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WHO HAVE MORE CORN…! by Gerry Kangalee

posted 9 May 2013, 08:51 by Gerry Kangalee   [ updated 9 May 2013, 09:27 ]

FINANCIAL COBOS CIRCLE FCB; TTMF; HMB!

 

The Government is close to divesting Trinid
ad and Tobago Mortgage Finance Company (TTMF) and the Home Mortgage Bank (HMB) as well as First Citizens Bank (FCB). Since the first Dookeran budget in 2010, they have made it clear that they want to transfer these publicly-owned assets into the pockets of the rapacious financial elite.

In his budget presentation to Parliament on 8th September, 2010, then Finance Minister Dookeran said: “We will clarify and confirm the mandates of these institutions (NIB, HDC, HMB, TTMF) and create a new holding company so that…

· The NIB and the HDC transfer their mortgage business for administration by TTMF as mortgage financing is not their core business;


· A new holding company, Trinidad and Tobago Mortgage Bank, will be formed, with the TTMF, and the Home Mortgage Bank as subsidiaries with the latter the funding source. The Trinidad and Tobago Mortgage Bank will buy out the existing shareholders of the subsidiary companies and offer an initial Public Offering on the Trinidad and Tobago Stock Exchange allowing for more extensive ownership of this very important aspect of the nation’s financial and social wellbeing.” 

  
In his 2011 budget speech Dookeran stated:
 
“…public offerings will be made on the Trinidad and Tobago Stock Exchange. We would offer to the national community further tranches of the shareholding of Government in:

• Point Lisas Industrial Port Development Corporation Limited since this company is already listed on the Trinidad and Tobago Stock Exchange.

• Trinidad and Tobago Mortgage Bank (TTMB) - a merger between Trinidad and Tobago Mortgage Finance Company and the Home Mortgage Bank for which an Initial Public Offer (IPO) by the Government will be made and

• First Citizens Bank, for which an initial public offering will be made, but which offering will not affect Government ownership of the Bank.
 
It will assist the Bank in widening its capital base and so facilitate its expansion programme in which the Bank is currently engaged…We envisage a second phase of the programme which would involve, where appropriate, the implementation of further public offerings or the securing of strategic investors for some of those enterprises.”

The new bank the TTMB will buy out the shareholders of the TTMF and HMB and then sell them out to big business. The shareholders of the TTMF are the National Insurance Board (51%) and the government. 
 
In the case of HMB the NIB owns 51.3% of the shares, while the Central Bank owns 15%. Republic Bank (which is, at this time, controlled by the government), owns 24%. TATIL, Bank of Nova Scotia and BAT (controlled by the government) own the other 9.7 %. 
 
Proponents of privatisation claim that there must be a shift from state control and that ownership must be widened through public participation to develop the capital market and to expand the sphere of the private sector.  
 
All of this is just fancy talk for routing public assets into the clutches of the very financial elite that is responsible for the endemic crisis of capitalism that
is impoverishing workers worldwide while benefitting a shrinking band of mega-billionaires. 
 
The intention is to get NIB out of low cost housing mortgages as co-owner with the state of TTMF. Dookeran claimed that mortgage financing is not part of the core business of NIB.
 
This is contrary to the National Insurance Act which establishes a DUTY under section 23(1) on the NIB to invest its funds in such securities as set out in the first schedule which authorises the NIB to invest in “Mortgages and other titles for repayment of loans secured by any of the securities described at paragraphs 1, 3 and 4.” 

After divestment the TTMB will be controlled by big business. What are the implications of such a situation? Will the merger of TTMF and HMB result in the retrenchment of workers, many of whom are members of the Banking, Insurance and General Workers Union? Will the divestment of FCB result in loss of jobs at that institution? 
 
