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“When politics is involved in business, they don’t thrive. In most of these companies… there is a significant inflow of politics.” Gokool Seemungal, National Enterprises Limited (NEL) shareholder.
“We adhere to the philosophy that cash in the shareholders’ hands has greater value than ours.” Ingrid Lashley, chair of National Enterprises Limited (NEL).
“When we look at all that we are doing here in the energy sector, I want to know to what extent those directors have any experience…in the energy sector, which is meant for our national development.” Patrick Edwards, National Enterprises Limited (NEL) shareholder.
(All quotes, Newsday, 7 June 2024)
The furore at the National Enterprises Limited 2024 Annual General Meeting foreshadowed the pitched battle between the One Caribbean Media (OCM) board and the largest single shareholder, Corporation Sole, via the National Investment Fund.
Unfortunately, the intervention by Senator Wade Mark has added no light. The debate has been structured as one of press freedom. The OCM Board held that adding two government representatives was an attempt to influence the media unduly.
What should we make of this response?
Press freedom essentially means that the government is held responsible for their actions. An independent news media uses its watchdog role to investigate and report on government overreach and wrongdoing and hold those in power accountable for their actions.
We get to choose what to listen to or watch. An informed nation makes better decisions about its future. The ‘give and take’ discussions and commentary allow us to form opinions about the alternatives that face us.
In many ways, news reporting creates the ‘first draft’ of our history.
With the rise of social media reporting, it is naïve to believe that the legacy media holds the key to press freedom. This situation is worsened when our mainstream newspapers report the same “breaking stories”. They generally publish later than the agile social media posters, which also supply video clips.
Vaneisa Baksh made some observations worthy of consideration.
“It seems to me that the newspapers have to reconfigure themselves, bearing in mind that the news they present is hardly exclusive, and what would make them stand out is the quality of their features.
“In this category, I include columnists… Newspapers, like so much else in our wretched societies, have been defined in minds that cannot budge from outdated notions.
“That mental stodginess is easily responsible for the rise of the quacks who offer opinions that are so devoid of intelligence that one would be tempted to see them as attempts at buffoonery were it not for the chilling consequences.”
In that context, should you accept Ms Baksh’s position, the other questions which should occupy our minds are:
Why does Corporation Sole, the entity in which all the shares owned by the state are lodged, want to appoint directors? Why not sell the shares to align with the Strategic National Objectives set out by the 2011 Ministry of Finance guidelines?
OCM is not a strategic national asset.
The ordinary NEL shareholders understood that politics does not have an excellent influence on business. They also understood that the choice of board directors contributes directly to the share value.
At the his side are chair Faarees Hosein (second from left) and CEO Dawn Thomas.
Photo: Curtis Chase/ Trinidad Express
Will the two new directors enhance the Group’s performance? How are we, the country, to navigate the current tight economy? Should we allow the Corporation Sole to get more influence and set dividend policy to bolster the national budget?
To achieve clarity of thought, we have to separate the actions of a particular administration from the national interest.
“The state is said to be permanent, outliving political parties and spanning many generations. The government, however, is the team of political officials who take office after an election with the task of running the state in the national interest.” Afra Raymond, May 2016.
Photo: OPM
At the next elections, we will vote on whether we agree with what is being done, and then the course of action can be reversed.
Mr Shakka Subero’s day job is to help his employer have smooth relationships with the government. His proposed role at OCM is to help the government better control the dividends and other policy issues. The skills are not equivalent: the only one in common is that his party card must be shiny.
On the OCM Board, he may pose a disadvantage to the other shareholders because of his day job.
Is he to be Ms Lashley’s equivalent in OCM? What skills does Subero bring to improve the company’s fortunes? Notably, while the state has 23% shareholding, the other significant shareholders collectively have 37%.
Should the state own shares in a media company? Will it do better than it does with TTT, and for which the nation has not been given annual reports in a timely fashion?
In 2011, the Ministry of Finance said: “State participation in commercial enterprises would be limited to those activities which meet strategic national objectives, and which cannot be achieved through the legal, regulatory, institutional, or incentive framework.”
(Copyright Alva Viarruel/ AFP)
OCM does not qualify as an enterprise of “strategic national interest”.
But Ms Lashley gave away the plot—there is a need for dividends to fund the ongoing government’s programmes. This need for dividends resembles how Kamla Persad-Bissessar’s administration milked the National Gas Company when it paid $2.1 billion in dividends in five years.
The national community should be asking about this strategy. Should the vast shareholdings held in trust be used by the Corporation Sole to bridge the shortfall in budgeted income? What are the guardrails needed?
The importance of Massy to the pensions paid by the National Insurance Board has been note.
Mr Brian Manning, minister in the Ministry of Finance, argued: “…the people’s shareholding, in OCM, reduced in value by over $100 million, with no sign of a recovery in the value in the near future under the present board.
“It is now considered necessary for the largest shareholder in OCM to be present in the corporate decision-making at the company.”
This argument is derived from a fundamental analysis perspective. Fundamental analysis looks at anything that can affect the share’s value, from macroeconomic factors, such as the economy and industry conditions, to microeconomic factors, like the effectiveness of the company’s management.
Essentially, he is saying that the current Board and management are not doing well.
In response, the OCM Board argues that there has been price manipulation. This argument is on the technical side of share valuation. The Board complained to the Stock Exchange in 2020, and this charge appears unresolved.
However, the other unresolved issue is whether a minimum volume must be traded to effect a price movement in a publicly listed stock on the TTSE. Our local stock exchange is illiquid and has several market inefficiencies, which result in significant market price movements with small-volume trades.
Why have successive governments not fixed this problem?
Bourse, a local stockbroker, noted in April 2019 that OCM faced profitability challenges.
“The Group’s revenue generation remains highly influenced by the cyclicality of media events such as sporting and election activity. A more competitive market environment has adversely affected profitability due to the growing popularity of more cost-effective advertising through social media and other digital avenues.”
It was reported then that OCM had embarked on strategic transformational initiatives to improve operational efficiency and take advantage of the new digital landscape.
Sadly, we do not know whether these steps are bearing fruit. The reason? The media industry benchmark study was last done in 2014.
Since then, Market Facts & Opinions (2000) Ltd (MFO), the supplier of that data, has engaged fruitlessly the industry leaders for seven years.
In 2018, MFO funded a pilot study and reported to the industry leaders that smartphones and social media had changed the media landscape. It did not move the industry leaders, including the OCM group, to action.
Maybe Mr Manning has a point. The fundamentals of the business are not being taken care of by those in charge. But Mr Subero is not qualified to help.
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