Weeks after Opposition Leader Kamla Persad-Bissessar chastised Couva North MP Ramona  Ramdial for her indecision in not openly demonstrating her support for her bid to retain leadership of the United National Congress (UNC), Ramdial has decided to go it alone in a bid for deputy political leader. 

Ramdial said after much introspection and consultations with her constituency, executive and party groups, she knew she had to run.

"I have decided to declare my intention to run as an independent candidate for the position of Deputy Political Leader," Ramdial said.

In a statement issued last night, Ramdial said: "At this juncture the party is bigger than the individual and the UNC needs rebuilding urgently if we are to present ourselves as a viable option for government in 2020.

 
"Therefore the onus rests on the membership of the UNC to choose a strong national executive that will be able to effect change and rebuild the structures which we can rely upon to win the next General Election."

Ramdial said she firmly believe the membership will vote across slates to ensure the best leaders are chosen and advocated against any and all negative or destructive campaigning. 

There is a three way race for leadership with the main contenders being the incumbent Persad-Bissessar and challengers Dr Rudy Moonilal and Vasant Bharath.

Ramdial. the only independent thus far, ahead of the November 20 nomination day said: "There must be no fracturing regardless of the outcome. Ours are a party based on unity and love, bringing all together under the UNC umbrella offering hope for a brighter day.”

Ramdial said she is qualified for the position based on her experience, humility, hard work and impregnable defence of the party's name throughout her term as Elections Officer on the National Executive, Director of the UNC Academy and as a Member of Parliament and Minister in the former People’s Partnership Government. 

She will square off against  former Oropouche West MP Stacy Roopnarine who is contesting the same position on the Bharath slate, as well as attorney Larry Lalla and trade unionist James Lambert, the latter two who were announced last night as contenders on Moonilal's slate.

Bharath  is expected to announce his slate on Saturday. Persad-Bissessar is yet to indicate any intention to identify her slate ahead of the December 5 internal elections.

The ease of doing business in T&T could be hampered by recent downgrades of the country by the US and Canada concerning our compliance with Caribbean Financial Action Task Force (CFATF) recommendations, Attorney-General Faris Al-Rawi said yesterday.

In a statement to Parliament in which Al-Rawi also announced T&T had now assumed the chairmanship of Caribbean FATF, he said, “This Government fully acknowledges its responsibility to the people and the international community to achieve effective systems to address the threats of money laundering, the financing of terrorism and the proliferation of weapons of mass destruction. As the incoming chair of CFATF and host nation of the secretariat, we have an even higher duty in this regard.”

The FATF’s 40 recommendations include implementing adequate procedures to identify and freeze terrorist assets without delay, implementing adequate procedures for the confiscation of funds related to money laundering and ensuring a fully operational and effectively functioning Financial Intelligence Unit, including supervisory powers.

The evaluation used to verify compliance with FATF recommendations involves a team of regional experts in the legal, financial and law enforcement fields examining T&T’s regime on the issue.

Al-Rawi said T&T’s fourth-round evaluation in June 2014 included a site assessment in January 2015.

“T&T must now seek adjustments to the ratings and observations of the assessors as appropriate. The evaluation will culminate with the report being discussed and finalised at the XLII Plenary this month, when we’ll also ascend to the chair of CFATF.”

On November 22 there will also be a meeting, including T&T representatives, the assessors and reviewers, to attempt to resolve any outstanding issues. At that meeting, ratings will be finalised and a determination made on what action is to be taken in respect of T&T.

Al-Rawi added: “No one should have expected T&T to be cut any slack by its contemporaries in the mutual evaluation. There are already calls for further downgrades of some of the ratings given to our country. 

“In respect of Immediate Outcome 1 (Risk, Policy and Coordination), the United States has recommended that we be downgraded from moderate to low. 

Gaps in respect of transparency of beneficial ownership of legal persons and regulation of the non-profit organisation sector are also high on the list of concerns of the Americans. 

“With respect to Recommendation 29—Financial Intelligence Units, Canada has recommended that we be downgraded from ‘largely compliant’ to ‘partially compliant’ based on the hiring system in respect of the FIU. Canada has also made similar recommendations in respect of Recommendations 27 (Powers of Supervisors) and 34 (Guidance and Feedback).”

Al-Rawi added, “Canada also highlighted that several immediate outcomes point to substantial lack of effectiveness due to deficiencies with the sanctions regime. The Government will strongly defend the national position. 

The inter-ministerial committee will continue to work with the National Anti-Money Laundering and Counter Financing of Terrorism Committee to select the strongest team to represent the country in the evaluation review. We’ve identified several statements and conclusions in the report that we view as inaccurate and which should be reviewed and amended.”

Al-Rawi said the upcoming plenary could also adopt other measures, ranging from a letter being sent from the CFATF chairman drawing attention to the lack of compliance with the FATF Standards, to suspension of membership in CFATF, to termination of membership.

“Any level of sanctions can have wide-ranging negative impacts on the country and citizens. The comments already received from the United States and Canada do not bode well for our position. 

The international investment marketplace is increasingly using mutual evaluations and follow-up reports and data on AML/CFT compliance to place and maintain foreign direct investments.

“Conversely, we may encounter challenges to capital investments abroad by government wholly or majority-owned entities. Multi-national financial institutions may also reconsider their tenability in a country with weak ratings to avoid being stained through association and possible declines in their share pricing.”

The ease of doing business in T&T, especially through financial institutions, could also be hampered, he said. Al-Rawi said T&T would likely have to report on further progress in May 2017.

Action

AG Al-Rawi said a complete assessment of the legislative requirements to correct the legislative deficiencies would be completed shortly, including key amendments to address confiscation and restraint of assets under the Proceeds of Crime Act and the freezing of assets under the Anti-Terrorism Act. 

The Anti-Terrorism Act will also be amended to strengthen the terrorism and terrorist financing sanctions regime, including financing travel for the purpose of partaking in terrorist training. 

“We’ll explore amendments to the Financial Intelligence Unit Act to allow for greater autonomy and strengthened powers of this critical regulator,” he said. 

“The Mutual Assistance in Criminal Matters Act will also be amended to allow the Central Authority to accede to a request that relates to a criminal offence under the tax laws of a Commonwealth country. 

“Procedural mechanisms to support the legislative regimes will also be strengthened, including, for example, the formalisation of a case management system for the Central Authority and the implementation of the seized assets fund. Greater emphasis will also be placed on effectiveness mechanisms.”

Al-Rawi said higher priority must be given to the investigation and prosecution of offences. 

“This will require us to ensure that institutions such as the Financial Investigations Branch (FIB) and the DPP are staffed by adequately trained and experienced personnel and there is effective communication and information sharing among the intelligence community, law enforcement investigators and prosecutors...” 

Emotional and angry, and understandably so, was the state of Prisons Commissioner Sterling Stewart at the funeral service of slain prisons officer David Millette. 

The officer was dealt fatal bullets in his home district sitting in front the wheel of his vehicle, obviously without a chance to defend himself against his assailant/s almost two weeks ago. 

Delivering the eulogy at the funeral service, Commissioner Stewart asked a few penetrating questions, not of the people at the service, but of T&T and a few of those questions were asked of them rhetorically, the Commissioner and all of T&T knowing the answers. 

“Where have these killers come from?” We all know the answer to that question. They come from the society in which all the citizens and residents of T&T live.

They have come from homes, some having parents, many without. These young people have attended national schools for varying periods of time.

Many have had problems grappling with the school curriculum; many have not been able to find areas of interest to them, so they turn away to more-attractive-for-them options. 

Many times those so-called options prove to be detrimental to them in the long run.

For many young men and women, spirituality is missing, so too social and community interaction with their peers and guided by elders. Institutions of yesteryear, such as scouts and guides have disappeared and there is little by way of social institutions with the capacity to pass on the positive culture.

So yes, Commissioner Stewart, the young criminals of today emerge from within the society and therefore we have to take responsibility for them. 

Commissioner Stewart also correctly chided those who, out of hand, condemn all prisons officers. In engaging in such generalisation there is no thought for the hard-working officers whose job it is to reform those who have been sent to them. 

Teenage pregnancy, a frequent occurrence in the society leaves young people without the capacity and sometimes aptitude to be parents. 