While the government may promise no loss of jobs as part of the divestment deal the new owners will not bind themselves to that when they take control. When Powergen took over T&TEC’s generating assets in 1994, there was a promise of no retrenchment. Seventy workers lost their jobs. Since the privatisation of ISCOTT in 1994, approximately five hundred and fifty jobs have disappeared. A promise is a comfort to a fool! 

 
Big business will be in control of the already battered low cost housing market. This market will now be run commercially as the new shareholders will demand maximum return on investments; profit maximisation will be the order of the day. 
 
This will affect severely young professionals and skilled workers. TTMF helped a lot of people who could not afford it otherwise to put a roof over their heads, because TTMF’s capital was financed through low cost bonds purchased by NIB. Under the new dispensation that will no longer happen. 

According to the Chairperson of FCB, Nyree Alfonso, in her Chairperson’s remarks introducing the financial highlights of the First Citizens Group for the year ended September 2012:

“I am pleased to report another successful year for the First Citizens Group. The Group’s total assets grew by 9.2% to $34.0 billion as compared to $31.2 billion in 2011. Profit before tax increased by 3.7% to $714.2 million in 2012 as compared to $688.6 million in the previous year.
 
The profit after tax amounted to $446.4 million; the reduction over the prior year was consequent upon a change in the tax estimate for 2011 which resulted in an additional charge in 2012. Total Shareholders’ Equity increased by approximately $603 million or 11.7% to $5.7 billion.”
First Citizens Bank is wholly owned by the government and it is one of those jewels in the crown that has the privateers rubbing their palms in glee and salivating over the prospect of divestment. 
 
The citizens of the country made all the sacrifices to build this institution and now that it is doing well, it is to be handed over to the hustlers and international banksters. The divestment of FCB is designed to facilitate increased foreign ownership of local financial institutions in the wake of the re-entry of RBC into the country. 
 
This policy would seem illogical and absurd in light of the widespread fraud and rip off of depositors and subsequently taxpayers’ bailouts at home and abroad. The bailout (class language for handout to capitalists) of CLICO cost $25 billion in public funds It seems to make no economic sense to divest FCB to the very institutions that have proved themselves interested only in concentration and accumulation of capital to the detriment of social welfare and equity. 
 
The point is it makes sense to the capitalists, the banksters, financial conmen and tricksters and their agents and protectors who run the government. It would seem highly ridiculous to sell shares that the people already collectively own and then turn around and tell them to buy those shares and dub that a shareholders’ democracy, a la the late unlamented Margaret Thatcher (may she rust in peace!). The policy is class-driven. It is designed to pauperise the many and obscenely enrich the few. 
 
The privateers argue that workers will be sold shares at a discount and would become owners of the company. Cecil Paul demolished that argument. He pointed out: “ESOP plans in their varying applications are nothing more than a management tool and a strategy to pacify workers. It effectively keeps out Unions and in cases where there is a Union considerably weakens the Union and gives workers a false sense of perceived ownership and control when in fact the companies remain under the control of the ruling business elites." (See Cecil Paul’s article The ESOP Illusion

In a society divided into haves and have-nots, divestment actually weakens what little influence the masses
have and strengthens the position of the rich and powerful. Those who have shares are in a more advantageous position than those who don’t. Those who have plenty shares are in a much more advantageous position than those who have a little. Who have more corn does feed more fowl! 
 
The value produced by workers must be utilised not to further enrich the international bourgeoisie, who make up the richest 1% of humankind yet own 40% of the wealth. It must be used to provide increased and better quality services for all. 
 
They want to further privatise health care and education. They are intent on privatising ports, airports, sanitation services and facilities management, public utilities, including the postal service and the provision of water (access to which is supposed to be a human right). Soon they will attempt to have us pay for the very air we breathe. 
 
We must not allow the government to get away with this anti-people programme. We must ensure that our unions wage a sustained, vigorous fight back campaign.
 
We must engage in a campaign to educate the public about the dangers of privatisation and build a united front led by the trade unions to utterly defeat this latest capitalist assault. 
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