Economist and UWI Lecturer, Dr Dhanayshar Mahabir has suggested that government sell its shares in First Citizens Bank (FCB) to some of the larger credit unions in the country that may have an interest in the bank. This way, he said government can keep the bank close to the “small people.” Mahabir has joined the growing chorus of dissenting voices against the proposed merger of FCB and the Unit Trust Corporation (UTC). In fact, he sees no merit in it. In an interview with Business Day, Dr Mahabir said the reason for his opposition is strictly an economic one. He said neither FCB nor UTC complement each other. “They perform separate and distinct functions. The UTC basically sells mutual funds and FCB is a commercial bank. Just because they exist in the financial sector does not mean that they are similar in how they operate.” Prime Minister Patrick Manning last Thursday announced that government is considering a “serious suggestion” that the UTC be merged with the FCB. He said government was trying to streamline the corporate arrangements before deciding whether the company should go public or be merged with FCB.

Mahabir thinks Government should consider other options. He said, for instance, government can seek a joint venture with a foreign bank to partner with FCB. “A foreign bank will bring foreign business to FCB. I do not wish to see FCB disappear like CIBC.” “I think the Prime Minister should consider all other options to expand the bank.” On Mahabir’s suggestions, FCB CEO Larry Howai said “no comment.” There are valuable economies of scope to be gained if the credit union sector invests in the bank, Mahabir said. The credit unions, he said,  can use FCB as their banker instead of going to other banks, noting that  FCB will be strengthened by gaining share capital injection. FCB, he said, can be used to “complement the services of the credit unions.”

He said government should consider this alternative and conduct a feasibility study into such a venture since both the credit union and FCB can be strengthened. This, he said, is a more plausible marriage than the proposed FCB/UTC merger. Dr Mahabir explained that FCB makes loans available to the government, individuals and corporations based on its own lending criteria and these loans can be either non-performing or performing. He said the UTC does not give loans, it merely accepts the injection of funds and purchases government securities, stocks and bonds and money market instruments for its different product offerings. “The risk involved is therefore lower for the UTC than commercial banks because it invests in securities which are safe investments.”

He noted that there  is also a legal reason why the UTC cannot be merged with FCB. He explained that the UTC operates under the UTC Act which gives clear directions to its board on what it can and cannot do, “so the board of directors are constrained in their activities by legislation.”
Dr Mahabir said FCB is guided by the Central Bank Act of 1993 which allows the bank to operate in a banking environment and a plethora of other services like ATM banking among others. He said any combination of the two organisations will not result in a stronger organisation because “they are different and we are going to get an improper fit.” “When firms merge, it is supposed to benefit both firms and bring something to the union. The output of the partnership is supposed to exceed what each organisation is doing right now individually. In other words it is supposed to result in economies of scope.” Dr Mahabir said government has not provided any details as to how this was going to be accomplished.

The UWI economist said he has no problem with government wanting to expand FCB to make it more competitive, however, he said it must be done in a sensible manner. He said it is his view that FCB is much too small to function as an equal competitor with the three larger banks in TT. With this in mind, he said government has to expand and strengthen FCB in order to make it an equal competitor. Dr Mahabir also thanked Manning for putting  the idea out for public comment before any solid decision was made on the matter. “I think that the PM was right to make the statement and put it out for public comment. That is good governance.” He said it is always good to seek public opinion since these kinds of issues cannot be handled in a high handed fashion. He said it is now up to Manning to make the right decision based on public opinion and economic reality. “I think the PM should just leave the proposed merger in the realm of talk,” he said, “since it will cause damage to a very strong, home grown, indigenous organisation which is the foundation of retirement funds for many people.

