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‘VSEP sweetener’ turns sour for former Caroni workers
Betrayed and deceived. That’s how former Caroni 1975 Ltd workers are feeling after the People’s Partnership Government failed to address in the 2012-2013 budget an outstanding $500 million dollar “VSEP Sweetener” dispute. This matter has been lingering for the past three years.
Thinking that Finance Minister Larry Howai would have tackled their concerns in his $58.4 billion 2012- 2013 budget package, the same way he addressed the Clico and Hindu Credit Union matters, the workers said they felt deceived and was hoodwinked by the Government who they supported in the 2010 general election.
If the Government fails to intervene, the former workers, who invested $500 million into the plan from their VSEP earnings, have vowed to protest in front the Office of the Prime Minister in December to show their dissatisfaction. In 2003, a pamphlet distributed to the farmers showed that the Agricultural Development Bank (ADB) in collaboration with the Unit trust Corporation (UTC) offered a “cane sweetener” to all former Caroni workers.
The plan was based on benefits invested in the UTC under the Individual Retirement Unit Account. “The investment will double in six years if it earns a rate of 12 per cent per annum. However, the current annualised total return is 26.12 per cent,” the pamphlet stated.
They were told that a loan up to the amount of the investment will be immediately available at 8 per cent annum and that no loan installments will be payable until the investment doubled. A 2 per cent management fee was also charged on the loans.
In a July 2, 2012 letter sent to Food Production Minister Devant Maharaj by a group calling themselves Former Caroni (1975) Ltd Employees, signed by co-ordinators Winston Ramdhani and Rakeeb Mohamed, stated that the plan with the ADB was based on the promise of 12 per cent per annum on VSEP deposits with corresponding loans at a high of 8 per cent.
Based on their calculations, Ramdhani said, the farmers were hoping to get back $200 million in returns in addition to the $500 million VSEP earnings. “The ADB violated the agreement by failing to pay the 12 per cent for the six years. Instead, they offered 0 per cent for the period, but continued to charge a high of 8 per cent on interest,” Ramdhani wrote.
Ramdhani said data shows that the investment deposit earned some 48 per cent and the ADB took all, including dividend payout. Ramdhani said the ADB failed to deliver on the 12 per cent, blaming “global factors.” They offered zero per cent for the entire six years, while still charging 8 per cent on loans, using their deposits as security. The group proposed:
• Loans be recalculated at 4 per cent per annum or a rebate of 50 per cent of the interest paid.
• A payment of 5 per cent on VSEP deposit instead of the 12 per cent as promised.
• A refund of the management fee of 2 per cent which equates to 0.3 per cent per annum.
“If there is no settlement we are coming in Port-of-Spain to protest outside the Prime Minister’s office in December,” Ramdhani vowed. “It’s really unfair that they dealt with the HCU and Clico matters and left us undone. We are not asking for taxpayers’ money. We see this as a betrayal because they only handled the big shot people in Clico by spending billions of taxpayers’ money.”
Ramdhani said if the Government does not settle the matter, “We will lead a no vote campaign. We will boycott our votes” in the 2015 general election. Ramdhani said one has to bear in mind that the majority of votes the PP acquired came from former Caroni workers and their families, who have been struggling since the closure of the sugar company.
Many have died without enjoying the little benefits they received. “These workers who came from the sugar belt formed the foundation of the UNC. If they are in Government it is because of us.”
Maharaj: ADB acted as an agent
Meanwhile, the Food Production Minister said the ADB was only acting as an agent for UTC when this deal was brokered. The ADB, Maharaj said, was willing to repay the two per cent management fee, which Ramdhani estimates will be approximately $10 million.
“The ADB was not the creators of that financial product. That financial product with the downturn in the economy could not achieve the interest rates which had been originally targeted. This is an issue the UTC should answer, not me.” Maharaj said the farmers presented their case to him on Monday. “I referred it to the Minister of Finance for consideration.”
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