The National Insurance Board, NIB, has taken the unusual step of buying a full page in the local press to publicize a press release.  (The press release is reproduced at the bottom of this article.)

 

It is actually quite remarkable. In an odd Freudian sort of way!

 

 

The press statement and advertisement begins by stating that its purpose is to “allay some of the concerns expressed by the certain stakeholders”, implying by definition that the concerns in the public domain are unwarranted.

 

Not much “allaying” with this press release!  Though there are certainly some aspirational attempts!

 

We must say at the very start of our analysis though that we continue to have high hopes for Colin Heartwell based upon his earlier tour of duty in the TCI.  However, as the new CEO of the NIB, he must do better than let a press release such as this be railroaded past his desk.

                                                                                                   

There are three sub-heading within the press release:  On the Issue of Transparency, Investments, and NHIP Funding Claims.

 

On the Issue of Transparency

 

The press release states that the NIB is committed to transparency and that the following can be found at its website www.tcinib.tc; “including the NIB’s Mission Statement, Annual Audited Accounts, Tri-Annual Actuarial Reviews”.

 

 A quick trip to the website and one finds no annual audited accounts.  No audited accounts for 2009-2010, or any other year for that matter.

 

Tri-Annual Actuarial Reviews?  There is actually only posted the one review that Martin Stanley released to the public.  The previous reviews, especially the one before this one would be valuable to see.

 

Most importantly however the NIB press release completely ignores the main item of TRANSPARENCY that the public has been asking for, for almost two years.  An item which most public pension funds disclose; a detailed quarterly inventory of the assets (investments) of the NIB.

 

Investments

 

The press release states, “The Investment Policy Statement was approved earlier this year by the Governor in his capacity as Minister, a copy of which is likewise available on the NIB website.”

 

We examined the entire website in detail and there is no such copy.

 

The press release continues and states “As a result of the new Investment Policy Statement, the Board is, in consultation with its Investment Committee, in the process of rebalancing its investment portfolio, including its investment of funds held at domestic banking institutions.  At this point, it should be noted that the National Insurance Board does not currently have any investments, or deposits with British Caribbean Bank, formerly Belize Bank, or in any of its other related firms. Moreover, the NIB has never held deposits with that bank totaling $30 and $60 million as alleged.”

 

Good to see that the NIB has now removed its funds from the British Caribbean Bank.  Odd, in the spirit of transparency and accountability why would you not say how much was deposited in the bank if you’re going to insist on saying how much was not? 

 

We do know from a leaked copy of the chief auditor’s report that more than $23 million was so deposited as of August 2008 and still present with the Bank as of September 2009, and it was done so without formal Board approval.  Please see below a scan of the relevant page of the chief auditor’s report.

 

 

Until the NIB Board decides to reveal how much was deposited, please no condescending remarks to the premium paying public about how much was not deposited.  

 

For the sake of our pension money, as we state above, good to see that the money has been withdrawn from the British Caribbean Bank.  Hopefully someday soon we will learn why it was placed there in the first place without going through proper channels.

 

The press release states, “Of course, the NIB’s $2 million in equity investments in the TCI Bank has been permanently lost, along with the equity provided by hundreds of other TC Islanders to the Bank.”

 

Quite fascinating bit of physiological rationalization / physiological coping ; “Shucks don’t pick on us, others lost their money too!” 

 

Here one could go on for pages and pages discussing the central role that the NIB had in the founding, the scandalous operation, and in the collapse of the TCI Bank.  Yes, in one way the sentence above is accurate, the collapse of the TCI bank caused hundreds of TCI Islanders to lose their money also.  

 

The Journal’s estimate of the total amount of money the NIB will lose through their handling of the investments in the TCI Bank; $14 to $20 million dollars. 

 

We invite the NIB to share with the premium paying public their learned estimate of the full extent of expected losses.

 

NHIP Funding Claims

 

This section of the press release is actually quite fascinating.  It shows that the previous announcement by the Governor and Advisory Council on the movement of $10 million from the NIB to NHIP is not without controversy within the different parts of the government.