Rapists; drugs users and dealers and gangs of young boys badly influenced by older young men already caught up in crime; prisons systems and cells inhumanely over-crowded without any possibility to achieve reform and transformation of the young men and women who find themselves there; a criminal justice system which at times keeps young men and women charged for petty crimes in Remand Yard for ten years—these are factors which eventually end in the perpetration of a murder like that of officer Millette. 

The state of criminality is sucking up resources, premature lives, creating disorder and at times mayhem in the society. 

Clearly this deep, social problem with so many tentacles and implications—spread right through the society—has not been attended to in any significant manner. 

Succeeding governments have spent tens of billions of dollars on all kinds of projects but have not been focused on what the requirements are to resolve criminality in the society. 

The society has to find the way back starting in the homes and in the communities. The Government has its responsibility for the infrastructure to contain and treat with crime, but every individual and group must be part of the solution. 

Concentrated programmes in communities to counter the growth of the criminal culture; massive community involvement and the end of the politicisation of crime are absolutely necessary. 

The risk is that there could arrive a point when there would be no hope of turning the tide. 

BRIDGETOWN—Stylish right-hander Shamarh Brooks stroked his third first class 100 in five matches to lead a strong Barbados Pride fightback on the opening day of their Regional First Class Championship against Trinidad and Tobago Red Force contest yesterday.

The 27-year-old finished the day at Kensington Oval on 102 not out as Pride ended on 247 for four, after opting to bat first in the second round encounter.

Roston Chase struck 59 and opener Kyle Corbin, 46, innings that also helped Pride recover from a tentative position of 91 for three after lunch.

Brooks put on 35 for the third wicket with Corbin before added a further 123 with Chase for the fourth wicket, a partnership that snuffed out any momentum Red Force had.

Leg-spinner Imran Khan has been the most successful bowler with two for 62 but Red Force’s attack generally lacked edge, allowing Brooks to reach his third first class hundred with ease.

The West Indies A batsman brought up the landmark in the day’s final over when he stroked captain and seamer Rayad Emrit to the cover boundary.

All told, he has faced 192 deliveries in 262 minutes at the crease and struck ten fours and one six —a straight down the ground off left-arm spinner Kavesh Kantasingh in the final session.

Red Force struck early at the start when West Indies fast tain Kraigg Brathwaite caught at the wicket for five with the score on seven in the day’s fifth over.

Corbin then added 49 for the second wicket with West Indies batsman Shai Hope who made 18 before popping a catch to Kjorn Ottley at forward short leg off Kantasingh, in the second hour of the morning.

Corbin and Brooks took Pride to lunch at 73 for two but the right-handed Corbin perished in the fifth over on resumption, edging a prod at Imran Khan into wicketkeeper Steven Katwaroo’s gloves.

At that stage, Red Force were in control but Brooks and Chase wrenched away the advantage with an excellent partnership that kept the visitors without further success in the session and took Pride to tea at 166 for three.

Chase also played positively, hitting eight fours off 156 balls in just over 2-3/4 hours, but perished in the final hour in disappointing fashion when he mis-hit a long hop from Imran Khan to Yannic Cariah at long on. (CMC)

SCOREBOARD

Barbados Pride vs T&T

1st day, 2nd round

Barbados 1st Innings

K Brathwaite c wkp Katwaroo b Gabriel* 5

K Corbin c wkp Katwaroo b Khan *46

S Hope c K Ottley b Kantasingh* 18

S Brooks not out *102

R Chase c Cariah b Khan* 59

S Dowrich not out *15

Extras (w2)* 2

TOTAL (4 wkts, 90 overs)* 247

To bat: K Stoute, A Nurse, J Warrican, K Roach, M Cummins.

Fall of wickets: 1-7, 2-56, 3-91, 4-214.

Bowling: Gabriel 15-3-36-1 (w2), Emrit 15-6-36-0, Lewis 2-0-12-0, Kantasingh 22-5-72-1, Deonarine 11-2-22-0, Imran Khan 21-3-62-2, Cariah 4-0-7-0.

RED FORCE – Rayad Emrit (captain), Evin Lewis, Kjorn Ottley, Kyle Hope, Narsingh Deonarine, Yannic Cariah, Yannic Ottley, Steven Katwaroo, Imran Khan, Kavesh Kantasingh, Shannon Gabriel.

Toss: Pride.

Umpires: G Brathwaite, V Smith.

T&T’s Monifa Sealy is among 26 players from 14 countries who will tee off at Golf Club La Padera de Potosi in La Calera from November 26 and concludes three days later, seeking to advance to the Final Stage of qualifying in Morocco from 18-22 December and ultimately earn a place amongst the best players in the world on the Ladies European Tour in 2016.

The tournament is the Lalla Aicha Tour School Pre-Qualifier D which will be held the South American mainland for the first time. 

The event has attracted six entrants from South America, including three players from the home nation. Laura Sanchez Zuluaga, Eileen Vargas and Maribel Lopez Porras from Colombia will compete along with Andrea Gomez Lloret from Mexico, Andy Jun from Paraguay and Karen Gutierrez from Panama.

The United States of America has the most representatives with nine players in the field: Maia Schechter, Lucy Davies, Sydney Cox, Kate Scarpetta, Brooke Baker, Lauren Mielbrecht, Samantha Troyanovich, Molly Aronsson and Kristen Park. 

There are two players from the United Kindom (Lauren Horsford) and Mavis Knight) and France (Emilie Alonso and Patricia Beliard).

The other countries with one representative in the field are Chinese Taipei (Mayko Chwen Wang), Trinidad and Tobago (Monifa Sealy), Germany (Greta Isabella Voelker), Norway (Jeanette Marita Engzelius), Switzerland (Sabina Imboden), India (Rhea Nair) and Latvia (Krista Puisite).

The Ladies European Tour is extending its global presence ahead of the Rio 2016 Olympic and Paralympic Games by expanding the qualification system and the unique brand of the Lalla Aicha Tour School, which is named in honour of HRH the Late Princess Lalla Aicha of Morocco. Colombia is the third country to host an Official LET International Qualification event, joining Morocco and China.

“We are delighted with the number and diversity of applications that we have received in the first year and are pleased to see strong representation from South America,” said Maria Salgado, marketing director of the Ladies European Tour. 

She added: “The introduction of a qualification tournament in South America reflects the global reach of the Ladies European Tour and our strategy to create a development pathway from entry level golf to the heights of professionalism, inspiring women and juniors to play golf in all parts of the world.”

Sebastian Pinzón, La Padera de Potosi event director, said: “We are extremely proud to be hosting the first Ladies European Tour event in South America, which is a fantastic opportunity for the talented young women golfers in our region to test themselves against the best and follow their dreams to compete on a truly global tour. This will no doubt inspire women and juniors in our country to take up golf, which is a fast growing sport in Colombia, currently experiencing rapid business and economic growth.”

Felipe Harker, executive director of the Colombian Golf Federation said: “We are very happy that Ladies European Tour is bringing the Q-School to our country and to La Pradera in particular. We continue to build a mutually beneficial relationship between Colombia’s women golfers and the LET. Golf has been growing significantly in our country and this event is the perfect next step”.

Joaquin Moreno, president of La Pradera Country Club said: “We are very excited at the prospect of the best women golfers in the region coming and playing our beautiful course. It’s a big opportunity for us to establish our credentials as a host of major golfing events. The board of directors and I are committed to make the event a great success and we are excited to be developing an enduring and warm relationship with The Ladies European Tour.”

Labour leaders have extended congratulations and support to Industrial Court president Deborah Thomas-Felix on her appointment as a member of the International Labour Organisation’s (ILO) Committee of Experts on the Application of Conventions and Recommendations.
Thomas-Felix’s three-year appointment was announced in Geneva on Thursday by the United Nations organisation.

The Committee of Experts is composed of 20 independent, eminent jurists appointed by the governing body for three-year terms.
The Experts come from different geographic regions, legal systems and cultures.  The committee's role is to provide an impartial and technical evaluation of the state of application of international labour standards.

President of the Banking Insurance and General Workers Union (BIGWU) Vincent Cabrera said while there were several committees under the ILO, Thomas-Felix had been appointed to the main one.
“This is a major appointment and a very prestigious position. I want to congratulate her heartily and warmly,” Cabrera said.
He said that Thomas-Felix would now find herself in an interesting position, as local labour laws were not in line with the international standards which she would deal with in her new position.

