Moss: If BEC is broken, look at where it first took place
Accepting the findings of the 2010 report by German consultancy firm Fichtner, the chairman of the Bahamas Electricity Corporation (BEC) says you have to understand the genesis of the issues that BEC is now struggling to address if you’re out to affix blame.
While the performance of Michael Moss has recently come under intense scrutiny by Al Jarrett, the former head of BEC, the current chairman says BEC is struggling to fix legacy issues the company has inherited.
“If BEC is broken, you have to look back and determine when that break took place,” Moss said yesterday. “If you see a fellow hobbling around with a broken leg, it could have been broken many years ago.”
Speaking candidly, Moss said he did not wish to perpetuate a media squabble that ultimately does nothing to fix BEC, particularly with public information readily available to refute many of the charges and claims presented. That said, Moss told Guardian Business he wished to provide his insight on a few crucial matters.
“[Jarrett] made the point that BEC never had a loss while he was chairman. Well, that’s a technical truth,” Moss said.
“… BEC did not report a financial loss ($2.9 million) until [the] financial year ended September 30, 2006 by which time Jarrett had been sent packing to the Bank of The Bahamas and had been replaced at BEC by Keith Major,” Moss told Guardian Business.
Moss directed Guardian Business to the 2006 PA Consulting report. Describing BEC’s current situation, the report said that although net income was positive, in the $10 million range, “other aspects of BEC’s financial performance have deteriorated to what [in many companies] might be called a ‘danger zone’.”
While Jarrett may not have been in the chairman’s seat by the time BEC’s losses were reported, there were indictments against the financial performance during his tenure in the 2006 report.
According to PA Consulting, the corporation experienced negative cash flow of over $7 million during 2003/2004. Liquidity has been a critical issue leading to many of BEC’s financial woes, with Moss saying you can’t starve an organization of cash.
The 2006 report also highlighted bank overdrafts and demand bank loans which had grown to represent more than two months’ revenues, current liabilities that “substantially” exceeded current assets, accounts payable that were “far higher” than accounts receivable, and government overdue accounts receivable which had grown to $35 million.
BEC also showed a gain of $14 million from the sale of Cable Bahamas shares in 2005, contributing significantly to the $15.3 million net income achieved that year. Profits would have been dramatically reduced otherwise.
In a previous article, Jarrett explained that a tariff reduction under his charge was done at the request of Bahamas Hotel Association members, with the macroeconomic implications of a less competitive tourism industry factoring heavily on the decision. PA Consulting called that 11 to 17 percent reduction beginning in 2003/4 a “complication” to the corporation’s situation at the time.
Moss said he was willing to ‘take his licks’, but only when they were warranted.
“BEC has significant financial challenges, no question about it,” Moss said. “Is everything at BEC fixed? No, not by a long shot. But it won’t be fixed by engaging in this back-and-forth in the media.”