SENATE
OF THE BAHAMAS
1
AUGUST 2001
ON
AMENDMENTS TO NEW FINANCIAL LEGISLATION
Today Mister President it is not my lot to outline the policy of the PLP on these bills, although tangentially I shall have to do so. Today it is rather my lot to address some general themes as it relates to affects of this legislation and how it has adversely affected us in this country. I would also take some time to suggest how we ought to rectify this.
I
have no hope that this Government will listen to the cries of the people of
this country about the millstone around the neck of The Bahamas that this
package of bills is. The Leader of the
Opposition has rightly described that this must be the most difficult country
in the world in which to open a bank account.
And since the advent of this legislation, the poor range of services
offered by banks and the quality of those services already poor have all
deteriorated markedly. Indeed going
into a bank in The Bahamas today is pure torture.
The
banks have to be blamed in part for this because they refused to stand up for
their consumers. They seem to have
accepted the principle that they are simply passive actors on the scene. But I think that their attitudes would have
been different if the interest of rich customers were at stake. But because the brunt of the inconvenience
is borne by their small customers, they could not give a hoot. And yet it is
from the small customers that most of the profits in the banking sector are
gouged.
I read
with interest this morning a response
to certain comments made in this house two days ago by me in connection with
the merger of two banks in this country.
I suggested that the announcement was made without reference to the
regulatory authorities of this country.
The regulatory authorities in this country must review this merger to
see if it meets the test of being better for the consumer.
Notwithstanding
the comments of Terry Hilts of CIBC and Sharon Brown of Barclays my suspicions
remain on two scores: the extent to which these mergers are going to be
anti-competitive, and secondly for the fate of the employees of these banks. I
will address each in turn.
First
on the question of competition. Its
seems clear to me that we may as well have a monopoly in the domestic banking
sector. All banks in this country
charge about the same for the services they provide. Each are in the dark ages in terms of the speed with which they
can deliver those services. Each
charges too much for the services they provide. And each requires too much
documentation and does not have a sufficient concern for the privacy of
individuals who are customers of the bank.
Further
the banks are as a whole anti-consumer.
They are not consumer friendly.
They have a set of rules with which you must comply in terms of their
opening times, their credit policies, their polices on default. And the polices are not sufficiently
flexible or perhaps there is simply not the talent in the sector to be able to
creatively deal with the range of problems that confront the consumer in the
banking sector. And this applies
whether in the domestic or offshore sector.
In
one case at Barclays that is supposed to be the expert on IBCs, it took some
six months to open an IBC account. A combination of too much Government
regulation and delays of various kinds in the bank itself.
Recently,
we sent a researcher to open a new account with Commonwealth Bank. The usual matters were required but
one I thought was particularly nonsensical and an invasion of privacy. They wanted to have the past two years
of statements from the previous bank of
the business before they would agree to open he account.
No
doubt much of this that I just described with these two banks, and I shall talk
about others, comes from this present a climate of intrusion into the private affairs of consumers on the grounds
that they are fighting crime. The
Government has set the tone for this by its abject surrender to the blackmail
of the G-7 and Organization for Economic Cooperation and Development structures
last year. We had the sad figure of our
Prime Minister running around like a groveling mendicant with his cap in his
hand asking how high should he jump.
I
repeat what I said here two days ago.
We have a way of life and we ought to defend that way of life. All of us have to make adjustments but
Bahamians must learn to stand up and defend their way of life.
That way of life includes a right to privacy, an absence of income tax
and the absence of regulation. The fact
that others want to impose and change that way of life is one thing but the question is do we stand
up for our way of life.
One
of the reasons I oppose income tax so vehemently is the experience in the
United States of the Internal Revenue Service that barges into the private
affairs of people and the amount of documentation that goes along with all of
it. That is why I do not think I could
live in the United States. And yet, we
are now creating that same situation here.
Try
applying for a license in this country today, and you get a whole list of other
things that you have to do including a national insurance number, a business license, pretty soon they will want to know if your
real property tax has been paid,
receipts from customs, a criminal record.
It is
all too intrusive and difficult. The
banking sector did not stand up for us as consumers, they did not protect our
privacy. And we have not spoken up
loudly enough. This legislation before
us today should have addressed that but it falls far short. In fact it does not address privacy issues
at all.
Recently
as a result of this legislation, the Banks have been sending around
circulars, I have received them from
Royal Bank and Barclays and CIBC and Commonwealth Bank. All of them saying that various clients have
to provide them with certain documentation and if they did not the money would
be transferred to the Central Bank and the accounts closed. Clients who have
received them have asked me what should they do. And I told them to do as I do, throw it in the garbage tin.
What
this will force people to do, is to return to the cash economy again. Because not only is opening a bank account a national nightmare
but maintaining one is also difficult.
Each
time you go and make a deposit in the banks in this country you are treated
like a criminal. This applies to
transactions in cash or cheuqes over $10,000. And if they suspect you, they may
even require it under $10,000. They ask
you to sign a source of funds form. The
law now requires it for over $10,000.