“There is a gap between local labour laws and international labour standards. That same committee has in the past, year after year, been critical of the gap which exists between our labour laws and the international standards.”
Head of the National Trade Union Centre (Natuc), Michael Annisette, said he supported the appointment completely.
“We believe her being there will bring value to the ILO post. She is knowledgeable. It is also a good thing for T&T. The ILO is the only UN committee structured to include unions, government and employers. It deals with social issues, industrial relations and workers’ and employers’ issues,” Annisette said.

He said the appointment would expose Thomas-Felix to international best practices which would benefit T&T.
Chairman of the Employers’ Consultative Association (ECA) Suzetta Ali said yesterday the “ECA fully endorses such an appointment and we are very confident that she will bring value.”
Industrial relations expert and an attorney specialising in employment law, Lennox Marcelle, said: “That is a very important committee for labour matters in the world and T&T should be honoured that we eventually have a representative on the committee that looks at annual reports of governments and then the whole conduct of labour relations.”

He said over the years this country has been represented on the committee by a judge of Barbados “so now that she is appointed it is a great honour for T&T and she will do a great job with her qualifications.”
Marcelle said the committee reflected labour standards and since Thomas-Felix was now a member of it T&T must be on the alert. In a brief interview yesterday, Thomas-Felix said she was surprised by her appointment and felt honoured to represent T&T. The Committee of Experts, which was set up in 1926, sits annually in December for three weeks.
The members, registrar and staff of the Industrial Court yesterday congratulated Thomas-Felix on her appointment.

Have the Advertising Agencies Association of T&T, Arrive Alive and concerned citizens paid any attention to an advertisement that is urging its customers and potential customers to “make your street Rum Street for the Christmas season?” 

Neither the association nor Arrive Alive have commented on the series of full page press ads, that featured scantily clad young women and suggested to the national community that Friday should be renamed “RUMDAY” in order to attract attention to rum sales promotional caravans in particular locations in T&T...on Fridays.

Perhaps, the entire national community will pay attention to and hopefully object when there is a call to rename Port-of-Spain “RUM CITY” and T&T, “RUM COUNTRY.”

John Henry

Petit Valley

On November 6, the Central Bank issued a statement in which it provided an update on the resolution plan for Clico, the insurance company that collapsed in January 2009.

There are several things that are noteworthy about the statement, which provides an update on the Central Bank’s original resolution announcement on March 27:

1 In the statement, the Central Bank claims, “Consultations are progressing with the Minister of Finance on the valuations of Angostura and CL World Brands.” 

If this is true, the population should be aware that there is an unresolved matter of a $984.6 million debt that CL Financial owes to Angostura.

One of the grave flaws of the draft shareholders’ agreement between the Government and CL Financial that the Ministry of Finance, led by the former minister, was negotiating, was that this $984.6 million debt (called a receivable) would have been omitted from the final shareholders’ agreement.

In other words, it is my understanding that once Clico transfers its 32 per cent stake in Angostura, its 42 per cent stake in CL World Brands and its 43 per cent stake in HCL to the Government for $3 billion, the draft shareholders’ agreement stipulates that the Government should immediately transfer those shares to CL Financial, whose shareholders still include its former chairman Lawrence Duprey.

If the draft shareholders’ agreement is sanctified by the current Cabinet, it would mean that CL Financial shareholders would get to control 78 per cent of Angostura, 100 per cent of CL World Brands and 100 per cent of HCL. In return, the Government would get a debenture over the fixed and floating assets of the three companies and an annual payment over a long period of time.

It is my understanding that the shareholders’ agreement makes no provisions for CL Financial to repay the $984.6 million that it owes to Angostura. I guess if you own CL Financial and you have a controlling interest over Angostura, that debt can be simply cancelled with the stroke of a pen.

But more fundamentally, what sense does it make for the Government to transfer valuable assets to the group that got itself into financial trouble BEFORE taxpayers have been fully repaid for bailing out that group?

If that point sounds familiar, it is because I made it on a number of occasions in this space following the July 2013 leak of the original Letter of Intent between the CL Financial shareholders and the Government.

After more than two years of negotiations in which the shareholders’ agreement was extended ten more times, it seems that this fundamentally unfair arrangement remains set in stone. 

The position of transferring assets to a group so that they can pay the Government over time, flies in the face of the common sense and the legally entrenched position that in situations like this, all the creditors of a failed company must be fully repaid BEFORE the shareholders are entitled to any benefits.

So I must ask: On what basis was the previous minister of finance (and his advisors, both financial and legal) proposing to allow Clico’s shares in Angostura, CL World Brands and HCL to be transferred to CL Financial shareholders BEFORE taxpayers are fully repaid?

If the issue is that CL Financial wants the control premium (more than 50.1 per cent ownership) of Angostura, CL World Brands and HCL, the point should be raised with them of whether they are entitled to the same.

Would it not be fairer and more equitable for the Government to retain the 32 per cent of Angostura, 42 per cent of CL World Brands and 43 per cent of HCL and for CLF to be compelled to repay the $984.6 million that it owes to Angostura?

In fact, doesn’t fairness and equity suggest that CL Financial should transfer 70.28 million of the 92.55 million Angostura shares it owns to the rum and bitters company to satisfy the $984.6 million CL Financial owes Angostura? 

2 As with the first statement, the Central Bank failed to seize the opportunity to provide the taxpayers of T&T with information on the financial state of Clico, in general, and more specifically on the status of the company’s statutory fund. For a company that benefitted from a bailout of billions of taxpayers’ dollars and is now 49-per cent owned by the State, this failure represents a continuing lack of accountability and transparency on the part of the Central Bank;

3 It appears that it took the Central Bank more than a year to hire Oliver Wyman, the global management consulting firm, that was engaged by Clico and the Central Bank on October 14, 2015, as advisor to assist with the sale of Clico’s traditional insurance portfolio. 

It is my understanding that Clico and the Central Bank received the valuation of the insurance company from Towers Watson at the beginning of October 2014. In the interest of accountability and transparency, the Central Bank ought to explain why the process of engaging an advisor to help sell Clico’s traditional portfolio took so long;

4 The Central Bank disclosed that Clico, following consultations with the Central Bank, engaged PAF Securities, a Miami-based investment banking firm, on May 6, 2015, to conduct independent valuations of Clico’s shareholdings in Angostura Holdings Ltd and CL World Brands. Angostura and CL World Brands are two of the three companies that Clico will transfer its shares to the Government for a total of $3 billion. The third company is Home Construction Ltd. 

While PAF Securities was engaged to value Angostura and CL World Brands in May, it took four months for the Clico, following consultations with the Central Bank, to engage GA Farrell and Associates Limited and PAF Securities to conduct an independent valuation of Clico’s shareholding in HCL. 

Is there any reason why GA Farrell and PAF Securities could not have been engaged in May, rather than on September 8 2015 and September 21 2015, respectively?

5 On the issue of PAF Securities, a company with that name with offices on Brickell Key Drive, Suite 604, Miami, Florida, has done a great deal of work in T&T, according to its website, some of which is outlined below:

• The company advised the investment consortium comprising the NIB, National Enterprises Ltd and the UTC on the acquisition of 100 per cent of the equity of Pan West Engineers, effectively 10 per cent of Phoenix Park Gas Processors, for US$168 million in November 2014;

• It advised First Citizens Bank on the August 2012 acquisition of Butterfield Bank for US$45 million in August 2012;

• It advised First Citizens on the comprehensive restructuring of US$171 million in long-term debt facilities provided to HCL for the construction of One Woodbrook Place

• It advised CMMB on the structuring and provision of a new US$12.8 million long-term debt facility to HCL in September 2010;

• PAF Securities advised First Citizens and its subsidiary, CMMB, on the restructuring of US$110 million of existing debt facilities from the bank, CMMB and Clico Investment Bank to Angostura in October 2010;

• It advised First Citizens on the acquisition of shares in CMMB in May 2009;

• It advised First Citizens on a US$50 million capital commitment by the Government in May 2009;

• It advised First Citizens on the assumption of about US$280 million in customer deposits from Clico Investment Bank in February 2009.

I make no further comment, at this point, on the apparent familiarity of PAF Securities to T&T entities.

