Fortress Caribbean Property Fund: Do We See Rats Jumping Ship?

Geoffrey Cave, Chairman of Fortress Fund

Geoffrey Cave, Chairman of Fortress Fund

There is the old saying that one should always follow the money. In the case of Barbados one can say that when the money-class in Barbados begins certain machinations others less positioned should sit up and take careful note.

A report which appears in the Barbados Today makes for interesting reading – Fortress Fund initiates major move to safeguard investors as property market sags. While the newspaper has done a good job of reportage, it is unfortunate the dearth of financial analysis by the Barbados media. Another indicator one can use to measure the quality of our education system and media fraternity, another blog perhaps.

Barbadians have always been spoiled by the idea that property value and rental income will never decline. The fact that the report by Barbados Today acknowledges that principals at Fortress Fund are warning about negative impact on the real estate market is interesting for many reasons.

PROPERTY FUND PROPOSAL

The big question BU has for Geoffrey Cave and Son is how could property values not have declined in the last five years?

The Fortress Caribbean Property Fund is proposing to split the fund into two, a Value Fund to comprise of income producing assets and Development Fund to include “properties held for development and resale”. The BU household encourages BU brainiacs to explain how the propose split to shareholders is designed to ameliorate the concern which Fortress Fund has about the Caribbean Property Fund.  Note the share price has declined from about $2.50 in 2008 to about $0.50 – Performance as at 31 July 2013.

Will the existing shareholders not continue to be stuck with the slow performing properties shifted to the Development Fund?

Continuing the point about when rats begin to jump ship the need for those in the environs to take note. Knowing the way Barbados operates BU is of the view that senior management at Fortress have reacted based on information which is not currently available to other investors and potential investors.

There are a couple properties in the portfolio which have caught the eye:

Limegrove Hillside Villa  Location: Limegrove, St. James  Carrying Value: $1.35 Million  Property Type: Residential Unit

Limegrove Hillside Villa
Location: Limegrove, St. James
Carrying Value: $1.35 Million
Property Type: Residential Unit

The Fund owns Limegrove Hillside Villa 6 and title will be legally transferred in the near future. The Fund has possession of the unit during the year and commenced rental of it, to defray costs, in July 2011. The unit is listed for sale with multiple real estate agents. Real estate available for re-sale was adjusted to its net realizable value of $1.35 million, resulting in a $457,000 impairment loss (2011 – nil).

Canouan  Location: Canouan Island, St. Vincent and the Grenadines  Carrying Value: $3.0 million  Property Type: Undeveloped Residential Lands

Canouan Location: Canouan Island, St. Vincent and the Grenadines Carrying Value: $3.0 million
Property Type: Undeveloped Residential Lands

 The Fund purchased a 35% interest in this 3.92 acre site with spectacular views of the Grenadines. The land has been classified as an investment in an associated company and is carried at cost which is lower than its net realisable value. The Fund’s portion of the cost is $3.0 million. A spectacular 5 star new hotel at this resort will be opened in the early part of 2013 and it is anticipated that there will be substantial interest in this lot at values well above current carrying cost.

  Thanks to Due Diligence for doing the research for this blog.

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72 Comments on “Fortress Caribbean Property Fund: Do We See Rats Jumping Ship?”

  1. lawson September 8, 2013 at 7:22 AM #

    I remember a 60 min show when Lloyds of London realized that their syndicates were going to take a beating with asbestos claims, they formed new syndicates to ensure the old ones with new investors money so the old syndicates didn’t lose money. When someone wants to change the deal you originally signed up for, telling you this new way is better. or is letting you in invest in a new company that only has the same asset base as the old one .Best to take a good hard look. Especially the real estate market, does anyone in Barbados think it is going to go up? Major water problems coming ,major garbage problems coming, major tourist problems here.Just like las vegas you always here of the investor big wins because they got in on the ground floor, keep in mind las vegas was not built on winners. Slow and steady wins the race

    Like

  2. Well Well. September 8, 2013 at 9:54 AM #

    Different name, same scam.

    Like

  3. Wily Coyote September 8, 2013 at 10:03 AM #

    Rats leaving the Sinking SHIP, if you have not already left it’s now too late, swimming lessons come to mind, oh yes, no money left for lessons. The BIG LESSON is greed will be your downfall and financial ruin the result.

    Like

  4. Hal Austin September 8, 2013 at 1:11 PM #

    Barbadians have been under two financial delusions: first, that accountants, economists and lawyers are financial experts – they are not; and that there is no need for financial training since a reasonable education should see them through.
    financial analysts are specially trained and they approach the valuation of a company and its investment strategies in a totally different way to accountants.
    We know from the Clico debacle that an over investment in property is high-risk, therefore a proper risk profile of the fund is very important.
    Clico over invested in property, which in the banking crisis, spelt collapse.
    If there is a problem with Fortress it is its structure. As I understand it, the chief executive of the fund also has a private company that is a major shareholder. If this is true, it is a conflict of interest.
    I also understand the chairman is related to the CEO. Again, if this is true, the regulator should ban it – another potential conflict of interest.
    In terms of its investment universe, there is a clear need to diversify, and be seen to be diversifying.
    There is also the question of charges – total charges: annual management charges; for trades, and any other charges such as rolling commissions.
    As things stand, the regulator has not intervened publicly about charges.
    Then there is the question of advice. Although I do not like criticising journalists, they already get too much criticism, there is clearly a lack of proper training for local financial journalists, a gap that should be filled as soon as possible by either the community college or the business school.

