Submitted by Not Taken
Canadian government has Cameco in its sights for $800 million – Photo credit: The Globe and Mail
Yet another interesting (scary for Barbados) article – Cameco’s $800-million tax battle. I have been sending these recent articles as a public service so the Minister of Finance (MOF) and Governor of the Central Bank have a heads up on the attack on Canadian tax evaders/avoiders that is undoubtedly about to hit the Barbados offshore industry; if in fact it has not already hit – but unreported.
This is very bad news for Barbados revenue sources. While the Cameco case involves its Swiss subsidiary, it is probably just the tip of the iceberg in CRA’s efforts to collect taxes due to Canada. There must be hundreds, if not thousands, of Canadaco (Barbados) Limited businesses doing the same same transfer pricing schemes (scams) in order to pay 2% income tax to Barbados, rather than 27% to Canada.
Even those Canadian companies not not already being audited for this this type of tax “management” may decide for close up shop in Barbados to avoid the publicity that a CRA audit will bring.
We must all offer our congratulations to finance minister Chris Sinckler for having the bravery to change his mind about the management of the economy. One can only imagine the amount of pressure that was on him, mainly from the DLP’s private economic advisers and the central bank governor, to continue down the policy cul de sac of a stubborn rush for growth at the end of which was national destitution and even more street crime. His decision to launch a Bds$600m economic stimulus is brave, and right, even if it has come a little too late. However, it is better to be late than never.
The challenge now for the minister and his senior advisers is how are they going to source this $600m that is now urgently needed and, once it has been found, how is it going to be spent. He must not resort to posturing or rhetoric and doing dodgy arithmetic to arrive at the numbers. Of course, as I am often reminded, the government is not in need of economic advice from me, nor am I offering it; but, instead of borrowing from external agencies, and incurring even more debt, the minister should dig in to the $1.2bn in foreign reserves which is money left idle, similar to old ladies putting their life savings under the mattress. This would be a much better and prudent strategy than robbing future generations of pensioners by taking it from the national insurance scheme.
When the voters of Barbados enter the polling booths on Thursday, it will be an enormous challenge for them to abandon old political tribal loyalties and objectively put the nation, future generations and their own futures before irrationally supporting a party or candidate they have always supported, while suspending reason. The harsh truth is that this is the most testing general election, not only since November 30, 1966, but since the early 1950s and the introduction of internal self-government.
In the new globalised world, there is no turning back for small nation states such as Barbados. New global organisations, such as the World Trade Organisation and the newly re-energised International Monetary Fund, now have power over small states, mostly wrapped up in international treaties, that they have never had before. At the same time, rich and powerful nations are subsidising their farmers and industrialists, such as car manufacturing and farming in the US, farming in the EU, and a long list of state-owned or controlled industries in China, which put further pressure on small states. But we are not just economic people, as a nation we are rounded with equal value given to our social relations, our civic and moral responsibilities and our cultural and creative environment.
Increasing Government Productivity:
One of the biggest drags on growth in Barbados is public sector efficiency, from improvements in technology, competent management to output per person. One only has to read the annual report of the auditor-general to see the extent of public sector incompetence. Take a simple, but important example, uncollected VAT. Value added tax is a sales tax paid by consumers and collected by trades and service people. For convenience, that money is paid to the government at pre-set dates – monthly, quarterly etc. However, in Barbados, there is a huge backlog of payments, of business people failing to handover to government monies collected on its behalf.
In the preface to its recent Alternative Worlds report, the US National Intelligence Council observed: “The world of 2030 will be radically transformed from our world today. By 2030, no country – whether the US, China, or any other large country – will be a hegemonic power. “The empowerment of individuals and diffusion of power among states and from states to informal networks will have a dramatic impact, largely reversing the historic rise of the West since 1750, restoring Asia’s weight in the global economy, and ushering in a new era of “democratisation” at the international and domestic level….”. In other words, even at the highest level of the inward-looking US, there is a realisation that the world is changing.
However, reading the over-optimistic, even fictional, recent central bank review of the economy and projections for 2013, one would not get this impression. The report tells us the fiscal deficit is growing, up from 5.2 per cent April to December 2011, to 6.2 per cent in 2012; personal taxes are down ten per cent and VAT fell by two per cent for the same period; subsidies to government entities rose by two per cent and interest rates rose by four per cent. Public sector debt is 54 per cent of GDP, and including the national insurance scheme, it rises to 83 per cent of GDP. But, in about or real optimism, the review predicts that growth over 2013 will be 0.7 per cent, based on the IMF predictions of growth in the US, UK and Canada, our major trading partners. Apart from the fact that I was under the impression the Caricom was our major trading bloc, to base projected growth of the Barbados economy on the projections for those three economies is economic lunacy.
