Gabb: no red flag in Godfrey?s role
On last night?s newscast we ran a clip from a session in which the bosses at the Development Finance Corporation and Social Security Board met with the press to explain exactly what transpired between those two institutions with respect to a set of loans bundled for securitization and sale by D.F.C. and guaranteed by the S.S.B. According to both Troy Gabb and Narda Garcia, the loans, originally made by Glenn Godfrey, were extensively vetted by the purchasers, who found nothing amiss.
Troy Gabb, CEO, Development Finance Corporation
?At the point in time when the transaction was being conceived, I understood that quite a bit of due diligence took place. This was a United States bond issue and there were quite a bit of entities involved in terms of vetting the transaction. One, as far as my knowledge, is that the Moody?s vetted the transaction so that they could apply a rating to it. There was Fitch, also another rating agent vetted the transaction; Deloitte and Touche, Cayman, vetted the transaction. In addition to the arrangers and the investors and the insurance that wrapped the transaction to make it an A class bond, vetted the entire transaction, which included all the cash flow projection and the assets that were backing the particular transaction. So, as far as we?re concerned from an investor bond stand point, all the necessary due diligence was done on the particular transaction prior to it going to the market. And in addition to that going to the market, then the investors came down and did their own level of due diligence; kicking the tires and making sure that they were happy with the transaction. So that?s the general position in terms of the two particular loans.?
?In reference to the transaction and how it was structured, I think it has quite a bit of level of guarantees built in. One is that it has an insurance. So it?s wrapped by an insurance in the event of any overall default. There is also the government support and also in there, is the support from the B.S.S.B.. I gather that was the structure of the transaction at that point in time. Maybe in hindsight now, you could say well there should have been a situation maybe if it was possible to get the B.S.S.B. not to be included or for them not to have a level of support for the transaction; that they should not be included. That is something that maybe in hindsight, as the Minister said maybe they shouldn?t have done in the point in time when the transaction was drafted.?
While, according to Gabb, the foreign investors saw no problem with the loans they were buying, people here have questioned the fact that the man who borrowed the seventeen million dollars from the St. James Building Society, Glenn Godfrey, was the same man who was behind the Building Society?s formation…and also the very same man who chaired the D.F.C.–the body that organised the loans? securitization for sale on the foreign market. Did that obvious conflict of interest raise any red flags in the mind of the D.F.C.?s Chief Executive Officer?
Troy Gabb
?Mr. Godfrey was the Chairman at the time; I can?t say exactly whether or not it was because he was the Chairman, this was placing. It was a project that St. James had; that they had planned to improve this particular asset and at that point in time when the transaction was concluded, everybody was of the understanding that when he gets the funds, he will put it in proving the facility. And that is the premise of what the transaction was done at. The investor basically bought the transaction under that circumstance. It wasn?t D.F.C.?s money per say or it wasn?t B.S.S.B.?s money; it was the investor…?
Stewart Krohn
?But Mr. Gabb, the investor, as long he sees this loan or this securitization is being guaranteed by the GOB, S.S.B. and an insurance policy; he doesn?t care what the money went to.?
Troy Gabb
?As part of the transaction, they did their due diligence and the assets as well.?
Stewart Krohn
?What due diligence you have to do except to know that the guarantee by GOB is real, the guarantee by S.S.B. is real, and that the insurance policy is paid up? If you were the investor isn?t that all you?d care about??
Troy Gabb
?As far as I know the transaction required that the assets had their due diligence as well and I think everybody did their due diligence and listed all the different components that came into play. And as a result, everybody was comfortable with the transaction.?
Stewart Krohn
?You are still comfortable with it??
Troy Gabb
?As far as the entire securitization, of course.?
Stewart Krohn
?You would get involved in another transaction like this with Mr. Godfrey??
Troy Gabb
?I would probably supervise it much closer.?