    Like

  5. David September 8, 2013 at 1:25 PM #

    Roger Cave is the son of Geoffrey Cave.

    Like

  6. Hal Austin September 8, 2013 at 1:31 PM #

    @ David

    If this is true, then the regulator should step in immediately. I am not casting aspersions on the two men, but having a father as chairman and a son as CEO is clearly a potential conflict of interest.
    Let us examine a hypothetical case: the fund over exposes itself to a particular asset and loses a lot of money (let us say property), the CEO appeals to the chairman not to take immediate action, but to give him time to recoup the money.
    Which father would not say all right, but just one quarter. That in itself is a breach of the chairman’s fiduciary duty to investors.
    Although the CEO and senior staff should indeed in vest in the fund, why do it through a private company? And who is he investing on behalf of: the investors or his private company?
    Where is the regulator when you need them most.

    Like

  7. David September 8, 2013 at 1:37 PM #

    @Hal

    To clarify, Roger is the Investment Manager/Director and John Williams who sits on the Board is CEO of Cave Shepherd.

    Like

  8. Hal Austin September 8, 2013 at 1:41 PM #

    I am talking of Fortress, the investment fund, not the retail store. Who sits on the fund’s investment committee? What is the asset allocation? Who is the stock picker? Barbadian investors mus t interrogate these fund managers.
    I know Mr Cave junior is exposed to the highest professional ethics, as a CFA analyst, but it is better to be safe than sorry.

    Like

  9. Bush Tea September 8, 2013 at 1:43 PM #

    @ Hal
    Skippa, ALL dem fellows does get together every weekend and “conflict we interest” anyhow.
    Um really ain’t no difference if dum is father and son or father in law and second cousin by the mother’s side.

    Essentially there is ONE big board of directors running things bout here – and everyone else are actors…..

    Like

  10. Hal Austin September 8, 2013 at 1:48 PM #

    @: Bush Tea

    Thre is a lot of truth in what you say, but we can either be victims of challenge their hegemony.
    The point quit clearly is more transparency in the fund: where it invests, the returns ie are there set benchmarks, if so does it meet the benchmarks, over three years, five years, ten years?
    How does it research companies to invest in, is it in-house research or do they buy it in? If so, who from?
    As a professional financial journalists, all this information is volunteered by firms, we do not have to ask for them. It is a highly competitive market and fund managers must compete on costs and performance. Is there an index that Fortress can be measured against?

    Like

  11. David September 8, 2013 at 1:53 PM #

    @Hal

    Was making the fringe point that John Williams is the CEO of Cave Sherpherd which s a shareholder of the Fortress Fund and that Roger Cave the sone of the Chairman is the Investment Director. Will have to do some research to establish who are on the investment committee.

    Like

  12. Hal Austin September 8, 2013 at 1:58 PM #

    The key point is that civil servants and academics cannot regulate financial services. They are playing a game they do not fully understand.
    They need to look carefully at cross directorships. While incompetent politicians talk about ripping off the national insurance, financial services remains a blind spot. The authorities can often be wrong-footed.

    Like

  13. David September 8, 2013 at 2:00 PM #

    @Hal

    Circular directorship is an accepted way how business is done in Barbados. What fund index what!?! this is Barbados.

    Like

  14. Hal Austin September 8, 2013 at 2:02 PM #

    @ David

    Precisely. This is Barbados so we get by despite our ignorance and pretent it is genius.

    Like

  15. David September 8, 2013 at 2:08 PM #

    @Hal

    You can do an acid test on BU to expose our ignorance by the number of interesting comments/contributions you get on blogs like this one.

    Like

  16. Hal Austin September 8, 2013 at 2:10 PM #

    @ David

    Thanks for bringing it to my attention. I have however noted it a long time ago. Unless it is about the tribalism of party politics it usually goes under the radar.

    Like

  17. David September 8, 2013 at 2:20 PM #

    @Hal

    Given your experience with this sector are you saying that Fortress Fund has an unusual ownership mix/configuration?

    https://www.fortressfund.com/property_fund/

    Like

  18. Hal Austin September 8, 2013 at 2:23 PM #

    @ David

    Who are the investment experts on the board of directors? Why is the investment adviser an estate agent?

    Like

  19. David September 8, 2013 at 2:43 PM #

    A Google suggest the expert on the Board of Directors s Ken Emery.

    Like

  20. Hal Austin September 8, 2013 at 2:46 PM #

    So why is the estate agent the investment adviser? In any case, when last did the FSC/Central bank carry out as risk assessment of Fortress. How about an undeclared one, with an expert advising the regulators, some from the CFA Institute? Just move in and seize all their books.

    Like

  21. millertheanunnaki September 8, 2013 at 2:55 PM #

    @ Hal Austin | September 8, 2013 at 1:11 PM
    “….there is clearly a lack of proper training for local financial journalists, a gap that should be filled as soon as possible by either the community college or the business school.”

    Now where would to these ‘trained journalists’ practise their craft? In Barbados? You got to be joking, Hal! This is not the UK where freedom of the press means exactly that (and more).
    Any time a journalist tries to dig too deep into any issue he or she is immediately branded a trouble maker or political plant, whether B or D.
    Barbados is one incestuous tribalistic plantation modeled society.
    Only the reporting on the glitz and glamour of the cocktail circuits would be deemed newsworthy.

