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COCOA IN THE SUN by Ken Howell

posted 18 Dec 2015, 04:53 by Gerry Kangalee   [ updated 18 Dec 2015, 05:00 ]

The Governor of the Central Bank rang alarm bells recently, when he identified several companies, which were the beneficiaries of very large slices of foreign exchange from the Banks and when he also said that the country was in a recession.

One would have expected the government to treat this information with some level of importance. Instead, what we are hearing is that the governor doesn’t know what he is talking about, that he has breached the Central Bank Act as it relates to confidentiality, and that it is only the Central Statistical Office (CSO) that can provide reliable data on the economy. What they forgot to mention is that the CSO was not functioning for quite a while because the old building in which it carried out its functions were in a state of disrepair, and it was only recently, it was provided with a new home.

Now, this is real time television that is unfolding before our eyes, as the media houses, both print and electronic, as if on cue, all received the baton and ran their respective legs of the propaganda race. Sadly, some of us are behaving as though we are not capable of thinking things through because the sides we take in electoral politics have been influencing our judgement. But it does not matter which political party we voted for. What is important, is whether the Governor is of sound mind and, if so, what set of circumstances would have precipitated his decision to name these companies and to announce that the country is in a recession. 

These are some of the questions which we should ask. He is our Central Bank Governor, responsible for managing the foreign exchange that belongs to us, and whenever he speaks on matters which impact the country's financial health we have to take what he says very seriously. 

But none of the spin doctors from the UWI and the media talk show hosts appear to be concerned about the underlying implications of the Governor's decision to do what he did. In my view he has opened the door for the police and the Financial Intelligence Unit and by extension the government through the Inland Revenue Division, to embark on a large scale investigation to determine whether these companies are using the foreign exchange for the purpose which they stated. 

For example, whether over invoicing of supplies is happening; how much money laundering is in the mix; whether the information provided could lead to the identification of the real Mr. Big in the illegal drug trade and so on. But no one is interested in looking at this issue from that angle. Instead, they are quick to jump on the messenger’s back shouting; kill the messenger! It should not surprise us when we discover that the reason for the coordinated attack on the Governor is because the broadside which he fired has exposed the soft under belly of the alliance between the PNM and the big business entities whose names were mentioned.

The leader of one such entity was quick to come forward to clear the name of his company and to threaten the Governor with legal action. But as my Grand Father used to say “If you have cocoa in the sun you must look for rain!”

It was the Minister of Finance who also said that the Governor might have broken several laws and might have also committed a criminal act. Let me say this however, to those who are quick to jump on my throat believing that I am defending the Governor; I have no such intention! I am pointing to the fact that what his statements have done is expose the reality of the alliance of the media with big business interests and how the two always work in tandem to support or bring down governments.

The next issue which comes to the fore is the reality that Central Bank Governors are political appointees. That is the case in all capitalist economies. Therefore, it should not surprise us if this PNM government would want to appoint one of its own in that position.

Now, this question as to whether we are in a recession should not be dismissed or be treated with in a casual fashion, because the implications are very serious for working people. While the last government can be chastised for many sins of omission and or commission, the objective reality is that successive governments failed to diversify the economy away from its dependency on oil and gas.

When the price of oil exploded on the international market, as a result of the formation of the Organisation of Oil Producing and Exporting Countries, O.P.E.C. and money flowed like water in this country, the government decided that there was no need to plan the economy, because we had money and we could build and buy what we wanted. Agriculture went into a downward spiral and once profitable banana, cocoa, coffee and citrus estates were abandoned by their owners. As a consequence of the decline in agriculture, the food import bill of the country increased, ran into millions of dollars and continued to increase even today.

From the private sector we are hearing that the government should embark on a programme of diversification, but they are not interested in taking the lead in that regard. Instead, when Lawrence Duprey of CL Financial (Clico) fame took the risk and embarked on a programme of diversification, he was condemned for being adventurous.

But even before the adventures of Duprey, no local private sector company ever made any attempt to embark on a diversification programme. When the Banks were clamouring about the very high liquidity in the financial system, none of these companies were even interested in borrowing to invest to expand the economic base, so as to generate new income.  Instead, it was the government who sought to mop up the excess liquidity by floating government bonds.

What worsened the situation was the decline in oil production even before the recent fall in oil and gas prices. So we should not be surprised by the announcement of the Central Bank Governor. And we should take the Minister of Finance’s response that he was not informed with quite a few grains of salt. But what is most frightening in all of this brouhaha is that persons, who purport to represent the interest of the working class, are now leading the charge on behalf of the PNM government against the Governor, calling him “an enemy of the state”.

These persons seem to have earned their rite of passage into PNM political acceptance on the “casting couch” while others are alleging that this recent display is the result of a relapse into  an old addiction, having served the PNM and perhaps other forces, to weaken the trade union movement from since 1975. 

Since it is now the belief in certain big business quarters that the movement is much weaker than it ever was, these elements believe that it is now safe to openly support the PNM which has displayed open disregard for the people of this country by placing an agent of the ANSA McAl group on the Board of the NGC, one of the cash cows of the public sector. That person is serving one purpose and one purpose only and that is to advise the Sabgas on which Companies in the NGC group are ripe for the picking!

One would have thought that leaders of the trade union movement would seize the opportunity to use the revelations of the Governor to begin to mobilize the workers, not to talk about productivity bargaining, but to begin to mobilize; because, make no mistake the privatization of state companies is coming, as well as retrenchment and receiverships and the wholesale reduction of the work force in the state sectors. The appointment of this former Chief Operations Officer of the Sabga group of companies should raise alarm bells in the trade union movement, but apparently the so-called leaders are all asleep or perhaps they are deliberately turning a blind eye to these troubling developments. Perhaps the casting couch has that effect on people.

Gerry Brooks, CEO of NGC

Anyone who believes that private sector companies will buy into state owned companies such as the National Gas Company and assume the liability for the past services of the employees is making a serious mistake. The State will clear up all debts on the books of the companies before they are placed under the hammer of the Auctioneer. What this means is that workers will be terminated in the same manner as the health workers who were previously employed under the Ministry of Health and are now employed in five Regional Health Authorities.

It is an indisputable fact that almost all the other sectors of the economy depend on the state to disburse funds through the Public sector Investment Programme (PSIP) and through the other ministries such as the Ministry of Works and Transport, or through the Urban Development Company of Trinidad and Tobago. The Commercial sector, of course depends on the spending habits of the population. Very few of these local private sector companies earn foreign exchange. What we may find is that they consume more than they earn. Therefore, it is really the foreign exchange which the government receives as rents and taxes from the oil and gas companies, which is driving the economy.

In those circumstances, and because we have no control over what happens in the oil and gas markets, we are not the movers and shakers in the international geopolitical game  of oil and gas; we have to get out of the way of the big guns that are playing in the game. What this government should focus its attention on is the diversification of the economy away from dependence on a one crop economy, and set about the task of economic expansion.

In so doing, it must come to the realisation, that reliance on the local or foreign private sector will be a grave mistake. The past record of that sector, the local private sector, speaks volumes about its unwillingness to break away from the habit of being the distributors for imported goods. They are afraid to take risks.

This fact is well known by persons who are currently heading the Committee which is now charged with the task of advising the government on privatization and ways to diversify the economy. But since these persons are largely pro-big business and are also sympathetic to the neo-liberal doctrine of the IMF, one should not be surprised by what they might recommend, especially as they believe that labour is well represented on that Committee. But do not be surprised when the workers realise that it is not local big business alone that have cocoa in the sun. When the rain begins to fall, union man cocoa getting wet too.