Moving to Michael’s groove

Newly appointed Unit Trust Executive Director Michael Alexander says he wants to quietly ride off into the sunset when his term comes to an end in 2006. If UTC’s recent turbulence is anything to go by, that may be a lot to ask for. In an interview at UTC’s board room last week, Alexander was at ease as he spoke about the “tribulation” and ensuing “turmoil” surrounding the botched merger of the UTC and First Citizens Bank (FCB). He insists that talk of a merger with any financial institution is not on the company’s cards and dismisses it as a viable path for the company. “I don’t think it is on the cards right now and has not been discussed as a way of going forward,”  he said. It was FCB chairman, Ken Gorden who first raised the issue of a merger and made a case for it in a letter to the Prime Minister.  It generated a groundswell of criticism and the idea sunk like a stone. When the dust settled, senior UTC executive Renwick Nickie was dismissed and UTC chairman Hubert Alleyne was shown the door. Now, some months after the tidal wave passed, Alexander, the man at the helm of the UTC, is treading carefully.

When the matter of the merger between the UTC and First Citizens Bank first surfaced, Alexander, 58,  says it was not discussed at any level, “neither at board nor management level.” He said despite the recent “turmoil” and “tribulation,”  the confidence unit holders placed in the UTC was overwhelming. “I’d rather not go back there,” he said of the merger. “We must understand that unit holders’ funds were safe.” The company, he said has not moved from its moorings: Best returns at least risk and to give “the small man a piece of the rock.”  It was the small man who made it known that they did not want any merger with FCB and telegraphed this to the mayor players, including the government. “Their confidence locked us together,”  said Alexander of the unit holders’ stance. He said while discussion on his appointment was going on for some time he was not surprised by it.  What he wants to put in place is a succession plan for the UTC, “so that Alexander could rise off into the sunset.” He said he wants to ensure “fluid succession.” 

“The issue came down to whether Alexander was prepared to lead the organisation,” he said, adding, “I would never, ever turn my back on the UTC.” He described the relationship with former UTC boss, Clarry Benn as “sincere and strong.” According to the Act, an executive director is appointed by the board in consultation with the Central Bank and holds the post for five years. The small man, he said, will continue to be the corner stone of the UTC, he said, noting that large investors are not given preferential treatment in any way. “There is shareholder democracy,” he said, noting that the UTC had some 400,000 unit holders and he was accountable to them all. He was pressed as to whether UTC was sufficiently buffered against political interference. He referred to the UTC Act which stipulates that the UTC must have a representative of the Ministry of Finance and Central Bank its Board.

“The Act mandates that these representatives must be there. I have no problem with that. The UTC must always operate in the context of the Act,” he said. Asked whether the UTC was insulated enough from political control, Alexander took his time. The Ministry of Finance and Central Bank representatives have served the UTC in good stead over the past 22 years, he said. He said he sees their contributions as valuable. “I don’t feel any differently,” he said, when pressed about it. On whether he had any residual fear left in light of the fallout from the FCB merger, Alexander said he had none. Even when the UTC came under the spotlight last year, it continued to grow, Alexander said, noting that the balance sheet will show that funds moved from $10 billion to $12 billion in a year’s time. He was also asked about how he felt about the appointment of representatives of financial institutions on the UTC board in light of the public perception that these institutions may have tried to stymie the operations at the UTC. He paused before answering. “The Act is not ideal,” he said, noting though that “one would have to objectively recognise the contributions made by those from competing institutions.”

“History would show,” he added “that you can’t divorce the performance of the UTC from the contribution of the other board members.” On whether the UTC Act should be changed, he was cautious. He said he was going to wait and see whether the legislation to reform the mutual funds industry will lead to the repeal of the Act in its present form. He is aware though that by allowing these institutions to sit on the UTC board, they got first hand knowledge about how the UTC mutual funds worked and its immense success. “It was only natural that commercial banks venture into the mutual funds industry,” he said matter-of-factly. He trumpets the fact that the UTC set the tone for the mutual funds industry and still remains the major player.

Alexander notes however that legislation in the mutual funds industry is “overdue” and notes that it is time to to put measures in place for this. On the Act itself, he said it should be amended to allow the UTC to invest in real estate. In its present form the Act debars the UTC from dabbling in in real estate. “Real estate is a prime mover,” he said, hinting that the UTC could capitalise on the buoyant market now. Asked what plans the UTC had in train, all he was prepared to say was that the company  was exploring other investment opportunities. He is now involved in putting together a strategic plan for the UTC. “We have to keep the momentum going because at the end of the day investments are based on sound financial planning.”