    You should reflect on the CLICO situation and see what would be in store for any journalist who should dare to dig deeper into the financial shenanigans of that company and friends.

    Like

  22. Bush Tea September 8, 2013 at 3:17 PM #

    @ Miller
    Hal still do not get the point that one large board of directors run things ’bout here..
    LOL @ financials and Investment Advisors :) …. to do what? report who donated a cheque for $50 to the QEH?

    why the hell would we need financial analysts if all the players will be at Bath or Cattlewash Sunday?

    …my company needs 3 million to buy some stuff…
    .. you can lend us 2 million – and we will let you bring in the stuff..
    Uncle John wunna would be able to insure the shipment? would that settle the dinner bill you paid last month in Las Vegas?
    Wait…Charles, your last boy back home? I looking for a chairman for a board for the Dairy….

    Man Hal – um is a good thing you live in England . you would ketch a heart attack ’bout here cause you like you cant handle brass….

    Like

  23. Sargeant September 8, 2013 at 3:39 PM #

    A little while ago I wrote the following on the pending return of Morris to the Nation “This whole island is a deep morass of an incestuous pit where there are circles within circles and labyrinths within labyrinths where those who aren’t kissing butt are having their butts kissed now where was I….’

    As Yogi Berra once said “It’s déjà vu all over again”.

    Like

  24. Nire September 8, 2013 at 6:12 PM #

    @Bushie

    Hal really aint getting it. You ever heard the term in journalistic circles “Kill it”? Ask any newsroom journalist. Investigative journalism…hahaha…aint gine happen bout here unless it bout mini buses. It is either “kill it” or “I pull my advertising”.

    @Hal
    Next time you in Bim, go down Cattlewash between 2 and 3 on a Sunday morning and see how the planning for the country for that week takes place and by whom. I would take you, if you like. If you and I had asked some of our black bros to go down there that early to discuss anything, they would think we mad. They would tell you to meet them there after lunch and don’t forget to bring the “Silver”….lol. We just aint wake up yet.

    As for Fortress….I want wunna to go back to Plantations Ltd……by the time the small shareholders ketch duhself….duh was holding worthless paper. Not a cent they got…..just because duh din catch on to what the big boys were up to, since they were not that investor savvy.

    I say shut down the Stock Exchange……dem useless.

    Like

  25. Nire September 8, 2013 at 6:20 PM #

    A few years back when Sir Douglas Lynch and the now Sir Allan Fields were on every board in this country, they was a big brouhaha bout interlocking directorships and wuh happen, anything change?…..stupse………we only talk nuff shaving cream.

    I gine put my two lil dollars a certain place, but certainly not in Cave Shepherd, Goddards, nor CIBC FirstCaribbean, that was Barclays, CIBC, First Caribbean and now CIBC FirstCaribbean. Lef me out soul.

    Like

  26. Well Well. September 8, 2013 at 6:26 PM #

    That is the kind of nasty nepotism and incestuous business practices the DLP and BLP have been allowing the minorities to practice on the island for decades, because the government(s) themselves have gleefully done the same conflict of interest disgusting and ugly practices as well. Now the want to complain about what the business people do, they all allowed it to happen and now it does not fit into the agenda of the meltdown they are not capable of controlling, want to complain. HA!! Both governments = scamsters…………allowed the scamster minorities to enrich themselves off the backs of the majority, pathetic and sickening.

    Like

  27. David September 8, 2013 at 8:27 PM #

    Colin Goddard defined ‘interlocking Directorship’.

    Like

  28. Nire September 8, 2013 at 8:35 PM #

    @David
    he was a director of the stock exchange at that time. Wunna tink it easy bout here.

    Like

  29. Alvin Cummins September 8, 2013 at 9:01 PM #

    @Miller, Well Well, David and Bushie. In fact all uh wunna. Get hold of my book (Buy it) The Royal Palms are Dying. Then you would not be surprised.

    Like

  30. David September 8, 2013 at 10:11 PM #

    Who sit on the Board of the BSE?

    Like

  31. Bush Tea September 8, 2013 at 11:08 PM #

    Wait David…
    How much longer you plan to let Alvin Cummins use BU to advertise his so-called books? …FREE?
    Skippa, if he could use his read name and advertise his books he should pay up some dinero…

    What buy what book what…Bushie waiting for the you-tube summary.

    Like

  32. checkit-out September 9, 2013 at 8:32 AM #

    Bush Tea;

    Just came across a Kindle e-book that might interest you and Miller.

    http://www.amazon.com/dp/B00ERETBU0/ref=pe_259560_32479610_pd_re_dt_dp1#reader_B00ERETBU0

    Of course it is better to go nearer the source such as the Zecharia Sitchin books. But this ebook promises to provide what looks like a readable summary with lots of pictures, of the supposed works of the Annunaki and of Nibiru on mankind and the Earth. Of course also much of the examples and underlying thoughts are not politically correct for a black bajan in the 21st century but the book does seem to provide the gist of the Annunaki story from an Old world perspective.

    Like

  33. Sargeant September 9, 2013 at 8:44 AM #

    @BT
    What buy what book what…Bushie waiting for the you-tube summary.
    *******
    Wunnah Cawmere boys always fighting on this blog either among wunnah selves or wid AC, so Miller,Onions and you should come out wid yuh own books so we could have a battle of the authors/books.