As we enter the dawn of a new year, all attention will be focused on the coming general election and, for some of us, the paucity of ideas battling for votes from a badly informed electorate. As things stand, it is largely a competition between tweedledee and tweedledum, although the recent injection of a broad, if under-articulated, idea of privatisation has raised its head.
However, even this glimpse of an ideological difference has been crowded out by the yahboo background noise of party humbug, rather than a rational discussion of the notion that firms owned by the private sector are in themselves inherently better managed and more efficient than those held by the public sector or social enterprises. Such closed mindedness also acts to shutdown debate, the arguments become irrelevant, as by definition people are either for or against the idea under discussion.
Now, as I have said here before, the world is entering a new phase in which the old economic assumptions are now redundant and the new global economic (and military) power will be centred in the early part of the 21st century in Asia and to some extent, Latin America. Therefore to understand what is taking place and the possible outcomes, one needs to read the runes carefully. For a little island state, proud of its independence, careful observation is more important now than at any point in our history.
Posted in Banking, Barbados, Barbados Labour Party, Blogging, Democratic Labour Party, Fruendel Stuart, Owen Arthur, Politics, World News
Tagged China, Eurozone, Hal Austin, UK, USA
Republic Bank (RBL) recently rebranded Barbados National Bank (BNB) with the Republic Bank blue. It pained many Barbadians to witness WE bank sold to “others” and it pained further when the BNB brand was dismantled and replaced with RBL’s. If it WAS any consolation, central government and the NIS owned a minority shareholding which gave hope that the holding may have served as an avenue to reclaim the bank at some point in the future. Sad to say, wishful thinking!
The recent offer by RBL to purchase minority shares was successful. According to 187 of the Companies Act because 90% of the offer was taken up, it gives RBL the right to acquire ALL dissenting shares.
The letter attached dated 17 December 2012 confirms RBL’s intention to invoke that right pursuant to the Companies Act. By the end of the year RBL in all likelihood become the100% owner of the former BNB.
Here endeth a national symbol.
Notice to Dissenting RBL Shareholders:
Letter one, two and three.
Dr. Justin Robinson, Chairman of National Insurance Board
“In light of this, Dr. Robinson indicated that, “The NIS is looking at all of the options right now. The options are that the NIS could decide not to sell any of the shares it has, it could sell some or it could consider an exchange of BNB shares for Republic Bank shares.”
The Barbados Advocate
BU wishes to commend the Board of the NIS Scheme for stating a coherent position regarding the options under consideration regarding Republic Bank’s offer of $5.00 to buyout minority shares. If Republic Bank is successful it means the Trinidad owned bank would 100% own the former national bank of Barbados.
Chairman of the NIS Dr. Justin Robinson is on record confirming that the NIS Fund is cash rich and the Republic Bank is on record it wants ALL of the shares. The two stated positions make the third option favoured by Dr. Robinson the most sensible investment strategy for the NIS and Barbados. Why should we not seek out an equity stake in one of Port of Spain’s leading companies? T&T capital has acquired many Bajan companies. It is time to confront the hegemony of Trinidad.
Republic Bank, in a brave move, has announced its intention of taking the former Barbados National Bank in to wholly-owned control. The announcement has led to a muted discussion among some Barbadians, with the professor of economics at Cave Hill, Michael Howard, ‘advising’ local shareholders to sell to the foreign owners.
Apart from the principle of clean hands, the professor’s advice, which also includes keeping the local subsidiary out of the hands of the government, appears to lack any real understanding of banking and its role in intermediation and, even more, economic growth. It is silly advice and should be ignored. Of course, there is no doubt that Republic Bank has behaved impeccably in its dealings both with the Barbados Stock Exchange and investors, but with other unscrupulous operators there is every opportunity in such a move to undermine shareholder value. Is the acquisition going to create value? What about cultural differences, or are they saying Barbadians and Trinidadians share a common culture? What stress and prudence tests have been applied? Retailing banking has reached such a comfortable state in the Caribbean that it is difficult to find common performance measures of success.
We know, for example, that customer satisfaction is not a measure shared by the former BNB, since Republic Bank neither formally informed all its account holders when it took control of the bank, when it changed its name, nor of its intention to buy out minority shareholders. In simple terms, it could not give a hoot what Barbadian shareholders think about their management style.
For the last five years governments of Barbados have been trapped like a rabbit in oncoming headlights as to what to do about the cascading economic crisis that has descended on the island and the simmering social breakdown that no one wants to talk about. Many prefer to close their eyes and pretend that global problems beyond local control are the reasons, so all they have to do is sit back and wait and things will magically change.
