AT the height of the 1990s’ economic meltdown, a Trinidadian with the reputation as a deft deal maker began sharing with skeptical boardroom colleagues the outlines of an audacious business idea he had been privately stitching together.

Jamaica, its economy under severe stress, had reappeared on the radar of one of the most prolific businessmen from the twin island republic.

Caribbean Cement Ltd seemed an improbable springboard for Arthur Lok Jack’s planned foray into the Jamaican market. The company was one of the island’s few remaining genuine industrial operations, but had for years flirted with bankruptcy, and now faced imminent collapse. It was being undone in slow motion by a lethal combination of falling sales, rapidly rising costs, and critically, an expensive $4 billion debt burden. To stay afloat, it urgently needed a deep-pocketed white knight investor.

As it turned out, Carib Cement’s balance sheet was a microcosm of the bloodletting that had been taking place across a wide swath of the local economy, beginning in 1994. From the perspective of the faint-hearted, Jamaica was a risky bet.

But Lok Jack was an incurable optimist, a bold and seasoned risk-taker, and, by his own declaration, “someone who always believes in the Jamaican market and the resilience of the Jamaican people”.

His immediate yet insuperable challenge was to imbue the board of TCL Holdings — the titular parent of Trinidad Cement Ltd — with the auspicious vision that he himself had of Jamaica, and in particular, the possibilities he envisioned for the country’s struggling cement manufacturer.

“Understandably, there were lots of fears and concerns about Jamaica,” Lok Jack says, in recalling the initial tepid response of the TCL Holdings board to his entreaties. “The country was going through economic turmoil, and there was also the issue of crime and violence. The directors knew about the situation in Jamaica, but many of them did not understand the deeper culture. I had been dealing with Jamaica for decades so I understood the sophistication and the culture of the people, and therefore had greater confidence in the country.”

Lok Jack was a large shareholder in the publicly listed TCL Group, which in itself gave him clout with the company.

In addition to its role as the strategic decision-making body for the cement firm, TCL Holdings, which comprised exclusively independent directors, was mandated to strengthen the group’s corporate governance structure.

“It was influential, it consisted of non-executive members who represented shareholders,” Lok Jack explains. “We wanted to strengthen corporate governance within the TCL Group.”

So it was from this vantage point that Lok Jack began to press TCL to make a bid for the 43.6 per cent stake in Carib Cement Company that the Jamaican government placed on the auction block in 1998. TCL already held 41 million shares, or just under 10 per cent of Carib Cement’s 422 million issued stocks.

Admittedly, the Jamaican operation was bigger than TCL’s, and its financial situation was so perilous that it could potentially drag under the Trinidadians, if they took the plunge and got it wrong.

The board understood this, and was also clearly unnerved by the sheer scale of the broader economic problems within Jamaica. So having, with great trepidation, allowed themselves to be persuaded by Lok Jack, the directors initially attempted to hedge their bet by partnering with Mexico’s giant cement producer, Cemex Ltd, to share the risks, costs, and potential rewards of the venture in Jamaica.

In the end, they opted for a separate tender, and in April 1999, emerged the winner of the auction, beating Cemex and a British cement manufacturer, Rugby, for the block of shares. The US$29 million cash deal, at J$6.25 per share, represented a significant premium on Carib Cement’s net book value, and was three times the stock market price.

Installed as chairman on April 19, 1999, with the mandate from an impatient parent company to quickly turn around the fortunes of the troubled Jamaican subsidiary, Lok Jack and the newly appointed general manager, Kelvin Mahabir, had their work cut out for them.

Indeed, given Carib Cement’s current robust balance sheet, those who knew may be inclined to forget, and those who didn’t, would find it hard to imagine the wretched state in which Lok Jack and his team found this company. The numbers speak volumes:

* It had lost $434 million for the year to December 31, 1997.

* In 1998 the net loss swelled to $1.85 billion.