 

(Nice to see the NIB finally showing concern for the money its holding!)

 

Here we would like to emphatically state our position once again that the entire structure of the NIB & NHIP requires re-visioning and restructuring.  The last thing we need is a territorial turf war.

 

The press statement continues, “In one of the statements made by persons unknown concern was expressed over the statement contained in the Actuary’s report that the NIB has the potential for a $119 million shortfall in the fund by 2030 if it does not undertake a program to raise contributions, increase our investment return and reduce our operating costs. If no action is taken, such as situation could occur, but the NIB is in the process of addressing all three of these factors to ensure the fund is secure far into the future.”

 

One of our primary concerns is that attempts will be made to address the shortfall by raising contributions to an unbearable level.  We already are paying a highly regressive 14% of wages for the NIB & NHIP. 

 

The size of the problem is also the reason to raise the alarm even now. No solution will be found in isolation.  Any solution will require the entire nation to enter into a meaningful dialogue on the matter.  The sums are such that the entire purpose, structure, and approach to the NIB & NHIP must be re-visioned from first principles outwards.  Band-Aids will not work.  Major surgery is required.

 

In conclusion, rather than show a modicum of contrition, an ounce of repentance, or an iota of remorse for mismanagement and outright corruption that has cost the people of the TCI tens of millions of dollars of their pension money, the NIB instead decides to spend more of our money to buy full page advertisements to say “allay your concern”.

 

Colin Heartwell, the ball is in your court.  Ervin Quelch’s days on the Board are numbered.  It is your reputation at stake now.  Draw a solid line on the past.  Publish a copy of the inventory of the NIB’s investments as at the end of each quarter for the last few years.  Then please help explain how the General Ledger accounts in recent years could have over $1 million dollars of expenses (almost 20% of a year’s expenses) be listed under “other”.  Until then please don’t waste any more of our time or money on PR stunts.

 

 

Respectfully,

Editors@TCIJournal.com

 

NIB PRESS STATEMENT

 

A number of statements have, in recent times, been made by certain person or persons with respect to various aspects of the operations of the NIB which have hitherto gone unaddressed. In light of the growing concerns as expressed to various members of the Board by stakeholders as a result of such statements, the Board of Directors of the NIB have decided to take the unusual step of issuing the following release in responses to some of those statements and allay some of the concerns expressed by the certain stakeholders to members of the Board.

 

ON THE ISSUE OF TRANSPARENCY

 

As stakeholders are aware, the National Insurance Board is a creature of statute. Its operations and dealings with stakeholders and the public are therefore governed by and is subject to the provisions of the National Insurance Ordinance. Within that context, the Board is committed to ensuring that adequate information regarding its operations are at all times available to stakeholders and the public in general and the NIB has consistently endeavored to ensure that all relevant and pertinent information is made available through its annual report that is normally available on the NIB’s website http://www.tcinib.tc, including the NIB’s Mission Statement, Annual Audited Accounts, Tri-Annual Actuarial Reviews and information on benefits as well as information on the most recent Pension Adjustments, etc. The NIB’s 2010/11 Audited Financial Statements have, as required by law, been sent to the Governor in his capacity as Minister of the NIB. Once the Governor has arranged for such audited accounts to be tabled before the Legislative Council, presumably now the Consultative Forum, as required under the relevant provisions of the National Insurance Ordinance, they will likewise be posted on the NIB’s website. The NIB’s 2010/11 Annual Report will likely be released in December, 2011 and will again likewise be posted on the NIB website. These documents give interested persons a broad range of information on the functioning of the organization and its operations.

