Deputy chairman of the Social Security Board (SSB), Dennis Jones, told Amandala in an interview on Tuesday morning that SSB’s Chief Executive Officer, Mrs. Merlene Bailey-Martinez, had resigned. He said that he received her letter after 10:00 on Monday morning, February 20.

“Yesterday, she went into the office and she handed in her resignation,” said Jones.

“She wasn’t asked to resign?” we probed.

“She handed in her resignation,” Jones insisted.

“By this time, she had already seen herself being depicted as the devil. You had this bad situation where staff was making a petition for her return, which kind of began to galvanize positions inside and outside the organization, so she felt that it was difficult for her to operate under those circumstances,” Jones said.

He also told us that “…we were in that process of determining what was the best option when this whole barrage of adverts came up where she was depicted as the devil and so on and so forth.”

He said that her resignation “removed the need for [the board] to come to a final determination to say what they were doing...”

Bailey-Martinez’s resignation comes on the heels of public controversy over allegations of “insider trading” at the SSB, in which staff members were accused of using “inside” knowledge to get an edge over other clients so that they could have their loans written off in a government program under which Central Government purchased the nearly 800 loans for total forgiveness. The CEO’s name was on the list, although Jones said she would not have qualified for the write-off.

“The CEO’s problem was the perception of trying to benefit from a program that was not designed for that,” Jones said.

Jones said, “There was an error made, yes: a mistake in judgment,” but he said that it cannot be classified as fraud and the SSB didn’t lose any money.

“It’s basically... she was pushing to get staff members to benefit from this program. Her error was that her name was on the list,” Jones commented, but declaring also that “the CEO would not have qualified” for the write-off.

He informed Amandala that of the 33 staff members who had paid down their loans, 31 did so in early January (between January 3 and 6, 2012), in order to reduce their balances to fit within the $50,000 ceiling announced by Prime Minister Barrow. However, said Jones, these persons cannot qualify for the debt forgiveness.

It had been reported from the Office of the Prime Minister that although the CEO’s name was on the second list tabled in Parliament, a list which was prepared while she was put on administrative leave (pending the outcome of a special investigation by Pannell Kerr Forster), her name was NOT on the first list prepared as at September 30, 2011. Chief Executive Officer in the Prime Minister’s Office, Audrey Wallace, had relayed to us that they had checked the lists.

More than that, when the media questioned Prime Minister Dean Barrow on Bailey-Martinez’s inclusion on the list, he told us: “Well, all I will say is that Mrs. Bailey has confirmed to me that she is not proposing her name for even any kind of consideration in terms of whatever might be the board decision, with respect to persons who did that [paying down their loans], so I will leave it there. She says that she is not ‘in the mix’ at all, in terms of the decision that the SSB board will have to make with respect to persons who might have paid down.”

However, Jones told our newspaper Tuesday that Bailey-Martinez’s name was on the original list, and it should not have been there in the first place: “It was an error in the part of SSB because she should not have been on the list.”

He told us that “Her name was on the list from the beginning... Her name was always on the list.”

Bailey-Martinez’s $80,000 loan was dated August 2011, and the list was prepared as at the end of September, the following month.

“She had a loan with SSB for $80,000. The issue is that she drew down balances from SSB, and would have qualified for part of the payment,” said Jones. He added, however, that this “would have not matched the intention of the debt forgiveness program.”

On Wednesday, our newspaper asked the Office of the Prime Minister for a copy of the original list, for verification purposes. We have perused the 13 pages we received and did NOT find Bailey-Martinez’s name on it, although 37 staff loans appear on the September 30, 2012, list, with balances within the $50,000 ceiling and a further 8 appeared with balances exceeding $50,000. It became clear to us that there was a missing page.

We called back Jones today, Thursday, who supplied us with that first page, which has Mrs. Bailey-Martinez’s name at the very bottom. The PM’s CEO, Wallace, told us, when we asked about the page, that the PM had disregarded those transactions, because those loans were above the $50,000 ceiling set by Prime Minister Barrow. She pointed out that some of those loans were above $100,000, which we had observed as well. There were 886 loans listed, but 780 fell within the $50,000 limit.

Oddly, when the new list was sent back to the Prime Minister, which should have included only the qualifying loans, the list had 780 names plus 1—and that one added on was Bailey-Martinez’s $80,000 loan, which was listed in the $20,000 to $30,000 loan category with a $20,000 principal balance.

Jones also told our newspaper that the PKF audit report also showed a number of anomalies on the list where 4 or 5 of the loans were in the process of being foreclosed; one person had died; and two persons had two SSB loans with balances under $50,000 as of last September that were both included on the write-off list.

“They would have gotten the benefit of two loan payments,” said Jones.
“What the report actually showed was that list sent to the House was not completely and properly vetted, and that is being done now,” Jones said.

The Investment Services Department at SSB produced the list, he said, adding, however, that the CEO is ultimately responsible, although the department generated the report and it should not be the responsibility of the CEO to do over reports.