* For the year to December 31, 1999 the net loss amounted to $530 million, while working capital deficiency was $821 million, and accumulated deficit, $2.33 billion.

These were stupendous, breathtakingly wrenching numbers by the standards of non-financial institutions during the period, and placed this firm in an ignominious class of its own. Within corporate circles, Carib Cement had become a metaphor for how not to do business.

Yet, amazingly, even as Lok Jack and his team went into overdrive on all fronts — securing less costly long-term financing to replace the short-term debt, equity injection via rights issue, replacing old, inefficient power supply and other critical parts, negotiating more flexible work policy, raw material sourcing, and so on – this acquisitive businessman began to pursue other opportunities that he says were opening up within the Jamaican market.

First, he explains the approach to dealing with some of the many issues with which they, as new owners of the cement manufacturer, were confronted:

“We communicated with all stakeholders; we contacted the creditors and assured them that they would be paid. We had to approach Peter Moses at Citibank even before our first board meeting to arrange financing, because the company had lots of creditors who were demanding payment but was not in a position to pay them. The creditors were complaining to Omar (finance minister) that they expected their money right away. We called in our suppliers, spoke to the staff and explained to them what we were trying to do, and what we expected of them. We had to get rid of some redundant positions.”

Back in Trinidad, Lok Jack was a major player in another company that was about to stamp its footprints across corporate Jamaica. His 4.5 million direct shareholding in Guardian Holdings Ltd (GHL) and beneficial ownership in an institution called Tenetic, gave him 37.3 million shares combined, and made him one of the two largest individual shareholders in the publicly traded insurance group. GHL’s then chairman, Nazir Ahamad, was a partner in Tenetic and a personal friend. Lok Jack succeeded him as chairman when he passed away in 2004.

The point is, Lok Jack had a much firmer grip on the leadership and strategic decision making at Guardian than he did at TCL; this was influence he was not unwilling to leverage in order to advance his Jamaica agenda.

“I began to look around for opportunities and decided that I would use the companies in which I had influence to invest in Jamaica,” he says.

Just around the time when the Carib Cement deal was consummated, Jamaica’s finance minister, Dr Omar Davies, began to signal his interest in returning to private hands four insurance companies that had failed, and for which he had become an unwilling custodian.

Lok Jack had the perfect vehicle, and for the second time, found himself sitting at the negotiating table with the Jamaican government for another major piece of the country’s assets. He was accompanied to Jamaica on this new round of trips by GHL’s CEO, Sydney Phillips, and later, his successor, Peter Ganteaume.

“Peter Ganteaume got involved in the negotiations as CEO after Sydney retired,” says Lok Jack. “Peter and I saw eye-to-eye and appreciated the potential of the Jamaican assets. We had to work like hell to convince the board of GHL that Jamaica represented a good long-term risk.”

In the end, Guardian Holdings came away with what many Jamaicans at the time thought was a sweetheart deal to a foreign company. The Trinidadians paid the government J$1 billion for the combined life insurance portfolios of Mutual Life, Crown Life, Dyoll Life, and Horizon Life — which GHL then rolled into a single operating entity called Guardian Life.

The arrangement was for GHL to assume the long-term liabilities of the four failed firms, allowing them to continue in business seamlessly, thus preventing disruptions within the Jamaican market. In turn, the company secured tangible assets from the government – many of which were once owned by Mutual Life.

Within months of this transaction, and throughout the next few years, Jamaica bore witness to an investment orgy by companies with which Lok Jack was associated.

Lok Jack, it appears, was driven to this country by a combination of regional sentiment and the kind of strategic calculation that had already made him among the wealthiest in his native Trinidad and Tobago.

“I always had faith in Jamaica,” he says. “My view has always been that Jamaica had a bigger population than Trinidad and Tobago, so it represented a bigger market. Jamaicans speak English and the country is part of Caricom. The economy was down at the time but I always believed it would rise again. It was a logical step for us to be here.”