 

INVESTMENTS

 

In response to independent professional advice and Consultation with the Governor’s Office the NIB has adopted a new Investment Policy Statement to govern its investment activities. The Investment Policy Statement was approved earlier this year by the Governor in his capacity as Minister, a copy of which is likewise available on the NIB website. As a result of the new Investment Policy Statement, the Board is, in consultation with its Investment Committee, in the process of rebalancing its investment portfolio, including its investment of funds held at domestic banking institutions. At this point, it should be noted that the National Insurance Board does not currently have any investments, or deposits with British Caribbean Bank, formerly Belize Bank, or in any of its other related firms. Moreover, the NIB has never held deposits with that bank totaling $30 and $60 million as alleged. The NIB does have funds at risk at the TCI Bank, but we are endeavoring to recover as much of that debt as possible. The NIB is confident it will recover its $5.5 million debenture and a portion of the monies originally provided as fixed deposits. Of course, the NIB’s $2 million in equity investments in the TCI Bank has been permanently lost, along with the equity provided by hundreds of other TC Islanders to the Bank.

 

NHIP FUNDING CLAIMS

 

Under the National Insurance Ordinance, the National Insurance Board is obligated to provide employment injury benefits to eligible recipients and it has done this for almost 20 years. In addition the NIB is obliged to reimburse the TCI Government for “actual medical expenses incurred for eligible costs to qualified recipients.” The onus is and has always been on the TCI Government to submit to the NIB, claims and receipts that substantiated the medical care expenditures arising out of employment injuries. Between 1992 and 2009 the NIB consistently made a $50,000/annum within its annual budget for this purpose, but no claims were ever received from Government.

 

In 2009, the Government submitted claims totaling $837,000 and discussions were undertaken between the NIB and the Ministry of Finance regarding these claims. In the end, the parties agreed that the NIB would transfer $836,734 to the Government in exchange for all parties confirming that this was the full and final amount owed to the Government for the period 1992-2009.

 

 

In 2009/10, the National Health Insurance Ordinance modified Section 49 of the National Insurance Ordinance, mandating that actuarially accessed compensatory transfers be made to the NHIB for medical services to employment injury beneficiaries. In February, 2011 the NIB paid the NHIB $612,000, being the amount assessed by the Actuary for that year, to cover the eligible injury claims for fiscal year 2010/2011. Currently the Board is awaiting the latest actuarial analysis to agree with the NHIB on the funds to be transferred to the health care system in 2011/12.

 

The NIB strongly disagree with the NHIB’s Actuary’s position that funds placed into the Employment Injury Fund in excess of the actual injury claims must be transferred to the NHIP. The National Insurance Fund is a single fund into which the monies are deposited into four categories to ensure that persons will receive the benefits to which the ordinance entitles them to receive. Today there is more money in all four categories than is immediately required, but as the fund matures over the years, these monies will be needed to ensure we provide the full range of benefits to all the eligible beneficiaries. The four categories in the National Insurance Fund are there to show that we are treating each area with high priority and were never designed as discrete funds whose monies cannot be shifted between uses. The National Insurance Board is determined to protect the National Insurance Fund from unwarranted efforts to transfer funds to the health care system.

 

In one of the statements made by persons unknown concern was expressed over the statement contained in the Actuary’s report that the NIB has the potential for a $119 million shortfall in the fund by 2030 if it does not undertake a program to raise contributions, increase our investment return and reduce our operating costs. If no action is taken, such as situation could occur, but the NIB is in the process of addressing all three of these factors to ensure the fund is secure far into the future. Any effort by third parties to compromise those goals will obviously make it more difficult to meet that target and provide benefits to the people of TCI.

 

 

The potential losses from the TCI Bank is a big challenge and the current demands for NIB to reduce the Fund by a further $22 million to pay for matters unconnected with the core functions of the NIB will be detrimental to our beneficiaries. In 30 years these withdrawals would translate into a $40 million

 

shortfall in our investment income or about 1/3 of the Actuary’s potential shortfall. The NIB Board and Management believes that the Government should solve its debt and health care issues through a different approach than simply taking the people’s pension funds and using them as a stop gap measure to fund the financial crisis.

 

 

By order of the Board of Directors

TURKS AND CAICOS NATIONAL INSURANCE BOARD