KINGSTOWN, St. Vincent, Feb. 25, IWN – A former minister under the New Democratic Party (NDP) administration has questioned the disclosure of information about accounts at the Building & Loan Association (BLA).
“On the question of confidentiality, I want to ask an open question. What authorises the Building & Loan to divulge information on people’s account to persons other than employees?” John Horne, a former minister of culture said on Thursday at a meeting of BLA shareholders.
“What gives any financial institution the authority to divulge personal information, however obliquely it is, to persons other than employees?” Horne further said at the meeting that elected and tasked a committee to explore talks with the Financial Services Authority, which took over the BLA on Feb. 1.
“Let me say this, I have worked for 21 years with a reputable financial institution, a bank — the former Barclays Bank. And, on the first of January every year, I was required to sign a declaration of secrecy, and, I quote, to keep secret and [inviolable] the business of customers of this institution. I leave that there,” the former West Kingstown representative said.
Horne did not say what specific disclosure he was referring to.
Both Government and Opposition politicians have divulged information about accounts at the BLA.
Opposition Leader Arnhim Eustace disclosed at a press conference on Feb. 11 that EC$1 million was withdrawn from Prime Minister Dr. Ralph Gonsalves’ mother’s account at the BLA.
Eustace said he was “reliably informed”, but did not identify his sources.
The following day, Gonsalves read from a 2009 Ministry of Finance report on the BLA that gave a sample of non-performing loans at the institution.
The report warned against divulging its content, in any circumstances.
But Gonsalves said that two members of the former NDP administration had non-performing loans at the BLA, including one that was not paid for 11 years.
He, however, did not name the borrowers.
Question about FSA regulation
Meanwhile, Horne also told the meeting that the FSA should be asked to provide BLA shareholders “with whatever regulations they have governing the [FSA] Act.
“Regulations are key to an act, and that should make a lot of things clearer. The question is, are there regulations governing the FSA Act? We need to know that.”
The FSA is the state agency that supervises non-bank financial institutions.
Horne said it is not independent.
“The FSA is not an independent body, in the sense that its experience is limited and it is also subject to higher financial authority and we need to show the FSA that we are deeply concerned and that we should be fully advised of any precipitous action they may be inclined to take.
“I say this because I don’t want to give any further details at this moment of things I have heard. And I heard it not just in St. Vincent, but in Trinidad,” Horne told the meeting.
He, however, said that the FSA must be given some scope to operate within the context of the act that established it.
Ready to work with FSA, but…
“But I also want to say that while we are prepared to work along with the FSA, the FSA itself should inspire confidence in us to trust it in handling our business,” he said.
Horne further told fellow shareholders that the FSA “should not take any precipitous action without communicating with the shareholders.
“But, more importantly, … I ask the question, what is in effect the broad financial status of the Building & Load with regard to solvency and or redeemability, if we can put it that way.
“In other words, how much is gone?” he further said, a reference to the amount of money withdrawn during a run on the institution this month.
The FSA told the API in a statement that was yet to be released at the time of the meeting that EC$9 million was withdrawn from the BLA during the two weeks before the takeover.
The government has said it is willing to make $15 million available to the BLA to stabilise its operations.
And, Horne said that assuming that the BLA “is not at the worst possible stage”, it should “ aim to prepare itself to retake control as soon as possible”.
He said factor influencing that possibility includes how the flow of fund away from and out of Building & Loan is to be stemmed.
“Question: do we here this evening present have the will to commit to keeping what we have there? And if that is the case, will that action give hope, encouragement, and confidence to the diaspora to desist from further movement?” Horne told the shareholders.
“… The secret … in saving institutions like this lies in having the courage in the initial stage, when the run has begun, to hold off, retain what you have. And it is a difficult decision to make. … If there is a run on the institution, that’s it,” he said.
The run on the BLA was triggered by a letter in the newspaper on Jan. 18 by Luke Browne, an economist at the Ministry of Finance.
Browne raised concerns about the management and financial health of the BLA and asked if it was about to collapse.