A Guy’s View: White oak, black fools
Is the Barbados Government incompetent?
Is the inexperienced Barbados Government being taken advantage of?
Were there people negotiating on behalf of Barbados with foreign entities without authority while they held no office in this country?
Is there corruption in the management of the affairs of this country?
On Friday last, the Financial Times of London published a story under the caption, “Barbados creditors fume at “absurd” $27m fees for boutique London firm”. The story was attributed to Colby Smith writing from New York.
The story starts out thus: “A little-known UK advisory firm stands to make about $27m from the restructuring of Barbados’s $7bn of debts – close to what Lazard earned seven years ago when it advised Greece on defaulted debt nearly 40 times bigger.”
Since the Times story draws a comparison with Lazard, it seems appropriate to say a little about that company. Lazard is a distinguished advisory company with a long track record. It promotes itself as “A global firm, built over generations, on a foundation of client service”. Lazard has about 43 offices, dotting pretty much every major city in Europe, the Americas and Asia. Its employees and associates come from more than 70 countries. It has been in their business for over 170 years.
If a country needs debt management advice, Lazard is the kind of company that one could turn to with some measure of confidence. That company has a history that would allow a country seeking advice to review its record and determine whether it is well placed to offer the guidance being sought at the time. Given the importance of the stability of a country, the track record of an advisor is an essential consideration.
On the other hand, White Oak Advisory Ltd. is described as a little-known company. It seeks to establish its credibility on the previous employment of its two founders and only directors, Juan Sebastian Espinosa and David Nagoski. Neither Espinosa nor Nagoski seems to be engaged in any other directorships.
The financial services community is like a rural village: pretty much all of the actors in that community know the other actors in the community. It shouts loudly, therefore, when White Oak is described as a little known company.
If little is known about a company in the financial services business, one would either have to have personal information, or have some other basis for the faith to choose that company over many others with proven track records. This raises the question – who introduced White Oak to the Barbados Government? Was there a finder’s fee?
This question becomes more important if it is indeed true that the Government entered into an agreement with White Oak five days after the Prime Minister was sworn in. Was this a decision made by cabinet?
In the modern era of complex money laundering schemes, it would be highly unusual for any entity to contract the services of a financial service provider without conducting background checks, especially if the service provider is a little known provider. What background checks were conducted on White Oak? By whom? In what time frame? Were the expert services of the Financial Intelligence Unit employed in this exercise? Did the Government accept the assurances of the person who recommended White Oak without conducting independent due diligence?
Taken to its logical conclusion, it would seem strange for a new administration in a highly indebted country to enter into a multi-million dollar debt restructuring arrangement with a little known company, five days after coming to office, for fees that outstrip what is normal in the industry. This raises a red flag which cries out for investigation.
One of two conclusions may be drawn here: either there were people negotiating on behalf of Barbados and probably making deals, while there was another Government administering the affairs of this country, or there was a senseless rush to enter a new financial arrangement with a company which was probably not the best for the services needed. I am not sure which would be worse. Take your pick.
If there were secret negotiations going on, did it involve public servants who were sworn to serve their Government and to keep its information confidential or secret? Were there persons in Barbados who were working against the success of their Government? Did the Official Secrets Act or the Public Service Act apply to any of these people? Was there any criminal exposure?
These are serious questions that deserve answers. Barbadians have a right, nay a duty, to call on the Attorney General of this country to investigate how a new administration could enter into an agreement like the one entered by the Government with White Oak within five days of coming to office.
The American Congress has held the Attorney General of that country in contempt of Congress for his efforts to protect the President from proper investigation. In Barbados, we have the unhealthy situation where there is no real parliamentary opposition, but elaborate efforts to stifle any opposing voice. One only has to listen to the call-in programmes for five minutes to recognise this unholy conspiracy and the wickedness that is now covering this country. In the circumstances, if the Attorney General is not large enough to rise to a new level of transparency, we are doomed. Are we doomed?
This entire scenario smacks of either incompetence, carelessness or corruption. I do not know which seems more likely. One might say that given the Government’s mantra of corruption, corruption, corruption, that should not be the case. But it has often been said that the person who shouts loudest is the one trying to divert attention from himself.
At an absurd fee of US $27 million (Barbados $54 million), plus a monthly retainer of US $85 000.00 (Barbados $170 000.00), in addition to the multitude of advisers in the Ministry of Finance and other consultants with bloated unreported earnings, it seems that the money Barbados is borrowing from the International Monetary Fund is mainly to pay consultants, advisors and other persons of dubious character and uncertain usefulness.
Meanwhile, poor civil servants who voted to elect this Government have been demoted or sent home. Is this incompetence, carelessness or corruption?