Social Security will lend Michael Ashcroft $10 million on highly concessionary terms and what's more, it is an unsecured debt, meaning there's no collateral to back it up.
It's a decision that was taken by the Social Security Board of Directors on Friday after the Prime Minister made a personal appearance to persuade the Board to consider the proposal favourably. That was necessary because on Thursday, the board voted in favour of another proposal, that Social Security would buy the shares. But that wasn't quite what the PM had committed to, and that's whey he went back to the Board on Friday, urging members to vote in favour of the Sunshine proposal. As we reported, he did persuade, that vote went 8 to 1 in favour of the Sunshine proposal.
Also, the board, as we understand it, did not have the benefit of seeing the letter from Social Security's Attorney Michel Chebat. As we reported, in that letter Chebat noted that the loan was unsecured, and not even the shares will be pledged as security. Second, he noted that interest on the loan is not going to be paid until October 31st, 2010. After that, the loan will pay only interest until the October of 2020 when the full principal will be paid in a single bullet payment. Chebat also points out that the term of the loan is 15 years at a rate of 8.5%, which he notes is far less then that current market rate for mortgages, which is 12 to 14%.
The Chamber of Commerce's Representative, Banker Cecil Arnold is the only board member that voted against the proposal. Today President of the Chamber of Commerce Tux Vasquez told us that as the employers' representative, put there to safeguard their members contributions, they could only vote against the proposal.
Arturo "Tux" Vasquez, Chamber President
"The only reason why we did what we did is because, as the Chamber, we represent the employers of this country and we do believe that the fund that is there, we need to look after it and at this point having an unsecured loan is not the best way to go. At least at this point, the documentations that were put forward at that meeting did not show any sort of security at all so that's one of the reasons, or the main reason why we actually gone against voting.
Since last year August 11th I think, or 9th, when we put out our position we have always been vigilant about the Social Security and the way the monies are handled and Cecil should have not any problems at all decided where to go with this, if it is an unsecured loan then its an unsecured loan and at that point his duty there and then, representing the Chamber and the employers, is to vote no against anything that is unsecured.
We do have a Senate hearing going. If you can recall the Chamber was the one who initiated that Senate hearing and we believe that we should at least wait for the Senate hearing to be finished and recommendations put forward before we think that any major loan should again be granted through the Social Security."
Jules Vasquez,
If it does go ahead, clearly the Chamber remains on the Board, having had a very minority view on this. Where do you all go next if indeed the attempts at maintaining vigilance at the Chamber is only paying off the in court of public opinion, its not paying out at the director's table?
Arturo "Tux" Vasquez,
"It's a good question Jules, I think we might have to take a look at this and decide what we do next but at this point, again, we are on the Board, that is our responsibility. We will attend the meetings, decisions that have to be made we will balance it based on what the Chamber's positions are. So at this point we remain on the Board and we will take them one at a time."
Both representatives of the National Trade Union Congress Horris Patten and Antonio Gonzalez as well as the Business Bureau's Representative voted in favour of the resolution. That single act, giving the green light to a $10 million Social Security loan to a British billionaire's company, has sent that trade union movement into a tailspin and the NTUCB reportedly convened an emergency meeting this evening to consider its position.
And while there will be much righteous hand wringing in the days ahead, the bottom line is that the government committed to the Sunshine plan almost two months ago. According to a statement made on July 19th, the Government committed to the Sunshine plan when it signed a share purchase agreement with Ashcroft's business principals on July 18th. At the time, government's statement said that Sunshine will hold the shares for the benefit of the workers of BTL. At that time, and even before that, those BTL workers flatly refused the Sunshine proposal and maintain that position at this time.