Caribbean states were among countries worldwide that were left disappointed after bedlam  broke out at Cancun, Mexico at the Fifth Ministerial Conference of the World Trade Organisation, causing its collapse. Although disappointed by the swift turn of events at the mid-September meeting, some regional countries actually believe they came away from the top-level ministerial meeting in a stronger position. The meeting broke down over the insistence of the EU, Japan and South Korea that negotiation of agreements on investment, competition, government procurement and trade facilitation — the so-called Singapore issues — should begin.

Now that the Fifth Ministerial has ended disastrously, significant questions have emerged such as what of the WTO in post-Cancun, whether there are repercussions for developing countries who stood their ground against wealthier nations and whether there could be any fall-out in the Free Trade Agreement in the Americas (FTAA) as negotiations have been closely tied to the WTO, particularly the issue of agriculture. Caribbean countries were among member WTO states that strongly opposed the launch of negotiations on the Singapore Issues. In a statement following the collapse of talks, the Caribbean Community (Caricom) said the Cancun Conference was expected to advance the Doha Development Round of Trade Negotiations on key issues for developing countries such as agriculture, non-agricultural market access, small economies and special and differential treatment among others.

“Caribbean countries, whose key interests are in the areas of small economies, special and differential treatment, services, agriculture and non-agricultural market access, were strong in their determination to have these development issues given priority consideration, consistent with the Doha Declaration and Decisions for a Development Round. There was little or no progress in these issues, “ the Caricom group said. “Caribbean delegations share the general sense of disappointment at the limited achievements of the Conference in spite of the best efforts of the hosts. Our ambassadors and regional negotiators must therefore with resolve continue to engage their counterparts in Geneva and maintain their continuing active role in the process to advance the development interests of the region.” Despite failing to obtain their objectives at the world trade talks, at least one Caribbean country believes the region emerged as part of an influential bloc better able to shape future negotiations. “I think for the first time in a long time, the developing countries of the world have been able to influence the agenda of international discussion,” said Jamaica’s junior foreign minister, Delano Franklyn, one of the negotiators.

Poor countries, he said, spoke with the authority and unanimity of the non-aligned movement of the 1970s. Jamaica’s Foreign Minister K D Knight said developing nations were well prepared for Cancun referring in particular to the newly formed Group of 22, led by Brazil, India, China and Mexico.
The group represents 65 percent of the world’s population and over 60 percent of the world’s farmers. Knight said while Caricom does not share all of the Group of 22’s positions, “their level of unity and purpose gave added strength to the voices from the developing world.” As for the future of the newly-formed group, Brazilian Minister for Agrarian Reform Miguel Rosse said: “We have a coalition of those that defend the present unfair international trade system, mainly the US and the EU, and we have a variety of scattered forces opposing this system. “The G20+ was created around the issue of agriculture in Cancun and in the post-Cancun will have to build bridges to the African and least developed countries and to civil society in the developed countries around the common goal of free and fair trade, food sovereignty and food security, social justice and the fight against poverty.”

US Trade Representative Robert Zoellick blamed the flow of rhetoric from some developing countries as being responsible for the collapse of WTO negotiations. “In my opinion, some spent too much time with tactics of inflexibility and inflammatory rhetoric before getting down to negotiate. Unfortunately — and this was the real shame — many smaller developing countries that followed this lead couldn’t make the turn that some of the other, bigger developing countries were ready to negotiate. And as a result, all walked away empty handed,” said Zoellick. With the collapse of the talks, one question that has emerged is whether negotiations on the over-ambitious agenda launched in Doha, Qatar in 2001 would be completed to meet the January 2005 deadline. Many left Cancun believing that the 2005 deadline is dead as did the pretence of a Doha so-called ‘Develop-ment’ round. Zoellick said the US would also continue to seek out free trade agreements (FTAs) with willing partners and that a number of ministers from different countries had already approached him during the Cancun meeting to inquire about FTA negotiations.

