No-seed!

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Our Prime Minister and Minister of Finance, Honorable Gaston Browne, has painted himself into a corner. Seems he has met his match with a company that refuses to be bullied. We are talking about the Bank of Nova Scotia (BNS) proposed sale of its Antigua holdings to Republic Financial Holdings (RFH) of Trinidad. From the moment that proposed sale was announced, our PM appeared to be peeved that the negotiations between the buyer and seller were quietly being done “behind his back”, so to speak, and he petulantly decided that, with or without an invitation, he was going to be the man to be reckoned with in this deal. After all, he is the “monarch of all he surveys;” the “financial wizard of all.” So he threw a tantrum and declared that the government should have been privy to the discussions, and that the government and people of Antigua and Barbuda should have been given the right of first refusal.

He also expressed grave concern about the workers and declared that he has a local consortium at the ready to purchase the BNS holdings. He was in full populism mode, and the faithful egged him on! Here was a man of the people standing up for the people against the big, bad, foreign investor.

The uncomfortable thing was that the brusque, give-no-quarter treatment being meted out to BNS is of a piece of the administration’s strategy – make a demand or threat to a private business entity, and when that entity refuses to yield on principle, create a hostile business environment, raise the temperature by revealing private and confidential aspects of the businesses’ operations, and inflame public sentiment by accusing the business of ripping off workers and making excess profits and taking advantage of the country. (See DIGICEL’s conflict with the government over sharing the spectrum and the government’s subsequent threat to buy the company). 

So there he was, on the bully pulpit, preaching the gospel of ‘local ownership of the means of production,’ and ‘solidarity with the proletariat!’ ‘Down with the multinational corporations that make money in the local economy and repatriate the profits overseas!’ ‘Power to the people!’Entrepreneurial socialism!’ Whatever that means! Marx and Lenin would have been proud, except that the Global Ports Holding agreement, the eyebrow-raising deals in Barbuda, the stinky YIDA deal and the obsequious courting of the wealthy foreign “investor,” give the lie to all that populist posturing. But those are stories for another day.

Our good PM, he of ultimatums and lines in the sand, in a fit of ire, threw down the gauntlet and told BNS that unless the government and its “local consortium,” whoever that is, are given a piece of the deal, that his government would not be granting a vesting order. Apparently, this vesting order was the government’s trump card (No pun intended. Well, actually, pun intended. See Trump’s ire over Denmark’s refusal to sell Greenland to the United States). You see, they have both proposed to purchase from an unwilling seller, and both have pouted and taken their marbles and gone home. Seems, for reasons best known to the Danes and the Scotia folks, they are unambiguously opposed to selling to these two governments. Hmmm! To our thinking, this is a case of cave venditor (seller beware), the opposite to caveat emptor (buyer beware). Cave venditor suggests that sellers too must exercise due diligence and caution, because they can be deceived in a market transaction. Hmmm!

Actually, RFH, the entity with which Scotia has been negotiating in order to consummate its sale, is also opposed to any sort of partnership-buyer relationship with our government and the so-called ‘local consortium!’ Hmmm! We wonder why? Why the reluctance, nay, the downright refusal, to enter into a sale or a partnership with our righteous government and its local consortium, (again we say) whoever that is? Of course, schoolchildren are talking about de-risking fears, and added scrutiny from the world of international finance, and money laundering fears, and the use of the bank as a piggy bank and so on and so forth. But what do school children know? They have too much time on their hands! Much like their head in the Ministry of Education, they are financial novices! So, “Don’t pay dem no mind; it’s children melee!”

What we ought to be ‘paying mind to’ is the cardinal rule of poker playing and gambling: that one should never lead with one’s ace or one’s trump card. And one should be careful when bluffing, because the opponent might have the testicular fortitude or wherewithal to call the bluff! And it seems, in the case of Government of Antigua and Barbuda versus Bank of Nova Scotia, the government showed its hand bright and early, waving the vesting order around like a flag and jumping up and down and smugly chanting “No Vesting Order! No Vesting Order!” Not that anyone was listening, let alone BNS and RFH. They quietly went about concluding sales in many of the various islands, and even had a meeting with high level officials from the other islands without bothering with our officials. Seems they were telling our government, “Take your vesting order and shove it!” Good grief! Talk about calling a bluff!

But don’t simply take our word. Here are excerpts from a letter written by our good PM, dated August 22, 2019 and addressed to Mr. Brendan King, the Senior Vice-president International Banking at the Bank of Nova Scotia in Ontario: “. . .You will recall that from the previously unannounced intention of BNS to sell its Antigua holdings, and of its negotiations with RFH without permission (Say what?) or other involvement of the government, (What? Is this not free market capitalism with private ownership? Is government’s role in a market economy not that of regulator rather than that of an active player or adjudicator, putting its thumbs on the scale and picking winners and losers?) we made it clear that, in the interest of the sustainability of the banking sector, our policy was that any sale should be made to an appropriate vehicle comprising substantial local ownership.” In other words, you (a private entity), will sell to our hand-picked entity, or you will not be the recipient of the almighty vesting order! Good grief!

And the good PM was not done. He revealed that RFH had rebuffed his government’s mysterious “local consortium” thusly: “We regret to advise that we have decided to no longer pursue the negotiations re the sale of any portion of the Antigua branch. . . We will proceed to close on the other branches and banks.” And indeed they have. Last we checked, Antigua is the only holdout. Yes, RFH has spurned the advances of our government with a clear, “No dice!” And then to add insult to unrequited love from RFH, our good PM reveals BNS’ lack of interest in the wonderful “local consortium”: “If we, (BNS) are unable to consummate the sale to Republic Bank, we will need to re-examine all of our options, including the closure of our operations in Antigua and Barbuda.” Ouch, ouch! Sigh! What a tangled web!

Again, we cite the axioms from the worlds of high finance (see mergers and acquisitions) and high-stakes poker: keep an ace up your sleeve, never bluff unless you have the gonads to back it up, and of course, as they say around the warri board here in our fair State, “Do not play imprudently, or you will get no-seed!”

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