6 In its November 6 statement, the Central Bank said that the process of selling/transferring Clico’s own assets required, among other things, consultations with the Minister of Finance under Section 44F (5) of the Central Bank Act. 

On May 20, 2014, I pointed out that “in the performance of its functions and in the exercise of its powers under Section 44 D, the Central Bank shall comply with any general or special directions of the Minister and shall act only after due consultation with the Minister.”

It appears to have taken the Ministry of Finance 18 months to figure out that it is in control of 44D bailouts and not the Central Bank.

Disclosure: The author is a shareholder of Angostura Holdings Ltd.

Sint Maarten may be considered the culinary capital of the Caribbean in part because, with two million cruise ship passengers and 583,000 air travelers arriving in 2014, food service is the island’s fastest growing sector. But the appetite of investors and business developers is what the country’s stakeholders are also eager to attract. 

Located three hours from Miami by air and with a combined population of 83,000, Sint Maarten and St Martin are part of the Kingdom of the Netherlands as well as a French collectivity, respectively. 

Dutch colonists, who negotiated with French settlers in 1648 to share the island, saw value in its salt pond and geographic position as a midpoint between New York and Brazil. Today, the salt is gone, but St Maarten’s role as a transportation hub is of tremendous value to companies that supply products and transport travelers across the region.

Aside from historical documents and exhibits, there’s little evidence that cotton and tobacco once fueled commerce in St Maarten. In their wake, the island was declared a duty-free port, which prompted the Dutch government to begin developing a tourism industry in the 1950s. Six decades later, a lack of diversification away from dependence on tourism is the thorny situation that presents opportunities to innovative investors. 

During a recent visit, Business Guardian met four local proprietors who shared insider insights on existing infrastructure, market demand and incentives that may attract new investment. 

“We don’t currently have a credit bureau on the island,” explains Anna Rabess-Richardson, who worked in banking for nine years before opening MJR Bailiff Marshall Services in 2010 with family members. As a business development officer she provided financial guidance. “I went to businesses to meet with employees to present a holistic view of how to structure yourself and be prepared for the known and unknown. The cost of living is extensively high here, a lot of times we live above our means.” In lieu of a credit reporting agency, banks have “a very good mechanism where they communicate with each other,” confirms Rabess-Richardson. 

For foreign investors seeking financing, she says banks require “credit reports, background checks and financial statements to verify what is on the credit report.” 

With the exception of Windward Islands Bank and Banco Di Caribe, Canadian institutions have a dominant presence. “I don’t think banks here are set up, willing or able to assist a small business or medium-size business to expand, in terms of offering certain facilities,” declares Stanley Lint, vice chair of the St Maarten Chamber of Commerce & Industry. 

“This is a discussion I have several times with my friends within the industry. It all comes down to one answer: it is not local! The main office that sets the rules and criteria is somewhere else. We need locally-owned and operated banks that understand the culture and environment, and can assist small entrepreneurs with starting and growing their business.” 

On the flipside Lint feels, “small businesses many times have a great idea, know how to work hard and sell their product or services, but they don’t know how to manage the business or finances. That could be a reason why banks are reluctant to finance smaller operations.” 

The Chamber of Commerce (www.chamberofcommerce.sx) registers all businesses and offers insights to startups and investors. Recently, the Chamber created a business centre that can help “educate entrepreneurs on how to manage finances.” 

“If you’re coming to set up a company, government will welcome you with open arms. If you’re coming to work that’s the difficulty,” attests Brenda Wathey, managing director of Artemia Event Planners (www.artemia-sxm.com). “We’re only 37 square miles. We can’t continue accepting people from abroad who are labourers or workers.” 

To curb the 11 per cent unemployment rate, government assesses whether service providers with similar skills already exist on the island (www.sintmaartengov.org). For investors government has implemented measures to expedite the processing of business permits and managing director licenses, according to Wathey. “The one good thing, after you get your permit and licence, you get status to live here. It makes sense because you can’t own a business here and not live here.”

In October 2014, the Port of St Maarten hosted the 21st Annual FCCA Cruise Conference and Trade Show, one of the largest cruise industry conferences. “We exceeded expectations,” adds Wathey. “Government had to invest in a temporary structure to house the conference. Occupancy at most hotels tops at 600-800; there is an opportunity for a conference arena to be built.” More rooms and a state-of-the-art concert hall could expand their reach into the incentive travel market.

While St Maarten Nectar cosmetics, Topper’s Rhum and a variety of Guavaberry products are manufactured on a small or medium scale, there are not enough natural resources to sustain manufacturing at a level that could significantly influence the GDP (ppp) of US$798 million (2010 est) (www.stat.gov.sx). 

“There are farmers starting to do little projects, though land is limited and the terrain isn’t very conducive to agriculture,” observes Wathey. “When you see Coca-Cola they distribute here but they don’t bottle here, we would have to import water.” 

Wathey estimates that 80 containers arrive weekly to deliver produce. “Shipping is very competitive as 99 per cent of everything sold here is shipped in. Most shipping companies are locally owned,” said Lint, who has 10 years in the industry and is managing director at STM NV, a freight forwarding company. “It is a good industry to be in.” He advises newcomers to avoid undercutting the market too much just to attract business. “It’s difficult for those who are established to go back to market levels.” 

“We’re establishing St Maarten as a sub-hub to the region,” notes Lint. “We have major shipping lines coming here. St Maarten is ideal for persons who want to do business in the region but need a base.” Twenty-two scheduled airlines serving 34 destinations directly is the sort of impressive factoid that gives St Maarten stakeholders leverage for courting new investment. 

Representatives of the chamber recently visited Miami and Panama to showcase the possibilities of working via St Maarten to cover the region, Lint said. “We are now focused on Trinidad, Antigua, Barbados, St Lucia and Montserrat.” 

While labour isn’t cheap, appealing real estate costs help to attract luxury brands such as Michael Kors, which opened last October. “My rent on the Boardwalk is U$2,800 monthly for 700 square feet, very reasonable,” shares Giovanella De Weever, owner of Island Blush (www.islandblush.com) boutique and wholesale company. Cruise ships dock near the picturesque beach at her shop’s doorstep. “On Front Street rent is U$5,000 and up. Rental properties have decreased in the last two years,” she adds. 

De Weever recently franchised her business and started a private label for her nail polish, perfume and chapstick inspired by St Maarten’s alluring beaches. In the Dominican Republic, she discovered, “a law (permits) only US$250 you can use online to bring merchandise into the country, above that it’s taxed at a higher rate. That encourages you to shop in your local economy. We want to offer the same price they find online.” 

Lint said: “We should focus on developing telecommunications, marine industry, banking and education. The environment for banking and doing business in St Maarten is very comfortable and safe.” 

In the meantime, “We’re a one pillar economy, our industry is tourism. We’re blessed that St Maarten is such a beautiful island,” affirms Wathey, an event manager for the illustrious Heineken Regatta and a member of the country’s leading business family. 

“Don’t get me wrong, St Maarten has made a lot of money for people who are not necessarily from St Maarten. They’ve set up businesses selling liquor, cigarettes, food and beverage. While we may not have the ability to produce those things, the consumption rate is through the roof. The potential for growth and to do well in St Maarten is huge.” 

Resourceful Web sites:

SXM official Web site: www.vacationstmaarten.com

SXM Small Business Development Foundation: www.sbdfsintmaarten.org

SXM Hospitality and Trade Association: www.shta.com

www.doingbusinessdutchcaribbean.com

www.theodora.com/wfbcurrent/sint_maarten/sint_maarten_economy.html

It’s no fun being in the middle. Heineken, Molson Coors and Carlsberg are storied brewers that trace their roots back hundreds of years and have loyal drinkers around the world. But the merger of their two biggest competitors leaves such mid-size brewers without a clear way forward.

They find themselves squeezed between a Goliath that will produce almost a third of the world’s beer and a growing army of craft brewers.

Some experts say the mid-sized brewers should respond by pursuing takeovers of their own. Others argue that would do little good because the underlying problem is that consumers are increasingly drinking craft beers, not mass market brands.

“There are so many craft beers out there,” said Jonny Forsyth, a global drinks analyst at Mintel. “They can’t buy them all up.”

