Eustace: PM fooling the public about NCB sale

While Leader of the Opposition Arnhim Eustace has accused Prime Minister Dr Ralph Gonsalves of “fooling the public” about the circumstances leading up to the sale of the National Commercial Bank, Gonsalves has hit back,{{more}} accusing Eustace of “twisting” the words he used during a speech he made to the governors of the Caribbean Development Bank (CDB) in Trinidad last month.

Gonsalves, speaking at a press conference Tuesday, was responding to Eustace who on Monday, June 27, on a radio program, said that the prime minister had in fact admitted that his government sold the National Commercial Bank (now the Bank of St. Vincent and the Grenadines) because of cash flow problems.

According to Gonsalves, his government, by taking the decision to sell 51 percent of the shares, had diverted any potential problem.

He further contended that the government showed political courage in taking the decision to sell out shares of then state owned bank.

“The Opposition Leader continues to fight a rear guard battle to explain why it was not a good thing to have sold shares in the bank,” Gonsalves said.

But according to the prime minister, he has repeatedly spoken of the facts that led to the government’s decision to privatise the bank.

“When we came to office, we met a bank that was undercapitalized,” the prime minister contended, adding that the bank was in real trouble.

“The internal banking arrangements were haywire,” he said, adding that the Unity Labour Party’s administration upon taking office set about to strengthen the bank, and had successfully done so to a point that the equity base reached EC$84 million.

He further explained that the non-performing loans were at 3 per cent when the bank was sold, compared to 18 per cent when the ULP took office.

“The 2 or 3 years under Eustace the bank received a qualified auditor’s report, meaning that the accounts were in a horrible state,” Gonsalves fired back.

He defended the decision to sell the bank, saying that a liquidity problem, compounded by the global financial crisis which started in September 2008, meant that it was important that the country’s financial system be stabilized.

“The fact that you have a liquidity problem and a challenge with the capital base doesn’t mean that you have an insolvency problem, but if we allowed the situation to continue as we anticipated with the financial crisis, we could have run into difficulties as other countries did around the world,” Gonsalves said.

But Eustace quoted sections of the Prime Minister’s speech at the CDB meeting, including a section which the Opposition Leader said was an admission by the Prime Minister that the Bank was sold to avert its collapse.

“The Financial Stabilisation Loan to assist the Government in the divestment of the National Commercial Bank (NCB). This loan aided in dealing successfully with the liquidity problems at the NCB and in reducing our debt servicing costs. We know now that the assistance of the CDB, in this special case PBL, not only averted the collapse of the NCB, but provided stability to the financial sector in St. Vincent and the Grenadines, and by extension, the Eastern Caribbean Currency Union (ECCU),” Gonsalves said, in his presentation at the governors’ meeting.

“This is the speech I am reading from, what he said,” Eustace said, adding that the Prime Minister was fooling the public.

He added that Gonsalves made all sorts of statements to the local media, but had a different story when he faced the economic elite of the region.

“He should tell the people the truth…they have been fed a diet that all is well, but all is not well here in St Vincent and the Grenadines,” Eustace said. (DD)