Bahamas: Cable and Wireless Communications (CWC) and the Utilities Regulation and Competition Authority (URCA)... What's The Connection?

CWC and the URCA connection
By CANDIA DAMES
Guardian News Editor
candia@nasguard.com


A closer look


Government officials are often quick to point out that the Utilities Regulation and Competition Authority (URCA) operates independently.

URCA may be so independent that ministers aren’t quite sure which of them is responsible for the regulatory agency.

Is it Minister of State for Finance Zhivargo Laing?

He said no. That would be Deputy Prime Minister Brent Symonette.

So we contacted Symonette.

He too said no. That would be Minister of National Security Tommy Turnquest.

So we contacted him.

But Turnquest said that would be Attorney General John Delaney, who we were unable to reach.

Perhaps it is Delaney.

We are still unsure whether he would have referred us to another minister.

With URCA reviewing the pending sale of a majority interest in the Bahamas Telecommunications Company (BTC) to Cable and Wireless Communications (CWC), in some circles questions are being raised about the affiliation former CWC executives have with the regulator.

CWC said last week that a foreign human resources consultant for URCA is a former CWC employee — not a current one as her LinkedIn profile had said. The Nassau Guardian based an initial story on what she was saying on that online professional profile.

Marsha Lewis left CWC in 2009, according to the telecoms company, and has been providing human resources consultancy to URCA since 2009.

So she is no longer with CWC.

On Friday, information came to our attention that her husband, Philip Lewis, is.

So we did some digging.

His LinkedIn profile confirmed that he is CWC Caribbean’s Vice President for Business Development.

We needed to be sure though that his LinkedIn profile was current.

So we confirmed through CWC that Mr. Lewis is still with the company.

We then sent a formal question to CWC: "Given that a former CWC executive is CEO of URCA (Usman Saadat), another former executive is the HR consultant for URCA (Marsha Lewis), and a current CWC executive (Philip Lewis) is married to the HR consultant, is CWC concerned in any way that there may be at the very least an appearance of conflict given that URCA is considering CWC's purchase of BTC?"

After The Nassau Guardian’s original story on Wednesday based on Mrs. Lewis’ LinkedIn profile — which has since been changed — CWC shot back, informing that Mrs. Lewis left the telecoms company in March 2009 to start her own business — LCI Inc., an HR consultancy.

Why URCA needed to bring in a foreign HR consultant is another issue. It was certainly the board’s prerogative.

And URCA has indicated that it is quite satisfied with Mrs. Lewis’ services.

Why Mrs. Lewis changed her profile to say she left CWC in December 2008, instead of March 2009, is not clear.

Following our inquiry on Friday about her husband, LIME CEO David Shaw approved a brief response from the company: “As the largest telecoms employer in the region CWC/LIME has been a corporate home to many people who gained experience with us and then moved on to other businesses or ventures.

“In this region, that’s not uncommon, especially in telecoms. And as for a conflict of interest, the legislation and regulatory framework were set up before we were the successful bidder.”

Indeed, The Nassau Guardian has no evidence to suggest that CWC had any advantage in the privatization discussions, but the connection to URCA is interesting to note, even if it is purely coincidental.

THE INTRODUCTION

URCA engaged LCI Inc, Mrs. Lewis’ company, in August 2009 “to provide assistance and advice in relation to URCA’s ongoing development of its human resource capacity.”

The former CWC executive was introduced to URCA by another former CWC executive — Saadat, the now CEO who at the time was URCA’s director of policy and regulation.

This was confirmed in URCA’s recent press statement.

“LCI’s selection by URCA’s then CEO was through an introduction of LCI by Mr. Saadat. URCA’s board endorsed the decision to engage LCI,” the statement said.

At the time of the approval of Lewis’ contract with the regulator, URCA pointed out, CWC was nowhere in the privatization picture.

