On January 1, 2000, the Hon. Chief Minister, Hubert B. Hughes delivered his New Year’s Address to the people of Anguilla at a time when his Government was struggling to maintain power confronted by the absence of a clear majority in the House of Assembly. As usual whenever he is in a time of crisis he waxes biblical and invokes every vestige of his early Christian training to the cause. And as he did in his pamphlet “My Long Crusade” he again refers to his divine calling. Listen to a direct quote from that New Year’s Day Address:
“It can only be divine intervention that God in his infinite wisdom brought pressure on those otherwise would-be tyrants to make me Chief Minister of Anguilla in 1994. Today, since the resignation of the former Minister of Finance in May, the majority of the electorate see me as a fortress standing in the gates between the treasury and the barbarians who otherwise would have our taxpayers’ blood and sweat for easy prey. These cultured American boys are not only highly qualified to do just that, but to put all ill-gotten gain in a smoking pipe all the way to the banks.
We are here to ensure that Anguilla remains a democracy. We are to guard ourselves against those who would desire a banana republic in establishing their family dynasties only for their friends, colleagues, and associates.”
I have quoted this section of the address to illustrate that the rhetoric and the approach has not changed over the last ten years particularly when the Chief Minister is under pressure. And as he did in 2000 last week he again called in the Christian Council to cloak his actions in a shroud of piety, reminiscent of medieval monarchy. The AUM clerics may be well advised to read the “Fall of Cardinal Wolsey”, as movingly captured by Shakespeare, and not serve, “with such zeal”, a man who will abandon them as quickly as he sought their counsel.
The pressures that the Chief Minister now faces --- being called upon to respond to a number of questions to which truthful answers will be damaging to his “self-proclaimed” integrity --- will result in the blame being thrown on key advisers and supporters. Heads will roll! (It wasn’t me!) The Chief Minister does not take the blame for anything. And as the week progresses his speeches and his actions will bear out these predictions.
In my column last week I promised that I would speak to the very serious issues that I believe were deliberately hidden behind the “smoke screen” which the “circus master” orchestrated last week. I expected that when the “smoke” dissipated the “issue with the Chief Minister”, which the Minister for the Overseas Territories asked the Governor to raise, would be exposed. In addition, the Chief Minister’s rant in the House of Assembly last Tuesday when he mentioned having received a letter from the Foreign & Commonwealth Office (FCO) Minister and commented that he was being condemned before he was tried, was a clear indication that these issues had come to a head. The core issue being that the Chief Minister without reference to or approval from Executive Council or the House of Assembly authorized the Chairman of the Social Security Board to borrow Two Hundred million United States Dollars. For the purposes of authenticity I have inserted the entire letter of authorization as follows:
“Dear Sir, The Anguilla Social Security Board is hereby authorized to enter into a loan agreement with the United Investment Limited of 11700 Preston Forest Center, Suite 660-388, Dallas Texas, TX 5230, to borrow up to united states currency two hundred million dollars (US$200,000,000) at a rate of 1.5% per annum simple interest for a period of 25 years. The same loan should be secured against the Anguilla Social Security Fund. Yours sincerely, Hubert B. Hughes Chief Minister and Minister of Finance.”
There is no plausible explanation for the Chief Minister’s wrongful action in this matter. He continually puts on discourses in the House of Assembly about borrowing, breaching borrowing guidelines, borrowing without the approval of Executive Council and the House of Assembly, borrowing without the approval of the Secretary of State, deficit financing, transparency in financial matters and on and on. He knows all the rules!
But there is an explanation for his actions, one that I continue to raise, that is, “the Chief Minister believes that the rules apply to everyone else but him!” So that while he chastises the “conduct” of the past Government and the former Minister of Finance --- he believes that he is above the need for such scrutiny and oversight because he is after all “Hubert Hughes”. “I am clean!”
Neither is the Chief Minister’s action on this occasion an isolated case --- it is a persistent pattern of behaviour. He wrote a letter ten years ago as Chief Minister suggesting that Grace University was established on Anguilla and that a number of students were graduating. In June 2010, he wrote a letter giving retroactive approval to his Minister of Utilities, Hon. Evan Gumbs, to vote Government’s shares in ANGLEC without EXCO approval. And to seal it all he went in the House of Assembly last week and boasted that the reason why he did not seek the approval of the borrowing was because he knew it would not be granted. In fact, contradicting the very claim in his New Year’s Address in 2000 that he was a “fortress standing in the gates between the treasury and the barbarians” --- and perhaps so indicating that he may actually be a “barbarian” himself.
