Globe Trust rescue in the works
Govt would have to make input
Stabroek News
August 2, 2002
Canadian and South African bankers and investors are trying to put together a proposal to reorganise Globe Trust and Investment Company Limited which was recently given a new lease on life by a High Court ruling.
South Africa-based Guyanese businessman, Eric Phillips is spearheading the discussions with the directors, shareholders, the Bank of Guyana - including the administrator it appointed to manage Globe Trust, Conrad Plummer - and the depositors including the African Cultural Development Association (ACDA). ACDA through its unit trust is a major depositor and is represented on Globe Trust’s board.
Phillips will also be consulting with Chartered Accountant Christopher Ram of Ram and McRae. That firm had put together a restructuring plan that was submitted to the Bank of Guyana before it moved to the court to have Globe Trust liquidated.
The Ram and McRae plan called for, among other things, the repayment of outstanding loans by Globe Trust’s directors, some capital injection, the writing off of some of the bad loans, a moratorium on withdrawals by depositors and the conversion of some deposits into shares in the company.
Phillips told Stabroek News yesterday that the proposal under consideration would have to take into account the interests of all the parties and be commercially viable. He stressed too that the government would have to make some financial input as well.
A fortnight ago Phillips and his group signed a memorandum of understanding with the government after discussions with President Bharrat Jagdeo. There has been no statement from the government on this.
Phillips confirmed that once the proposal was put together it would have to be approved by the Bank of Guyana which has statutory responsibility for such matters under the Financial Institutions Act 1991.
Last week, Chief Justice Carl Singh ordered the Bank of Guyana to reorganise Globe Trust, turning down its application to liquidate it.
The Bank’s move followed signals from the government that it would not intervene to save Globe Trust and that it should be liquidated. The government had indicated that it would take steps to protect the savings of the small depositors, described as those with deposits of up to $10,000 who comprised about 80 per cent of Globe Trust’s 4,000 depositors. Globe Trust’s doors were closed by the Bank of Guyana in July, leaving depositors in limbo over the $870 million they had on deposit.
President Jagdeo had said that he had no plans to use taxpayers’ money to bail out the “fat cats”.
Finance Minister, Saisnarine Kowlessar said in July last year that the Globe Trust failure would not impact on the financial system as it represented less than one per cent of the asset base of the financial sector. (Patrick Denny)