Amendments to NBS Act forced through the National Assembly

That the Government used its majority in the National Assembly to push through major amendments to the New Building Society Act was not surprising. That Messrs Winston Murray and Khemraj Ramjattan so persuasively argued the case for the PPP/C to reflect on the implications of a piece of legislation was commendable.

That a debate on a technical bill could descend into real gutter remarks was I am told, not unusual. What was disappointing and regrettable was the attitude of those on the government side, the little or no research reflected in their presentations and their failure to understand, or total disregard of, the co-operative nature of the NBS or what corporate governance means.

That the Governor of the central bank and one of his staff were in the Chamber suggests that they were invited by the Government. None of the directors of the NBS including its CEO made any appearance during the entire four or so hours it took before the vote.

Yet, even in the absence of an invitation, it would have been both necessary and helpful for the directors to attend the debate on what is, to date, one of the most fundamental changes to the Act under which they operate.

Their non-attendance did not surprise, as the directors have consistently belittled the contribution and views of their own members. They did not seem to be interested in the views of the legislators either.

Harlots and hypocrites
The exchanges in the National Assembly were peppered with negatives like “harlot”, “bullies”, “instigators” and “hypocrites” instead of capital adequacy, loan provisioning, corporate governance and minority protection. Those who referred to the Companies Act to support their case were at the same time economical about the provisions of the Act which they selectively chose some sections from while ignoring others. Their response to the suggestion that good governance, as does the Companies Act, seeks to protect the interest of the minority was that “the will of the majority must prevail.”

The self-styled NBS Concerned Members used almost every possible means and opportunity to engage the decision-makers and to advise caution. Once I received a copy of the Bill, I tried calling the Chairman of the Board Dr. Nanda Gopaul. His secretary wanted to know the reason for the call. I explained to her that I was calling on behalf of the members of the NBS and wanted to speak with him urgently on the proposed amendments. I never heard from her again. My attempt to contact by telephone former Chairman Moen McDoom, S.C. was similarly ignored while PPP/C General Secretary Donald Ramotar treated our correspondence with equal discourtesy.

The Secretary/Director of the NBS refused to meet with Cyril Walker and me when we took a requisition to him signed by scores of members for the calling of a special meeting. We tried to lobby the parliamentarians as they went into the National Assembly. Prime Minister Sam Hinds said we were too late. He seemed unaware of the fact that at the time of the debate, the Bill had not yet been published in the Official Gazette, as is required under the Standing Orders. Notwithstanding that this may not be part of the parliamentary procedures, I believe that the Speaker should have taken a stand on that basis.

Bullies and cowards
I also believe that the Speaker should have intervened when Minister Nadir who was labouring to make a constructive and informed contribution to the debate took the opportunity to attack “the accountant, attorney-at-law and social commentator” for trying to bully the NBS’s board. In an aside, the learned Attorney General typically rejoined “not social commentator, instigator”.

Many would say that it is they who were the bullies and cowards for attacking without naming a person knowing that the person could not reply there. It was a disgusting demonstration of the abuse of power which has come to characterise our national politics.
It did not strike the government benches as odd that they took offence at the factual identification of Drs. Prem Misir and Gobind Ganga, and Mr. Paul Bhim as directors of the Bank of Guyana but applauded when members of the NBS were repeatedly being described as “bullies’ and a “tiny minority”.

The party prevails
During the break one member of the ruling party volunteered to Mr. Walker and me that he recognised the validity of some of the opposition concerns and would recommend that the Bill be taken to a Select Committee. And one leading member of the government admitted that the amendments as drafted might be inappropriate to a building society. But when the time came to stand up and be counted, those views were forgotten.

The fact that members had used legal and proper means to have the amendments considered at a meeting of the NBS, and the strong and constructive arguments by the opposition, mattered for nothing.

So in the end, subject to presidential assent and publication in the Official Gazette the bill that brings the New Building Society under the Financial Institutions Act will also remove several rights which members of the Society have enjoyed for seventy years.
There may be some complications. What the members did by their requisition was to ask that there be prior consultation on proposed changes which fundamentally reduce their rights as members.

Effectively, they are asking that if there are to be changes to the rules under which they joined the NBS in the first place, and if the goal post on the field on which they have been playing, are to be moved, then at least they should be consulted.
Would the President now try to pre-empt the holding of the meeting by assenting to and publishing the Act, giving the directors an excuse that the requisition has been overtaken by events? And if he does, the Concerned Members would have to consider their own response.

The Bill
In their requisition the members drew to the attention of the Board that they have always advocated bringing the Society under the supervisory control of the Bank of Guyana. In welcoming this proposal they also noted that they supported the amendments introduced by at least twelve of the clauses in the Bill.

They did however express “serious concerns” with certain other proposals which they highlighted and discussed in their requisition. Here are some of the more significant concerns.

Clause 5 (2)
The members noted that having regard to the nature of the Society’s business, great care ought to be taken in the wholesale application of all the provisions and guidelines of the FIA. The Financial Institutions Act 1995 was designed for banking and other financial business, not co-operatives, credit unions and similar organisations. In Jamaica for example, while the Bank of Jamaica regulates all financial institutions including cooperative societies and building societies, in the case of building societies, they do so under specific legislation. The same is also true of Trinidad and Tobago.

Jamaica recognises the special and unique characteristics of building societies and has separate primary and subsidiary legislation governing such societies. So that in that country, there is The Building Societies Act, 1897 which was last amended in 2004 and there are The Bank of Jamaica (Building Societies) Regulations, 1995 (amended 2005) and The Building Societies (Licences) Regulations, 1995.

This is also true of Trinidad and Tobago and the UK where there is a Buildings Society Act under which building societies are formed and regulated.

We different
The approach taken in Guyana is to treat the NBS as an entrenched monopoly. Does this mean that if another group wanted to set up a building society it must do so by asking for it to be set up by legislation? Corporate law has moved away from charter companies and there is a generic companies act that sets out the legal framework for the incorporation of companies.

Members are concerned that there had been no statement from the directors on whether they had been consulted by the government and on the impact on the Society of the FIA and its several Supervision Guidelines. Members expressed the view that the operations of the NBS could adversely affect the Society. In this regard the Board may have wished to consult with the Bank of Guyana and the other entities subject to Supervision Guideline No 5 – Loan Portfolio Review, Classification, Provisioning and Other related Requirements as to its effect. And Supervision Guideline No 4 – Capital Adequacy Ratio would be similarly relevant.

It does not appear that transitional arrangements allowed in the new clause 7 A apply to loan provisioning and this could impact on the Society’s mode of operations and results for the current and future years.

To be continued

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