Discussions about world domination heightened Wednesday when Budweiser maker Anheuser-Busch InBev agreed to buy SABMiller for £71 billion (US$107 billion). That combination would account for 29 per cent of the world beer market, making it three times bigger than its nearest rival Heineken, with a mere nine per cent, according to the market data firm Euromonitor.

Beer makers looking to bulk up in response will have few options because some of the likely targets are privately held and not interested in selling, said Jeremy Cunnington, the senior alcoholic drinks analyst for Euromonitor.

“There isn’t that much else to buy or acquire,” Cunnington said.

Heineken NV has public shareholders, but the family owns 50.5 per cent of the shares, “retaining family involvement and vision.” Carlsberg is also controlled by a foundation, which has 75 per cent of the votes.

To ease regulatory concerns in the United States, SABMiller will sell its 58 per cent stake in a venture with fellow brewer Molson Coors for US$12 billion.

But AB InBev would still be the No 1 player in North America as well as Australasia, Latin America, the Middle East and Africa. In Europe, it would lag behind only Carlsberg in the east and Heineken in the west, according to Euromonitor.

AB InBev was attracted to the deal because it wants to grow sales through SABMiller’s brands in Africa and Asia, where drinkers are expected to increasingly buy brand beers as their wealth increases.

In developed markets, by contrast, the big companies are seeing sales decline and trying to fight off an onslaught of craft brewers. Consumers, bored with the previous offers, began fleeing the big brands in the 1980s in favor of more complicated craft brews.

“Beer drinkers ... these days are far less brand loyal,” said Duane Stanford editor of Beverage Digest. “There’s a lot of room to play.”

Beer companies have tried to counter the trend by buying craft brewers. They have also tried to replicate what the craft brewers have done or at least evoke their ethos. Carlsberg, for example, calls their founder “probably the first hipster,” and said he opened his first micro-brewery in 1847.

AB Inbev’s deal is far from completion, facing regulatory hurdles in the United States, China and South Africa. Craft brewers are among those watching things closely.

The Brewer’s Association, the trade body for America’s 4,000 small and independent breweries, urged the Department of Justice and Congress to closely examine the merger’s “potential effects on the US marketplace and American consumers.”

“The beer drinker wants variety. (Beer drinkers) want choice. They want quality. They want authenticity. All of those things are delivered by the American craft brewer,” the association’s CEO Bob Pease said as he described his concerns.

Ironically, the craft brewers should want the new combination to be as big as possible, argues Erik Gordon of the Ross School of Business at the University of Michigan. That’s because economies of scale discourage behemoths from doing niche and special run beers, “leaving those spaces open to the craft brewers,” he said.

“In the US, the test of a merger is not its size considered alone,” Ross said. “It is the potential effect on competition and therefore on prices.” AP

LESLIE FIGARO

As recent as 2012, a major e-auction event was conducted at a state enterprise for the procurement of pipe and fittings valued at US$47million. 

At the end of the event—which took one hour and 30 minutes—a savings of 30 per cent (US$15million) was realised. This is equivalent to $100million.

This article is intended to provide an understanding of e-auction and share the power of the process.

What is e-auction?

E-auction is a procurement tool using Web-based software that allows suppliers to bid online for the supply of goods or services. Sometimes it’s called “reverse auction” because bids are reduced and not increase as in a traditional auction. It forms part of the procurement process. 

This tool consolidates the whole process of negotiating with individual suppliers through a single on-line (Internet) event. It therefore provides a forum whereby suppliers are bidding in real time, to provide a specified product, against each other. This process can generate significant savings and improve the efficiency of the procurement process. 

It ensures and maintains the key procurement operating principles:

1. Transparency: information regarding the procurement process would be in the public domain.

2. Accountability: in current best practice, officials of procuring agencies are clearly identifiable along with their responsibilities.

3. Value for money: procurement of goods and services means the achieving of the best combination of price and quality based on a specific need in the shortest possible time.

The Procurement 360 Degree Cycle

The diagram shows the procurement 360 degree cycle detailing the steps from 1, where the procure needs are identified, to the end at step 14 where the performance of the suppliers on the contract can be evaluated. The e-auction activity occurs in steps 5 and 6, where tenders are invited and bids are received. Once completed, the traditional process of evaluating the bids continue (step 7).

E-procurement is simply using Web-based applications to operate the transactional aspects of the requisitioning, authorising, ordering, receiving, contracting and payment processes for the required services or products. E-auction is a subset of this process.

The e-auction element is usually the first to be introduced, as the significant savings peaks the organisations interest and the other elements of e-procurement can be progressively introduced. This, too, provides savings and efficiency.

Identification of spend

Many organisations are not aware of how their money is spent, with which suppliers and on what categories of spend (eg chemicals, materials, services). 

A general spend analysis rule of thumb is: organisations spend 80 per cent of their money on 10 per cent of their suppliers /contractors and 10 per cent of their money on 80 per cent of their suppliers/contractors. 

Invariably, most of the procurement administrators spend most of their time on resolving issues from the 80 per cent of suppliers/contractors where only 10 per cent of the organisation’s money is spent. The opportunity for major savings resides in the management of the major 10 per cent of your organisation suppliers/contractors.

The process identifies areas where the greatest savings potential exist and results in real market prices being obtained, thereby yielding significant savings which is approximately 10 to 25 per cent.

Reducing corruption 

In order to get the best benefit of the e-auction process, clear and proper specifications must be done ideally through a cross-functional team for the best results. This tool replaces individual negotiations which usually transpire over long periods of time, by having all supplies bid at the same time on the same clear specification clearly communicated prior to the e-auction. 

A competitive market must also exist. This ensures greater transparency. The process is managed by a service provider whereby all communication and bid data is logged and available for scrutiny and audit. The availability of this information could reduce corrupt activity. The reputation of the service provider can be fatally jeopardised if there is any semblance of collusion between the buyer, the supplier and the service provider.

Financial and legal 

In order to maintain the creditably of the process, the funds must be available and secured in order to pay the supplier/contractor, who has been awarded the contract on a timely basis, consistent with the terms of the agreement.

In modern organisations, procurement is considered strategic not transactional. This means that the legal framework, board tenders rules must be reviewed to accommodate e-auction as a multi-bidding process and the engaging of a service provider. 

The relevant officers in the organisation must be trained to assess where major spend is occurring to identify the potential areas for savings. For e-auction to be a success, I strongly recommend a champion, a senior officer, who has the lead and the authority to make decisions.

E-auction in T&T

E-auction was introduced using a pilot project approach in 2006 for the purchase of pipe and fittings. Since then, approximately 100 events have taken place by various state agencies and e-auction has been a part of the procurement landscape in T&T since then.

The Ministry of Finance commissioned an E-Auction Task Force in 2008, mandated to spread the use of e-auction among state enterprises.

Twelve agencies got involved and over 300 suppliers/contractors were trained.

Under the E-Auction Task Force, a few bulk purchase events were completed, clearing identifying the benefits and savings. For example, all of the state agencies use paper. A simple analysis revealed they all pay different rates for the same size of paper specification. We invited them to join a bulk purchase for paper where savings obtained were significant.

If we want transparency, accountability and value for money introduced into our procurement processes along with significant saving, e-auction towards e-procurement is the way. 

Below are some of the items procured using e-auction providing savings of over $390 million.

Pipes and fittings

Chemicals (liquid aluminum sulfate)

Data loggers

Flow meters

Hard note book

Dump truck, backhoes & forklifts

Supply & install of meters/accessories

Construction of offices & workshops

Computers & printers

Bottle mounted chlorinators

Wire wall fencing & gate

High voltage switches

Refurbishment works

Electrical cable

Generators

Equipment rental service

Gas fuse tanks

Paper

Steel products

IT hardware

Footwear

Maintenance & security services

Pumps & fittings

Sewers

Leslie Figaro is a procurement and e-auction specialist. 

The case

Joseph, 40, is single and has no intentions of having a family. He also decided that he does not have the energy to deal with tenants and the issues associated with property ownership. He wants a simple, low-stress life in retirement and plans to live off of his savings and whatever he gets from NIS. He currently earns $8,000 before taxes but figured that if he were 60 years old today he could live quite comfortably on $5,000 per month. 

Joseph wants to start an annuity but does not know how much money he should save per month. The agent told him that the plan has been yielding an average of 5.5 per cent annually for the past five years. 