The US already has trade agreements with six countries and negotiations are currently taking place with 14 others. “The results are very revealing to me, that over the past few days, a number of other developing countries, that are committed to opening markets and economic reforms, expressed their interest in negotiating free trade agreements with the United States,” he said. Zoellick indicated the Cancun failure could influence progress in the FTAA negotiations in different ways. A ministers’ meeting to advance the FTAA negotiations is scheduled for Miami in November and it will be the first test as the US seeks to reassert its political dominance over the strong resolve shown by Latin America and the Caribbean in Cancun.

Now that the jubilation over the collapse of the WTO talks has ended, many developing countries which opposed the wealthier nations are now beginning to consider the real possibility of reprisal and retaliation.During the meeting the US made threats to withdraw market access preferences, terminate negotiations on free trade agreements and cut aid funding. As Cancun collapsed, US Senator Chuck Grassley said: “Let me be clear. I’ll use my position as chairman of the Senate Finance Committee, which has jurisdiction over international trade policy in the US Senate, to carefully scrutinise the positions taken by many WTO members during this ministerial…. “ I’ll take note of those nations that played a constructive role in Cancun, and those nations that didn’t. “ Cancun might long be over and a muted commitment made to continue talks in Geneva. But a more fundamental issue that has emerged and should be dealt with as a matter of urgency is over the way the WTO operates and whether it should be revamped to enable meaningful participation by its member countries and transparency to the public.

 The Grace Kennedy and Company Limited in its Interim Report to Stockholders indicated the adoption of International Financial Reporting Standards (IFRS), formerly International Accounting Standards (IAS).  They are one of the first Caribbean companies to make such an announcement. The new IFRS is another outcome of the European Union. In May 2002 the European Parliament ruled that the consolidated financial statements of substantially all companies domiciled in the EU whose shares are listed on the EU Stock Exchange must follow IFRS beginning January 2005.  The IFRS seek to create comparable, reliable and transparent financial statements that will facilitate greater cross-border capital raising and trade. The objective is to promote uniformity across the EU’s many borders. “As the business community gets more global and companies list across stock exchanges, the need for consistent worldwide reporting standards intensifies.” 

This is good news as firms operating across EU borders can apply one set of standards and no longer have to restate financial statements.
Companies listed on regional stock exchanges, will have to follow Grace Kennedy’s lead and apply IFRS by January 2005. Small steps, as evidenced by the adoption of IAS 39, are being taken in preparation for this eventuality. 
In the long term a new international standard that represents critical aspects of US GAAP and IFRS will emerge.  Companies like Angostura with American subsidiaries  will welcome this move — restatements to produce comparative statements at an international level, will no longer be needed.
The International Accounting Standards Board (IASB) expects to also complete in 2004 (or early 2005) IFRS dealing with:
– business combination procedures (including accounting for non-controlling interests)
– performance reporting
– post-employment benefits
– revenue and liabilities, consolidations (including special purpose entities)
– segment reporting
– financial institutions (deposit taking, lending and securities activities).
Companies may elect to adopt early either individual standards or subsets of standards from this set, as done by Grace Kennedy. 

External auditors and regional regulatory bodies — ICATT and Stock Exchanges —  have a critical role to educate and provide technical assistance to ensure a seamless transition from IAS to IFRS for regional companies.

Maxine Attong is a financial and management consultant
email: enhanceink@hotmail.com

A Guyanese businessman is looking to bring slot machines to Chaguanas. According to the Starbroek News, the popular Palm Court Restaurant and Bar on Main Street in Georgetown, Guyana, will shut down on October 15 and a new Palm Court Club is to open in Chaguanas, Trinidad. Palm Court Managing Director, Jad Rahaman in an interview with Stabroek News said he is currently setting up the Palm Court Private Members’ Club. The business climate in Guyana over the past two years had not been good, he said, adding his overhead expenses were now more than his earnings. “It’s not making any sense, when the electricity bill alone is more than the rent,” he said. “I don’t run a business not to make money”, he told Stabroek News. He is being assisted by his business partner and son, Ryan.