    Let me see a colouring book, a picture book and a book with blank pages, now I didn’t indicate who is writing what….. have a good day :-)

    Like

  34. Bush Tea September 9, 2013 at 9:00 AM #

    @ Sargeant
    Bushie can see why you will always be non- commissioned. You are really a strife maker and gallows bait……

    Bushie writing a book too… But the draft is too high for BU…. LOL :)

    Like

  35. checkit-out September 9, 2013 at 9:06 AM #

    Getting back to the main topic. I have not been on the main south coast road at night for a few years but I did so last week. It is amazing to see the darkness on the stretch, perhaps connoting the slowdown in nightime business and movement, in the Hastings area. The story of the closure of TGI Boomers, which one commenter said here was despite relatively good financial outturns and was partially due to the downturn in the Barbados economy, might be a bellweather for private sector reactions that have not yet been publicized. Can one say capital and foreign exchange outflows?

    If this is so, look for a day or very short period, when the interlocking directorships, will pull up many stumps figuratively leaving the majority of the population, ie the book learned ones like me in the lurch.

    Like

  36. Well Well. September 9, 2013 at 9:06 AM #

    Alvin……what is nauseating is that both government(s) on such a small island allows it to happen, practice it themselves and don’t believe they are doing anything wrong or that there is something wrong with such practices. That is what has many people inside and outside of Barbados amazed.

    Like

  37. Well Well. September 9, 2013 at 9:13 AM #

    Check it out said:

    “If this is so, look for a day or very short period, when the interlocking directorships, will pull up many stumps figuratively leaving the majority of the population, ie the book learned ones like me in the lurch.”

    _____________________________________

    Sadly, that is what happens when the government(s) and by extension the taxpayers have remained largely dependent on one group of people, in this case the minorities, who themselves are always looking for greener pastures………….can’t for the life of me understand why the bajan governments see absolutely nothing wrong with that picture. We get to see the effects of the eggs in one basket syndrome, which is the result of refusing to use one’s brains.

    Like

  38. Nire September 9, 2013 at 10:33 AM #

    @David
    The BSE board is as follows:
    Dr. Grenville Phillips – Chairman
    Richard Cozier
    Ryle Weekes
    Roger Cave
    Paul Maxwell
    Patricia Downes-Grant
    Randall Belgrave
    Cleviston Haynes

    Like

  39. Due Diligence September 9, 2013 at 12:40 PM #

    A review of the Fortress Caribbean Property Fund Limited section in the Fortress Fund Managers website https://www.fortressfund.com/index.php?Section=4&PageId=35&Flag= raises some questions.

    Re Carlisle House – Fair Market Value of $12,000,000. (There are a couple of listing for sale at BDS $13,500,000.)
    “As a result of government’s decision to consolidate some of their departments along with LIAT’s decision to close all of their region-wide ticketing offices, the occupancy level at Carlisle House fell from 98% to the current level of 78%. As a result 9,846 square feet of space is currently available.”
    Question – With a significant amount of space having been rented to Government, is it a conflict of interest for Senator Carmichael to be a Director of the Fund?

    Re the Carter’s and Cave Shepperd Buildings
    The Fund bought a major interest in the properties of Cave Shepherd and Carters.
    The previous owners apparently cashed out some of their equity in the properties using cash from the shares of the fund sold to ordinary investors.
    Question – Do the Directors ensure that the rents paid by the major retailers to the Fund are at market rates?

    Re The Cable & Wireless Building
    Question – How much of that 85,000 square feet C&W contracted for 12 years ago in the analogue era when it had no competition, does LIME now need In this competitive digital era, What happens if they walk away?

    Like

  40. Hal Austin September 9, 2013 at 12:45 PM #

    Any fund or insurance company investing in commercial property in Barbados in this climate is, in my view irresponsible. Also, an investment fund with three senior directors of Cave Shepherd ( the CEO, the chairman and the CEO of Cave Shepherd) on its board investing in Cave Shepherd’s commercial property should, in my view, be investigated by the FSC.
    There is a conflict of interest that, to my simple non-legal mind, borders on illegality.

    Like

  41. Hal Austin September 9, 2013 at 1:03 PM #

    Fund managers do not exist in a vacuum; they get their headwind from the macro-economy and in an economic climate of high unemployment, huge public sector debt, a massive current account deficit and political turmoil, the combination of those forces is a volatile investment environment.
    Over exposure to commercial property is high risk.

    Like

  42. David September 9, 2013 at 1:45 PM #

    @DD

    Senator Carmichael is an independent.

    Like

  43. Nire September 9, 2013 at 1:50 PM #

    Who are the owners of DGM Bank & Trust Inc.?

    Like

  44. millertheanunnaki September 9, 2013 at 3:00 PM #

    @ checkit-out | September 9, 2013 at 8:32 AM |

    Hope you enjoy your read. The subject matter is really out of the traditional genre Bajans are accustomed to.
    You should view the “information” contained therein as a key for unraveling the hidden mysteries contained in that first book of Jewish history and mythological writings.

    One thing must be said of Jewish scholars and writers of old, they were fantastic plagiarists and boldfaced copiers of other cultures’ myths and legends especially those of ancient Sumeria. Jordan Maxwell also shares this view.

    Zecharia Sitchin makes for good reading; and listening too. Sitchin (now dead almost 3 years) was himself a very radical thinking Jewish writer on ancient astronauts visits as recorded by the Sumerians. There is a guy called Rael who espouses similar “theories” in a book called “Intelligent Design”.
    Enjoy.

