Former finance minister denies wrongdoing in ABDB investment

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By Elesha George

Former Finance Minister and Political Leader of the United Progressive Party (UPP), Harold Lovell, has denied that investments made by the UPP administration, using funds from the Antigua and Barbuda Development Bank (ABDB) were misused under his tenure.

Lovell described the announcement made by Government’s Chief of Staff, Lionel Hurst, on Thursday, September 19, 2019, as being “total nonsense and foolishness.”

“I mean I can’t believe these people. This is obviously some attempt to build a smokescreen,” he uttered, when contacted about the threat of a possible lawsuit against him and the former chairman of the ABDB Board, Carlton Lake.

The chief of staff had said that the funds ($13 million) were “unusually spent” in 2010, on a pineapple and cotton project and the purchase of a boat, expected to have been used similar to that of a ferry service.

“The Antigua and Barbuda Development Bank became both the lender and the borrower it would appear, and so when the $13 million were all lost to poorly conceived projects, there was no one from whom to recover anything,” Hurst explained.

This is why, he reasoned, that the chambers of the attorney general will look into the “possibility of beginning lawsuits for public malfeasance against the former finance minister, as well as the former chairman of the board of the Antigua and Barbuda Development Bank.”

The government believes that the duo would have contributed to the Antigua and Barbuda Development Bank’s current indebtedness.  Hurst said the matter had come before the Cabinet and the prime minister recently, and warned that the bank would “collapse if we don’t plow at least $25 million into the bank sometime between now and next year May.”

But in his defense, the party leader said that the ABDB had been in serious problems, and it was only when the UPP was elected to office in 2004 that efforts were made to rectify the situation.

“When the UPP came in, the ABDB had a non-performing loan ratio of something like 85 per cent, almost 90 per cent. That was the reality and it was the UPP, during its term that stabilised the Antigua and Barbuda Development Bank. The Labour Party had left it in an absolute mess before 2004. That’s a fact,” he noted.

Supporting documents from the Caribbean Information & Credit Rating Services Limited (CariCRIS), received by OBSERVER media, spoke to an existing debt issue with theAntigua and Barbuda Development Bank.

The ratings lettershows that in 2011, the bank operated exclusively in a relatively weak, highly indebted economy; it had limited access to funding coupled with a high level of concentration in funding resources; a weak loan portfolio characterised by high, but declining levels of non-performing loans (NPLs), low loan growth and industry concentration; poor financial performance and weak risk management systems.

Lovell also disputes the $13 million figure that was quoted by Hurst, saying it was not $13 million but $6 million dollars that had been deposited from the Medical Benefits Scheme (MBS) to the ABDB at a 6 percent interest rate. 

He explained that “as minister of finance, I am aware that the Medical Benefits Board would, from time to time, place deposits with different financial institutions. I am aware that the Medical Benefits Board placed a deposit; it was a certificate of deposit with the Antigua Barbuda Development Bank. When you place a certificate of deposit with a financial institution that institution will use the funds in their normal operations to lend for projects and to do things that banks do; to make loans and investments and that type of thing. That’s what happened with the Antigua Barbuda Development Bank. The money would have been placed at an interest rate of 6 percent and up until the time that we left office, I am aware that interest payments were made on a regular and in a consistent manner. There’s nothing untoward about that.”

In the interim, the Antigua and Barbuda Labour Party government plans to make an initial injection of $12.5 million to assist the Antigua and Barbuda Development Bank.

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