Asked what he thought was responsible for the loss in business, Rahaman said many of the patrons had either migrated or shifted to other venues with the escalation in crime. He was himself the victim of a shooting incident last year when he went to placate a rowdy patron. He added that the spending power was no longer there. Persons preferred to buy a drink from a roadside bar than paying for services provided by a waiter. The club in Trinidad will feature 24 slot machines for which he has been granted a licence to operate. While Rahaman would not say what his investment would cost, he said that he had had to pay TT$2,000 (US$1 = approx. TT6) for a licence for each slot machine. The slot machines are the same ones seized by the local police at the Main Street Palm Court exactly one year ago after they had been in operation for three weeks. They were subsequently released following a court order. At the time Rahaman had said that he had done all within his power to ensure that the machines were operated within the law.

He had said then that he had bought the machines because business had been on the decline and he saw the need for entertainment for local and overseas visitors. During the three weeks that he had operated the machines, he said that he had begun to see a way of meeting his overhead expenses. During that period he had employed a staff of 70. He subsequently laid off some workers. On Saturday night, Rahaman held a `lime’ for workers, colleagues and friends who helped in setting up the new “investment” in Chaguanas. He said Saturday night’s “dry-run” was a success. The club is in essence a casino. It is very different to the Main Street Palm Court. It is dark as opposed to airy and food and `liming’ are not the central purpose. Gambling is.

Rahaman, who had leased the building on Main Street and had operated it for the past 14 years said that he had given the proprietor a month’s notice and was due to vacate the building on October 15. He has already given the staff notice of his pending departure. When Stabroek News visited the bar yesterday, patrons were unaware of the impending closure but workers were worried about finding jobs elsewhere. Forty-six employees will be affected. Rahaman said that he still had investments in Guyana including the Baracara Resort in the Mazaruni River which he hoped to promote from Trinidad and Tobago. Nevertheless, he said that he was not complaining because he had had some very good days at Palm Court. He recalled that Friday used to be the biggest night for business. Rahaman described the current investment climate in Guyana as fragile and a real challenge. He insisted that he was not leaving Guyana but that the new Palm Court Club was an investment meant also to benefit Guyana. He said that the new Palm Court Club had paintings, pictures and promotional material all showcasing the country. He said that when things improved he might reopen another branch of Palm Court in Guyana. 

CABLE & WIRELESS has blocked access by objectors to crucial financial and other information in its rate adjustment application before the Fair Trading Commission (FTC). And at least two of the 17 objectors, or intervenors as they are being called, have protested, charging the move would, among other things, put them at a disadvantage and weaken their case on behalf of the public. The two are the Barbados Association of Non-Governmen-tal Organisations (BANGO), which represents a network of 147 bodies, and Alvin Cummins. C&W listed seven instances of information submitted to the FTC in “commercial confidence”, which it said should be held by the commission and not placed on the public record.

They relate to cross subsidy; cost oriented pricing; international direct dialled rates; calculation of the rate base; capital expansion; sales projections; and revenue forecasts. Those issues are at the core of an additional information request by FTC which it said should have been submitted along with the application. Under the Procedural Rules of the Utilities Regulation Act 2000, the company can ask that all or part of any document be held in confidence by the commission if publication would create a competitive disadvantage, but the FTC would make the final determination after a hearing. The intervenors insist, however, they must have access to adequate information upon which to base their objections, and that a claim of confidentiality of pertinent information would negate the fairness of the rate hearing.

“Cable & Wireless’s claim of confidentiality of this information denies the public essential information of the process upon which rate changes might be instituted that will affect their day-to-day existence,” Cummins charged in a letter to the FTC last Friday. Further, he said, it had not “stated how public disclosure of this information will be to the advantage of the consumer as opposed to the disadvantage to (sic) Cable & Wireless”. “Cable & Wireless by withholding vital information from the intervenors (sic) is delaying the process of objections to their application with consequent possible and probable extension to the timelines established by the commission, delay in the process of interconnectivity, and possible delay in implementation of rates that are more favourable to the consumer.” Cummins added that adequate information, in the absence of information claimed to be confidential, upon which a case for the rebalancing of international and domestic revenue, and cost oriented pricing had not been provided.