    Like

  45. Hal Austin September 9, 2013 at 3:52 PM #

    I find it absolutely incredible that in a society with a crisis level of shortage of residential homes, a leading fund manager should be investing tens of thousands of dollars in commercial property. Government should intervene to restrict how these funds should invest..

    Like

  46. Hal Austin September 9, 2013 at 3:53 PM #

    milliond

    Like

  47. checkit-out September 9, 2013 at 4:34 PM #

    Miller;
    Just bought it. Hope to start reading it tonight.

    Like

  48. Nostradamus September 9, 2013 at 4:46 PM #

    @ Hal Austin
    “I find it absolutely incredible that in a society with a crisis level of shortage of residential homes,…..”

    Really? What shortage? Do you know how many residential homes are for sale? Or do you mean low cost housing?

    Like

  49. pieceuhderockyeahright September 9, 2013 at 5:15 PM #

    @ Anunnaki

    Now is see why Cocky Locky hate you so!!

    I see your name in bold gold letters in that article by Check-it-out and den i see Cocky Locky, in a book bout Henny Penny and Foxy Loxky.

    Grudge is great O Sage

    Like

  50. millertheanunnaki September 9, 2013 at 5:31 PM #

    @ Hal Austin | September 9, 2013 at 3:52 PM |

    Hal, we like your proposal of the extensive “refurbishment” of Bridgetown and its environs. Why don’t you push that some more?
    Bridgetown has good basic infrastructure but the housing stock is in an awful mess almost slum-like or shanty town in appearance. This is an area ripe for redevelopment. Housing is always a good way to kick start an economy since it cuts across so many sectors and provides jobs although many temporary by nature.
    There would be no need to take up “virgin” land or require massive new infrastructural investments in road construction and utilities.
    As you also argue it would act as a spur to attract young people back to the city and bring it back to life; something so important to a tourist destination.

    Like

  51. millertheanunnaki September 9, 2013 at 6:06 PM #

    @ pieceuhderockyeahright | September 9, 2013 at

    He hates me because I dare to persistently challenge his blind partisan ignorance of the wider world. He can see the world only through a “(D)ense” lens through which his amoeba-like inchoate intellectual capacity can never pupate from the dark cocoon of the propaganda cesspit in George St.

    We also notice he has taken the naively stupid puerile approach of attacking you; a man a million light years his senior in both knowledge through graft (hard work) and wisdom through learning from life’s experiences.

    We all know he is not the sharpest knife in the box so we would see him as just a silly little boy; shouldn’t we?

    “A wise son brings joy to his father,
    but a foolish son brings grief to his mother.” Proverbs 10:1

    We must give our commiserations to Carson’s mum Eustine.

    Like

  52. Well Well. September 9, 2013 at 7:06 PM #

    Nire | September 9, 2013 at 1:50 PM |

    Who are the owners of DGM Bank & Trust Inc.?
    ____________________________________

    I don’t believe DGM Bank & Trust is a local entity, it was managed by a Canadian who passed away last year, i do believe it is a Canadian offshore company.

    Like

  53. Due Diligence September 9, 2013 at 8:19 PM #

    DGM Bank & Trust owners

    See website link

    http://www.dgmbank.com/about.corporateprofile.htm

    Board is dominated by Cave Shepherd execs.

    Like

  54. Due Diligence September 9, 2013 at 9:41 PM #

    re DGM Directors

    Philip Armstrong, Chairman of Jovian Capital Corp (Toronto) is one of two DGM Bank & Trust Directors who appear on the surface to be independent of Geofrey Cave/Cave Shepherd.

    Based on April 2012 and July 2013 articles in The Globe & Mail (Toronto) copied below, it looks like he fits right in with the Cave and the other Barbados interlocking Directors who look after themselves first, and the ordinary investor last. Indeed, Armstrong can probably teach them a trick or two.

    Jovian execs cut themselves $12-million cheque Add to …
    TIM KILADZE
    The Globe and Mail
    Published Monday, Apr. 30 2012, 3:35 PM EDT

    Two months after managers at Jovian Capital Corp. disclosed that they cut themselves an extra $12-million cheque, top executives have yet to explain where the money came from, and how they decided on the amount that was doled out.

    In its last quarterly earnings, released in February, the company included a $12.2-million provision for the “Jovian senior management profit plan,” which it said was the result of both “continued and discontinued operations.” Not exactly the most precise description.
    When pressed for more details by shareholder Scott Reid of Stornoway Portfolio Management, management didn’t add much, other than to say that it had been underpaid for some time. No explanation where the money came from. No proven justification of why it was paid out.
    The easiest explanation, and this is just a guess, is that Jovian had a chunk of cash on its balance sheet after selling off its stake in BetaPro Management to a South Korean firm last year. Jovian also recently sold off its mutual fund subsidiary to Desjardins Financial Security for $27-million.
    But you can’t be sure, because Jovian has yet to comment. Calls and e-mails left with the company were not returned.
    Mr. Reid is perturbed because he personally believes that management doesn’t deserve the payout. “Since the creation of Jovian in its current form on July 9, 2003, Jovian’s shares have declined by 6.2 per cent, or 0.72 per cent on an annualized basis,” he wrote in a public letter. “In comparison, over the same period of time, the TSX Total Return Index has appreciated by 114 per cent, or 9 per cent on an annualized basis.”
    He is also annoyed that few details have been provided, and that because the payment wasn’t in the form of securities, it doesn’t have to be put to a shareholder vote. That means the company can hand out about 10 per cent of its equity value to “unidentified ‘senior management,’” Mr. Reid wrote.
    In management’s defence, it also paid shareholders $4 per share earlier this year. However, this handout wasn’t a special dividend; it was a return of capital. If you held shares at $10, theoretically, and the return of capital is $4, you are given 40 per cent of your investment back. You aren’t paid a 40 per cent special dividend.
    Mr. Reid has talked to both Philip Armstrong and Jason Mackey, Jovian’s chief executive and financial officers, but that hasn’t gotten him anywhere. If he had it his way, Jovian would make a copy of the payment plan available for public consumption and execs would reconsider the payments.

