Shut up, Mr Prime Minister
September 28, 2003
By Raffique Shah
PRIME MINISTERS are not inclined to take advice from journalists or members of the public, which is why I find the length to which Patrick Manning is taking this UTC-FCB merger issue, based on the fact that the advice supposedly came from "someone at FCB", alarming. But whether or not he likes it, I'll give Mr Manning this piece of advice: Just shut up! He may not like it, and he may henceforth see me as "the enemy", as politicians are wont to. But since I am in nobody's back-pocket, nor do I depend on politicians for favours, I hope he will take it as good advice, and most of all heed it.
From the time the issue first came to light—that is, the Government had problems retaining Clarry Benn as executive director of the UTC—I have kept abreast of it. And that's not because I know Benn personally and believe that he is very much a professional when it comes to his job. It's because I have grown to regard the UTC as one of the few success stories the State can boast of. It is one organisation outside of the heavy industries sector that was conceived by government (in this case, the late Dr Eric Williams), and has, with some further help from Government, and visionary leadership from its boards and senior managers, become a financial institution that is the envy of financial houses in the region.
It is often said that you do not tamper with something that's working well—unless you want to scuttle it. The UTC, after a shaky start in the lean years of the early 1980s, took off like the proverbial jet under the stewardship of Henry Sealy. In 1985, the UTC's resources under management moved from $21 million to $1.342 billion in 1996. In that year, a new government took office, and it was also in that year that Sealy's contract was not renewed. In another investigative story I have done for the Express Business magazine (coming next Wednesday), I pointed out that while many of us were led to believe that Sealy was a victim of the Basdeo Panday government, that "another Black man bites the dust", it was not so. There were other reasons why Sealy's contract was not renewed.
Be that as it may, Sealy had fulfilled his mandate and after much bickering and even attempts at political interference, Benn was selected from a number of candidates to lead the UTC. His stewardship proved to be even more rewarding, maybe because of the tremendous experience he had garnered in the 14 years he had been there as a senior investment manager. The UTC's asset base almost doubled within the first year, and that even though the Government had removed the tax shelter unit holders enjoyed from the inception of the mutual fund. Benn's record—and I am not suggesting that he alone was responsible, since his co-managers and even ordinary employees will have played sterling roles—speaks volumes of the man. The asset base story reads like a fairy tale: $2.196 billion in 1997, $5.577 billion in 2001, and $8.455 billion in 2002. Today it stands at over $10 billion, a target that was set for the end of 2004.
So if Sealy was a successful manager, Benn can best be described as a financial wizard. I am not here to praise Benn, although I suspect this column could bury him! I am simply saying that the man has performed well, and even if the Manning Government believes it's time for him to go because of his age, they are going about it in the wrong way. The internal wrangling that took place when time for his re-appointment came was sure to come to the public domain in short time.
The termination or retention of Benn, though, is not the critical issue at stake here. What's worrisome is the PM's treatment of the issue. Firstly, when he was badgered by my colleagues at his weekly news conference two weeks ago, he blurted out something about a merger of UTC and FCB. Pressed to elaborate, he said the suggestion came from a private citizen. Now that was sure to send journalists a-hunting, as we did. What followed was even more disturbing. Certain radio stations called on people to "take out your money from the clutches of the PNM" (meaning the UTC), and others dubbed the sugar workers, who had invested more than $250 million of their VSEP money in the ADB/UTC plan, fools and "traitors to their kind".
It is a miracle that there was no run on the UTC, although I understand withdrawals in the days following the PM's remarks were higher than usual. Last week, Manning further eroded confidence of unit-holders when he alluded to "amending the law" if Government decided that was the way forward. That only exacerbated the impasse since the last thing people who invested their money in the UTC wanted was Government interference.
As a columnist who is also a journalist and was at one time an editor, I was schooled in just how to handle matters pertaining to financial institutions. Such institutions rely purely on their clients' trust and confidence in them to remain in business. If one plants any doubts about aspects of their operations, one could do irreparable damage to a bank or other financial institution. So on occasion, what looked like a good story had to be killed in the public interest. Manning, as Minister of Finance should be acutely aware of that. And when he speaks in his capacity as Prime Minister, his words carry infinitely more weight than Shah's or John Public's. Which is why he should immediately desist from taking this UTC/FCB merger talk any further, at least in public.
Instead, the Prime Minister should look at legislation that was laid in Parliament since the year 2000, but which is yet to be debated. The proposal is to repeal the existing Unit Trust Act and enact new legislation to give life to a new company, Unit Trust Holdings. My understanding of the proposed legislation is that it will enable all unit holders to become shareholders in the new company, which will have two subsidiaries, The UTC Financial Services Ltd and UTC Trust Services Ltd. Unit holders were briefed on this proposal by then chairman Judy Chang at the institution's annual meetings between 1999 and 2002. And they were receptive to the idea.
Mr Manning will be doing us a service by saying nothing more on this "merger" talk and focusing instead on strengthening one giant of which we can be very proud, the UTC.