Q. I once read that the best time to buy shares is when everyone else is selling.
Does that make sense and if so, how does it work?

Milton, Scarborough

A: There is a school of thought in the financial markets that investors possess a herd mentality. That is, they all tend to buy shares at the same time and sell at the same time.
However, the majority catch on late so there is a last round of bulk buying before the price settles. Similarly in case of a price decline there is a last round of bulk selling by the herd which decides to offload late.
As a result of this phenomenon the price of the share in a rally usually overshoots its fair value. Similarly when a share is declining the herd causes the price to overshoot equilibrium on the downside.
In the financial markets when shares overshoot on the upside or downside the imbalances are usually corrected in short order. That is, the inflated price usually comes down or the low price usually goes back up to fundamental value.
This is why it may be good to buy shares when everyone is selling because if the share temporarily dips below fair value due to herd selling, it would then be a good buy as the share would eventually go back up to its fair value.
The key is to talk to a broker and get an idea of what the fair value of a particular share may be. However, different brokers may have different ideas about what a particular share’s fair value may be as it is an estimation process, which depends on the company’s growth rate and projected dividend payout. Talk to a number of brokers and try to get a consensus estimate.

Q. How are bond prices affected by changes in interest rates?

Kenny, Princes Town

A: A plain vanilla bond is one which pays a fixed rate of interest or coupon rate over its term. This rate is agreed upon from the issue date of the bond and does not change over the life of the bond.
 However, interest rates in the bond market do not stay static, but can change due to many different factors.
Let us assume Bond A is issued at the beginning of September 1993 at a coupon of 10% for 10 years.
Then rates fall in the market such that the coupon rate required on a 10 year Bond B of the same issuer now falls to 8% at the end of September 1993. However, the rate on Bond A is 10%, which was fixed at inception, while that of a similar or equivalent Bond B is 8%.
In order to reflect the new interest rate environment the price of Bond A would appreciate such that an investor buying Bond A would receive 8%, same as that of Bond B.
The way this works is that since we receive the same interest proceeds as before, but with a new higher initial outlay, the percentage return would fall. In financial markets the price of the bond would move up so as to yield a return of 8% on Bond A.
In other words, a new investor would receive the same overall return of 8% whether he bought Bond A or Bond B. If this did not occur then the return on two instruments with very similar characteristics would have markedly different returns. By Bond A appreciating there is now price equilibrium in the market. Conversely, if market rates had increased at the end of September 1993 such that Bond B had been issued at a coupon of 12% then the price of Bond A would have had to fall such that an investor would receive the same return of 12% as that of Bond B.
The investor in Bond A with a coupon of 10% receives a return of 12% by virtue of him paying a lower price than that at which it was originally issued. At the same time the yields on two similar instruments equalise, restoring market equilibrium.
Therefore, there is an inverse relationship between bond prices and interest rates. As rates fall, bond prices appreciate while when interest rates increase bond prices depreciate.

Q. Please explain the difference between a lending investment and an ownership investment.
Nisha, Couva

A: A lending investment is when the investor has a “creditor-type” relationship with the borrower or the company in which he is investing. This type of relationship is achieved through a fixed income type instrument where the investor is promised a fixed rate of return from the borrower with principal protection. Examples of this are a fixed deposit, money market account or bond.
An investor in any of these is basically a creditor or lender to the institution that issues these instruments. The agreement is a fixed rate of return and principal protection. In some cases there is collateral or security backing the investment. In other cases the investment is unsecured and the lender has a high priority of claim against the assets of the firm in case of bankruptcy.
In the case of an ownership type investment the investor has an unsecured ownership stake in the company in which he is investing.
An example of this is investment in the company’s stock. In such an investment the investor is a shareholder and in the event of bankruptcy would only be entitled to the share of assets after all creditors, or the investors who have “lending type” investments in the firm, have been paid off.
In an “ownership” type investment there is no principal protection and so the risk is much higher than “lending type” investments. As a result the return is also much higher. The type of investment you choose would depend on your own risk tolerance.