But beyond these governance issues there are the issues within the letter that must concern all of us. First of all the letter authorizes the Anguilla Social Security Board to enter into a loan agreement with the company to borrow up to US$200 million at a given rate for a total period of twenty five years, but no where in the letter does it indicate for what purpose the monies are being borrowed. It must be noted that whatever loan agreement the Social Security Board enters into the Government of Anguilla has a contingent liability to the extent that in Section 14 (1) of the Act it states: “Any temporary insufficiency in the assets of the Fund to meet the liabilities of the Fund shall be advanced out of the (Government) Consolidated Fund”. Further in Section 15(7) of the Act requires that the Audited Accounts of the Board must be forwarded to the Minister for Social Security to be laid before the House of Assembly on an annual basis. It therefore follows that in granting an authorization which affects the Social Security Fund there must be clear instructions as to what purposes the funds may be applied --- not just a open check to borrow and spend.
Secondly, the letter authorizes the Social Security Board to borrow from a particular institution, in this case United Investment Limited. Authorizations from the House of Assembly do not refer to a particular institution it refers to “financial institutions” generally, unless it is a regional institution like the Caribbean Development Bank or any similar institutions with which the Government has an approved agreement. This is to ensure that the arrangements are “arms length”, transparent, competitive and secure. To name a lending agency in such an authorization presupposes that the necessary due diligence has already been done and the Executive Council and the House of Assembly have signed off on it. There has been no evidence that the Chief Minister did any such investigations regarding this company in fact at the time of writing I have been informed that the Financial Services Commission has requested that he retracts a statement in which he claimed that it did due diligence on United Investment Limited. Another Hubert inaccuracy!
Finally, and perhaps the most dangerous, the letter authorizes that the “loan be secured against the Anguilla Social Security Fund.” We all are aware that at present the Social Security Fund stands at roughly EC$250 million. The letter of authorization allows borrowing up to US$200 million. That figure is more than double the assets of the Fund. It therefore means that not only is the Chief Minister authorizing that the present Fund be used as security for the loan --- but future contributions to the Fund as well. Is this the same Chief Minister who criticized the past Government for investing in national education by leveraging the Fund for the acquisition of property for an institution of higher learning? Is this the same Chief Minister who does not believe in borrowing --- yet now intends to more than double the present debt commitments of the Government and People of Anguilla? Is this the same Chief Minister who believes in transparency --- yet is willing to mortgage the Social Security Fund (present and future) without having any consultations with the Anguillian contributors and beneficiaries to the fund?
The Chief Minister in the Anguilla House of Assembly in an effort to rationalize his actions before the contents of the FCO Minister’s letter were revealed --- tried to buy new friends. He suggested that he was doing this borrowing to stimulate the indigenous banks. You can imagine my shock having being so strongly criticized in his presentation in the House on the state of Social Security for assisting the indigenous banks. I quote: “During these times the Social Security Board and its investment Committee decided to (a) deposit all of the Social Security funds in NBA and CCB, and (b) to invest Social Security funds through Smith Barney, a company which does investments from Anguilla in conjunction with NBA which receives a financial benefit from all such investments. …. Sadly, the former Minister, now called the Journalist, defended this practice…” After having criticized the former Minister of Finance for his support of the indigenous banks --- why is the Chief Minister now so anxious to be helpful to them after agreeing with Chairman Tommy’s plan to curtail critical deposits? Could it be that only at this late hour that he has come to realize that these banks have almost four thousand Anguillian shareholders --- not only the Director and his family?
The very “inconvenient truths” contained in the worrisome questions which the Minister for the Overseas Territories has posed for the Chief Minister’s response are unsettling. Indeed, the large sum that is being contemplated and the low interest rate being applied provoke the verbal reaction: “This is too good to be true!” In this world of international finance beset by myriad schemes with untoward intentions --- if something seems too good to be true --- chances are it is too good to be true!
