Divestment - on again and off again

The divestment of the Caymanas racing complex is once again the subject of discussion. This matter came up during the public sector adjustment discussions at committee level.

One of the important comments made during those discussions held at the meeting of September 8 was that there seemed to be no urgency to the execution of this long-outstanding policy decision. It was suggested that the matter should be treated with exigency and a committee formed to finalise this matter within a specified time deadline. Since then, nothing has happened and we all fear that it will be business as usual.

Flawed request

Those in the industry will recall that the stated purpose for Government acquiring the assets in 1983 was to restructure the business so that it could be divested with adequate assurances for capital injection. When the government changed in 1990, a major lobby was mounted by the anachronistic democratic socialists who convinced the 'old guard' not to pursue the divestment route. This was only revived in 2006 when the National Investment Bank was asked to prepare a Request for Proposal (RFP) for divestment. This request was put together by people ignorant of business and was flawed in concept. This RFP got only two responses, neither of which was found acceptable.

The need for major capital injection is a priority, as each day the situation deteriorates even further. The Government needs to treat as a priority the establishment of a committee mandated to complete divestment within a determined time frame. This should be treated with no less importance than the divestment of the sugar industry and Air Jamaica. Some time ago I wrote about my experience with the divestment of an important government entity. It is worth reminding you of how that was handled. I wrote then:

"On the subject of divestment, I would like to share with you my experience with the recent divestment of a wholly owned government company of which I have been chairman for a number of years. I don't know how many of you saw the report that came out in the press some time in August. Excerpts of that release make interesting reading:

"The Government of Jamaica is pleased to announce the restructuring of the state-owned National Rums of Jamaica Ltd., (NRJ) the holding Company of Clarendon Distillers Ltd, Long Pond Distillers Ltd and Innswood Distillery Ltd (collectively the NRJ Group).

"Under agreements signed with Demerara Distillers Ltd of Guyana, the West Indies Rum Distillery Ltd (a subsidiary of Goddard Enterprises Ltd of Barbados) and DIAGEO North America Inc (a subsidiary of Diageo PLC the world's largest Spirit Company), the three investors will bring new equity investments totalling US$5.368 million to the NRJ Group.

"With the injection of this new capital, Demerara Distillers Ltd, the West Indies Rum Distillery Ltd and the state-owned National Sugar Company Ltd will each own 33.3 per cent of the shares in NRJ. NRJ will hold 73 per cent of the shares in Clarendon Distillers Ltd at Monymusk, with 27 per cent held by Diageo North America Inc, through its subsidiary Trelawny Estates Ltd. Long Pond Distillers Ltd and Innswood Distillery Ltd will continue to be wholly owned subsidiaries of NRJ.

"This New Investment Capital, along with funding from the European Union's Integrated Development Programme for the Caribbean rum sector, will be utilised to finance a major modernisation and expansion programme of the NRJ Group. NRJ, which is a leading supplier of Jamaican bulk rum, is also looking to develop a brand portfolio in order to facilitate its entry into the value added market.

"The board of directors of NRJ will be restructured to include representatives of the new investors, and we wish to record our thanks to the long-standing outgoing chairman, Mr Howard Hamilton, who has kindly consented to remain on the board. Mr Evon Brown will also continue as group CEO and a director of NRJ and its subsidiaries.

"This new venture represents a significant step towards increasing the output of the Jamaican and therefore Caribbean rum industry, while ensuring that quality, competitiveness and the highest international standards are maintained. This also represents a significant movement towards the consolidation of the Caribbean rum industry and totally accords with the objectives of the Caricom Single Market and Economy.

"I have reproduced that press release to show what forward thinking can produce when there is vision and purpose. None of this would have been possible without the full understanding and cooperation of the minister of agriculture, who has portfolio responsibility for National Rums. Why can't Caymanas Park and the racing interests be treated in the same manner? Is it any wonder that I keep asking for the portfolio responsibility of racing to be transferred? There is certainly more agricultural activity in racing than financial matters. Tax can be collected in much the same manner as is done with any other business activity."

That was written in 2006 and the company is today in a very profitable position. We have built a state-of-the-art distillery and are now globally competitive.

Let us stop talking and bring this matter of the divestment of the Caymanas racing complex to a speedy conclusion. Remember that while Nero fiddled Rome burnt.

Howard Hamilton is the former chairman of Caymanas Track Limited and is currently the president of the Jamaica Thoroughbred Owners and Breeders Association. He may be contacted at email: howham@cwjamaica.com.