The rush from the Government to get the list was also cited as a factor: “Speed and accuracy don’t run on the same track,” said Jones.

Whereas Bailey-Martinez had told our newspaper that 60% of the loans had been non-performing, Jones told us that “hardly any of the loans from SSB staff were non-performing because there were salary deductions.” It was, perhaps, ex-staff of SSB who may have had loans overdue, he said.

“They [the staff] weren’t the people the program was targeting…” the deputy chair said.

He also pointed to other anomalies on the list: “Some started with loans such as $179,000 in the late 90’s. Those aren’t poor people and those aren’t people that need our help.”

As for the PKF investigation into the allegations against staff, Jones recounted it as follows-:

Friday, February 10, 2012: the SSB board receives the draft PKF report.

Monday, February 13: Bailey Martinez and Internal Auditor Denise Mahler are sent the PKF report

Tuesday, February 14: Bailey-Martinez and Mahler appear before the SSB board to give their input on the report. The board rules that Mahler can return to work.

Wednesday, February 15: Board meets to review the information and “individual positions,” according to Jones were expressed.

“At that point, people had their positions but at least I think they weren’t fixed,” said Jones.
Amandala had been informed by SSB chair Lois Young that she had received a report following that meeting that a vote had been taken, which was largely in favor of terminating Bailey-Martinez, but Jones has refuted that, saying that no final decision had been taken.

Jones said that the board was continuing with its due diligence, because it had to speak again with the PKF investigator, Mr. Bautista, before proceeding.

Friday, February 17: Administrative leave of Bailey-Martinez and Mahler was to end. Leticia Vega had been asked to act as CEO until this date, pending the outcome of the PKF investigation.

Monday, February 20: Deputy chair receives Bailey-Martinez’s resignation. The board meets for about 5 hours (3:30 to 8:30 p.m.)

Tuesday, February 21: SSB issues a press release stating that it had accepted the CEO’s resignation, which did not cite the PFK report as a reason for her departure, but “negative public criticism and its impact on her family and her Christian community, as well as to protect the SSB from negative publicity.”

It also reported that Mahler has returned to work and that she is NOT responsible to the CEO but directly to the board. Vega, said the release, will continue to act as CEO. The SSB board ends its term with the change in government, and the CEO’s contract expires at the same time.

Jones told us that the Internal Auditor had also paid down her loan to try to qualify for the write-off.

The 30-odd SSB staff members who tried to get in on the debt forgiveness program are now in an unenviable position where they have two loans – one with a commercial bank and one with SSB, or they used up their savings to pay down their loans, Jones noted.

As for the dual counting of loans, including dead people and loans in process of foreclosure, “all those things should have been cleared out of the list,” Jones contended.

“The problem is really the list that went to the House is not clean – it did not have all the checks done...” he conceded.

As for the staff accused of “insider trading,” Jones said, “Most of them paid the balances down after the Prime Minister’s speech, in the first week of January.”

We asked Jones why it appears that only the CEO is facing consequences when she wasn’t acting alone.

His reply was: “She is the CEO and she is the person that is supposed to have the best judgment.”

“She shouldn’t have been on the final list that went to the Prime Minister. It was careless, slackness on the part of our Investment Services that made most of these things happen and the rest is basically history,” said Jones.

Well, it is not quite history yet. The SSB is working out a financial package for Bailey-Martinez, which will include payments for vacation and gratuity, in line with her contract of April 2008. Termination would have meant less benefits at her departure.

To Bailey-Martinez’s credit, Jones pointed out that under her tenure as CEO, the SSB performed better every year since 2008. He said that the administrative costs in relation to SSB’s contribution income dropped. The SSB’s Statistical Abstract (2006-2010) noted that between 2007 and 2010, the figure dropped from 40% to 31%. Also, he said, there was a trend of improvement in the collection of contributions, as well as in the time for registration of documents and for issuing benefits. Jones added that the actuarial report shows that in 2008-2009, during the global recession, SSB was showing improvements in collections.

“We have to say that she worked well for the organization and that should be recognized,” Jones commented.

As for the negative public criticisms levied at the former CEO, “It’s a pity...” said Jones. “There could have been a little more restraint.”

The SSB has come under heavy criticism for the manner in which it handled the public relations element of this controversy. Its February 21, 2012, press release also came under criticism for citing the reason for Bailey-Martinez’s resignation as “negative public criticism… [and to] protect the SSB from negative publicity.”

One board member we spoke with pointed out that there was no connection made with the results of the PKF audit, which immediately preceded her termination. Jones conceded in a conversation with our newspaper on Wednesday that the resignation “wasn’t done in isolation,” and he said “it is also the fact that the report did say that she made an error in judgment when she had her name on the list.”

For her resignation, said Jones, Bailey-Martinez “won’t lose any benefits” permitted under her contract.

Upon our request for the audit report, Jones undertook to release the executive summary of the PKF audit, saying that he would not want to release the entire document because it contains confidential information of the debtors.