These kinds of transactions have been circulating in Anguilla for over two years now, as schemers try to entice struggling businesses to apply for much needed financing. The schemers usually have a local representative who is promised a significant fee if a deal is arranged. A large up-front fee is usually requested from the borrower. A number of local businesses have been duped as no loan has ever been disbursed despite the fact that large up-front fees have been paid to the schemers. When the transaction has been supposedly closed however, there are usually statements of the funds being “approved” and claims that the funds are “on the way”. Can this be one of those transactions? Has Hubert been duped? Who is the local representative for this transaction?
You can be assured that for every question that the FCO Minister has asked the Chief Minister he already knows the answer. It therefore means that the Chief Minister’s “smoke screen” has only been temporarily effective. The time of reckoning has come --- so his only recourse must be to find someone to blame. Can it be Chairman Tommy?
Finally let me make this strong point! What the Chief Minister has done shows his lack of understanding of proper conduct in the governance of this island’s affairs and in the professional management of the Ministry of Finance. I am certain that none of his technical officers in the Ministry of Finance were involved in this matter. In his paranoia he has been led to depend on advice from outside Government from persons who have their own agenda. The past Government that he criticizes, incessantly, has never had such issues as to the propriety of its borrowing arrangements. And in fact the British Government approved every cent of borrowing the past Government had undertaken.
The past Government’s response to the need to service its growing loan portfolio was to pursue the Policy Based Loan from the Caribbean Development Bank, an institution in which we are qualified members. It never risked Anguilla’s future on spurious companies without an established track record. It put in place the Caribbean Catastrophic Risk Insurance Facility to mitigate the financial and economic impact of natural disasters like earthquakes and hurricanes. All these are initiatives the present Government has benefitted from, including the EC$ fifteen million in virtual reserves from the ninth European Development Fund. Never has a British Minister questioned our adherence to good governance in executing any of these arrangements.
By what moral or imperious authority then, can the Chief Minister now continue his “holier than thou” tirades about the past Government or the former Minister of Finance on the several media? Can he speak about unsustainable borrowing? Can he speak about lack of transparency? Can he speak about bad governance? Can he speak about honesty and integrity? Can he even tell the truth?
I can think of no more appropriate a response --- should the Chief Minister persist along his usual condescending vein, than: “Physician! --- Heal thyself!”
Victor F. Banks
Sachasses Estate
October 5, 2010
“It can only be divine intervention that God in his infinite wisdom brought pressure on those otherwise would-be tyrants to make me Chief Minister of Anguilla in 1994. Today, since the resignation of the former Minister of Finance in May, the majority of the electorate see me as a fortress standing in the gates between the treasury and the barbarians who otherwise would have our taxpayers’ blood and sweat for easy prey. These cultured American boys are not only highly qualified to do just that, but to put all ill-gotten gain in a smoking pipe all the way to the banks.
We are here to ensure that Anguilla remains a democracy. We are to guard ourselves against those who would desire a banana republic in establishing their family dynasties only for their friends, colleagues, and associates.”
I have quoted this section of the address to illustrate that the rhetoric and the approach has not changed over the last ten years particularly when the Chief Minister is under pressure. And as he did in 2000 last week he again called in the Christian Council to cloak his actions in a shroud of piety, reminiscent of medieval monarchy. The AUM clerics may be well advised to read the “Fall of Cardinal Wolsey”, as movingly captured by Shakespeare, and not serve, “with such zeal”, a man who will abandon them as quickly as he sought their counsel.
The pressures that the Chief Minister now faces --- being called upon to respond to a number of questions to which truthful answers will be damaging to his “self-proclaimed” integrity --- will result in the blame being thrown on key advisers and supporters. Heads will roll! (It wasn’t me!) The Chief Minister does not take the blame for anything. And as the week progresses his speeches and his actions will bear out these predictions.
