Penn, who is the NDP’s former minister responsible for Social Security, told BVI News in an interview on Tuesday that Fahie’s allegations are completely untrue.
“His explanation of the ‘loss’ as a 70 million-dollar loss on interest shows his gross misunderstanding of how an investment portfolio works. But also raises questions of his fitness as the Minister of Finance. Moreover, his statements and what he attempted to insinuate, are downright false,” Penn stated.
Penn also explained the investment procedure used by the SSB, stating that the statutory body, through its Investment Policy Statement (IPS), invests the taxpayer’s funds using a stable long-term investment strategy.
“So our funds are invested for the long haul. In between investment cycles, you will have what is called ‘unrealised losses’. What that means is that we could have a loss on paper, but the loss would be unrealised if the investment instrument isn’t liquidated at the time of the dip. When investing for the long term, this loss could be recouped at the time of the maturity of the investment,” Penn explained.
“Typically, this has been the case with the SSB Investment portfolio. There have been two notable cases of unrealised losses with the SSB portfolio. One was in 2008 with the global financial crisis and the other most recently in 2020 at the peak of COVID-19 lockdowns. In both cases, the SSB investments were able to recover and make significant increases on the investment portfolios,” Penn further explained.
The Opposition legislator further explained the facts of the $70 million-loss allegations as reported by the SSB in the 2020 Standing Finance Committee.
He said: “The SSB Investment portfolio had a 77 million ‘unrealised loss’. And by December, they had already recouped that 77 million dollars with an additional 40 million in gains as of December 2020. The records pertaining to SSB investment records will confirm this fact.”
“So the Premier’s statement about the territory losing 70 million on its interest or investment, is totally false and incendiary rhetoric, and another in a series of diversionary tactics aimed to again confuse, distract and mislead the people of the Virgin Islands, which is counterproductive and unfortunate, considering the times we’re in,” Penn added.
He also said it was the responsibility of the present Minister in charge of the SSB or the Premier himself to report any needed information from the statutory body to the public since the allegations occurred under their watch.
“The SSB is a corporate body established by statute and as such is required to report to the people of the Virgin Islands. This should be done through the Minister in Cabinet responsible for the SSB via its annual report that is laid on the table of the House of Assembly. The annual report is a public document and has all the details of the SSB investments on behalf of its contributors,” Penn stated.
“For clarity, I should add the nonfactual allegations levied by the Premier happened in 2020 under his administration and if anything was supposed to be reported, the Premier would be responsible to report it. It’s unfortunate that the Premier continues with more diversionary, misleading tactics at a time when we should be uniting together to manage the difficult issues we are facing,” he further said.