In 2001, GHL paid US$14 million for Boscobel hotel in St Mary and spent millions more on its renovation – part of a strategic move by the group into hard-currency earnings. The Trinidadians then signed a management contract with hotelier Gordon Butch Stewart for him to operate the resort under his Beaches brand.

Lok Jack says the US$10 million that GHL is currently spending on renovating the property reflects its “commitment to the hotel business”.

By using acquisition as a strategy to accelerate the growth of its Jamaican life insurance subsidiary, GHL sent a clear signal to the market that it was impatient to add critical mass to its operation, and that it intended to be a formidable competitor. The purchase of the life insurance portfolio of Prime Life in 2001 was one of the big moves towards this goal.

That same year, West Indies Alliance general insurance company was snapped up, and was followed in 2002 by Investment Masters, a fund management outfit that was founded by financial analyst and entrepreneur Claudette Crooks. Re-branded Guardian Asset Management Ltd, this firm became GHL’s investment subsidiary in Jamaica. It was offloaded earlier this year to a group of local investors.

This director took a surprisingly hands-on approach to GHL’s investment decisions in Jamaica. For example, he recalls how on a rainy day, he travelled from Kingston to Ocho Rios to inspect the site that was future home to a mall that was being erected in the tourist resort by businessman Chris Blackwell. It was part of his due diligence, ahead of deciding whether to put any of GHL’s money into Ocho Rios Resort Ltd, the holding company that Blackwell used for the investment.

“We made the investment and we still have a substantial investment in it,” he says.

He also held discussions with Maurice Facey, the chairman of Pan Jamaican Investments in which GHL inherited a 13 per cent shareholding when it took over the portfolio of Mutual Life. GHL bought another seven per cent of Pan Jam, taking its stake to 20 per cent.

Even as the Trinidadians continued to invest in areas they considered critical to their strategic outlook, they quickly disposed of those assets that were out of sync with their future plans. For example:

* They sold the Terra Nova Hotel in Kingston to the Hussey family.

* They sold GHL’s 50 per cent interest in three north coast hotels to John Issa, (Hedonism II, Grand Lido, and Trelawny Beach (now Star Fish). Mutual Life had owned the hotels as a 50/50 partner with Issa, whose SuperClub chain was the operator.

There is no doubt that among the positive spin-offs of GHL’s investment activities was that, at the very minimum, it helped bring stability to asset prices in what was an otherwise depressed market.

Its more enduring benefit, though, was the choice it afforded Jamaicans within the life insurance market.

Earl Moore, who up until his retirement in December, was president of Guardian Life, says that Jamaicans should not underestimate the impact of the company’s presence within the local market.

“In this respect we have had a tremendous impact that even goes beyond our actual size in the industry,” he notes.

A seasoned Jamaican insurance executive, Moore was in Trinidad in 2000 as vice president of sales at Guardian Life when he was seconded to Jamaica to help get the new operation going.

“The company was immediately Jamaicanised,” he says, in pointing to some of the early strategic decisions that he believes laid the foundation for Guardian’s future success. “There was a dislike in Jamaica for the fact that Trinidadians had bought out the entities, but by the time we sent out our 200- strong sales force into the marketplace, in no time Guardian became a household name as a Jamaican company. It was a good decision to have employed Jamaicans to run the company.”

At the time of Moore’s retirement, Guardian had a staff count of some 600, and billions of dollars in reserves — thanks to its many years of unbroken profitability.

Moore believes that the innovations and competitiveness that Guardian brought to the industry redounded to the benefit of consumers, and that the company’s involvement in social and voluntary work — from health, to police, to academia — stands as a model for good corporate citizenship.

He was succeeded as president by another Jamaican, Eric Hosing.

The breadth of Lok Jack’s institutional network was on display throughout the early 2000s. Even before the ink on the Guardian deal could dry, he was on the hunt again.

The government was seeking to divest itself of several commercial banks that had failed and which it had been forced to take over.