He is a bit indifferent about inflation but would still like to know how much money he needs to save in this plan so he can have the equivalent of $5,000 at age 60 (assuming inflation is five per cent) and maintain this standard of living for at least 15 years after he retires. 

Nick’s assessment and advice

I believe that Joseph’s circumstances are not unique and many people in this country neither have the desire nor the financial capability to acquire a rental property to supplement their retirement needs. Because of this, their only choice, like Joseph, is to depend on NIS, an employer pension or a personal annuity. They simply have to do the best they can with what they have and leave the rest up to God. 

One of the challenges with saving is not knowing if one is ahead or behind. The reason for this is the difficulty in estimating the dollar value of the goal they would like to accomplish. For many, it is a hit and miss strategy. 

Even though no one can say for certain what the future holds in terms of the economy, foreign exchange rates, inflation or interest rates, it is often necessary to make some reasonable assumptions in order to come up with a workable retirement plan. 

Retirement planning is also not a static activity that one just sets and forgets. It requires at least annual reviews to account for changes in the variables that could impact the end result. 

Starting point

We know two things: how much money Joseph wants to collect monthly at retirement and, secondly, his intended sources of income.

NIS (National Insurance) plans internationally are facing serious problems because of the increasing numbers of retired individuals and a shrinking workforce who contributes to the latter’s current benefits. 

With this in mind, even though there could be funding problems that might necessitate—extending eligible retirement ages, reducing benefits or increasing current contributions—for all intents and purposes we will assume that the current NIS pension of $3,000 monthly will continue and, hopefully, keep up with inflation by the time Joseph is ready to retire. 

Speaking in today’s dollars, Joseph will need to deal with the difference between $5,000 and his $3,000 NIS pension, that is, $2,000 per month. 

We will project that monthly amount to age 60 using the rate of inflation given. We will then calculate the lump sum needed to fund his monthly pension for life, assuming he is only living off of the interest from his investment (not factoring actuarial calculations.) We will then project what his age-60 income need should be when he turns 75 and work backwards to see what his funding gap would be.

In our calculations we have assumed the following:

Inflation: 5.0 per cent per annum

Annuity growth rate: 5.5 per cent per annum 

Interest earnings after retirement: 5.5 per cent per annum

Results

Part 1

The $2,000 monthly income, adjusted for inflation would be $5,307 by age 60

This $5,307 monthly figure will require a lump sum of $1,273,583

To achieve $1,273,583 he will need to save $2,924 monthly today 

Part 2

The monthly income figure of $5,307 should be $11,032 by age 75 

The income gap between these two figures is $5,725

To have $5,725 extra he will need an additional lump sum of $1,374,104 by age 75

To achieve $1,374,104 by 75 he has to save an additional $1,081 monthly today

To achieve $1,374,104 by 60 the amount will jump to $3,154

Just looking at the numbers above, Joseph will need to carve from his salary anywhere between $4,005 ($2,924 + $1,081) and $6,078 ($2,924 + $3,154) to ensure he maintains that $2,000 extra buying power by and beyond retirement. 

If he decides to save the $1,081 he will have to wait until age 75 before he starts collecting the extra $5,725. 

But there are two challenges with this option: 

1. The income he started collecting at age 60 will gradually erode with inflation for the 15 years before age 75. 

2. He will have to continue saving even after he retires at 60, which means he will either have to set aside $1,081 from his age 60 pension or continue working and saving until age 75… poor guy! 

If he decides to get the full $11,032 by age 60 he will need to cough up $6,078 from his $8,000 salary!

If there was a remote chance that this was at all possible then he would have some healthy surpluses at retirement and would be able to save for life beyond age 75. 

Note: Not all of the savings should be in a registered plan as he may exceed the tax-deductible limit of $50,000 annually nor will he get the full tax benefit on $50,000 ($12,500 annually, $50,000 x 25%) because his salary is only $8,000 and his tax liability will only be approximately $4,950 annually.

How to fix the problem?

There are a lot of assumptions in this case and the longer the investing time horizon the more the variables could change; in or out of his favour. This case rests heavily on NIS, which no one has a guarantee for. It also depends on certain interest and inflation rates.

Joseph will have to do a combination of things to fix his problem. He has to save as much as he can, as fast as he can, for as long as he can! 

He may need to find ways to increase his current level of earnings without the corresponding increases in expenditures. He could consider slightly higher risk annuities that are based on the stock market to get better returns and gradually shift to safer portfolios as he nears retirement. He may need to even consider light work after retirement to bring in the extra dollars. 

Of course, if he revises his targeted income figure of $5,000 downwards the burden of saving will not be as great. 

If you have any questions or need advice on today’s subject please email me at: nickadvice@gmail.com or visit website: www.FinancialCoachingCentre.com

To facilitate demand among individual and institutional investors, the Unit Trust Corporation has extended the initial public offering (IPO) of the company’s most recent closed-end exchange-traded product—the Calypso Macro Index Fund—to December 4, 2015.

The Calypso Fund is the Caribbean’s first exchange-traded macro index fund and the first UTC fund to be listed on the T&T Stock Exchange. While it is the first fund of its kind—for both the UTC and the T&T economy—it is also firmly rooted in the UTC’s original mandate to foster a culture of saving and investment through education and innovative solutions. It also allows everyone access to participate in the country’s capital markets.

The decision to extend the fund’s closing date from November 6 to December 4, 2015, was in order to facilitate demand and allow investors more time to secure their participation in the local and global stock markets. It also provides the brokers adequate time to process the orders they have received. In addition, it ensures that institutional investors—with new or changing boards of directors—have adequate time to secure necessary approvals.

A stock or share is a right to ownership of a company. It is also known as equity. Equity can either be privately or publicly held on an exchange. The reason why owners of a company would want their ownership rights publicly held is to raise capital to expand their business. 

Investors attain the opportunity to own a piece or share in the company, vote at the company’s AGM, obtain a portion of the profits through dividend payments and see the value of the stock potentially increase over time. 

The merits of investing in equity appear attractive to the risk tolerant investor. Over the past three decades, this attractiveness has led to some international developments where some investor sponsors packaged their equities into a fund to reflect certain investment objectives that were unlike the typical mutual fund. 

The Calypso Fund—a medium- to long-term investment—is one such fund. With the purchase of one unit, investors will have access to the largest T&T companies listed on the T&T stock market (16 companies) as well as a host of approximately 100 energy companies. 

The Calypso Macro Index Fund’s weightings are such that a little over one third of its composition will represent the energy sector through global energy companies, while the local stocks will represent two thirds, similar to the revenue structure of T&T. 

Buy the market

There are several benefits to be derived from the fund. More choices have been presented to local investors. Rather than going from stock to stock, investors can “buy the market”. 

By doing so, the investor will have instant diversification to equities. This gives an appropriate introduction to local stock market for novice equity investors. Digging further, investors can also do some tactical positioning. Investors can use the fund as their equity base or benchmark and then proceed to acquire certain local and international stocks, strategically, in order to optimise their equity portfolio.

Secondly, for those who have been struggling to attain certain stocks, through the acquisition of units in this fund, investors would have the ability to hold these thinly-traded stocks. 

Another benefit is the fee structure. Given that the objective of the fund is to hold the securities and attempt to track the respective stocks, the management fees are substantially lower than the typical mutual fund. 

Finally, investors need not worry about queuing for US dollars in order to attain the energy component of the Calypso Macro Index Fund. Investors will be able to use TT dollars to purchase the units and still have access to approximately one third of their TT dollars in US dollar-denominated equity. If the US dollar were to appreciate, the investor will benefit.

Innovation 

The UTC’s core objective has always been to enable unitholders’ participation in the long-term productive assets of this country. Consistent with our culture of innovation, the fund is yet another initiative undertaken by the UTC to fill a void in the investing landscape and increase value for our unit holders.

It is a “closed-end fund,” with an initial value of $500 million, where 20 million units will be sold at a price of $25 per unit. Once subscribed, unitholders can buy from or sell to other investors directly through the stock exchange for up to 10 years. The minimum initial investment is only $1,000 and a unit will be priced at $25.

With one unit, the fund reflects the business drivers of the country, receives the income generated from these companies and distributes it to its holders. 

Also, like any true democracy, access and choice to the equity market are delivered to masses. 

