KINGSTOWN, St. Vincent, March 18, IWN – An opposition law maker has noted the amount of debt that state-owned firms International Airport Development Company (IADC) and National Properties have amassed.
Central Kingstown representative St. Clair Leacock further told Parliament that the arrangement between the two firms resembles a Ponzi scheme.
A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors.
It generates returns for older investors by acquiring new investors and actually yields the promised returns to earlier investors, as long as there are more new investors.
These schemes usually collapse on themselves when the new investments stop.
“… We have been operating something in this country that takes on the image of a Ponzi scheme. I didn’t say it is. But when you are in a country and you take the state lands and state properties as we have done and vest them into a company named the National Properties, so that becomes its equity and its asset base, and National Properties then takes the state lands and puts it up as security to go up to the NIS (National Insurance Services) to secure funding and NIS decides it will lend Properties money on the basis of state lands and assets as security and send them down to … the National Commercial Bank as it was then and NCB gives them cash — all that is what helped to put the bank under,” Leacock said.
“… ultimately, neither National Properties or the IADC has an income stream that can take them out of that debt. None of them! In fact, I don’t ask you, I am telling you, National Properties cannot be so sold as a going concern. It hardly qualifies as a going concern,” he further said, adding that it cannot sell many of its assets.
Going concern refers to the idea that a company will continue to operate indefinitely, and will not go out of business and liquidate its assets.
Leacock said the two companies have amassed nearly $200 million of the $1.3 billion National Debt.
“So, it is not as if this beautiful baby — this wonderful institution that is involved in the argyle development doesn’t have an albatross around its neck,” he further said.
The international airport is slated to be completed this year.
“IADC’s debt will have to be written off and has to be written off by taxpayers and for a long, long time because EC$150-$200 million is a lot of debt. And National Properties will be in no position to bail them out because they too will have a lot of debt,” Leacock further said.