Transport Minister Robert Montague yesterday sought to reassure the country that the Airports Authority of Jamaica (AAJ) and Norman Manley International Airport (NMIA) will not be rushing to sell their plummeting 28.5 million shares in First Rock capital holdings amidst growing controversy over the investments.
Additionally, he said the boards of both entities are to be dissolved after members offered their resignation en bloc, even as he pointed out that the outgoing board is not the same one that approved the two investments.
Montague said the investments — which have been the subject of controversy since July when questions were tabled in the House of Representatives about them — are being reconsidered, given what is now in the public space.
The shares were acquired in two separate deals, a year apart — January 2019 and 2020 — the first a private placement, and the second from an initial public offering (IPO) on the Jamaica Stock Exchange.
The AAJ and the NMIA now own US$2.9 million in shares in the private company.
Answering questions in the House of Representatives yesterday about the controversial investments, Montague said up to June this year the AAJ group had earned dividends of US$123,220 on the shares, representing a two per cent return annually.
“The full portfolio of shares purchased are still held by the NMIA and the AAJ,” he noted.
Montague attributed the drop in trading price of the shares — from US$00.12 in May this year, to US$00.07 now — to the onset of the novel coronavirus pandemic. Still, he insisted, “There is no intention to hurriedly sell at a loss,” pointing out that First Rock has never registered a loss.
However, Opposition spokesman on transport Mikael Phillips said no investor will touch the shares, knowing that the AAJ wants to dispose of them.
“As it is now, they breached government guidelines and have lost position [in the market]. They hold a substantial amount of shares. The market is going to wait until those shares reach to rock bottom before they go in to try to pick up any of these shares… the NMIA and the AAJ now are at risk of putting taxpayers’ money at risk of losing most of it,” he argued.
Montague acknowledged a breach of the Public Bodies Management and Accountability (PBMA) regulations (2017) in the acquisition of the shares by the AAJ, but said it was not deliberate. He said the authority was confident at the time that its amended 2019 investment policy would have received the usual non-objection of the finance ministry, given the nature of the amendment.
He noted that the AAJ’s investment policy is amended from time to time to accommodate developments or products if the investment is deemed suitable for its portfolio, and is usually submitted to the finance ministry for its non-objection. But, after submitting the amendment in March 2019 for approval, the ministry, while offering the non-objection, had recommend that the investment policy be updated to ensure consistency with the public bodies amendment regulations relating to the acquisition and disposal of shares.
“It was at this point where the AAJ team advised that they first became aware of this regulation which requires that the approval of the minister of the finance and the public service be sought for the purchase of shares in a private company,” Montague said.
In relation to the resignation of the directors, Montague said, while one member of the AAJ board was a minority investor in First Rock, this wasn’t seen as a conflict of interest, given than the shares were less than one per cent. Furthermore, he said the NMIA board chairman, who is the brother of a director and shareholder of First Rock, had, at the time, recused himself from the January 2020 meeting where the decision to invest in the First Rock IPO was made.
He further explained that an AAJ board director had joined the board of First Rock in March 2020, but this “wasn’t construed to present a conflict of interest as the AAJ shares were acquired before the director became a member of the First Rock board, and therefore no declaration was necessary to have been made”.
Montague said he was alerted to the PBMA regulations breach in March, and wrote to the chairmen of the two public boards ordering an investigation, for any breaches to be corrected, and for the value of the investment to be protected.
The AAJ has concession oversight of NMIA in Kingston and Sangster International Airport in Montego Bay, St James.