It seems that for every business opportunity that presented itself within the Jamaican market, this ubiquitous investor had an available vehicle.

This time around, it was a bank.

Guardian Holdings owned 20 per cent of RBTT Bank, which in turn, held 20 per cent of GHL’s shares. This arrangement created interlocking directorship, and, from the perspective of this bullish entrepreneur, the perfect corporate symbiosis.

The delegation that accompanied Lok Jack to Jamaica included RBTT’s chairman and CEO, Peter July, who was also a member of GHL’s board. July had been introduced by Lok Jack to finance minister, Dr Omar Davies, on a previous trip here.

“Peter was very supportive when we were negotiating for Guardian and he came to Jamaica with me,” recalls Lok Jack. “I introduced him to Omar so he was very interested when the opportunity to buy the banks in Jamaica came about.”

The failed institutions had been culled together under one umbrella called Union Bank. It remained open for business, but going forward, would require significant capital injection.

Lok Jack remembers he and July having “to work hard to convince the board of RBTT to make the investment because they had serious concerns about Jamaica. They did not understand the country. We pushed like hell to get the board to agree to buy the banks.”

RBTT came away from the negotiations as a major player within Jamaica’s financial sector, taking over the operations of five commercial banking groups and a merchant bank: Century National, Citizens Bank, Workers Bank, Horizon Merchant Bank, Eagle Commercial, and Island Victoria Commercial Bank.

This acquisition was not without controversy. In fact, if some Jamaicans were taken aback by the Guardian Life transaction, they were outraged when details of this latest deal began to surface.

The first piece of information that became a major talking point within business circles was the US$35.6 million (J$1.6 billion) price tag; this translated into a 60 per cent discount on the net book value of the bank. An equally hair-raising detail was that the new owners were able to get the government to agree to a two-year payment plan for $600 million of the purchase price. The loan was at an effective annual interest rate of six per cent. (An interesting postscript is that GHL, of which Lok Jack is a 25 per cent owner, realised gain of TT$227 million in 2008, when the Royal Bank of Canada acquired RBTT Financial Holdings along with its entire Caribbean branch network, including Jamaica).

One Jamaican who has been a consistent and public critic of the way the government handled this and other transactions is John Jackson, a well respected financial analyst and publisher of the Investors’ Choice business magazine.

But even Jackson expresses admiration for Lok Jack’s negotiating skills, and likens him to the American billionaire investor, Warren Buffet.

“These guys are very entrepreneurial, and have key contacts which they use effectively,” says Jackson. “He is like a Warren Buffett who started small, and he had the advantage of cheap money in Trinidad that was able to facilitate his entrepreneurial exploits.”

Dennis Lalor, chairman of the general insurance company ICWI, and co-founder of Life of Jamaica, while declaring that he too may have taken a different approach to the disposal of the assets, quickly points out that he was unwilling to second-guess the government which, he says, may have had much more information than was available to the public, to factor into its decision.

“In any case people need to understand that a government has to do what it has to do,” cautions Lalor. “I would not necessarily have approached it the same way, but I do not know the consideration that went into the decision making.”

Like Jackson, Lalor says he admires Lok Jack for the positive impact of his brand of entrepreneurism on the region.

“He epitomises what I think is the real Caribbean man; he believes in the region and spends a lot of energy promoting business in the Caribbean. As a result he has been successful. I find him extremely honourable. More of us need to look outside of Jamaica.”

Lalor appears to have drawn inspiration from this icon, having himself over the past decade ventured deep into the region with his general insurance business. ICWI is now in The Cayman Islands, Turks and Caicos, The Bahamas, The Netherlands Antilles, St Kitts, and British Virgin Islands.

Lalor is not alone in taking note of Lok Jack’s ‘Pan Caribbeanism’.

Ian Neita who had a stint as chairman of one of Carib Cement’s subsidiaries – Jamaica Gypsum – just before the acquisition by TCL, says that the entire region is benefiting from the philosophy cultivated by this well-positioned businessman.