    Industrial Alliance strikes asset management acquisition Add to …
    SUBSCRIBERS ONLY
    The Globe and Mail
    Published Wednesday, Jul. 17 2013, 11:08 AM EDT
    Last updated Wednesday, Jul. 17 2013, 11:13 AM EDT

    Banks aren’t the only companies chasing asset managers.

    Consistent with its strategy to beef up its asset management arm, insurer Industrial Alliance is scooping up Jovian Capital, a holding company that owns stakes in a number of small asset managers, for $94-million. The deal adds roughly $7-billion of assets to the insurer’s existing $45-billion portfolio.
    Like many of its Canadian peers, Industrial Alliance has been trying to diversify its revenue mix. In this era of low interest rates, insurers are having a hard time proving that their current market returns will ultimately allow them to pay out their long-term liabilities, so they’re branching out into areas such as wealth management.
    At first glance, Jovian may seem like a bit of an odd choice. The company hasn’t produced positive cash flow in the past few years, and it posted a $7.5-million loss from continuing operations in 2012.
    Plus, last year some shareholders were outraged after Jovian’s management team cut themselves a $12-million compensation cheque amidst the weak performance. Shareholders wanted this cash for themselves.
    However, it appears there’s a way for Jovian to become profitable under Industrial’s umbrella.
    “To the extent IAG can eliminate holding company costs (primarily holding company management compensation and administrative expenses), it will start from a baseline of positive earnings before interest, taxes, depreciation and amortization,” noted National Bank Financial analyst Peter Routledge, adding that backend synergies will also help.

    Like

  55. Hal Austin September 10, 2013 at 1:04 AM #

    When the DLP was in opposition its housing spokesman told parliament that there were 30000 people needing homes. Presumably a large number of these people – many living two, three and four generations under one roof – still need housing.

    Like

  56. Well Well. September 10, 2013 at 7:18 AM #

    Well, we can now see a pattern here, the local minorities look to sit on each and every board of local and foreign companies, that should tell the majority blacks on the island something. Form your own companies, stop letting others control your future and that of your offspring, stop letting others control your money. Stop letting minorities and foreign self-interest groups control your money. By the way, Canada is taking a nasty hit from the recession, i am sure they will be the first to recover however, in saying that, no surprise to see rats jumping ship.

    Like

  57. Hal Austin September 10, 2013 at 7:24 AM #

    Where is the FSC in all this?

    Like

  58. David September 10, 2013 at 7:32 AM #

    @Hal

    The point has been made by Caswell and we agree, the FSC is underresourced.

    Like

  59. Hal Austin September 10, 2013 at 7:36 AM #

    Why is it under-resourced. The cost of the FSC should be met by a levy on all financial services companies and individuals.
    There is a difference between being under-resourced and incompetence. How can you allow a fund manager, whose chairman and CEO are related, to buy property from a company, chaired by the same chairman and whose relative (the ceo of the fund manager) is on the board and not declare a conflict of interest.
    By the way, yesterday DeLoitte was fined £14m for failing to mange a conflict of interest – and it was nothing like Fortress and Cave Shepherd. What else does the FSC want.
    They must priortise their work, and this looks like a top priority.

    Like

  60. David September 10, 2013 at 7:39 AM #

    @Hal

    You have to understand that the FSC has had to build from ground up. This is an agency which has risen from nothing, ie.institutional knowledge.

    Like

  61. Hal Austin September 10, 2013 at 7:47 AM #

    David,
    You need proper primary legislation, good regulations and well trained and competent staff. What training in regulation did the top staff receive, including the former acting CEO, recruited from the bumbling NIS, just look at the auditor general’s reports.
    This gross incompetence and willingness to turn a blind eye is civil service seepage.
    Trade unions – and the press (BU excepted) should be scrutinising all these bodies – the regulators and the regulated.

    Like

  62. Bush Tea September 10, 2013 at 8:32 AM #

    The two of wunna could really hush up.
    Wunna getting on like if wunna don’t know the answers to the shiite questions wunna asking one another….

    What FSC what?
    That is just a SHAM front formed by Arthur out of embarrassment with the damn supervisor of Insurance ( a chicken feed maker) and CLICO, after applying for an international FOREX loan and being told that there were no effective financial controls in place.
    They were FORCED to form the FSC.
    The banks and white people then get vex and mek them include the Credit Unions for spite….
    …and the ONLY group that this FSC are able to influence, manipulate, retard is …..you guessed it….

    As to the interlocking directorships….
    Man what interlocking directorships what…Wuh dum only got effectively ONE board bout here….. And that does meet in Cattlewash or bath pun weekends.
    All the rest are brass bowl rubber stamps…….. So what if they interlock…?

    Wuh wunna still fail to get is that only a Pachamamma style revolution can fix what we have….

