Mon | Sep 25, 2017

No screw-up - Aubyn Hill rejects claim that divestment of sugar industry was mishandled

Published:Sunday | April 3, 2016 | 4:00 AMMark Titus

Banker Aubyn Hill, who led the team which divested the loss-making sugar factories in 2011, has again rejected claim that the move was not done in the best interest of the industry.

Hill came under fire last Wednesday as prominent cane farmer Kenneth Newman used a Gleaner Editors' Forum to question how the divestment was handled and the long-term impact on the now ailing sector.

According to Newman, he was very suspicious of the divestment arrangement from it was announced and is not surprised that the local sugar industry is now in trouble.

In revisiting what transpired in 2009 when he was a member of the board of the Sugar Company of Jamaica, Newman, the owner and operator of Cambria Farms in Bog Walk, St Catherine, charged that the divestment team led by Aubyn Hill in negotiating the sale of the haemorrhaging state-owned sugar assets might have "screwed things up" for players in the sector.

"I happened to have been on the board of the Sugar Company at the time of the divestment and I will remember when I asked the board chairman what is our mandate, what do you want us to do ... he said we want you to get rid of the thing, divest it, not improve it, get rid of it," Newman told Gleaner editors and reporters.

"We had accumulated debts of more than $19 billion and we were losing $3 billion a year. Those were the figures presented to us at the board, and, of course, Aubyn Hill got the mandate and did what he could, including screwing up the market for a couple of years, profit sharing and all kinds of things ... he screwed us up," added Newman.

"He had a profit-sharing arrangement and we got a lower price than we could have received, and the farmers got no benefit from the advance money that he got to keep the factories running," declared Newman.

 

FAULTY MEMORY

 

But Hill, who is now a Government senator, said that there should be caution in making such assessment because over time memories might have failed.

"Does he have a record? The memory may be faulty or taken out of context," said Hill.

"The mandate was to divest, not manage the estate assets. The divestment team divested the sugar assets successfully and completely by August 2011, owners were responsible to manage in the almost five years since divestment," added Hill, whose appointment, role and remuneration came under much scrutiny following the divestment.

"Which advance money? ... 'screw it up' is rather subjective, especially when he has such a fuzzy understanding and memory of the divestment mandate," quipped the former banker who argued that he should be given credit for finding money from Eridania and Tate & Lyle to keep the industry going until it was divested.

According to Hill, some of the funding received to run the factories were for the payment of raw material from the farmers to the factories, and everyone was paid.

Hill had previously defended the divestment process as he argued that those who are now criticising the process clearly do not understand finances.

Hill said the problems facing the sector now should be blamed on those managing the sugar factories and not the divestment team.

The Chinese state-owned entity COMPLANT, through its subsidiary Pan Caribbean Sugar Company, captured the lion's share of the Jamaican Government's stake in the divested sugar industry, but despite investing millions of dollars over the past six years, it has failed to realise a profit and has decided to cut its losses.

Last Tuesday, Agriculture Minister Karl Samuda announced that the Government would be taking temporary control of the Long Pond and Monymusk sugar factories.

Samuda did not say how much the State would spend to ensure the factories remain operational until new investors are found.

mark.titus@gleanerjm.com