December 4 is also significant as it marks the culmination of the UTC’s 33rd anniversary week celebrations reinforcing our founding mission of creating more opportunities for individuals to access our economy’s capital markets.

Similar factors that hampered its half-year results continued to impede profit growth for GraceKennedy’s nine months results to September 2015.

These reasons included the costs of integrating its recently expanded USA operations, immediate (first quarter) recognition of the assets tax liability, lower foreign exchange gains and higher finance costs.

Let us now further expand on these and other developments that impacted on its third quarter results.

Changes in financial positions

Total assets expanded by 4.1 per cent to J$106 billion from last December’s J$101.9 billion.

The largest component, investment securities, closed at J$22.4 billion; this represented growth of 8.9 per cent over the J$20.6 billion at which it closed last year-end.

Strong growth of 16.7 per cent was noted under loans receivable, which expanded from J$18.4 billion to J$21.4 billion.

Cash balances declined marginally to J$9.2 billion from J$9.5 billion. Pledged assets contracted to J$7.3 billion from J$9.5 billion. Meanwhile, receivables advanced to J$12.3 billion from J$11.5 billion.

The value of inventories fell to J$9.4 billion from J$10.8 billion; this decline was positively helped by the reallocation of Hardware & Lumber’s portion of J$1.9 billion to assets held for sale. This factor also explains the decline in fixed assets, which fell to J$8.1 billion from J$8.7 billion; the H&L portion was J$0.715 billion.

Investments in associates advanced by 20 per cent to J$1.5 billion from J$1.3 billion. This gain was influenced by higher profitability at these companies.

A new line item, valued at J$3.6 billion, represented the assets of H&L, now described as being held for sale.

Total liabilities rose to J$66.9 billion from J$63.6 billion or by 5.1 per cent.

Here, the liabilities of H&L represented J$2.1 billion. These comprised payables (J$1.5 billion), bank and other loans (J$0.26 billion) and other post-employment obligations of J$0.35 billion.

Not surprisingly, the payables component fell to J$17.3 billion from J$19 billion, primarily due to reallocation from H&L.

Deposits grew to J$22.9 billion from J$21.2 billion as First Global Bank continued to attract new customers.

Bank and other loans grew from J$11 billion to J$13.8 billion. This was influenced by the reduced usage of securities sold under agreements to repurchase, which declined to J$6.3 billion from J$7.5 billion.

Equity changes

Total equity advanced to J$39.1 billion from J$38.2 billion. Excluding minority interests, shareholders’ equity rose to J$37.2 billion from last year-end’s J$36.5 billion.

Consistent with its buy-back programme, GKC’s share capital fell to J$567.8 million from J$588.5 million.

All reserve balances improved modestly. However, retained earnings advanced to J$25.4 billion from J$25.1 billion. This change was boosted by total comprehensive income of J$1.03 billion and then reduced by dividends of J$522.5 million and transfers to capital and banking reserves totalling J$241.4 million.

With 330,639,000 shares outstanding each share has a book value of J$112.47 (December 2014: J$110.38).

Revenues and profit

Total revenues expanded to J$59.7 billion from J$52 billion or by 14.4 per cent. In contrast, gross profit declined from J$2.23 billion to J$1.99 billion. This reduction was influenced by the disproportionate increase in expenses to J$57.7 billion from J$49.9 billion or by 15.6 per cent.

Other income fell to J$1.11 billion from J$1.27 billion. This category includes contributions from net foreign exchange gains, fees and commissions and dividend and interest income. With the falloff in foreign exchange earnings, mentioned earlier, this decline was not surprising.

These changes saw profit from operations fall to J$3.1 billion from J$3.5 billion.

Net interest income from non-financial services came in at J$255 million; this represented a decline of J$42.8 million or 14.4 per cent from the 2014 result of J$297.4 million.

In contrast, and consistent with its higher debt load, interest expense in relation to its non- financial services rose to J$527.4 million from J$474.7 million.

In line with their higher profitability, the contribution from associated companies expanded by almost 30 per cent to J$246.2 million from last year’s J$190.1 million.

These movements resulted in a pre-tax profit of J$3.08 billion; this represented a decline of J$439.1 million or 12.5 per cent over 2014’s J$3.52 billion.

With the effective tax rate marginally declining to 26 per cent from 26.6 per cent, GKC’s after- tax profit from continuing operations registered at J$2.28 billion from last period’s J$2.58 billion. The discontinued operations of Hardware & Lumber then contributed J$112.7 million, down from the prior period’s J$134.2 million. (That result will be expanded on later.)

This contribution boosted the net profit to J$2.39 billion from J$2.72 billion. Of these figures, the profit attributable to shareholders came in at J$2.05 billion (nine months 2014: J$2.38 billion.)

These results translated into diluted EPS of J$6.18 versus J$7.21 for 2014.

Divisional performance

Despite a 17.3 per cent improvement in revenues, the food trading segment’s operating results contracted by 26.3 per cent.

A significant part of that decline can be attributed to continuing integration costs of its US food operations via GraceKennedy Foods (USA) LLC. Notwithstanding these costs, there were several positives.

GKC has a distribution agreement with a global beverage distributor, Arizona, which is expected to expand its reach within the USA. Also, its Grace Jerk Seasoning (and related products) was launched using the Internet distributor, Amazon.com.

In addition, there have been improved results at Hi-Lo stores. Finally, efficiency gains and lower commodity prices have helped demand and profitability at its manufacturing facilities.

Despite a marginal decline in external sales, the banking and investment segment delivered a strong 18.7 per cent improvement in operating results.

This result was primarily due to the improvements in both net interest income and non-interest income at its flagship operation, First Global Bank, where loans expanded by 28 per cent and deposits grew by 21 per cent.

The insurance operations delivered a 16 per cent expansion in external sales accompanied by a 10.7 per cent improvement in its operating results. This was mainly due to the improved underwriting results at the general insurance unit. That company has recently launched Internet access for its growing clientele.

The star performer in terms of operating results was money services. 

Here, external sales expanded by a modest 1.6 per cent. However, operating profit grew by 6.4 per cent.This result was helped by three factors: cost containment initiatives; higher revenue from its cambio operation in Trinidad; finally, higher remittance transactions and improved market share in Jamaica.

Dividends and share price

On December 16, 2015 GKC will pay its third interim dividend of J$0.90. This brings its total dividends for the calendar year to J$2.48.

Its EPS for the last quarter of 2014 was J$2.68, which, when added to the EPS to September 2015 of J$6.18, brings it up to J$8.86 for the most recent twelve months. Thus, when related to the dividend of J$2.48, represents a pay-out of 28 per cent.

Given that many companies distribute a much greater percentage of their net profits as dividends, there appears to be significant leeway for GKC to improve this figure in the coming years.

Its share price ended on September 28, 2015 at J$63.92. By October 19, 2015, the price advanced to J$64.71 and closed at J$67.28 on October 26, 2015.

Following the release of these results on the afternoon of November 5, 2015, the share price rose and it closed on Wednesday November 11, 2015 at J$74.39 with asking prices coming in at J$77.75 (about TT$4.18). At that closing price, Jamaican investors enjoy a dividend yield of 3.33 per cent.

On the local exchange, the price closed at TT$3.61 on September 25, 2015, then it held steady at TT3.60 for the entire month of October. As at last Wednesday, when its third quarter results were issued in the local print media, it closed at TT3.60, with offers to sell coming in at TT$4.00 (about J$74.35).

Contribution from hardware and lumber

H&L’s assets closed on September 30, 2015 at J$3.6 billion while liabilities stood at J$2.1 billion; thus, the equity position was J$1.5 billion.

Revenues rose marginally to J$5.36 billion from J$5.24 billion, however, gross profit fell to J$101.8 million from J$127.7 million. In addition, there was a notable decline in other income, which contracted to J$19.2 million from J$69.7 million.

Helped by a favourable tax add-back of J$7 million, the net profit from its discontinued operations closed the 2015 nine months at J$112.7 million from last year’s J$134.2 million.

GKC announced on October 16, 2015, that all the main conditions have been agreed for the sale of its majority (58.1 per cent) stake in H&L to Greystone Equity Partners Inc. It is now anticipated that the sale should be concluded by the end of December 2015.

This transaction should provide GKC with a useful one-off lift to its year-end 2015 results.

