SHAL­IZA HAS­SANALI

Last June, a Pub­lic Ac­counts (En­ter­pris­es) Com­mit­tee (PAEC) in­to the ex­am­i­na­tion of the Na­tion­al En­tre­pre­neur­ship De­vel­op­ment Com­pa­ny Ltd (NED­CO) au­dit­ed ac­counts, bal­ance sheet and fi­nan­cial state­ments dis­cov­ered that the com­pa­ny had paid out $66 mil­lion in “bad loans” for the pe­ri­od 2016-2017.

Ap­pear­ing be­fore a 2017 PAEC, the State-owned com­pa­ny had al­so re­port­ed a “bad loans” loss of $94 mil­lion be­tween 2008 and 2014.

These bad loans amount­ed to $160 mil­lion of tax­pay­ers’ mon­ey over a nine-year pe­ri­od.

Sev­en months af­ter the last PAEC meet­ing, chair­man of NED­CO, Clar­ry Benn, be­lieves Gov­ern­ment may have to con­sid­er writ­ing off a com­po­nent of its mul­ti-mil­lion dol­lar debt in­curred by its bor­row­ers who have ei­ther died, mi­grat­ed, gone miss­ing, or are no longer in busi­ness.

These debts, Benn said were like an al­ba­tross around the neck of the com­pa­ny, stat­ing that once they are writ­ten off, it would make NED­CO’s bal­ance sheets look pre­sentable.

Benn made the com­ment dur­ing a tele­phone in­ter­view with Guardian me­dia, as the com­pa­ny re­cent­ly launched a search for 16 ve­hi­cles be­long­ing to loan de­fault­ers in a bid to re­cov­er sig­nif­i­cant sums of mon­ey owed to NED­CO.

When Benn as­sumed of­fice in 2015, he said its board found that NED­CO had a “huge non-pay­ment com­po­nent” and their loan port­fo­lio was poor.

“The delin­quen­cy lev­el at NED­CO was ex­treme­ly high and we had to deal with that. And that still re­mains our num­ber one prob­lem to­day. We are grad­u­al­ly im­prov­ing the qual­i­ty of our loan port­fo­lio.”

To clamp down on delin­quent pay­ers, NED­CO es­tab­lished a Cred­it Risk De­part­ment to en­sure ap­pli­cants ser­vice their loans.

NED­CO has over 1,000 clients on its data­base.

Last year, NED­CO ob­tained $28 mil­lion in Gov­ern­ment fund­ing.

This year, the com­pa­ny was al­lo­cat­ed $24 mil­lion.

“Since then, we have been wag­ing a war on that. So, we have been able to re­cov­er a fair amount of what was owed and our delin­quen­cy has been re­duced con­sid­er­ably. It is not where we want it to be just yet be­cause COVID didn’t quite help.”

While NED­CO has been try­ing to cre­ate a re­spon­si­ble group of bor­row­ers, Benn said their out­stand­ing debt is “still huge” amount­ing to “mil­lions of dol­lars” ad­mit­ting the com­pa­ny “in­her­it­ed a lot of bad debts.”

He holds the view that a por­tion of that debt “NED­CO will nev­er get back” as many of its bor­row­ers have ei­ther died, mi­grat­ed, can­not be found, or no longer op­er­ate their busi­ness­es.

There were in­stances, Benn said where peo­ple were grant­ed loans with­out col­lat­er­al.

Benn could not say how many bad pay­ers were on NED­CO’s records and what their es­ti­mat­ed cred­it loss was for 2018 to 2020, as their fi­nan­cial books are still be­ing au­dit­ed.

“The ob­vi­ous ques­tion which faces NED­CO now is what do we do with that bunch of debt?”

Pressed if NED­CO was mov­ing to write off these out­stand­ing loans, Benn said the com­pa­ny “can­not write off those debts be­cause they still re­main loans on the books of NED­CO and we have to deal with that. The out­stand­ing is so sig­nif­i­cant that it will con­tin­ue to be like an al­ba­tross around the neck of NED­CO for some con­sid­er­able time un­less there is some con­sid­er­a­tion by the State, to have, if not all, much of this hard­ened debt writ­ten off.”

He said to write off spe­cif­ic debts would make the bal­ance sheet of NED­CO “look much bet­ter.”

On­ly the Min­istry of Fi­nance or cor­po­ra­tion sole, Benn said can write off these bad loans.

Ques­tioned about the $160 mil­lion in “bad loans” NED­CO dis­persed Benn said he was fa­mil­iar with the fig­ures which were ref­er­enced from a Price­wa­ter­house­C­oop­ers re­port.

Benn said NED­CO in­her­it­ed a sit­u­a­tion that was mis­er­able.

“There have been all kinds of es­ti­mates as to the true ex­tent of the bad loans.”

NED­CO, Benn said is cur­rent­ly quan­ti­fy­ing these fig­ures, stat­ing for each year there is al­ways an “es­ti­mat­ed loan” out­stand­ing.

He said the fi­nal “bad loans” fig­ure may not be “as ter­ri­ble or as hu­mon­gous as those num­bers” quot­ed.

In fact, he said the num­bers re­port­ed were an “over­state­ment.”

Last year, NED­CO pro­vid­ed un­der 300 new loans to clients amount­ing to al­most $10 mil­lion.