    Like

  63. Due Diligence September 10, 2013 at 11:32 AM #

    David | September 10, 2013 at 7:39 AM |
    @Hal
    You have to understand that the FSC has had to build from ground up. This is an agency which has risen from nothing, ie.institutional knowledge.

    This from The Nation

    “THU, NOVEMBER 24, 2011 – 1:09 PM
    SOME 3 500 APPLICATIONS have flooded the Financial Services Commission for 30-odd posts in the regulatory institution. 

    Minister of Finance Chris Sinckler, disclosed this in an interview at the opening ceremony of the FSC at Warrens yesterday.                          

    He said that the Commission’s recruitment drive had been done locally and at Barbados’ embassies in London, Washington, Miami and New York in order to ensure that its officers reflect the highest level of competency, skill and propriety.

    He said appropriate staffing was the immediate objective of the FSC, which was started in April to regulate non-banking financial institutions including mutual funds, securities, insurance and credit unions.”

    Almost two years ago then the MOF said that “appropriate staffing was the immediate objective of the FSC”

    Surely the MOF would not lie or mislead.

    Surely there must have been some among the 3,500 applicants to fill the 30-odd posts who have some institutional knowledge.

    Surely after almost two years the 30-odd officers “with the highest level of competency, skill and propriety.” hired should have bonded as a team and developed some institutional knowledge to:

    Establish standards for institutional strengthening, for the control and management of risk in the financial services sector and for the protection of customers of financial institutions as well as creditors and the public; and to supervise and regulate the operation of financial institutions.

    The above cut from FSC website.

    Inciidentally, one would expect to see the names of Officers and Directors listed in an organization’s the website; but did not see that info at http://www.fsc.gov.bb/index.php/contact-us/background

    Bush Tea | September 10, 2013 at 8:32 AM |

    What FSC what?

    That is just a SHAM front formed by Arthur out of embarrassment with the damn supervisor of Insurance ( a chicken feed maker) and CLICO, after applying for an international FOREX loan and being told that there were no effective financial controls in place.
They were FORCED to form the FSC.

    This is from the FSC website:

    The Financial Services Commission “the Commission” was established on the 1st April, 2011 pursuant to the Financial Services Commission Act 2010-21 “the FSC Act” and is responsible for supervising and regulating the non-banking financial services sector in Barbados.

    You may be correct about FSC being a SHAM front, but it was in fact created by an Act of Parliament in 2010-2011 and not by Arthur; though it may have been created in response to events that occurred in the Arthur era.

    Like

  64. David September 10, 2013 at 11:38 AM #

    @DD

    The article supports BU’s point.

    Like

  65. Hal Austin September 10, 2013 at 11:39 AM #

    I am not trying to do down the organisation, but the remit is flawed. I cannot recall any advertisements in the UK, although that does not mean much.
    However, I would be very surprised if anyone trained in the UK in financial regulation and with an influential position at the FSC has not raised questions.
    I know of at least one Barbadian based in New York working in fianncial regulation (he reads thisa forum) who came to Barbados last year with a prepared papoer on the subject at the Diaspor conference and was virtually ignored.
    All I am saying that the more ideas the better the outcomes. We are all in this together – not point scoring.
    Why did we have an academic economist as the founding chairman of a financial regulatory body?

    Like

  66. Due Diligence September 10, 2013 at 1:01 PM #

    Hal Austin | September 10, 2013 at 11:39 AM |
    
Why did we have an academic economist as the founding chairman of a financial regulatory body?

    Good question – politics perhaps?

    Maybe this article from The Nation – titled “Take it slow” explains the Chairman’s mindset and why FSC is so slow doing stuff.

    BY DAWNE PARRIS | FRI, JULY 12, 2013 – 12:11 AM
    The chairman of Government’s Council of Economic Advisers has a different view from Central Bank Governor Dr Delisle Worrell’s of how the Freundel Stuart administration should close its $400 million deficit gap.
    While Dr Worrell suggested on Wednesday that adjustments should be sharp and swift, Sir Frank Alleyne is adamant that Government should take it slow.
    “Any economist who’s worth his or her salt would advise the Government that these things have to be phased in. The Government of Barbados is the single largest buyer of goods and services in this economy. If you go and chop out $400 million – one chop like that – you risk imploding the economy unless you have a plan. This thing has to be managed,” he said on VOB’s Down To Brass Tacks yesterday.
    “Government must have access to what major foreign exchange projects are in the pipeline in Town and Country Planning. A prudent Government then would say ‘look, this is the cut we’re implementing in this timeframe over the next three months; let us sit down with the fellas in Town and Country Planning, see what foreign exchange projects we can bring up to scratch and make sure they’re ready to go in that time period so that when we withdraw, they come in. That is what proper economic management is about.”

    This Government has been taking it slow for 5 1/2 years.

    If the fellas at Town and Country Planning are counting on The Merricks and Pure Beach as “major foreign exchange projects” to solve problems they are going to have to go REAL SLOW.

    Like

  67. Bush Tea September 10, 2013 at 2:15 PM #

    @ Mr Diligence
    Thanks for the Nation reference.
    Bushie stands corrected…..but perhaps you can find another reference to support the fact (according to the inference drawn) that these laws were conceived, drafted and enacted in the two years after the DLP had won office…and while Thompson was sick….