It was the murder—execution-style, in broad daylight— of a friend and fellow farmer in the Colombian countryside that prompted German Sanchez to finally heed government calls to get out of the cocaine trade and plant cocoa instead. Six years later, market forces, more than concerns about personal safety, are persuading him not to switch back.

Prices for cocoa, the raw material used to produce chocolate, are climbing in international markets, lining the pockets of Andean farmers. Sanchez says he’s getting about 6,800 pesos (US$2.31) this year for a kilogramme (2.2 pounds) of cocoa beans, compared with 5,000 pesos last year and about 3,000 pesos in 2012.

Coca, the source of cocaine, “caused a lot of bloodshed,” said the widower, a father of two. “Family members were killed and others ended up in jail. The economic revenues didn’t justify the risk.”

Cocoa futures have surged 39 per cent in the three years through November 10, according to data compiled by Bloomberg. The Bloomberg Commodity Index, which doesn’t include cocoa, tumbled 40 per cent in the same period. Cocoa for March delivery rose 0.5 per cent to US$3,329 a tonne on ICE Futures US in NY.

The trend partly reflects supply constraints in West Africa, which accounts for about 70 per cent of the world’s supply. Dry weather from the strongest El Nino since the 1997-98 record has hurt crops there—mainly in Ghana, the No 2 producer—although the return of rainfall last month eased some of the concerns.

Even so, the 2015-2016 crop in Ivory Coast, the No 1 producer, will be smaller than last year’s record of 1.8 million tons, and El Nino continues to pose risks in Indonesia, the No 3 grower, and Ecuador, Rotterdam-based trader Cocoanect BV said in an e-mailed report.

Old trees, disease and a younger generation reluctant to follow their parents into the fields also keep supplies tight as demand rises. Global cocoa bean use will outpace crops by about 96,000 tonnes in the 12 months ending September 30, 2016, based on estimates by the International Cocoa Organisation in London. The chocolate market will grow to US$115 billion by 2020 from about US$50 billion in 2001, Euromonitor International projects.

All this is supplementing years of effort by governments and organisations in the US and South America to reduce coca cultivation. The illegal crop is grown exclusively in the Andean region, with Peru accounting for about 39 per cent of cocaine production, Colombia 33 per cent and Bolivia 28 per cent. The final product typically ends up in Europe and the US, the biggest consumers, according to the US Office of National Drug Control Policy.

The US Agency for International Development began its alternative development programme in Peru 20 years ago. Since 2002, it has invested US$620 million assisting the country in replacing more than 80,000 hectares (198,000 acres) of illegal coca with legal alternative crops, including cocoa, said Gregory Swarin, USAID regional programme officer in Lima.

Farmers are on track to plant an additional 28,000 hectares of fine and aromatic cocoa with help from a three-year plan started in 2013 by the Peru Cocoa Alliance, a US$36 million public-private partnership supported by USAID, Swarin said.

Exports up 57 per cent

The value of Peru’s cocoa exports rose 57 per cent to US$247 million in 2014 from a year earlier, according to ADEX, the nation’s exporter group. Government data show that production may double by 2020 from this year’s projected 80,993 tonnes.

Reyes Mulatillo, 36, is contributing to the increase. With the help of the USAID and a local group, he abandoned coca for cocoa three years ago, to his wife’s relief, he said in a telephone interview from the town of Tingo Maria, in the country’s Huanuco region. He now has one hectare planted with premium beans and expects to reap more than 250 kilogrammes this year, his first crop.

“We wanted a legal product and a more peaceful life,” Mulatillo said.

The Colombian government started its alternative development programme 10 years ago, with support from the United Nations Office on Drugs and Crime, or UNODC. About 54 per cent of total cocoa plantings in the country—58,886 hectares—are in areas where illegal crops once grew, according to government data.

Rising production

The shift has helped to boost Colombia’s cocoa production 11 per cent to 54,120 tons in the 12 months ended September 30 compared with the previous season, data from the Bogota-based National Federation of Cocoa Growers show.

German Sanchez, president of his local association of cocoa producers, switched to cocoa beans with the encouragement of the Colombia government programme. The Valdivia, Antioquia, farmer now has three hectares, about the same as he once planted with coca, and expects to reap five tonnes of the beans in 2016, up from three this year. A recent loan through his association, Asocaval, from Banco Agrario de Colombia SA will allow him to add 1.5 hectares of the safer crop.

The support for legal crops—and farmers’ concerns about the violence and insecurity associated with cocaine—helped cut combined coca plantings in Peru, Colombia and Bolivia to 120,000 hectares in 2013 from a year earlier, the lowest since the mid 1980s, according to the UNODC World Drug Report 2015.

Some farmers are sticking with the illegal crop, partly because the reduction in plantings caused the price of coca leaves to rise in certain regions. Cultivation in Colombia rose 44 percent in 2014, to 69,000 hectares, from 2013, according to a July 2015 UNODC report, which noted the expanse was mainly in communities that already grew coca.

Pedro Suarez quit coca in 2000 and hasn’t gone back, citing dangers that include its link to the conflict that involves rebels and paramilitaries. He began sowing cocoa beans six years ago and is now the president of his local cocoa association in Topaipi, Cundinamarca, with three hectares.

A park ranger sponsored by the UN for security is giving him confidence to stay with cocoa, along with the price of the crop, which “has improved a lot,” he said by telephone. It’s “giving people the morale boost to keep planting.” Bloomberg

It was undoubtedly the best start for a T&T team at a World Cup Qualifying match. An impressive 2-1 victory over Guatemala in their backyard in Guatemala City on Friday night earned the young “Soca Warriors” full three points and the confidence for their next match tomorrow against the USA at the Hasely Crawford Stadium. 

Former national captain Clayton Morris and ex T&T players Brian Williams and Ron La Forrest described the result as extraordinary and congratulated coach Stephen Hart. 

La Forrest said that, for all his life playing football, Guatemala has been the most hostile of the Central American countries. 

“They make noises at your hotel, they tap the bus that takes your team to matches and back and basically try to throw you off your game. And for the T&T team to win in the midst of all this was a magnificent achievement,” La Forrest said. He also expressed the view that the players have been responding nicely to coach Hart. 

“In fact, the players are not playing for T&T but rather for coach Hart. I think he has a really good thing going with the players and they are really responding to him,” La Forrest noted. 

Meanwhile, Morris said he cannot remember a T&T team getting a better start to a World Cup campaign. 

“They were playing at a very high tempo which is not a customary thing with T&T teams. In fact, the way they were playing I told myself it was just a matter of time that we would have gotten a goal and we did.”

According to Morris the team also played with a certain level of confidence that was impressive. 

“You can see them controlling the ball under pressure and making passes. In defence the defenders were also taking the ball in pressure situations and starting attacks which was great,” Morris explained. 

Meanwhile, Morris warned against simple mistakes being made by the defence that he feels will be costly if the team does not work on it now. Morris, the ex T&T captain of the 1989 “Strike Squad”, which came within a point of qualifying for the 1990 World Cup in Italy, is warning that Hart’s men need to spend time working on defending as a unit. 

“Individually I think we have great defenders but as a team there is some work to be done. For instance, the goal that we received; there was absolutely no marking and tracking. When the Guatemalan player got through the defence with the ball and went wide of the post, there was no one marking him. He even had the time to pick out a man to pass the ball to while the T&T defence was slow to track back and pick up players in the box,” Morris explained.  

Morris, who played as a central defender for the Strike Squad, wants the Soca Warriors to not become complacent by the result but rather use it to go after the US at the Hasely Crawford Stadium in pursuit of a another victory in their second match. 

Williams is calling on the T&T players to express themselves a bit more in the home game on Tuesday night at 7.36 pm. 

After congratulating Hart for the win Williams made the observation that T&T teams tend to play too cagey when they are in front their own home crowd. 

“We saw it against Nicaragua last month and we have had a history of doing this, but I think the time has come for us to build our confidence more when we are at home and go after opposing teams. We need to go after the US team because we will have nothing to lose,” Williams said. 

The Trinidad and Tobago team is coming off a series of impressive showings, particularly a 4-4 draw with Concacaf giants Mexico and a 2-1 triumph over Panama in Panama. Williams explained that despite playing away from home on Friday night he always felt that T&T had the edge over their counterparts, as has always been the case for T&T teams.

WALTER ALIBEY