March 15, 2004 - The Dominica Social Security (DSS) is out of the running for the Commonwealth Development Corporation (CDC)'s shares in the Dominica Electricity Services (Domlec), but another local entity is seeking to return the power company to local control, The Sun can report.
DSS and CDC had already agreed a deal after several months of negotiations; however, the international lending institutions intervened, forcing DSS out.
"We have backed out because the IMF (International Monetary Fund) and the World Bank did not support our bid. CDC is looking to sell its shares to the other players," Steven Myers, executive director of the Dominica Social Security confirmed to The Sun, without elaborating further.
Dominica is under a structural adjustment programme with the IMF, the world's most powerful financial institution, which normally demands privatization of state institutions and the non-participation of others in profit-making ventures, as part of its lending conditions.
"It's a serious travesty," one irate DSS official familiar with the transaction between the statutory body and CDC complained. "The World Bank has taken the position that it's okay for other people to buy it (the CDC shares) and sell some of the shares to social security at a profit but it's not okay for DSS to buy it and sell shares to make a profit."
The "other people" referred to by the official is WRP Enterprises Inc, a company based in Tampa, Florida, which seems to be the front runner in the race for CDC's 72 percent shares in the power company.
Ironically, DSS, recognizing that as a statutory institution it could not own all of the electricity company, had reached a strategic partnership agreement with WRP Enterprises under which, it would sell 40 per cent of the shares to WRP, after reaching a deal with CDC. This would make WRP Enterprises the largest single shareholder and it would manage Domlec's operations.
"I can't help but thinking that it is a racist thing. They don't mind WRP (getting all the shares), the official, who spoke on condition of anonymity, told The Sun. "The new viceroys of Dominica (IMF and World Bank) decided that whatever they say goes."
According to the official, if DSS had been allowed to purchase the CDC shares the local institution would have determined the terms under which the strategic partner operated.
"The benefits to Dominica would have been tremendous. Now that the strategic partner buys the whole thing (they can do whatever they want to)," the official said.
According to the Centre for Economic Justice, a US group that is part of an international campaign demanding an end to "the World Bank's harmful structural adjustment programmes and related policies," the IMF and World Bank's demand for privatization of enterprises previously owned or operated by the government "almost always entails layoffs, and much of the time, foreign companies take control of the enterprises."
This is what DSS was trying to prevent in the first place when it moved to purchase the CDC shares, one official confirmed to the Sun during the negotiations with the British company last year.
The source stressed several times that the DSS was not interested in total ownership of Domlec but had hoped to "assist with the transition" to a local and Caribbean owned company.
"Their (DSS) rationale for all of this is to put the future of Domlec back into Caribbean hands," another source told The Sun at the time.
The company can remain under local control if CDC sells to Nature Islands Investment Company (NIIC), a company headed by a local entrepreneur and supported with financing by Americans, one of the people behind the company told The Sun.
NIIC, whose financial backers are based in Boston, USA, put a bid for the CDC shares last August and has been pushing since to try to persuade the British institution to sell to it. NIIC parents met with Greg Ossdetz, the chairman of CDC, in the US last week to discuss the proposed sale.
NIIC officials would not comment on the discussions, nor would they say how much they have offered to the shares. But The Sun was informed that they would be willing "to match or even better" any offer from others in the race, a reference to WRP Enterprises.
Still, there remain concerns that CDC "is hell bent" on selling to WRP Enterprises, prompting one local business person to rant: "These guys are racists."
"I'd like CDC to do the honorable thing and let a Dominican company take over Domlec. There you are you have the people ready to run their thing and you want to give it to a foreign company," the businessperson noted.
CDC chairman Greg Osadetz dismissed the racism claims, telling The Sun that he could not understand the reason for the allegation.
"I can't address social issues in the island and I'm not sure how that fits into this," he told The Sun in a telephone interview from his hotel in the US.
On the question of the sale and the contentions that CDC wanted to ensure that WRP bought the shares, Osadetz said that the process was continuing towards the sale of Domlec, and that it was a fair process that offered equal opportunities to all of the many parties interested in the power company.
"It's a process that's continuing. It is correct that it has been a very long, drawn out process, but we want to ensure we are running a fair process, obviously one that is in our commercial interest and the interest of the people of Dominica," the CDC chairman said.