) has a whole lot of money."

 

He said, "What it's going to do is drive deposit rates down.  If you're selling shoes and you have a store full of shoes and the Central Bank or some other body stops you from selling the shoes, the question is, are you going to order anymore shoes?  The answer is no.  Why should the banks continue to take deposits if they have no avenue to lend the money out?  The government has already said it is hurting them and it is hurting the consumer."

 

Foreign reserves, meanwhile, remain at a healthy $550 million.

 

But Mr. Rolle said while the reverses have been increasing in recent months, "the growth in reserves that we've seen is a bit deceptive."

 

"Some of that growth continues to occur because we are very restrictive on the credit side," he said.  "At the same time, the growth is reflecting the fact that there is a gradual firming in the momentum of tourism and we certainly hope that it will accelerate now that we enter the most important part of the tourist season."

 

Mr. Rolle said to remove the restrictions would be to presuppose that there are strong inflows coming into the economy that would support increased demand for imports.

 

"Increased demand for imports is going to be one of the results of removing the ceiling," he explained.

 

Mr. Rolle added, "When we talk about seeing improvements in the economy, we also know that when the improvements start to occur, it will also be evident in the government's position.  The majority of the imports in this country are not financed by credit.  They are financed by the general level of economic activity.  So as the general level of economic activity picks up so will imports and the government will see a return from that avenue."

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.

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.