The Bahamas Hotel Catering and Allied Workers Union had to underwrite more than $4 million in bad loans owed to Workers Bank when the institution’s assets were sold to the Bank of The Bahamas, one of a number of factors that has the union operating in the “red,” it was revealed yesterday.
BHCAWU president Pat Bain said that while the idea of Workers Bank was a good one, the union never got the support of its members to make it a “working institution.”
“When [the bank] was started it was undercapitalised, it started with $3 million in capitalisation; secondly we put out shares to our membership, asking them to purchase shares in Workers Bank. Out of a membership of approximately 5,000 at the time, only 143 bought shares,” said Mr. Bain, who was a guest yesterday on Love 97’s Jones and Company, hosted by Wendall Jones.
He said the shares were valued at $1 with a par value of 500, but members did not participate in the deposits and business aspects of the bank.
“When we took the decision, and it was not an easy decision, to sell the assets, [which were about] $1 million, we had to ask if we were going to continue to pour money into the bank or lease the building and get rent from it,” said Mr. Bain.
Another reason behind the downfall, according to union officials, centred on the perception that the bank was a small lending institution, where members could get small sums of money, but not as a place for larger transactions, such as mortgages.
Mr. Bain said that since the sale of Workers Bank, the union has implemented a philosophy that it will hire professionals to operate businesses that union officials have no expertise in.
The president said the failure of the bank was one explanation for the union’s current deficit, a point raised last week by former union president Dr. Thomas Bastian, whose “United We Stand Committee” is seeking to dethrone the current “Rainbow Team” in the union’s elections later this year.
Dr. Bastian, who held the union’s presidential post for 18 years before he was defeated by Mr. Bain’s team in 2000, has levelled a number of charges against the current administration, claiming that the BHCAWU is deteriorating.
The former president is claiming that the union is currently operating in an overdraft position and is merely taking care of expenses. Dr. Bastian said that when he was at the helm a number of buildings were constructed and the union had a surplus of funds.
In response to Dr. Bastian’s charges, some of which were made last week Sunday on Jones and Company, Mr. Bain pointed to a number actions by the former administration that has the union now operating in the “red.”
The president said that in addition to having to lease the union’s building in Eleuthera, which was operating at a $700,000 loss annually, when the “Rainbow Team” took office there were a number of creditors and suppliers who had not been paid “over the years.”
Credit with those suppliers and creditors had to be re-established, said Mr. Bain, in order for the union’s services to continue.
“I don’t want people to walk around spouting things to the public with this sanctified attitude that they were the best thing since sliced bread to happen to the hotel union,” said Mr. Bain.
The president also pointed to the closure of several hotel properties, resulting in a loss of revenue from membership dues and the union’s failing International Bazaar investment in Grand Bahama, in addition to the strain of having to help its members who are out of work.
After the terror attacks in the United States on Spetember 11, 2001, which greatly affected the hotel industry, the union gave out more than $1 million dollars to its members affected by the impact.
However, it was noted that some of those losses were being balanced by gains made by other union properties.
He said that even though the union was in the black when the “Rainbow Team” took office, its expenditures outweighed the income, bringing it into the red once all of its bills were paid off.
Despite the financial challenges, which Mr. Bain attributed mainly to poor decisions made by the previous administration, the “Rainbow Team” has expanded and introduced a number of social programmes since taking office, including a new scholarship initiative, the expansion of death benefits for members, and the introduction of computer and foreign language programmes schemes, he said.
Responding to Dr. Bastian’s claim that the union should reveal why it borrowed $5 million, executives said that the $5 million was the result of the consolidation of a number of outstanding loans. The union, they said, did not borrow any money.
Also appearing on Jones and Company yesterday was Quebell Rolle, BHCAWU vice-president; Lloyd Cooper, second vice-president; Leo Douglas, secretary general; and Aramentha Butler, treasurer.
By: Erica Wells, The Bahama Journal
