As related at the International Press Institute’s (IPI) congress in Trinidad two weeks ago, 2012 is trending to be the worst on record for journalist deaths and nowhere was the dilemma more pointedly expressed than when Ms Marcela Turati of Proceso declared at the gathering that journalists had become war correspondents overnight, caught in the crossfire of the bloody battle between the Mexican government and the drug traffickers.
What journalists in the Caribbean experience has very little compare with the tribulations that their brothers and sisters in Mexico and other states caught up in the drug war have to endure on an almost daily basis.
Nevertheless, governments and centres of authority never fail to seek new ways of constraining journalists from discharging their duties. At the IPI congress it was pointed out by UN Special Rapporteur on Freedom of Opinion and Expression, Mr Frank La Rue that harassment of journalists is on the rise in various forms, lawsuits are increasingly being used to cow journalists and there is the constant threat of the shutting down of the internet even in the developed world. There is more and more interest globally, he said, in the introduction of so-called `bank panic’ type legislation which makes a criminal offence of certain types of reporting. Such a law was introduced several years ago in Guatemala ostensibly to prevent rumour-mongering from leading to debilitating runs on banks. Critics however say that the real intention is to circumscribe the right of the media to properly and fully report on money laundering and other financial crimes.
While recognizing the sensitivities of the banking business and the primal role played by public confidence, it is clear that bank panic laws particularly in secretive and unenlightened jurisdictions can leave the public at risk of bewildering financial crimes, the threat of loss of their savings through reckless practices and illegal and usurious fees.
Nowhere was it clearer as to why bank panic laws and the general secretiveness of the industry are dangerous as in the disclosures over the last few weeks that the venerable Barclays, Britain’s third largest financial institution has been guilty of rigging the London Interbank Rate – the rate at which banks lend to each other – in a bid to make its financial situation look better. This rigging had gone for several years unnoticed and had a knock-on effect on trillions of dollars worth of other financial transactions the world over which set their rates according to Libor. More big name institutions including Deutsche Bank are suspected of engaging in the same practice and more hefty fines are expected. All of this has come in jurisdictions where regulatory mechanisms have been well-established even if under resourced and in the aftermath of upheavals in the financial markets from the US sub prime scandal.
The point is that even in fairly well regulated financial sectors abominations like the Libor rigging can occur and perhaps in this case with regulatory awareness of the crime.
It is therefore vital that in small and not very transparently regulated markets like Guyana that every effort be made to improve the capabilities and standing of the regulatory bodies and to ensure that there is greater openness in the way that the banks and other financial institutions interface with stakeholders and the general public.
There have been two piercing wake-up calls for Guyana in the last 15 years or so – GNCB and Gaibank were much earlier – which have apparently not spurred the authorities into comprehensive and decisive action. The first was the disgraceful managing of Globe Trust and Investment Company Limited and the heart-breaking losses that hundreds of small depositors suffered after trusting the local banking system. The Central Bank was grossly derelict in its responsibilities in this matter and paid little attention to the unsecured loans and bad debts ratios until it was too late and the institution had to be wound up after no suitable suitor could be found to restore it.
The other case is the scandalous collapse of CLICO (Guyana) after it sucked in money from investors here and funnelled it to its sister company in The Bahamas for onward investment in Florida real estate which is worth little today.
The damage done to public confidence by the Globe Trust collapse will forever put the regulators and the banking industry here on the defensive. The problem is worsened by the absolute failure by the regulatory authorities – obviously under the severest intimidation by the previous Jagdeo administration – to address the failings of CLICO (Guyana) and to determine who was culpable for the loss of investor funds and whether there had been insider dealings just prior to the collapse of the company.
It was only on Saturday in Trinidad – the seat of CLICO’s parent company – that the outgoing Central Bank Governor stated unequivocally that the shenanigans at CLICO which crashed tsunami-like into Guyana and other jurisdictions constituted “massive fraud on the public”.
Said Mr Ewart Williams: “Whenever any regulator presides over a situation where there is a disruption in financial stability and where depositors and policyholders lose their savings and have reason to question the stability of the system, the regulator must be concerned.
“I am sure that all of the members of my regulatory staff have lost a lot of sleep on this.”
Apparently this does not apply to the regulators here. When the scandal broke under the Jagdeo administration it was clear that the government’s actions were intended to protect the culpable for fear of damaging revelations. There is no reason why the administration of President Donald Ramotar should be fettered from taking action even if long after the fact. Indeed, the impending findings of the Trinidad commission of enquiry will likely pile pressure on the Ramotar administration to act against those who operated recklessly in relation to CLICO (Guyana). Undoubtedly the albatross of corruption which this government is now dogged by was a part of the CLICO collapse and it must be exposed.
There is a crucial role for the authorities but the banks and other financial institutions must also show themselves willing to be open with their customers and other stakeholders. As commented on previously in this newspaper, local banks are unwilling to interface with the media on anything but what they want to speak about. They see the media as only purveyors of reports on their donations, social work and advertisements. They harbour an irrational fear that discussion with the media of any other matter would undermine the confidential nature of the banking business or lead to a loss of confidence in their business.
How else does one explain the silence of the banks in the face of requests by Stabroek News for information on their preparations for the introduction from next year by the US of the FATCA law which would require local banks to share information with Washington on accounts held over a certain limit by US citizens?
That level of secrecy about something which has to be addressed frontally and communicated to customers is exactly the kind of culture that contributes to malpractices which escape the attention of the regulators. One would have expected that the Bank of Guyana would have taken the lead in this matter and communicated with the public on what the ramifications of this law were and whether this had been communicated to the government for addressing either at the state to state level or within CARICOM.
A bank panic law would definitely be completely out of order here but equally irresponsible would be paralysis by the regulator and banks and an obtuse determination not to level with the public.