However, no where has there been a substantive strategic plan, no strategy to rebalance public sector spending, no plan for growth, apart from the rhetoric, and nothing at all to deal with the threat to social order. Nowhere in the many speeches and rebuttals of his critics has finance minister Chris Sinckler talked about the much-needed fiscal discipline, reducing public sector borrowing or spending. He has mentioned growth, but it is all smoke and mirrors, rhetoric without any follow through action.
Here I want to outline some simple policy actions or announcements the DLP government should have taken within the first 100 days of coming to power, and, to my mind, the mistakes it has made. The nearest the government has come to publishing an expressed policy was its “Barbados Short and Medium Term Action Plan” of December 2008. Lots have happened in the last four years, and, apart from the occasional reference to it, that document has not been updated.
Dr. DeLisle Worrell, Governor of the Central Bank of Barbados
Dr. DeLisle Worrell will go down in history as one of the most visible and controversial Governors of the Central Bank of Barbados. He is certainly not a Kurleigh King, Calvin Springer or Winston Cox, perhaps closer to a Dr. Courtney Blackman.
Some Barbadians have become concerned by what appears to be virulent attacks directed at Worrell coming by the Barbados Labour Party (BLP). Attacks led by Arthur and Mascoll, which have reduced Worrell to an economist of lilliputian status. That Arthur, Mascoll et al would be so harsh about one of their own merits scrutiny. Bear in mind the Central Bank of Barbados has always been regarded as a respectable institution.
In the same way many believe governments managing world economies at this juncture in history are unfortunate so too Governors of Central Banks. All have to agree that the unprecedented challenges posed by the protracted global economic slowdown mean that modalities in boom times are not relevant at this time. It is in this context that we have to debate and evaluate the economic outpourings from Dr. Worrell since his appointment in 2009.
Posted in Banking, Barbados, Barbados Economy, Barbados News, Owen Arthur, Politics
Tagged Calvin Springer, Central Bank of Barbados, Clyde Mascoll, Delisle Worell, Kurleigh King, Winston Cox
At a time when banks in Europe, the US, Japan and Britain are imploding and every jurisdiction is enforcing legal requirements on financial institutions, the authorities in Barbados have come up with a wonderful idea of a voluntary code – see Feedback Invited On Draft Banking Code Of Conduct. It is interesting that many of the features of this draft code are similar to those of the now abandoned British banking code, which too was voluntary until November 2009.
Paragraph 2.4 of the draft is of no use for a large number of people in Barbados who do not have access to the internet.
Paragraph 3.2, on unfair contract terms should be a legal requirement, not a voluntary one. The second section of the above paragraph reads: “Financial institutions will also ensure that employees and agents who are authorised to give advice on the financial services offered are properly trained to competently, knowledgeably, efficiently and accurately render such service.” These basic requirements should be legally compulsory on every count. First, agents and employees are working on behalf of the financial institution, not of the customer, and in the case of the agent the form of remuneration is just as important. If s/he is being remunerated by commission, then the sale is more important than advising the customer on his or her consumer rights or even if the product is the right one for them.
Consumers International (CI)
Consumers International (CI) in collaboration with Barbados Association of Non Governmental Organizations (BANGO) is working to complete the final draft of the Banking Code of Conduct for Barbados. The project is being funded by the Inter-American Development Bank (IADB) in Barbados, Trinidad and Tobago and Jamaica. The objective of the exercise is to establish minimum voluntary standards of conduct for financial institutions.
The document is currently being widely circulated to garner feedback from the general public. BU encourages the family to jump on the bandwagon.
Justice delayed is Justice denied!
Instead of touching on incidents that have actually happened, this latest edition of Tales From The Courts focuses on a developing international scandal that may involve the Barbados courts.
In the last month, the financial world has been rocked by evidence of LIBOR fixing by Barclays Bank. LIBOR is the London Inter Bank Offered Rate. The scandal in the making has led to the resignation of both the UK chairman and the UK chief executive of Barclays Bank and the setting up of a parliamentary enquiry in the UK involving, not just of Barclays, but of all banks. Last week Barclays was fined £290 million for LIBOR rigging.
This, however, is not just a UK problem, but an international one. There are ongoing investigations in the USA – to which the Barbados economy is pegged and in the UK and there is every likelihood of criminal prosecutions for certain people and massive fines resulting.
The scandal now has taken a turn and involved Canada and the Canadian courts, where the Royal Bank of Scotland is seeking to have a court order for the discovery of documents and evidence from a senior judge set aside on the basis that it breaches the Canadian Constitution (in Canada) and the Data Protection Act 2000 (in the United Kingdom). It is doubtful if this legal tactic on the part of Royal Bank of Scotland will succeed, given that all the other banks subjected to the Canadian court order are complying.