In my column last week I promised that I would speak to the very serious issues that I believe were deliberately hidden behind the “smoke screen” which the “circus master” orchestrated last week. I expected that when the “smoke” dissipated the “issue with the Chief Minister”, which the Minister for the Overseas Territories asked the Governor to raise, would be exposed. In addition, the Chief Minister’s rant in the House of Assembly last Tuesday when he mentioned having received a letter from the Foreign & Commonwealth Office (FCO) Minister and commented that he was being condemned before he was tried, was a clear indication that these issues had come to a head. The core issue being that the Chief Minister without reference to or approval from Executive Council or the House of Assembly authorized the Chairman of the Social Security Board to borrow Two Hundred million United States Dollars. For the purposes of authenticity I have inserted the entire letter of authorization as follows:
“Dear Sir, The Anguilla Social Security Board is hereby authorized to enter into a loan agreement with the United Investment Limited of 11700 Preston Forest Center, Suite 660-388, Dallas Texas, TX 5230, to borrow up to united states currency two hundred million dollars (US$200,000,000) at a rate of 1.5% per annum simple interest for a period of 25 years. The same loan should be secured against the Anguilla Social Security Fund. Yours sincerely, Hubert B. Hughes Chief Minister and Minister of Finance.”
There is no plausible explanation for the Chief Minister’s wrongful action in this matter. He continually puts on discourses in the House of Assembly about borrowing, breaching borrowing guidelines, borrowing without the approval of Executive Council and the House of Assembly, borrowing without the approval of the Secretary of State, deficit financing, transparency in financial matters and on and on. He knows all the rules!
But there is an explanation for his actions, one that I continue to raise, that is, “the Chief Minister believes that the rules apply to everyone else but him!” So that while he chastises the “conduct” of the past Government and the former Minister of Finance --- he believes that he is above the need for such scrutiny and oversight because he is after all “Hubert Hughes”. “I am clean!”
Neither is the Chief Minister’s action on this occasion an isolated case --- it is a persistent pattern of behaviour. He wrote a letter ten years ago as Chief Minister suggesting that Grace University was established on Anguilla and that a number of students were graduating. In June 2010, he wrote a letter giving retroactive approval to his Minister of Utilities, Hon. Evan Gumbs, to vote Government’s shares in ANGLEC without EXCO approval. And to seal it all he went in the House of Assembly last week and boasted that the reason why he did not seek the approval of the borrowing was because he knew it would not be granted. In fact, contradicting the very claim in his New Year’s Address in 2000 that he was a “fortress standing in the gates between the treasury and the barbarians” --- and perhaps so indicating that he may actually be a “barbarian” himself.
But beyond these governance issues there are the issues within the letter that must concern all of us. First of all the letter authorizes the Anguilla Social Security Board to enter into a loan agreement with the company to borrow up to US$200 million at a given rate for a total period of twenty five years, but no where in the letter does it indicate for what purpose the monies are being borrowed. It must be noted that whatever loan agreement the Social Security Board enters into the Government of Anguilla has a contingent liability to the extent that in Section 14 (1) of the Act it states: “Any temporary insufficiency in the assets of the Fund to meet the liabilities of the Fund shall be advanced out of the (Government) Consolidated Fund”. Further in Section 15(7) of the Act requires that the Audited Accounts of the Board must be forwarded to the Minister for Social Security to be laid before the House of Assembly on an annual basis. It therefore follows that in granting an authorization which affects the Social Security Fund there must be clear instructions as to what purposes the funds may be applied --- not just a open check to borrow and spend.
Secondly, the letter authorizes the Social Security Board to borrow from a particular institution, in this case United Investment Limited. Authorizations from the House of Assembly do not refer to a particular institution it refers to “financial institutions” generally, unless it is a regional institution like the Caribbean Development Bank or any similar institutions with which the Government has an approved agreement. This is to ensure that the arrangements are “arms length”, transparent, competitive and secure. To name a lending agency in such an authorization presupposes that the necessary due diligence has already been done and the Executive Council and the House of Assembly have signed off on it. There has been no evidence that the Chief Minister did any such investigations regarding this company in fact at the time of writing I have been informed that the Financial Services Commission has requested that he retracts a statement in which he claimed that it did due diligence on United Investment Limited. Another Hubert inaccuracy!
Finally, and perhaps the most dangerous, the letter authorizes that the “loan be secured against the Anguilla Social Security Fund.” We all are aware that at present the Social Security Fund stands at roughly EC$250 million. The letter of authorization allows borrowing up to US$200 million. That figure is more than double the assets of the Fund. It therefore means that not only is the Chief Minister authorizing that the present Fund be used as security for the loan --- but future contributions to the Fund as well. Is this the same Chief Minister who criticized the past Government for investing in national education by leveraging the Fund for the acquisition of property for an institution of higher learning? Is this the same Chief Minister who does not believe in borrowing --- yet now intends to more than double the present debt commitments of the Government and People of Anguilla? Is this the same Chief Minister who believes in transparency --- yet is willing to mortgage the Social Security Fund (present and future) without having any consultations with the Anguillian contributors and beneficiaries to the fund?