“Public announcements by the government have disclosed that C&W did not participate in the government’s initial search for a strategic partner in the privatization of BTC, and was therefore not under consideration as a possible purchaser of BTC until 2010. From URCA’s perspective, there was no actual or perceived conflict arising out of the recruitment of Mr. Saadat or the engagement of LCI in 2009. “

The Nassau Guardian noted in a story on this issue this past Friday that CWC — though not a bidder in the BTC privatization process in 2009 — was on the government’s radar as Privatization Committee Chairman T. Baswell Donaldson advised Prime Minister Hubert Ingraham in 2009 that CWC had conducted a “lengthy” review of the opportunity to purchase 51 percent of BTC.

CWC in 2009 was one of the companies the privatization committee said it favored to bid for BTC. But CWC at the time decided not to proceed.

URCA has stressed that there is no conflict involved in the fact that two former CWC executives play key roles with the regulatory agency.

But is there an appearance of conflict?

It depends on who you ask.

The Progressive Liberal Party insists that there is.

Its chairman, Bradley Roberts, has said Saadat should not serve as CEO.

What’s clear is that URCA will not only have to provide the necessary regulatory approvals to CWC’s purchase of BTC’s majority shares, but it will also have to regulate the new company.

So the appearance of fairness and transparency is not only important in the approvals process, but in the ongoing regulation of the new BTC or whatever CWC will decide to call it.

Furthermore, URCA may need to provide repeated assurances to BTC’s competitors that CWC does not have an advantage in the regulatory process due to connections any of its key officials may have to CWC.

Competitors may get jittery at the knowledge that a former CWC CEO is now CEO of URCA, and that a current executive is married to URCA’s human resources consultant, who is a former executive of CWC.

But URCA’s Chairman Wayne Aranha said in a statement to The Nassau Guardian over the weekend the board has no concerns in this regard.

He advised that Mrs. Lewis’ company is an advisor to URCA in relation to certain human resources matters and initiatives.

“As such, Mrs. Lewis does not initiate or authorize transactions or otherwise make decisions for URCA relating to HR or any activities,” Aranha explained.

“To be clear, she has no involvement with regulatory matters and there is no issue of conflict.

“The board and I are aware of her husband’s employment. This does not concern me given the conclusion above relating to Ms. Lewis.”

USMAN SAADAT

In May 2009, Prime Minister Hubert Ingraham informed the House of Assembly that URCA — which was about to be formed — would be headed by a non-Bahamian.

Usman Saadat became URCA’s director of policy and regulation, and later its CEO, a post he currently holds.

“We have already accessed the talent of someone from outside The Bahamas who will be the policy director of URCA,” Ingraham said in the House of Assembly in 2009.

He explained then that while it was the government’s hope to populate the entity with Bahamians, it might not be realistic in the near term.

“In this early phase...we will be required to access talent that may not be available in The Bahamas,” Ingraham said.

He noted then that the policy director’s salary will also be “far in excess of anything heretofore known by public sector enterprise.”

“I would expect that some of the salaries paid to some of the professionals will be higher than what is normally paid in other areas in The Bahamas,” he said without divulging the pay scale for those appointed to URCA.

URCA’s goal, the prime minister noted, is to “have a transparent, effective, well-managed and knowledgeable entity that can act independently: that has no axes to grind; no preferences, no bias to cause the sector to be regulated in accordance with the Communications Act.”

The bill to establish URCA was passed in Parliament in 2009, as part of a package of communications bills designed to restructure the communications industry in the country.

URCA made extinct the Public Utilities Commission (PUC). URCA has far more extensive powers, authorities and duties than the PUC.

In September 2010, Chairman Aranha announced that Saadat was the new CEO of URCA.

He said URCA received applications from the local market as well as regional and international candidates for the top position.

Saadat, who headed CWC St. Lucia, reportedly has more than 15 years of global experience in regulation and competition strategy, coupled with a proven track record of leadership roles in the communications industry.

It wasn’t long before concerns about Saadat’s appointment made it to the press.

Trade Economist Hank Ferguson asked on The Guardian Business Facebook Feedback months ago: “Should I be worried that the former CEO of Cable and Wireless is now the regulator for BTC which is being purchased by his former employers? This should concern us all.

