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UNIT TRUST DILEMMA

Newsday TT

Government is caught between Scylla and Charybdis on the question of whether to introduce the long deferred UTC Vesting Bill, which would privatise the Trinidad and Tobago Unit Trust Corporation, and have it listed on the Stock Exchange, or keep it as it is. However, it may have been offered a way out. On Thursday, Prime Minister Patrick Manning introduced a fresh factor in the equation, when he declared that Government was considering a "serious suggestion" that the Unit Trust Corporation be merged with the First Citizens' Bank. He declined to name the source of the suggestion.

The idea of privatising the Unit Trust Corporation was raised during the life of the former United National Congress Administration, but nothing concrete was done. In the 2002 Annual Report of the UTC, the Corporation's Chairman, Hubert Alleyne, has strongly come out in favour of "the passage of the UTC Vesting Bill," and describes the Bill's passage as "the mark of the high calling." Alleyne employs a biblical phrasing, and speaks of "When we enter the Promised Land after the necessary legislation is passed," offering the "hope that the present Administration will succeed in obtaining the passage of the Bill in the next three months." Earlier fears, whether justifiable or not, had been expressed that should the Unit Trust Corporation be privatised, it would come under the control of large investors, even foreign investors, unless special provisions were put in place to allow for a substantial portion of its shareholding to be reversed for acquiring by small investors and credit unions. But this may prove to be a Utopian view, as small investors, yielding to the blandishments of the large, may be tempted to dispose of their shares once there was an appreciable increase. The question arises: Was Manning's somewhat vague announcement that Government was considering "a serious suggestion," with respect to a merger of UTC with First Citizen's Bank, meant to be a broad hint that Government had no intention of divesting the Unit Trust Corporation? We wish to emphasise, however, that this should not be interpreted to mean that we are saying that the Prime Minister pulled the idea of the "serious suggestion" out of a hat.

Nonetheless, it may be viewed as a fortuitous "suggestion" by the People's National Movement Government. Alleyne in his Chairman's Review, stressed that the promise of the passage of the UTC Vesting Bill had "been made to the investing public every year for the past three years." Alleyne's was a diplomatic way born of not chiding the Administration, and hinting at the clearly heightened interest by "the investing public" in the Unit Trust Corporation. The Unit Trust Corporation, launched in 1982, has been a success story. Funds under management had risen from a first year $42 million to $3 billion 17 years later, in 1999, and to $10 billion this year, a full year before it had been initially targetted. Dividends paid out under the UTC's funds have risen appreciably. In turn, there has been both regional and international interest in the successful strategies adopted by the Corporation. Dominica was the first country to establish a Unit Trust Corporation facilitated by the Trinidad and Tobago UTC, when in July of 1999 it set up the Dominica UTC Growth and Income Fund. Within a few months the fund enjoyed an annualised rate of return in excess of 20 percent. Other UTCs facilitated by the Trinidad and Tobago Corporation, both of which were mentioned in the Executive Director's (Clary Benn) Report, were the Belize Unit Trust Corporation, officially launched this year, and a model in Nigeria, acted upon in May of last year. Yet another international plus for the Corporation is that its Chaconia Financial Services "was registered as a broker-dealer company with the Securities and Exchange Commission and the National Association of Securities Dealers in the United States." Meanwhile, the suggestion that the UTC should be merged with the First Citizen's Bank, may be seen by Government as the answer to the dilemma posed by the highlighted interest in the privatisation of its regionally and internationally recognised success story. This brings us to the question: Does PM Manning have some problem with Clary Benn, the UTC Executive Director, who has been so successful at the job? If he does he should tell us.

Trinidad and Tobago News

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