The Chief Minister in the Anguilla House of Assembly in an effort to rationalize his actions before the contents of the FCO Minister’s letter were revealed --- tried to buy new friends. He suggested that he was doing this borrowing to stimulate the indigenous banks. You can imagine my shock having being so strongly criticized in his presentation in the House on the state of Social Security for assisting the indigenous banks. I quote: “During these times the Social Security Board and its investment Committee decided to (a) deposit all of the Social Security funds in NBA and CCB, and (b) to invest Social Security funds through Smith Barney, a company which does investments from Anguilla in conjunction with NBA which receives a financial benefit from all such investments. …. Sadly, the former Minister, now called the Journalist, defended this practice…” After having criticized the former Minister of Finance for his support of the indigenous banks --- why is the Chief Minister now so anxious to be helpful to them after agreeing with Chairman Tommy’s plan to curtail critical deposits? Could it be that only at this late hour that he has come to realize that these banks have almost four thousand Anguillian shareholders --- not only the Director and his family?
The very “inconvenient truths” contained in the worrisome questions which the Minister for the Overseas Territories has posed for the Chief Minister’s response are unsettling. Indeed, the large sum that is being contemplated and the low interest rate being applied provoke the verbal reaction: “This is too good to be true!” In this world of international finance beset by myriad schemes with untoward intentions --- if something seems too good to be true --- chances are it is too good to be true!
These kinds of transactions have been circulating in Anguilla for over two years now, as schemers try to entice struggling businesses to apply for much needed financing. The schemers usually have a local representative who is promised a significant fee if a deal is arranged. A large up-front fee is usually requested from the borrower. A number of local businesses have been duped as no loan has ever been disbursed despite the fact that large up-front fees have been paid to the schemers. When the transaction has been supposedly closed however, there are usually statements of the funds being “approved” and claims that the funds are “on the way”. Can this be one of those transactions? Has Hubert been duped? Who is the local representative for this transaction?
You can be assured that for every question that the FCO Minister has asked the Chief Minister he already knows the answer. It therefore means that the Chief Minister’s “smoke screen” has only been temporarily effective. The time of reckoning has come --- so his only recourse must be to find someone to blame. Can it be Chairman Tommy?
Finally let me make this strong point! What the Chief Minister has done shows his lack of understanding of proper conduct in the governance of this island’s affairs and in the professional management of the Ministry of Finance. I am certain that none of his technical officers in the Ministry of Finance were involved in this matter. In his paranoia he has been led to depend on advice from outside Government from persons who have their own agenda. The past Government that he criticizes, incessantly, has never had such issues as to the propriety of its borrowing arrangements. And in fact the British Government approved every cent of borrowing the past Government had undertaken.
The past Government’s response to the need to service its growing loan portfolio was to pursue the Policy Based Loan from the Caribbean Development Bank, an institution in which we are qualified members. It never risked Anguilla’s future on spurious companies without an established track record. It put in place the Caribbean Catastrophic Risk Insurance Facility to mitigate the financial and economic impact of natural disasters like earthquakes and hurricanes. All these are initiatives the present Government has benefitted from, including the EC$ fifteen million in virtual reserves from the ninth European Development Fund. Never has a British Minister questioned our adherence to good governance in executing any of these arrangements.
By what moral or imperious authority then, can the Chief Minister now continue his “holier than thou” tirades about the past Government or the former Minister of Finance on the several media? Can he speak about unsustainable borrowing? Can he speak about lack of transparency? Can he speak about bad governance? Can he speak about honesty and integrity? Can he even tell the truth?
I can think of no more appropriate a response --- should the Chief Minister persist along his usual condescending vein, than: “Physician! --- Heal thyself!”
Victor F. Banks
Sachasses Estate
October 5, 2010
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“Nothing in the world is more dangerous than sincere ignorance and conscientious stupidity” – MLK.