“If I were a visitor to this country, I would be forced to believe that the local population did not have competent or capable people, as every major entity within the country seems to have foreign (non nationals) at the helm. Where are the Bahamians?

“I do not question Mr. Saadat’s capabilities and his work in St. Lucia but noted that when he resigned from that post he noted his desire to return to his home country.

“I assume he has lost that desire but it worries me that our dependence on foreign talent may come at the expense of developing our own skills and talent (and God forbid that he and others are not engaged in the transfer of skills).”

The timing of Saadat’s hiring to the regulatory body after he left his position at Cable and Wireless prompted one union leader to say “we smell a fish there”.

But URCA said in December 2010, “The appointment of Mr. Saadat as former DPR (director of policy and regulation of the Public Utilities Commission) is far from sinister and would not give rise to any reasonable person concluding that some untoward scheme was underway or otherwise provides a basis for one to ‘smell a fish there’.

“…This URCA board is very pleased with Mr. Saadat’s performance, firstly as DPR and now as CEO. The board is satisfied that no conflict of interest exists, and will ensure that none rises between Mr. Saadat’s duties as CEO (and an executive board member) of URCA and any past association that he had with Cable and Wireless.”

At the time, the names Marsha and Philip Lewis were not yet in the press.

But last Thursday, URCA said, “From URCA’s perspective, there was no actual or perceived conflict arising out of the recruitment of Mr. Saadat or the engagement of LCI (Mrs. Lewis’ company) in 2009.”

PLP CONCERNS

The PLP has expressed concern about the fact that a former CWC executive heads URCA at a time when URCA is considering the BTC sale.

“The Progressive Liberal Party finds it most interesting that Mr. Saadat’s resume made no mention of his return to the Far East to ‘settle down’ as noted by him as his main reason for resigning from Cable and Wireless St. Lucia in 2008.

“The PLP asks how is it that in less than eight months Mr. Saadat, with just 14 years of experience, was selected by the FNM government to become the director of policy and regulations at URCA in The Bahamas and was then instantly promoted to the position of chief executive officer at URCA,” a recent statement from the party said.

The issue was raised in the House of Assembly last week by Golden Gates MP Shane Gibson. It came after The Nassau Guardian article based on Mrs. Lewis’ LinkedIn profile.

“Now bear in mind, Mr. Speaker, that this thing was carefully plotted out. Cable and Wireless has a former employee working in the MIS (management information systems)department at BTC. Cable and Wireless’ former employee is in charge of URCA (Saadat).

“Cable and Wireless’ current employee is also a consultant to URCA. You see the picture, Mr. Speaker? This thing was carefully crafted and carefully designed.”

As previously mentioned, CWC subsequent to these statements released a statement saying Mrs. Lewis left in 2009.

Speaking in the House early Wednesday, Gibson said, “This didn’t just start. Don’t mind them saying (it), Mr. Speaker. Everybody knows that Cable and Wireless did not just parachute into this position where they decided to purchase BTC. This was carefully planned out and mapped out where they put their people in strategic positions to make sure that at the end of the day, Mr. Speaker, they get what they want.”

Gibson added, “I wouldn’t be surprised if this was condoned by the Government of The Bahamas, because when you look at that contract that they signed with Cable and Wireless the Bahamian people would wonder who is it that the government is representing.”

But Minister of State for Finance Zhivargo Laing denied that Cable and Wireless had received any advantage in the BTC privatization process.

“I’d like to make it abundantly clear that any suggestion on the part of the member for Golden Gates that the government coordinated, orchestrated for any employees of Cable and Wireless to work at URCA or anywhere else in pursuit of this privatization is false, inaccurate and absolute nonsense, absolute nonsense,” Laing said.

“URCA is an independent organization and has employed and engaged at its pleasure. I want to make that abundantly clear, Sir.”

That independence will no doubt be important as the regulatory body considers whether to provide the green light for the sale of BTC.

2/28/2011

Bahamas: Cable and Wireless Communications (CWC) and the Utilities Regulation and Competition Authority (URCA)... What's The Connection? (Part 2)

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