Long ago, during the days of sugar, when the sun would still rise over the sugarcane fields, the Indian elders, like my grandparents in Rio Claro, used to talk about the people in the village “whose hand didn’t have “barrakat”. Barrakat, I learnt, was an Urdu word used to describe the ability to earn wealth and keep it. Our Muslim neighbors also frequently used the term to mean blessings.
This morning, June 11th 2023, the Sunday Express cover page screamed the headline “Heritage and Stabilisation Fund: Historic US$913m Loss”, reminding me that the old idea of barrakat still has relevance today, as the Rowley PNM Government continues to show their hands have not been blessed to create wealth.
Think about that for a moment…it took about five years for our Heritage and Stabilisation Fund (HSF), in its previous informal incarnation as the interim revenue and stabilisation fund, to build up a balance of over US$900 million. The Rowley PNM Government has lost this amount from the HSF in just one year! And they waited nine months to disclose a loss which is equivalent to nearly 20% of the outstanding balance in the HSF, at the end of September 2022. Talk about having no barrakat.
We, the citizens of this country, are the rightful owners of the HSF. The HSF does not belong to the Government. It is not a trophy backup line of credit for the Minister of Finance to do as he pleases. The HSF is a national heritage fund created from excess energy revenue for the people of Trinidad and Tobago. The HSF belongs to you, your children and your children’s children.
We, therefore, must have an interest in how much money is placed in the HSF, how much money is withdrawn from the Fund and for what purpose, how its resources are invested, and, most importantly, what is the investment performance of the Fund.
This historic large, first loss of our HSF should disturb us all.
And this brings me to the governance of the HSF. The HSF has a Board which decides on the Fund’s investment objectives and guidelines. It also reviews the performance of the HSF and submits quarterly and annual reports on the operation and investment performance of the Fund to the Minister of Finance.
The current Chairman of the HSF is Ewart Williams under whose negligent watch as Central Bank Governor the billion dollar CLICO crisis erupted, sending shockwaves throughout Trinidad and Tobago and the rest of the Caribbean. Will a similar meltdown as CLICO now take place with the HSF under Williams? In attempting to defend his stewardship and that of his HSF Board, Chairman Williams stated in the 2022 HSF Annual Report that… “the HSF has confronted a series of challenges that have tested its resilience and threatened its sustainability”.
Absolutely not!!! Nothing could be further from the truth. Events in the global financial markets have simply revealed the incompetence of the HSF Board.
Over the past three years, global financial markets have exhibited elevated levels of volatility, starting with the uncertainty of the COVID-19 pandemic, followed by the geopolitical shock of Russia’s unprovoked invasion of Ukraine, and now the U.S. Federal Reserve and other central banks in most advanced economies sharply raising short-term US interest rates to combat inflation.
In this turbulent environment, the HSF Board must be adept enough to shield the Fund from the worst effects of the financial risks associated with such events. This requires a pro-active approach, constant monitoring of the markets, mature reflection and deliberate judgement to act. Do we even have such competence on the HSF Board? According to the HSF Act, members of the board should be persons of proven competence in finance, investment, economics, and business management or law. Does anyone on the current HSF Board meet this requirement? Do we even know who are the other HSF Board directors entrusted to manage our national heritage for future generations?
This historic large, first loss of the HSF shows an egregious breach of fiduciary duty on the part of the current HSF Board members. By law, these Board members have a fiduciary responsibility to the owners of the HSF, the people of Trinidad and Tobago. Their relationship with the HSF involves a special trust, confidence and reliance to exercise their discretion and expertise in the best interest of the Fund. They must therefore conduct themselves “at a level higher than that trodden by the crowd” and show an “obligation of undivided loyalty.”
In any other country, these HSF Board members would have already done the honorable thing and resigned. But this is Trinidad and Tobago….PNM country where apparently integrity does not live.
Surely, the Rowley PNM Government should not expect us to go lightly on them for such grave fiscal irresponsibility. They were voted into office twice, giving the electorate the assurance they had all the answers to run the country and make it better.
However, as barrakat slips more and more out of the Rowley PNM Government’s hands, their legacy will not be one of development but a decade of decay.
*Disclosure: Jwala Rambarran served as a Director on the Board of the HSF during July 2012-December 2015. He is a former Governor of the Central Bank of Trinidad & Tobago, which is legally responsible for investing the assets of the HSF.
June 11th 2023