It is not easy being a journalist, especially in this neck of the woods.
On the one hand you are often criticized for not being investigative enough, but the moment you expose some ‘guarded truth’ you are immediately branded as the worst form of human being ever known to mankind – irresponsible, reckless, sensational and bent on destroying Barbados.
This was precisely the treatment meted out to Barbados TODAY this week after we published details of the International Monetary Fund’s confidential review of the Financial Services Commission (FSC) and its supervision of insurance giant Sagicor.
While careful not to challenge the existence of the said IMF report, which interestingly enough was invited by the FSC to conduct the investigation, the chairman of the regulatory authority, Sir Frank Alleyne, in a hastily arranged news conference, sought to publicly discredit this newspaper and its leadership over its decision to publish the naked truth about what the IMF has deemed to be nothing short of lax regulatory controls.
In fact, after reading the IMF’s 16-page report, if anyone’s reputation should be called into question it is Sir Frank’s for his oversight – or lack thereof – of this country’s financial system. And the IMF report, which has been reproduced in full on Pages 10 to 13 of today’s newspaper, has said as much.
“The Financial Service Commission is exposed to significant reputational risk. The current organizational structure of the FSC’s resource teams responsible for regulation and supervision results in operational silos. The current structure, coupled with limited resources available to fulfill its mandate create vulnerabilities, and significant reputational risk for the agency,” the IMF explicitly said in the document in which it also expressed concern that the FSC was suffering from “implementation paralysis”.
This was explained to mean that “there is a general lack of confidence and fear to adopt policies and procedures that have been recommended by various expert reports”.
The IMF also raised concern about the FSC’s supervision, or lack thereof, of Sagicor, which we also note has equally been attempting to bury its head in the sand – though perhaps a tad more eloquently than Sir Frank – following our publication of what is a most damning assessment of the way our financial regulator regulates.
But it is not our report. It is the IMF’s. Frankly, it is the FSC’s report, produced by the IMF. We are just the messenger, who incidentally happens to be made up of several investors and policyholders in Sagicor, which is also a client of ours.
Therefore, it benefits us none to seek to “inaccurately” portray it as the IMF has done as a high risk agency that on account of wanton supervision could one day come back to haunt us in the very way, or worse than, what occurred over the last decade in relation to CLICO.
“The Sagicor group poses systemic risk for the Caribbean region, which should be monitored on an ongoing basis. The size and complexity of the SG operating in 21 countries throughout the Caribbean, and holding assets equivalent to about 50 per cent of the GDP of Barbados, is larger than CLICO before it collapsed. The FSC-Barbados is currently not in a position to conduct group-wide supervision, and solo supervision is weak,” the IMF said.
It has therefore called for enhanced regulation and supervision of Sagicor to be viewed as a priority to reduce systemic risk to the financial sector in most countries within the Caribbean.
“Given the potential cost that could arise from the failure or near failure of the group, enacting regulations and/or guidelines that align with R-SIFI designation, and conducting the corresponding group-wide intrusive supervision of Sagicor are desirable objectives,” the report said.
“In this respect, the recommendations provided should be implemented, along with a desirable level of technical assistance to ensure successful implementation,” it added.
With the situation as it stands, we reckon that it would be in the best interest of all concerned for the FSC to get to work immediately to mitigate the risk.
Sagicor is also duty bound to provide a clearer picture of its plans for Barbados in view of the advice its senior officials gave to the IMF of plans to establish a reinsurance operation in Bermuda, and of the company’s request to the Bermuda Monetary Authority (BMA) to be the agency responsible for group-wide supervision.
What does this all mean in terms of the Barbados operation? Could it mean that you are preparing to shut shop?
As guardians of the truth we would like to know.