Benn placed NED­CO’s loan pro­jec­tion for this year at $22 mil­lion

“We had been able to re­cov­er. Be­cause of that, we would see some new num­bers...small­er num­bers emerg­ing which would make the bal­ance sheet and even the in­come state­ment not look as bad as they were look­ing be­fore.”

In 2002, NED­CO was es­tab­lished by the Gov­ern­ment to pro­vide fund­ing and train­ing to start or en­hance mi­cro, small and medi­um en­ter­pris­es.

NED­CO which falls un­der the purview of the Min­istry of Youth De­vel­op­ment and Na­tion­al Ser­vice of­fers loans up to $250,000 for first-time bor­row­ers and $500,000 for re­peat bor­row­ers.

The in­ter­est rate on these loans is eight per cent.

Since its in­cep­tion, Benn said the com­pa­ny has pro­vid­ed 13,862 loans val­ued at $408 mil­lion.

Benn said NED­CO pro­vides three months mora­to­ri­um for busi­ness own­ers who are un­able to pay their loans.

“We try to as­sist in every way pos­si­ble.”

Benn drew ref­er­ence to the re­cent ac­tion tak­en by NED­CO to re­cov­er mon­ey owed by bor­row­ers who have not been ser­vic­ing their loans.

Late month, NED­CO on its Face­book page sought the pub­lic’s help in lo­cat­ing 16 ve­hi­cles be­long­ing to busi­ness own­ers who took loans from the com­pa­ny us­ing their ve­hi­cles as col­lat­er­al.

These bor­row­ers have not been pay­ing their month­ly in­stal­ments nor can they be found by NED­CO’s Re­cov­er­ies De­part­ment to re­trieve the out­stand­ing pay­ments.

Once the ve­hi­cles are lo­cat­ed, they will be auc­tioned to re­cov­er the sums owed.

“It’s a clear case of clients con­scious­ly and de­lib­er­ate­ly at­tempt­ing to hide their as­sets which they have pledged as col­lat­er­al. If they don’t want to pay, we have re­course.”

With the help of the pub­lic, NED­CO was able to seize a few ve­hi­cles re­cent­ly.

“Yes, we lo­cat­ed a few of the ve­hi­cles. As a mat­ter of fact, one of the de­fault­ers called me on Tues­day ask­ing for for­give­ness. I couldn’t him help,” Benn said.

Up­on ques­tion­ing the busi­ness­man, Benn said the man was grant­ed a loan in 2008.

Last year, Benn said NED­CO col­lect­ed $3.8 mil­lion in debts.

Over an eight-year pe­ri­od, Benn said NED­CO was able to re­cov­er “be­tween $15 and $16 mil­lion” in monies owed. “We are mak­ing a se­ri­ous ef­fort to re­cov­er what is owed to us and they (bor­row­ers) are feel­ing the heat and hid­ing their ve­hi­cles. So, it is an at­tempt at dis­hon­esty. They are now be­ing smoked out.”

NED­CO al­so ad­ver­tised on its page four ve­hi­cles for sale and ap­pealed to over 150 busi­ness own­ers to con­tact its Re­cov­er­ies De­part­ment with­in ten days “to dis­cuss mat­ters of mu­tu­al in­ter­est.”

Benn said the Re­cov­er­ies De­part­ment has been try­ing to cleanse NED­CO by in­sti­tut­ing a range of pol­i­cy mea­sures ap­proved by the Fi­nance Min­istry.

“We are en­sur­ing there is tidi­ness, con­sis­ten­cy and ac­cu­ra­cy in what we do. We have been able to curb spend­ing.”

The posts al­so gen­er­at­ed some neg­a­tive fall­out for NED­CO, as the com­pa­ny was ac­cused of al­leged­ly of­fer­ing friends, fam­i­ly and sup­port­ers of the Peo­ple’s Na­tion­al Move­ment (PNM) loans and not do­ing prop­er checks and bal­ances.

How­ev­er, Benn de­nied this has hap­pened un­der his watch.

“I would like them (the pub­lic) to iden­ti­fy who these peo­ple are,” Benn said, in ref­er­ence to loans al­leged­ly grant­ed to PNM sup­port­ers.

“This is Trinidad and To­ba­go. Noth­ing you do in this coun­try will be ap­pre­ci­at­ed by many. There will al­ways be haters about the place. I does al­ways say if Je­sus Christ comes down here... there would be peo­ple who would want to cuss him.”

Asked if NED­CO was a char­i­ty house, Benn fired back “that is non-sen­si­cal. I would chal­lenge that any time. This is the peo­ple’s mon­ey, you know, not ours. This is tax­pay­ers’ mon­ey.”

He said NED­CO pro­vid­ed loans to hun­dreds of busi­ness­es many of whom are suc­cess sto­ries.

An op­ti­mistic Benn said “you mark my words, NED­CO will be a ma­jor con­trib­u­tor to the eco­nom­ic and com­mer­cial land­scape of T&T over the next year. This year is ex­pect­ed to be a bumper year for NED­CO.”

Go­ing for­ward, Benn said NED­CO will seek to mul­ti­ply its loan port­fo­lio sev­er­al folds to en­able them to earn a suf­fi­cient in­come to meet its ex­pens­es.

As it stands, he said NED­CO’s earn­ings are in­ad­e­quate to meet their cost of op­er­a­tions.