This must surely be unconstitutional since it assumes that everyone who
has over $10,000 to put in the bank is a money launderer. That cannot meet the constitutional test of
reasonable suspicion.
But
of course who cares about rights and the constitution. In a country where a judge of the Supreme
Court can visit the Fox Hill Prison, see the appalling conditions there and
pronounce that they do not cross the threshold of cruel and inhumane punishment. In a prison where the Minister of Health
himself has admitted in this place that the kitchen in the prison ought to
condemned as being in violation of the health code.
In my
small firm, the law is now requiring a compliance officer whose responsibility
it is to rat on my clients private business. That is an unlawful intrusion into
my business affairs and it must be resisted.
And clients can be assured that there will be no cooperation at all on
that score from me. And then there is the requirement that if I want to
continue practice as an attorney who wants to incorporate companies, I
must get another license from the Government. And no doubt that application form is filled with requests for
information that’s none of the Government’s business.
The
other day an attorney and myself were discussing a matter that involved a
someone making a formal demand. And I said to him, there is no doubt in my mind
that this was designed for someone to leak the private affairs of the company
to persons for reasons other than
business. The banks do not have
sufficient concern or regard for privacy. So this Senator is reluctant in this
country to provide any bank or any insurance company or any government agency
with anything because you never know just where it is going to end up and for
what purpose it is going to be used.
And
perhaps the sector ought to work on building higher regard for privacy and the
issues related to it.
The
messenger in my office is amongst the most unhappy campers in this country
today. We deal with Scotiabank. Now at a certain level, the relationship is
quite courteous. But making deposits,
cashing cheques are a nightmare. And it
took my speaking directly to Tony Allen, the head of the bank in order to get
some of the problems sorted out. The
messenger who had been going to the bank for years to cash the employee cheques
was suddenly told without warning one day that she had to bring identification
in order to cash the cheques of the employees that’s he had been doing all
along. And the only form of
identification acceptable was a passport.
A voter's card was not acceptable.
(Saying voters’ cards are subject to fraud). Further, she had to bring a copy of a current bill with her
street address in order to show that she was currently active, employed and working. I hit the roof and had had enough.
That
is the daily nightmare of doing business in The Bahamas.
And there is no point moving from one bank to the
next,. First of all, the number of banks is shrinking. Secondly, they all have
the same polices like any good cartel.
Thirdly, the cost is much too high to change banks.
Let
us look at the costs of their services today.
A draft that you can buy for 99 cents in Seven Eleven Store in Miami
costs 6 dollars in The Bahamas. In
Atlanta at an ATM, I made an error and withdrew $1,000 from my credit card instead of $100. Immediately upon my return to The Bahamas I
put the money right back on the card. I
was charged for the withdrawal, which is correct. But I notice that I lost 27 dollars on the transaction. In other words, I was charged 27 dollars for
that mistake. And the fees go to the
bank.
And
then there is the recent example of a client who paid $25 to Commonwealth Bank
to wire 500 dollars from Freeport to Nassau, something that should take hours
to do. The money has still not
arrived. But the cost $25 is
outrageous.
I
know of cases where persons have children in school overseas. They have to pay thousands of dollars in
school fees. He told me that it will
cost him some $2,000 dollars in charges at Barclays his bank to transfer the amounts of monies the
needs. So eh and his wife and he knows
of others are simply trying to accumulate the money in cash and then spirit it out in pieces. This is physically dangerous because it
makes them the target of robbers. And of cruse if they are found with the
money, they then are accused of being money launderers.
Of
course, while talking of scholarships this can all be avoided if the Government
had a proper and fair scholarship scheme.
Instead, there is still rank favoritism and connections involved in the doling out the scholarship loan
money. Once again students are
reporting to me that they have been denied funding, but some say they know of
cases where a ministers two children have been granted loans. I know of one case of a young man who was
denied funding because he was one month shy of 18 years old. It was in fact granted then revoked because
they discovered that he was 17. Then
when his mother protested he was told to apply next year. This year it has been denied again and all
of the money has run out. Of course, we cannot appeal to the Minister of
Education who I see is to in the islands campaigning and so is not in his
office. My view Mister President is
that all of these Ministers who are campaigning to become the leader of their
party should take a leave of absence without pay, since they are obviously not
doing the peoples work. This would
include the Minister of Housing, Attorney General, the Minister of Transport ,
the Minister of Tourism and the Minister of Education. Also I see that the Minister for the Public
Service is also involved in the campaign.
They ought to stop their pay until they return to work.
But back to the scholarships, there is so much of a
hue and cry about the needs not met that we hear that the Government will have
to revisit the matter again and get fresh money to meet the demand.
But
the bottom line with this legislation is that what we have is a Government in
complicity with the banking sectors to make us conform to documentation and
regulation, built making it more expensive for us to do business, invading our
privacy, while telling us it is all for
the good. We reject it. We condemn it.
I say
again, that we must hear from the regulators on the demise of Citibank in the
domestic banking sector. Citibank has announced that it will downsize. This after not one month ago telling
employees that they had nothing to worry about. That is the same assurance that Sharon Brown and Terry Hilts of
Barclays CIBC gave. So they reassure
you today and then your job is gone tomorrow.