    Skipper….the ONLY laws that were passed in Barbados in under 10 years were the world cup sunset laws (which were needed in order to get the surveillance equipment and training :) )……and the CSME laws – which basically says that in Barbados, a Bajan ain’t no better than anyone else….

    Even seat laws were marathons…. and dem ain’t even finish yet.

    Like

  68. Due Diligence September 10, 2013 at 3:08 PM #

    Bushy
    No inference was intended.

    That law could have been conceived in the prior 14 years, or in the 7 years before that; but I am guessing conception was some time after 1997.

    But, I do find it hard to believe DEM would pass into law something drafted by BEEs, without substantial amendments – unless of course both of them were simply using the same existing law from another jurisdiction as the model.

    In any event it is what it is.

    Here is another Nation article.

    “MOU to boost financial system

    THU, SEPTEMBER 05, 2013 – 8:00 AM

    THE CENTRAL BANK of Barbados and the Financial Services Commission have signed a memorandum of understanding (MOU) aimed at cementing their ongoing relationship and strengthening the financial system.
    The objectives of the agreement include providing detailed parameters for cooperation in relation to the exchange of information, the monitoring of financial soundness indicators for banks, insurance companies and credit unions within Barbados and for the development of early warning systems and conducting of stress tests.
    Speaking during a signing ceremony at the bank last Thursday, legal counsel Sadie Dixon said the MOU also established an oversight committee comprising principal functionaries of both entities including the chief executive officer of the FSC and the Central Bank Governor.
    The committee is expected to meet regularly to discuss and formulate the financial stability report and to closely monitor and respond to developments within the financial system.
    FSC chairman Sir Frank Alleyne said the financial sector played a pivotal role in enhancing the quality of life of all citizens and residents of Barbados.
    Maintain integrity
    “Our country has one financial system where operations within it are very much intertwined, and clearly as regulators we need to collaborate to ensure the system’s integrity is maintained,” he said.
    Sir Frank noted that a number of areas had to be properly addressed including surveillance and development of early warning indicators of financial stress, the thorough assessment of households’ and corporates’ balance sheets, indebtedness, and vulnerabilities, and ensuring that there is no fragmentation within the regulatory and supervisory framework.
    Meanwhile, Central Bank Governor Dr DeLisle Worrell said Barbados had a history of cooperation among financial regulators that went back decades, with the Central Bank lending its regulatory expertise to the regulators of credit unions, insurance companies and securities traders for many years.
    “In partnership we will continue to blend our best efforts towards the best health of our financial system in these uncertain times,” he said. (NB)”

    As has been said repeatedly in BU, the key is in the execution. not who conceived or drafted or passed the legislation.

    Lets hope it does not take the FSC and Central Bank 10 years to execute in collaborating to ensure the system’s integrity is maintained.

    Like

  69. iabingy September 11, 2013 at 2:18 AM #

    the seven deadly sins.left to your interpretation.

    A proud look
    A lying tongue
    Hands that shed innocent blood
    A heart that devises wicked plots
    Feet that are swift to run into mischief
    A deceitful witness that uttereth lies
    Him that soweth discord among brethren

    Like

  70. Due Diligence September 13, 2013 at 11:50 AM #

    DD said

    Re The Cable & Wireless Building
    Question – How much of that 85,000 square feet C&W contracted for 12 years ago in the analogue era when it had no competition, does LIME now need In this competitive digital era, What happens if they walk away?

    Article in Nation today said

    More than 200 workers at telecommunications company LIME have been informed that September 30 will be their last day of work.

    The WEEKEND NATION understands that in addition to the 200 employees from the service support and delivery and associated customer support teams who will be going home as a result of a deal with global provider Ericsson, 12 others from various departments have been given their walking papers as the company looks to either outsource their jobs or make their positions redundant.

    LIME outsourcing, positions redundant.

    This is not good news for Fortress Property Fund investors

    Like

  71. David September 17, 2013 at 9:19 PM #

    The following interview with Roger Cave appeared in Monday’s Business Advocate.

    http://bajan.files.wordpress.com/2013/09/rogercave_fortressfund.pdf

    Like

  72. Hal Austin September 18, 2013 at 6:15 AM #

    As I read the question and answer interview with Roger Cave (one of the weakest and most unpopular methods of journalistic interviewing) in one of the local papers I though of some questions I would like to ask him and his colleagues.
    Who are the shareholders voting at this special meeting on September 26? Will they be A shareholder, B shareholders or both?
    Do you have any institutional shareholders, if so what class of shares do they own? And are they happy with the division of voting and restricted voting shares?
    If the value of the portfolio, presumably residential and commercial, has been devaluing over the years, what strategy do you have to reverse this?
    Eugene Fama, the outstanding financial economist, states that prices reflect all available information. Are you happy that your funds are transparent enough?
    You talk of cash flow, when Lehman Bros went bankrupt it has assets of US$600bn, but no cash flow. Is your fund insolvent, do you have cash flow to meet your bills?
    You say you have been in contact with the FSC. Have your fund ever been stress-tested by the FSC, and if so, what has been the outcome? You also mentioned poor cash flow. What is the regulatory capital requirement for your property fund?
    How do you internally measure performance? Do you produce annualised performance statistics, either for internal or external use, so that investors have as better idea of the fund’s performance? Value at Risk is forward-looking. Do you use VaR when estimating future fund performance?
    What risk-adjusted performance measures do you use? What is the total expense ration of the property fund and have you calculated what William Sharpe calls the arithmetic of investment expenses?
    What about fund governance?

    Like

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