Avert hostile takeover of Jamaica

IN 2008, college dropout turned billionaire, Ron Burkle, attempted to seize a controlling interest in Barnes & Noble - the multibillion-dollar United States bookseller. Burkle, dubbed the "billionaire party boy" for his global exploits with beautiful women and powerful friends like Bill Clinton, made a killing buying and consolidating grocery chains. Armed with a US$7-billion war chest, Burkle set his sights on the struggling retail giant.

Leonard Riggio would have none of it. The Barnes & Noble chairman spent half a lifetime growing the bookseller from a small, family business to a corporate behemoth - in which he controls a 30 per cent stake. Riggio vigorously objected to Burkle's stated direction and plans to acquire an interest in the company. Undaunted, Burkle began snapping up shares - eventually amassing a nearly 20 percent stake. Sensing the danger of Burkle's increasing influence and fearing a hostile takeover - a transaction in which a bidder seeks to acquire a company without approval of its board of directors - Riggio and the Barnes & Noble board implemented a shareholder rights agreement, commonly known as a 'poison pill' - a controversial legal measure designed to make it prohibitively costly for an outsider to purchase more than a specified amount of a company's stock.

A poison pill typically allows existing shareholders to purchase new shares at deeply discounted prices whenever an outsider amasses a predetermined interest - in this case 20 per cent. By diluting the hostile bidder's stake in the company, the poison pill makes it virtually impossible for a hostile takeover attempt to succeed. The poison pill mentioned above thwarted a hostile takeover of Barnes & Noble.

Hostile takeover in Jamaica

If ever a city has undergone a hostile take-over it was Spanish Town. For years the old capital has been decimated by gang violence. Gangsters have effectively seized control of the town while enriching themselves through extortion and murder-for-hire schemes. Recent reports suggest the Clansman Gang, one of Spanish Town's deadliest, is raking in upwards of $400 million per year. This hostile criminal takeover isn't unique to the old capital. Many parts of Jamaica, including large swatches of downtown Kingston, May Pen, and even historically quiet Mandeville, have been under threat from organised criminal enterprises.

Politicians, many of whom covertly rely on these criminal enterprises to fund campaigns and secure votes, are naturally unwilling to halt the systematic takeover of the country at the hands of these criminals. Our long history of garrison politics - dramatically highlighted by the 'Dudus' extradition debacle - has created tightly woven bonds between politics and organised crime, bonds that must now be broken if Jamaica is to avoid collapsing under their unbearable weight. We need a number of poison pills to avert a complete criminal takeover.

Our poison pills

The primary mechanism of a poison pill is the dilution of the hostile bidder's shares. In our case, we must dilute the dual influences of organised crime and political corruption. At the heart of this collaborative threat to our democracy is money - dirty money finances political campaigns; in return, government contracts are distributed as rewards for election victories. If we are serious about cleaning up our political system, we'll need to get serious about political campaign finance reform, stricter monitoring of government contracts, and requiring comprehensive financial disclosures for government officials. Indeed, public financing of election campaigns - as is widely practised in Europe and South America - would be instrumental in curtailing the amount of illicit money in elections.

Another poison pill - dismantling garrison communities - would dilute powerful criminal dons' abilities to influence elections through strong-arm tactics. This would also alleviate the social and moral decay and rampant lawlessness present in many of these communities.

Discarding the Westminster system for an American-style republic with clearly separated legislative (parliament) and executive (government ministries) functions would free government ministers from the sordid and corruptive world of representative politics.

Broader protection of speech would spark the type of investigative journalism needed to shed light on incidents of political corruption and election fraud.

Barnes & Noble Chairman Leonard Riggio took extraordinary steps to protect the company he spent much of his life building. We must do the same to defend, from the forces of darkness, the country our forefathers gave their lives to build.

Din Duggan is an attorney who now works as a consultant with a global legal search firm. Email him at columns@gleanerjm.com or dinduggan@gmail.com or follow him at facebook.com/dinduggan and twitter.com/YoungDuggan