Questions can be sent to PO Box, 1830,
Wrighston Road, Port-of-Spain
E-mail : cmmbsecurities@mycmmb.com

WE EXPECT that by now Prime Minister Manning has totally abandoned the dubious idea of merging the Unit Trust Corporation with the First Citizens Bank. If, as he claims, he floated the proposition for public comment, then he should be painfully and embarrassingly aware of the fierce and overwhelming opposition his proposal has provoked from the public at large. Indeed, such has been the general reaction from ordinary members of the public on the one hand and knowledgeable people in the financial sector on the other that we must wonder what prompted the Prime Minister to make such a precipitated and ill-considered suggestion in the first place.

One would expect that if the Prime Minister is desirous of  “testing the waters” with some measure his government is contemplating that, at the very least, the proposed action would have the benefit of some kind of preliminary exploration as to its basic feasibility, its legal implications and its obvious advantages for the entities involved, the public at large and the country as a whole. Unfortunately, it seems, the suggested UTC-FCB merger does not fall into that kind of positive category. To begin with,  a consensus of legal opinion makes the proposal a total non-starter, which seems to indicate the shallowness of thought behind the whole idea. The fact is that the UTC is not owned by the Government, it is not a state-owned corporation; rather, it belongs to the more than 400,000 unit-holding citizens of Trinidad and Tobago. Any decision, then, about the future course of the Trust must be a matter for the Board and its unit-holders. Sources in the financial sector tell us that, under the legislation governing the UTC, such a merger would be impossible. “At the Trust,” sources point out, “all the money belongs to unit-holders. The Trust can’t take the people’s money just like that and merge it with someone else’s. That would be a breach of trust and a breach of confidence.”

In light of that obviously correct assessment and in view of the potential damage of Mr Manning’s suggestion, we expect that the Prime Minister would now appreciate the extent of his faux pas in even contemplating and airing such a proposal and that he would make haste to clear the air of any intention to merge these two financial institutions. The public’s spontaneous and vehement opposition to this idea tells us that a loss of confidence in the Unit Trust can become a real possibility if this proposal is not categorically squashed. In fact, we find it difficult to understand why Mr Manning would even think of interfering with the excellent operation and impressive success of the UTC which, under Executive Director Clarry Benn, has been providing outstanding returns to unit-holders and repeatedly outperforming some of the leading mutual funds in the United States. The achievements of the Unit Trust since its inception is, in fact, a matter for national pride. Even if the law is changed to permit the merger, what possible benefit would the Trust derive from this change? In fact, to unite it with a lending organisation may well be a recipe for disaster. We find it impossible to believe reports that the motive behind this ill-conceived suggestion is really the desire of the Prime Minister to force the retirement of Mr Benn who attained the age of 60 a year ago, and has been retained by the Board on contract. Mr Manning and the government cannot be so determined to replace the executive director with their own candidate at the cost of disrupting and possibly damaging such an outstanding financial institution as the Unit Trust. If he believes in democracy and heeding the voice of the people, then he should have no doubt about the mandate to abandon this absurd idea.

Internationally, there is growing distrust with individuals and organisations in public life. The annual United Kingdom Mori survey of trust in public life showed doctors, teachers, professors and judges ranging from 91 percent to 72 percent on a trust scale. On the other hand, politicians, journalists, government ministers and business leaders were at the bottom of the scale ranging from 18 percent to 28 percent. Research by Cambridge academic David Halpern shows that people are becoming more suspicious of each other. In the late 1950’s, 60 percent of Britons believed other people could generally be trusted.