I would like to advise the employees of Barclays and CIBC to insist that
they cannot be transferred to the new entity unless their old employers pay
them their severance benefits. That is
a lesson to be learned from the former employees of the bank of Montreal who
were absorbed by the Bank of The Bahamas when the Bank of Montreal left The
Bahamas.
Citibank
was good for Bahamian consumers. They entered the domestic market with a vengeance and undercut the business of other banks by offering
cheap credit and loans to persons who could not ordinarily get loans. Now that they are leaving the cartel gets
more powerful and the situation is anti-competitive. I believe that eventually we will have to move legislation to
regulate the conduct of the banks vis a vis their customers to protect privacy,
to lower costs.
I
hope that one of the results of all this invasion of privacy is that there will
be a consumer revolt, a return to the cash economy and perhaps some Bahamians
will now turn to their credit unions and seek their own forms of savings to
escape from this nightmare on banking.
The PLP will have to view all of this legislation and my view is to make
further changes to ease the situations as I have outlined it.
Before
I take my seat Mister President, there is one further area that I should like
to address and that is to respond to some remarks made last night at the
opening of the Bahamas Communications and Public Officers Union convention by
Greg Bethel of British Fidelity. I want
to say that I have the greatest respect for Mr. Bethel’s intellect. And certainly he is infinitely more
successful than me, but I seriously beg
to differ on much of what he said last night.
The
press reported some of what he said this morning. And it is easy for me to agree with those things that he said in
the press. We must invest. We must save. But the system must encourage saving and investment. This system does no such thing. And the fact is that while one can use
credit cards in The Bahamas, often it is the only form of credit that the banks
are willing to give. And people use
their credit cards to invest.
It is
easy to belittle shopping in Miami using the credit cards. But what if you are picking up items not for
your consumption but because it is cheaper to shop for your children there, or
because you can sell some items in Nassau and make a profit. People criticize persons for buying cars.
But what about the lady who loses her job and has to sell lunch. She
needs to get a car to do so. That is an investment. Investment does not
only mean buying shares from Colina or British Fidelity. So we must be careful
when we condemn what looks like consumer credit on wasting assets.
Further,
I want bankers such as Mr. Bethel to proceed with caution when statements are
made which suggest that globalization
is such an all powerful factor that we are almost helpless agents in the face
of it to defend our way of life.
I
happen to know that Mr. Bethel is a born again Christian. Christianity is a deterministic religion,
not a fatalistic one. It preaches
fundamentally that you can come to salvation by your own efforts. It also has a basic tenet the acceptance of
a basic moral order that there are some things that are objectively right
and some things that are wrong. Surely given those philosophical beliefs, we
are not passive instruments in the face of globalization. We can and must defend our way of life. We have the moral authority to do so. It is our way of life.
Further,
any suggestion by Mr. Bethel that globalization means that national identity is
no longer important is premature. It is
also premature to suggest that politicians are simply subject to the whims of international business and are passive
actors in the process. On the latter point, the recent refusal of
the Europeans to accept the merger of Honeywell and General Electric shows that
politicians still have a say. Further,
on the point of nationalism, all of us still require passports and visas to
travel from one country to another. And
in my presentation two days ago, I pointed out that our main trading partner,
that is the main proponent of globalization, still requires us to get visas
even to travel to their country.
As
long as the nation state exists and I believe it will for the next century, politicians and their
citizens will have powerful influence over any economic development. They both influence each other. That is why the PLP will continue to support an immigration
policy that protects and projects Bahamians first, globalization
notwithstanding.
I do
not accept the frightening scenario that is often painted by proponents of the
fully globalized and computerized world that somehow we are all destined to be
passive slaves in this process. Wherever people are involved systems will and
must be made to bend to their legitimate and needful demands. That is how it has always been in human
history and that it is how it will continue to be.
In
fact, Mr. Bethel must know that he and many others like him are in fact where
they are not only because of their brilliant minds but those brilliant minds
got an opportunity to interact on the world stage because men like Milo Butler
and Lynden Pindling demanded that Bahamians, yes further black Bahamians be
given a chance to work in the banks because they had the talent to do so. We cannot having come this far, we must not
forget that and allow the clock to be turned back.
The
trade unions are going to be important actors n this whole process. The banking
sector must be unionized. The workers
are badly paid and their rights are often abused. The PLP pledges to ensure that this is facilitated. We cannot have a situation where all we
think about is profit without regard to the rights of people.
I
want to say to those Bateclo workers also that they should not fear all that
was predicted last night. If things go
as they should after the next general election, help is on the way. The fact is that the Government should put
the privatization of Batelco on hold until after the next general
election. It took us a generation to
build up asset value in Batelco. Now
this Government proposes to divest itself of the wealth of a generation or more
to foreign nationals at fire sale prices.
They have rejected any suggestion that Bahamians can buy the
company. The only sensible public
policy is for Bahamians to buy the company.
Any investor who proposes to buy Batelco should wait until after the
next general election to see who is going to run this country. And so Mr. Bethel, I think that suggests
that a politician still has some say.
Thank
you Mister President.