20 November 2015
Dear Dr Webster,
I am grateful to you for taking the time on Wednesday afternoon with members of the community to come to Government House and present a letter supported by 291 signatures concerning several matters relating to the banking situation.
Your letter and the level of public discussion in recent weeks amply underline the importance of resolving effectively the challenges faced by the National Bank of Anguilla (NBA) and the Caribbean Commercial Bank (CCB). That focus is right, since the structure of the resolution will have a significant impact on Anguilla, and Anguillians, for years to come.
As you know there have been many detailed discussions since the start of the conservatorship which continue today. In my view, the resolution should be affordable to the Government of Anguilla – and the Anguillian tax payer – not just in the coming year, but over the medium and longer term. There should be no unexpected future additional costs for the tax payer to absorb. It should provide banking services that are properly capitalised, well managed and effectively regulated. And whatever is done must be sustainable: we must be sure that we will not end up in a similar position in a year or two because we relied on unrealistic assumptions, either about the value of the assets in the banks, or prospects for economic growth.
As with any such difficult and complex issue, there are of course different approaches and views as to how best to deliver the shared objective. That is both normal and a healthy part of decision making. In the coming weeks the Government of Anguilla, the ECCB, other international partners and the UK Government must continue to work closely together so that an agreed resolution can be implemented that is truly in Anguilla’s best interests. I welcome the Chief Minister’s stated commitment to these discussions, and wish him and all the teams the best as they take forward this important work for us all.
Turning to the detail of your letter, the former Chief Minister recognised the need for work to be done to review the lending practices prior to conservatorship at NBA and CCB. This is the work conducted by Grant Thornton (BVI), funded by the UK DFID, and generally known as the ‘forensic audit’.
I was always keen, as you say, that the findings of the report be made public. I was therefore pleased that the current Chief Minister agreed to publish the key findings, conclusions and recommendations from the report. This is available on the website of The Anguillian1. The review provides an independent assessment of some of the circumstances and decisions that directly contributed to the banks being placed in conservatorship. Whilst the report concludes that there were weaknesses in the handling of related party transactions by both NBA and CCB, it concludes that these were not a major factor in causing the banks’ current situation. In publishing the report’s findings, the Chief Minister said that he had passed the report to the ECCB as the bank regulator and current managers of the banks and asked that they take all appropriate action in response. In consultation with Grant Thornton, it would not be appropriate to release the full report as the evidence from which the conclusions and recommendations flow is essentially an assessment of a random selection of individual loan portfolios of people in the community. They would rightly not welcome their private financial arrangements being shared publically.
Your letter refers to the ‘ECCB Banking Report’. By this, I think you are referring to the ECCB’s assessment reports of the two banks in conservatorship. On these, I can confirm that these reports have not been shared with me as Governor, or with colleagues in London. I am not aware if others in the Government of Anguilla have received them, but I have not and so I cannot share them.
Thirdly, you mention the work of Price Waterhouse Coopers (PWC). The FCO contracted PWC to provide itself and the Government of Anguilla with technical capacity and advice in March 2014. This has resulted in technical advice on different options, as well as papers on particular issues to support policy making. Different iterations and elements of advice have been shared with this and the previous administration over many months. PWC continue to support the discussions currently underway. It would be inappropriate to release advice from PWC at this stage as theirs is just one of a number of technical inputs that are contributing to the current discussions. The onus now should be on the different organisations around the table to come to an agreed set of numbers which can be shared, rather than publishing assessments from one organisation, which may not yet be agreed by all.
As Minister Duddridge stressed in his letter of 6 November, the coming weeks need to see sustained and detailed discussions on the way forward. The Anguillian public have been admirably patient for a long time, and rightly want to know how the resolution will affect them. I appreciate that the delay is frustrating, but can assure you that the time being taken is driven only by a focus on agreeing the best way forward in the interests of Anguilla.
With best wishes,
Christina Scott
Governor of Anguilla
1 https://theanguillian.com/2015/11/government-publishes-key-findings-on-nba-ccb/.
