Gonsalves, Eustace dispute Morgan’s security
July 23, 2010
Gonsalves, Eustace dispute Morgan’s security

by Kenton X. Chance Fri, Jul 23, 2010

Opposition Leader Arnhim Eustace still doubts that former chairman of the National Commercial Bank (NCB) Desmond Morgan had $4 million worth of property put up as security for loans from the bank, as Prime Minister Dr. Ralph Gonsalves has said.{{more}}

On May 19, 2010, the High Court ordered Morgan, proprietor of Blue Skye Communication (SVG) Ltd., to pay the NCB EC$2.251 million as repayment for loans and interest accumulated.

Gonsalves told reporters on Tuesday that at no time was the money unrecoverable since the bank was holding as collateral for the loans, Morgan’s house and three parcels of land, valued at a total of EC$4 million.

“That is what he said,” Eustace told SEARCHLIGHT on Wednesday of Gonsalves’ comment.

“I have no reason why I should believe the Prime Minister, because, [in] objective circumstances, where they had that (security), there is no reason to go to court,” Eustace, a former prime minister said.

“…[T]he court order [was] to make the surety of the legal mortgage doubly sure,” said Gonsalves, who last week told SEARCHLIGHT that banks are generally reluctant to take their clients to court.

Eustace told SEARCHLIGHT if the loan was secured, going to court “doesn’t make sense to me,” adding, “He (Morgan) never responded to them (NCB) when they asked for payment of the loan.”

“I don’t understand. If you have security, you go ahead and realise your security, especially [for] somebody who is not responding to you,” the former minister of finance said.

Eustace, speaking at the NDP’s convention on Sunday, said Morgan was trying to sell to the NCB, as repayment of the loan, $2 million shares in his company, Omega Development Limited.

Gonsalves said an idea was mooted, in which a company would be formed, and the property that NCB was holding as security for the loans would be put into that company.

It was proposed that the share certificates be deposited with the NCB and if, by a particular date, Morgan and his Blue Sky Communication could not repay the loan, the shares would have been transferred to the NCB, making it the owner of the company.

The idea was not followed through on, Gonsalves said, adding that such arrangements exist in several Caribbean nations, including here in St. Vincent and the Grenadines.

“…It was a way of getting the security realized. And there are different ways of getting the security realized,” Gonsalves said.

He said the bank could have exercised its power of sale under the legal mortgage.

“But they wanted to make doubly sure; they have a court judgement. And the order of the court binds all his property,” said Gonsalves, who, in his capacity as Minister of Finance, is the principal nominal shareholder of NCB.

“I want Mr. Morgan to pay the money. That’s all,” Eustace told SEARCHLIGHT, adding that the bank should ensure that borrowers have enough security so the bank would not be in a position “where they have to do other things.”

Eustace suggested that Morgan received preferential treatment, saying that the bank often sells the vehicles of omnibus operators who default on their loans for a few months.

“I am saying if Morgan had property put up there, sell the property. All I am saying is treat everybody the same. Set out your conditions and everybody must meet them,” Eustace said.

Gonsalves removed Morgan from chairmanship of the bank in November 2008, when NCB executives informed him that Morgan’s loans were in arrears.

“This is a man whose wife is the Attorney General (Judith Jones-Morgan) and who supports the ULP (Unity Labour Party),” Gonsalves said, adding that deposing Morgan was “demonstrating good governance”.

He said the situation with Morgan was different from the “sweetheart deals” some ministers got under the Sir James Mitchell New Democratic Party (NDP) administration. Some of those loans were given under conditions that prevented the bank from exercising its power of sale even when the loans were in arrears.

“I didn’t have any,” Eustace said of these “sweetheart loans”, adding, “That is something I would have to check.”

“[The NDP] are the masters of corruption in government,” Gonsalves said, adding, “This government, at the ministerial level, is free of that”, even as he said some government state employees have been charged with stealing government property since he came to office.

Omega Development Limited, a real estate development and trading company, was incorporated here on February 16, 2010, with Morgan as the sole director.

Morgan is the chairman of Buildings, Roads, and General Services Authority (BRAGSA) but Gonsalves said BRAGSA “does not have anything to do with” the NCB.

“BRAGSA is probably more headache for Desmond Morgan than anything else. And I won’t be surprised if he gives up the headaches,” Gonsalves said on Monday.

Eustace, speaking at the NDP convention, called on Gonsalves to investigate and explain the activities of Morgan’s company, even as he said he had more information to reveal about operations at the NCB.

“I will give that information when I am ready to,” he told SEARCHLIGHT on Wednesday.