Depositors meet on way forward for Globe Trust
Concerned about future Bank of Guyana input
By Andre Haynes
Stabroek News
August 15, 2002
Following the order by Chief Justice Carl Singh that the Bank of Guyana reorganise Globe Trust and his ruling that the Central Bank had acted "unfairly" towards the institution, the Concern About Globe Trust Action Group (CAGTAG) met with depositors at City Hall last Thursday.
The Group, chaired by Lorrie Alexander and whose members include Dr Kenrick Hunte, Dr Edward Simon, Basil Williams and Roshan Khan, addressed and sought to allay the concerns of some depositors, many of whom were at risk of losing their deposits, following the Central Bank's decision to shut down Globe Trust and its attempt to secure the compulsory liquidation of the institution late last year.
The future involvement of the Bank of Guyana as well as likely investors in the reorganisation of Globe Trust, as well as the interest which may have accrued over the time elapsed between the closing of the company's doors and its resuscitation, were some of the issues uppermost in the minds of the depositors.
The involvement of the Bank of Guyana was of particular worry to those in attendance, since according to many of them they felt betrayed by the Bank's moves to have the institution's assets liquidated.
Many shared their concerns and fears about the possibility of the Bank mismanaging the reorganisation. The reality of the Ram and McRae plan was also one of the topics for discussion, while many of the depositors present were very critical of some of the proposals highlighted in the plan for Globe Trust's resuscitation. Addressing the nearly 200 depositors on where the Chief Justice's decision would leave them in relation to their money, Williams, who is an attorney-at-law, explained that reorganisation would entail the Bank of Guyana devising a plan to bring Globe Trust back to financial soundness, essentially doing what they should have done at the outset.
The attorney, however, cautioned that the Bank must now move forward with all the stakeholders, including the depositors, who must be consulted as it embarks on the exercise, since they were unprepared to leave that institution on its own again.
Outlining the possibilities which existed for the Bank of Guyana, he noted that they could either come up with new shareholders or a plan to amalgamate Globe Trust with another financial institution.
And while alluding to the proposal being put together by Canadian and South African bankers and investors to reorganise the institution, he also noted that another possibility would be for the institution to be absorbed by another thereby losing its identity in the process. This latter prospect in particular did not find favour with many of those in attendance.
Whatever the enterprise, Williams noted, the reorganisation plan would need to be laid over with court, at which point depositors would have adequate opportunity to signal their approval or disapproval for the plan. He noted that the importance of the depositor was recognised by the Financial Institutions Act (FIA) and the Bank, in the first instance, ought to have consulted the depositors, who now need to be informed at all times, and who must meet with investors to approve of what they are prepared to do.
While confronting the concerns over the continued involvement of the Bank of Guyana, he explained that the FIA had reposed power with the Bank and it would be possible for it to proceed alone, but a resolution by depositors could mandate the Group to represent their interests in negotiations with the Bank.
Dr Hunte, meanwhile, referring to the President's statement that he would be willing to look after the small depositors but had no plans to use taxpayers' money to bail out the "fat cats," noted that the big issue would be those who have lent money to the institution.
Noting that elsewhere, the United States being an example, there have been attempts to protect depositors, he suggested that the Bank of Guyana could be helpful in this regard by collecting loans outstanding to Globe Trust.
Addressing the proposed sale of the institution's building, with which many of the depositors did not find favour, he suggested the possibility of the government holding the building at the value for which it was originally purchased, thereby creating a flow of cash into the institution, while the company could rent it.
And while underscoring the need for flexibility in terms of cash flow, he also highlighted the need for more rights for the depositors as well as for the enforcement of financial contracts to prevent a recurrence of the institution's financial crash.
Addressing the implementation of the Ram and McRae plan, and noting that the plan was not cast in stone, he said that the idea behind the plan was merely to raise funds. He acknowledged the criticism of parts of the plan, but maintained that the plan had been conceived in haste and would need to be modified.
During his appreciation of the Chief Justice's decision, Alexander pointed to the judge's findings on the Bank of Guyana's negligence and unfairness. He urged that the Bank take into consideration what it could do about restitution. He considered legal action as one of the avenues open to depositors.
Meanwhile, depositors were urged by Dr Simon to retain their stake in the company once it was resuscitated. He warned of the dangers of the situation where "as soon as Globe Trust gets going, it will be alright to pull out our few dollars and get away." "We are all in this together," he said, urging depositors to continue to work and invest their savings in the entity.
Those depositors at last Thursday's meeting were asked to sign a form to mandate CAGTAG to represent their interest in the reorganisation of the institution.
CAGTAG represents a group of depositors who had opposed the liquidation petition brought by the Bank of Guyana against Globe Trust and Investment Company Limited and was represented by Williams in the legal proceedings before the Chief Justice.