Bermuda's Finance Minister
Denies 60/40 Deal
This story is reproduced by kind permission of the Royal Gazette athttp://www.accessbda.bm
Finance Minister Eugene Cox has categorically denied that a deal had been done with any of the banks to exchange political favours for 60/40 exemptions.
In an article in Friday's Mid-Ocean News it was implied that one of the banks had been offered a "quid pro quo" deal by the Progressive Labour Party Government.
The article said that any lifting of the 60/40 rule - which limits the foreign ownership of local companies to 40 percent - involved the "bank's facilitating the fast-tracking of black Bermudian entrepreneurs who want to enter the traditionally white-dominated retailing and wholesaling mainstream".
The article says that the local importers and owners of the Phoenix stores, Bermuda General Agency (BGA), was sold for $12 million to black entrepreneur Wendall Brown, and it was implied that either Bank of Bermuda or Bank of Butterfield had loaned the money in return for an exemption.
Mr. Cox said: "This is nothing I know of. When I saw the headline I thought it was interesting, but I knew nothing of it. It is ludicrous to think that we had anything to do with it. Ludicrous.
"I categorically deny any involvement with this." Neither bank would say if it had given the money to back the deal. Bank of Butterfield would issue no comment on Friday, and a spokesman for Bank of Bermuda said: "We are not going to comment and do not wish to respond to this."
The article by veteran journalist Patricia Calnan, was headlined "Shock multi-million dollar BGA sale."
Ms Calnan, who said her sources for the story were reliable and came from various sectors, reported that Ward Young had sold the business which was founded by his family at the turn of the century for more than $12 million.
The story said that Mr. Brown ran a betting shop, and had an unnamed source stating the "deal was a curious one".
The Mid-Ocean reported that the BGA was predominantly a pharmaceutical business which became part of the US Rexall Drug Company in about 1914 and diversified in to the wholesale as well as retail business, selling toys, books, magazines and cards as well as groceries.
It stated the "source" said that the deal had received "huge" financial backing from an unspecified local bank.
The source was quoted as stating: "It seems that this has been just one of several deals being pursued by the Progressive Labour Party Government as part of its determination that more major businesses come under black ownership."
The article read: "The BGA deal is seen as just one thrust in efforts to diversify ownership of the local economy prior to a planned relaxation of the 60/40 Bermuda ownership regulations. The two main local banks - The Bank of Bermuda and the Bank of N.T. Butterfield - are in the forefront of efforts to achieve this. It is understood that the PLP Government's quid pro quo for any such lifting of the 60/40 rule involves the banks facilitating the fast-tracking of black Bermudian entrepreneurs who want to enter the traditionally white-dominated retailing and wholesaling mainstream."
The Mid-Ocean News also claimed that there was "considerable" dissension within the ranks of the PLP over this approach, and said the source told the newspaper that many PLP backbenchers were concerned by the lack of discussion over the 60/40 issue "even within their own party".
Mr. Cox has promised to look into the relaxation of the ownership rules for the banks to allow more foreign investment.
The Bank of Bermuda wants exemption to allow it to list on the Nasdaq which the bank says will boost shareholder value, and Bank of Butterfield has also applied for an exemption.
So far there has been no announcement on whether the exemption will be allowed.
IMPORTANT NOTICE: Bermuda.org.uk has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. Bermuda.org.uk is not an official or authorised Bermuda police web site.