Illegal money- takers being investigated
Monday May 30 2011 | 04:34 AM

The Central Bank of Barbados has been asked to investigate the actions of several companies which, though unlicensed, are reportedly accepting financial deposits from Barbadians.

This was revealed by former Permanent Secretary in the Ministry of Finance William Layne, who said he was told about the development recently and had informed an official of the financial institution.

"It has been brought to my attention recently that there are still companies in Barbados taking deposits from the public, which are not licensed as banks or other deposit taking institutions. I have given that information to one of the directors of the Central Bank, whose has promised to look into the matter," he disclosed.

Layne, now retired, was speaking at the Institute of Chartered Accountants of Barbados annual general meeting at the Courtyard Marriott, and he said this new development was a reminder of the devastating collapse of Trade Confirmers in the 1980s and was the latest wake up call for increased regulation in Barbados.

"In Barbados the year 1986 saw the collapse of Trade Confirmers, a finance company offering interest rates on deposits that were in excess of what the other regulated entities were offering," he said.

"Trade Confirmers, though a deposit-taking institution, was not regulated by the Central Bank and this brought about a change of legislation subsequent to the event to regulate finance companies."

Layne said this and the problems caused following the collapse of insurance giant CLICO was a sign that "we have not learnt much from the mistakes of each other".

"Companies were operating in an environment, which allowed them to place policyholders and depositors funds at risk. Regulators must therefore be given the tools to do their jobs and must be allowed to function by the political directorate," he stated.

"There is also a need for better education among the public about investing, so as to allow the public to make informed decisions."

The former senior government official also called for "special attention" to be given to "the regulation of conglomerates, which own regulated entities".

"Conglomerates, which own regulated entities, in my view, should be made to submit consolidated accounts to the regulator, and, where they are private companies, published consolidated statements in the Press," he said.

"In addition, the regulators must publish all decisions made about regulated entities. In Barbados the prohibition at CLICO Life from writing new business in August 2009 was not published in the Press, and so the company was able to continue writing new business as attested to by the chairman of CLICO Holdings."

There was a need for the law to be changed to allow such publication, he noted.

"In addition, corporate directors must not allow themselves to be made appendages of the CEO, but must realise the seriousness of their role. People must start understanding the seriousness of their role, and only when we start suing directors for negligence are people going to wake up, because you are not there to warm a seat," Layne said.

"The fees they pay you are not enough for you to do foolishness and therefore you have to take your position seriousness. In addition, it is my view that the positions of CEO and chairman should be split. Executive chairmen are dangerous creatures, they are like nuclear war heads.

"In addition, this profession, the accounting profession, has to re-examine itself. The auditors must do their jobs."