“He has achieved a lot,” says Neita. “I see him as an icon in regional economic and entrepreneurial integration. He understands the need for businesses in the Caribbean to expand beyond their domestic borders. He has also demonstrated a sensible approach to diversification by getting involved in manufacturing, financial services and other commercial areas, for which he must be lauded.”

Neita, who is currently executive director of the Tourism Enhancement Fund, argues that Lok Jack cannot be blamed for his strong negotiating skills and good sense of timing. “The opportunity was there and there was no Jamaican investor or conglomerate group coming forward with serious propositions,” he argues.

“The same is true with the sale of Carib Cement,” Neita continues. “In the final analysis, it was down to a regional company or a Mexican firm. The government had to look at the best fit for developing a strong regional entity.”

Yet, what is astounding is that back in 2001, when news got around that another Trinidadian company was headed Jamaica’s way, the name that began to surface was that of the same entrepreneur who had been so pivotal to the previous investments – by Trinidad Cement Ltd, Guardian Holdings, and RBTT Bank.

Neal & Massy was no stranger to the Jamaican market. It used to be here in a substantial way but gradually withdrew, beginning in the mid 1980s. So its acquisition in 2001 of HD Hopwood, a manufacturer and distributor of pharmaceuticals and consumer goods, represented an important reversal. N&M also established a branch of its technology subsidiary — Illuminat — in Kingston just around the time it bought Hopwood.

Not only was Lok Jack a major shareholder, he was deputy chairman of Neal & Massy Holdings when the subsidiary re-entered the Jamaican market. He took over as chairman in 2004, succeeding Nazir Ahamad.

By late 2005, as though on financial steroids, N&M flexed its muscles in Jamaica in a manner that forced many in this country to really pay attention.

Through a subsidiary, N&M Industrial Gas Holdings Ltd., the Trinidadians partnered with Jamaican businessman Joe Issa to establish a firm called Cool Petroleums Holdings (CPH). Issa operated the Cool brand of gas stations throughout the island.

CPH then bought the entire Jamaican operation of the Anglo-Dutch giant, Shell Corporation, shelling out over US$100 million for the asset.

This massive undertaking was bankrolled by the Trinidadians. They took 100 per cent ownership of the LPG side of Shell’s business, inheriting 44 per cent of Jamaica’s liquid petroleum gas market. That operation is now under the name Gas Pro. With the Shell acquisition, N&M, which also owns Industrial Gases Ltd (IGL), gained a near monopoly control of the LPG market in Jamaica — 85 per cent, with the other 15 per cent supplied by the state-owned Petcom.

The petrol side of the business operates under the CPH umbrella. Issa has majority ownership (60 per cent) of this company, though, importantly, it was N&M that appointed the chairman to the board — Brian Young.

Lok Jack explains: “We provided the financial backing for the transaction to work. We used our good name to provide the guarantees to the bondholders for the loans that funded the acquisition. Then we secured a shareholder agreement, and to ensure a sound corporate governance structure we named Brian Young as chairman of CPH. It was also a condition of the agreement to the bondholders.

“We were not interested in the gas station business. We are not in that business. However, Shell said that it was only interested in selling all the assets as one, and would therefore not sell us the LPG side of the business separately. Issa on the other hand, was only interested in the gas station business so we formed a partnership.”

For all his entrepreneurial gravitas, Lok Jack does not always get his own way. This was spectacularly demonstrated when he came out at the losing end of an acrimonious boardroom fight at TLC in 2002.

The corporate dogfight was triggered when Cemex which owned 20 per cent of TCL, and had a seat on the main board, expressed interest in making a buyout offer to all the shareholders. For the proposal to move forward, it first required a 75 per cent super-majority shareholder affirmative vote, to remove an existing ceiling on individual ownership.

Lok Jack supported Cemex’s right to make the offer to all the shareholders, and for them to be able to weigh the benefits, so he mounted a campaign for the removal of the cap.

