The Indian Ocean Tuna Factory major shareholder, Lehman Brothers, is in deep financial waters after making a series of bad financial risk decisions over the last year that has amounted to over $US 40 Billion in losses for the company in one financial year. Included in this financial disaster are over valued-ballooned property mortgages in the United States and the United Kingdom that have now burst.
In Seychelles, Lehman Brothers had purchased the Indian Ocean Tuna Factory from Heinz Foods as Heinz decided it was time to leave the tuna canning business and concentrate on the more stable sauces business. Since Lehman Brothers purchased the Tuna Factory, the facility has been besieged by low production, low tuna tonnage landings destined for the European market and staff layoffs and repatriation back to Asian countries as Thailand and Malaysia.
Soon after the Indian Ocean Tuna Factory purchase was completed, Lehman Brothers then set out to assist the Communist SPPF Government of Seychelles with a first time ever, junk bond facility valued at over $USD 200,000,000.00 at an interest of 9% per annum. At the time of issuing of the Junk Bonds, there were no signs that the Communist SPPF Government of Seychelles would be in a position to repay the Bond. In fact, there was every reason to believe, that they could not manage additional debt obligations since their external debt had already exceeded almost $1 Billion for a population of 83,000 citizens.
Lehman Brothers failed to advise subscribers of the Seychelles Junk Bonds as required by United States law, of the Seychelles circumstances that were indicative of Seychelles inability to make payments on the Junk Bonds when the time of performance would so arise. Nor did Lehman’s advise subscribers of ongoing political turmoil in Seychelles that would give subscribers an indication of Communist SPPF Government’s inability to perform on its bond obligations.
For example, in October 2006, soon after the $200,000,000.00 was subscribed, the Leader of The Opposition was bludgeoned with night sticks by para- military police officers at the steps of the National Assembly of Seychelles. This incident was reported to Lehman’s Brothers and they failed to advise subscribers of the Bond of the incident in order for them to make an informed decision vis-à-vis the purchase of the bonds.
In 2007/ 2008, Lehman’s again failed to give Seychelles Bond Subscribers adequate notice of Seychelles financial posture in regards to the severe lack of foreign exchange in the country which would in fact, hamper Seychelles ability to repay the Bond payments.
In 2007, Lehman’s Brothers again assisted the Communist Government of Seychelles with another Private Bond issue, worth Euro 54.75 Million for which the government paid them $1000, 000 in fees according to the Minister of Finance Danny Faure. It is uncertain if this money ever reached the shores of Seychelles as Afif, the Principal Secretary in the Ministry of Finance later said on SBC TV that there were “irregularities” in the transaction and not all the money had been received. This happened after Seychelles defaulted and failed to make repayment as expected on 1st July 2008. There are rumors that Cable and Wireless received Euro 30 Million in arrears settlements for profit repatriation. What could have happened to the remaining 24 Million is any one’s guess.
In July 1st, 2008, Communist SPPF Government failed to make a key installment payment on this private Bond issue. Consequently, Standard and Poor’s downgraded Seychelles credit rating twice in the month of August 2008. S&P also downgraded the $200,000,000.00 Junk Bond, citing that if the Seychelles Government could not make payments on the private bond, it is very likely that it will also fail to pay the $200,000,000.00 Junk Bond.
The SPPF Government has remained silent on the matter thus far. They even neglected to mention the second financial credit rating down grade in the Government press, Nation and SBC.
Lehman’s Brothers is itself now in awkward financial situation as its own financial house has been down graded by Standard and Poor. Lehman’s Brothers is now attempting to sell itself to Development Bank of South Korea (DBSK) in order to shore up the $40 Billion loss for the year, resulting from bad financial decisions. Among the bad decisions is Lehman’s Brothers decision to lend-issue Junk Bonds to a communist government in Seychelles and to invest in the Indian Ocean Tuna Factory which has produce little success for Lehman’s.
The DBSK is viewing Lehman’s offer to purchase with great caution.
It remains to be seen who will pay for this financial folly at Lehman’s Brothers. One thing is certain though; no one escapes the long arms of the Federal Government in the United States, not even sausages and bank bunnies.
The Seychelles portfolio at Lehman’s is accountable for not less than $400,000,000.00 in Junk Bonds, which are now trading for cents .28 to the $1.00; a tuna factory with assets
valued at least $ 600,000,000.00. In total this accounts for $1 Billion of Lehman’s $ 40 Billion of losses in 2008.
To think New Yorkers think we have only coconut trees in Seychelles.