In the early 1980’s this figure fell to 44 percent. This year the figure fell even lower to 29 per cent and is still falling. Social trust differs from country to country. Britain, the US, Australia and Ireland have seen declining levels of social trust. By contrast, Denmark and Sweden, where nearly 70 per cent of the population say they trust others, are the most trusting in Europe. France has one of the lowest levels, about 20 percent. Rising affluence, leading to a more self-gratifying and fractured society is cited as the main factor behind declining social trust. Affluence is accompanied by greater social mobility, high divorce rates, more short-term contracts, greater commercial pressures, and a tendency to see strangers as competitors. In many TT neighbourhoods, rising affluence has led households to be self-centred, to be unaware of their neighbours’ names, lifestyles, problems or even their existence. Where community life has ceased to exist there can be no community trust. However, the advent of Neighbourhood Watch Groups, especially where they become involved in community building activities in addition to the basic task of “watching” may lead to a revival of trust within communities. One must question whether people claim to be distrustful of institutions but act differently despite evidence. TIDCO is blamed by the public and by vendors at Maracas Bay for neglect of its development and maintenance.

Yet happy hordes of holidayers frequent the waters at Maracas Beach and also Chaguaramas, despite its contamination by human faecal and other matter.   Despite studies which show that WASA pipe water is undoubtedly as healthy as filtered bottled water it has become commonplace to patronise bottled water in restaurants, offices and homes. The consumption of fast foods remains attractive and unabated even by informed members of the population who are aware of research on the adverse effects of fast foods, consumption of which leads to obesity and the resultant diabetic and cardiac diseases already prevalent in Trinidad and Tobago. Perhaps there is no deep-seated lack of trust in these areas. It may be that there is simply suspicion, not strong enough to be energised into complete lack of trust.  Or it could be that people are becoming more demanding in what they expect from service organisations.

Counter measures aimed at preventing breaches of trust can exacerbate the problems already existent. The decline in confidence in institutions has resulted in an accountability revolution, a regime of regulation, inspection, target-setting and audit. In her Reith lectures Ms O’Neill argued that this was in many ways making matters worse. Changes designed to make them more accountable to the public in practice made them more subject to central control. Far from increasing public trust, they often had the opposite effect. Reports of mistrust had grown during the years in which the accountability revolution made striking advances. Her advice was: “If we want a culture of public service, professionals and public servants must in the end be free to serve the public rather than their paymasters.” Politicians are traditionally targets of lack of trust. Trust in governments worldwide to place the nation’s needs above party or individual interests and greed has continued to decline. The ongoing dialogue about possible manipulation of evidence by The Coalition of governments which promoted the 2003 war in Iraq, ironically to gain public trust in the merit of that war, has helped bring about this decline.
 
Another area of public concern is corporate greed exemplified by excessive executive salaries and perks. The public regards such executives as citizens with no moral conscience and consequently no authority to pronounce on crime and other ills in the country.  Where companies provide substandard goods and services while paying excessive salaries to senior executives the public attitude may be “if the priest could play who is we.” Under such circumstances why should the ordinary worker aim at high standards. The Enron debacle was the first of many corporate scandals in the USA characterised by fraud and manipulation. Compensating committees routinely awarded skyrocketing executive pay to poorly performing CEOs, fallen leaders were awarded gargantuan severance packages, Board Directors were appointed because they had ties to their companies rather than for competence and independence, directors were stretched thin by belonging to too many boards, accounting tricks were used to boost revenue and earnings. The growing worldwide phenomenon of lack of trust in public life is a high cost of the modern trend of individualism and the evidence is that this phenomenon is increasingly an issue in Trinidad and Tobago.
(The first part of this column appeared in last week’s Business Day)  

The views expressed in this column are not necessarily those of Guardian Life. You are invited to send your comments to guardianlife@ghl.co.tt