Eustace – Funds in name of PM’s mother withdrawn before FSA takeover

How could investors in the St Vincent Building and Loan Association (BLA) be expected to maintain their investments in the financial institution, when immediate family members of the Minister of Finance have withdrawn theirs?{{more}}

Leader of the Opposition Arnhim Eustace posed this question yesterday, after disclosing that Theresa Francis, mother of Prime Minister Dr Ralph Gonsalves, withdrew over EC$1 million from the BLA in the final months of 2012.

Speaking at a press conference at Democrat House, Eustace said that he has been reliably informed that the funds in the name of Francis, were withdrawn during the period when Gonsalves, who is Minister of Finance, supervised the institution.

Prior to November 12, 2012, when the Financial Services Authority (FSA) was established, local non commercial bank financial institutions were supervised by the Ministry of Finance.

“How can investors be expected to maintain their investments in Building and Loan when immediate family members of the minister in supervision of the Building and Loan have withdrawn theirs?” Eustace asked.

“Who else withdrew monies in advance of the FSA takeover?”

“With respect to the immediate future, many members will no doubt continue to apply to withdraw their respective investments in Building and Loan,” Eustace l Continued from Page 1

said, adding that he was calling on the FSA to give members a full account of the status of the financial institution.

The FSA, the regulatory body for all non-commercial bank financial institutions, took management and control of the BLA on February 1.

In his presentation, the Leader of the Opposition said the FSA had indicated in the letter to the BLA, that the reason for the takeover was to protect the interest of the shareholders, members and depositors, as well as the public, and for ensuring that the association remains financially sound.

“The FSA further stated that it took this action ‘based on concerns about the financial soundness and corporate governance of the Association’,” Eustace said.

This, according to Eustace, prompted many members to immediately withdraw their monies.

“…some of whom were able to do so without notice, to the extent of millions of dollars,” the Opposition Leader said.

A number of other factors have influenced investors’ confidence, Eustace said, including the sale by government of 51 per cent in the National Commercial Bank (NCB), the collapse of CLICO and BAICO and the 2012 downgrading of this country’s credit rating by Moody’s.

Eustace, however, said prior to recent developments, many were not aware that the BLA had been experiencing problems and that efforts had been made since 2009 through the Eastern Caribbean Central Bank to effect changes in the BLA to protect its members.

He further stated that many were also unaware, until the release by the FSA, that since February 2010, BLA had entered a Memorandum of Understanding with the Ministry of Finance, with the assistance of the World Bank,

to introduce measures to strengthen the overall condition of the BLA.

An action plan was developed under this MOU and carries on until 2013, Eustace explained, with further assistance from the World Bank and close oversight by the newly formed FSA.

He continued that since assuming control of BLA, the FSA indicated that it was satisfied with this ongoing work, the Leader of the Opposition said.

“If the three-month-old FSA was so satisfied with the work under the Memorandum of Understanding, why move in and take over the Building and Loan?” Eustace again questioned.

“What was the reason for the takeover?”

But there are other matters surrounding investor confidence, Eustace said, and the government’s takeover of the BLA that he said were baffling.

“One important aspect is the role – prior to the FSA takeover – of persons (and their immediate family members) in the service of institutions related to the supervision and takeover of Building and Loan,” he said. (DD)