Communications to investors in the Gibraltar Savings Bank [GSB] should avoid any political content, especially that which is party political. Investment decisions should also not be led by the needs of the public purse.
There is no getting away from the fact that Sir Joe Bossano, Minister for Economic Development, Telecommunications & the GSB, politicised his last circular to GSB depositors, so criticism is valid from the Gibraltar Social Democrat Opposition [GSD]. He did so in his references to GSD MP Roy Clinton, Shadow Minister for Public Finance and the Savings Bank.
The GSB Director may wish to engage with Sir Joe on this issue and place his/her position on subject in the public domain, after all he/she has responsibilities and obligations.
PAYING FOR RISING PUBLIC COSTS
Further, it is additionally worrying when, in the GSB circular to savers, the signatory, Sir Joe admits that the GSLP-Liberal Government is:
“… implementing the policy of expanding the bank’s operation to increase savings and deploy them for the benefit of all taxpayers in Gibraltar, since the deployment of funds into our economy produces, at one stage or another, increased revenue used in meeting the rising cost of public services.”
Where does safeguarding the investment of savers come into that statement? It seems that political expediency and opportunism may lead in making GSB investment decisions.
GSB SAFE HAVEN?
The investment strategy explained by Sir Joe, and one assumes approved by the Director, whose identity is difficult to find, with the attendant potential liability, is not why savers put their money into the GSB.
The GSB is considered by savers as a ‘safe haven’ for their money. The sophistication of savers does not extend to understanding that the offer of higher than market value interest rates indicate a higher risk.
Sir Joe’s letter points to higher risk rather than safety. It also confirms that there is a subjective focus, enhanced by Sir Joe’s conflicting roles as a government minister and within the GSB, on lending to government owned or connected companies and entities.
Perhaps that could be mitigated by the Director.
A concentration of lending of that nature increases risk also as the ultimate debtor is one and the same, namely the public purse, which is every one of us, especially as guarantors of savers money in the GSB.
UNHEALTHY
Such GSB lending is an unhealthy concentration of risk when direct public borrowings are in themselves high already, and public finances are running at a loss or tiny surplus.
To add to the risk, an economic downturn is forecast to be approaching, whether there is a Gibexit treaty or not. The probability of no treaty, with the even greater risk that brings with it, is gaining momentum. One imagines the GSB Director has taken all that into account in making investment and lending decisions. Or following and implementing those taken by Sir Joe.
Those Gibexit consequences will reduce public revenues needed to pay “… the rising cost of public services”, or from which public debt and that owed to the GSB, namely indirect public debt, can be met.
At some point the cost of public services will need to be controlled and reduced, perhaps the imminent Budget will reflect that need. Hopefully it is not too late to avoid increases in taxes.
POLITICS
What greater admission of involvement by Sir Joe, and so the GSLP-Liberals, of the GSB in party politics than the use in his GSB letter to savers of the phrase:
“It is quite extraordinary that Mr Clinton from the opposition seems to expect us to implement the GSD policy that was and is to use the money you place in the Savings Bank to buy loans of companies quoted in the London Stock Exchange or to keep it in commercial bank accounts at low interest… we reject their policy…”.
Yes, it is he who uses the word POLICY twice. Additionally, how can he divorce his functions within the GSB and as a minister in circumstances where he is deploying GSB savers money so clearly to further GSLP-Liberal Government policies. What view does the Director of the GSB have on subject?
MINISTERIAL CODE BREACHES?
The GSD has suggested that Sir Joe’s letter to GSB savers seems to breach the ministerial code, as being “highly party political”. The suggestion is that the letter breaches the requirements that ministers should not use official facilities and resources to spread party political propaganda.
Roy Clinton said, “… the important issue of principle [is] that he [Sir Joe] should not use his office to issue part-political communications to depositors of the Bank… To use its resources to disseminate party political opinions is simply wrong.”
Sir Joe seems to admit the breach in his reply by denying that he “attacked” Mr. Clinton and admitting that he was informing savers of the GSD ‘policy’ whilst in Government, i.e. politics.
BREACHES DENIED
The GSLP-Liberal Government blandly denied the accusation saying: “The message sent to depositors cannot, therefore, be seriously described as dissemination of party-political material.”
If the references to Roy Clinton cannot be described as such, what can they be described as? Undoubtedly all the other information, unrelated to Roy Clinton, in the letter in question is not party-political material, but that does not put right any wrong.
The Government, in its replies on the controversy, again uses its usual tactic of distraction and not tackling the central argument raised by the GSD.
TRANSPARENCY AND ACCOUNTABILITY
The Government argues that: “It is a reflection of his [Sir Joe’s] dedication to the people he serves, the depositors whose money the Savings Bank manages and the principles of transparency and good government that he and the Government are committed to.”
The GSD, via Roy Clinton, counter that by saying:
“He [Sir Joe] was the one who described the funding of his National Economic Plan as being a financial jungle.”
“He is the one who will not tell me exactly how money from the Savings Bank is being directed to projects.”
“He is the one who tells Parliamentary colleagues to ‘lump it’ when he refuses to answer questions.”
“He is the one who refuses to gazette the audited accounts of the Savings Bank.”
So where is the transparency and accountability that the GSLP-Liberal Government boasts about?
REGULATION
All in all, an unsatisfactory situation impacting on all who have savings in the GSB.
Perhaps the argument over the GSB could be put beyond worry by it voluntarily submitting to a full inspection and review by the Gibraltar Financial Services Commission [GFSC].
The GSB is not regulated like every other bank and investment/financial institution by the GFSC or any other regulatory body. Perhaps, it should be. The Director may wish to consider that to safeguard his/her own position.
Llanito World 