“I was championing the rights of all shareholders,” he argues. “My principle was to ensure shareholder democracy.”

Some members of the board wanted to maintain the status quo and were unrelenting in their position.

A nasty public fight broke out — among former friends and colleagues — reverberating throughout the entire Caricom region.

Ultimately, Lok Jack and his supporters fell just short of the 75 per cent shareholder support that was required to remove the restriction. He subsequently resigned as director and chairman of Carib Cement.

But with the benefit of hindsight, some of the TCL shareholders who voted against lifting the restriction could very well be now second-guessing their earlier judgement call.

“What is interesting,” Lok Jack points out, “is that the TCL shares are now selling for less than half the price that was offered by Cemex nearly ten years ago.”

When Lok Jack resigned from Carib Cement, he was succeeded by current chairman, Brian Young. A Trinidadian, Anthony Haynes, replaced Mahabir as general manager.

Importantly though, by the time of their departure, the cement company had already returned to profitability — netting $294 million in 2000, and $379 million in 2002, by which time the working capital deficiency was slashed to $229 million from $3.7 billion at its peak in 1998. In 2003 net profit stood at $374 million.

Still, the venture through which Lok Jack maintains a constant presence on the shelves of retailers, and in the cupboards of households throughout every nook and cranny of the Caricom market, is his privately held company, Associated Brands Industries Ltd, (ABL). This is, by most estimates, the region’s leading manufacturer and distributor of snack foods, chocolate confectionery, biscuits and breakfast cereals.

ABL has been the unwelcome nemesis of Jamaica’s businesses that have tried, with various degrees of failure, to compete against its products in their own domestic market, and elsewhere within the region.

In 1996, Lok Jack established a distribution and warehouse facility in Jamaica, for the ABL’s subsidiary, Confectionery & Snacks JA Ltd (C&S).

Roger Bell, the managing director of the Jamaican operation, which is housed in a 50,000 square foot building at Naggo Head, near Portmore, St Catherine, says that C&S uses “aggressive nationwide distribution, unique and innovative merchandising, creative promotional and advertising programmes as well as competitive prices,” and that the firm “strives to deliver quality products at an affordable price to the population”.

Among the products it sells are Sunshine snacks, Charles chocolates, Devon biscuits and Sunshine cereals.

Some 300 Jamaican find work at this firm, including the individuals who operate the large fleet of trucks that are used in the distribution of the products.

The company also operates a depot in Montego Bay.

“C&S… through its brands has become an integral part of the Jamaican marketplace while enjoying a very unique position in the hearts of families around the island,” beams Bell.

Lok Jack, who was born in 1944, started Associated Brands Investments Ltd at the age of 28. The company has two subsidiaries as far away as Malta — Consolidated Biscuits Malta, and Sunshine Snacks Malta.

Bell describes his boss with whom he has worked for 10 years (seven in Jamaica) as “a great teacher” and a man given to “in-depth evaluations and analyses”.

What is interesting, however, is Lok Jack’s modest self-evaluation and the way he tries to put his success into perspective.

He points out that he and other businesses in T&T have been able to borrow for retooling at five per cent interest rate. Access to this cheap source of capital has given them the ability to invest in plant efficiency on a scale that has been denied to their Jamaican competitors.

“The interest rates in Jamaica have been significantly too high for too long and make industries there uncompetitive,” he says. “This is why I totally admire what finance minister Shaw did with the reduction of the interest rates with the debt exchange programme. It was a masterful decision, and a move in the right direction.”

Last year, Lok Jack had an opportunity to make another big move in Jamaica. As its chairman, and having led the reorganisation and transformation of the loss-making BWI airline into Caribbean Airline, he was asked by the Trinidadian government (the owner) to lead the negotiations with the Jamaican government for the acquisition of Air Jamaica.

Dennis Lalor, who led Jamaica’s negotiating team, sat across the table from Lok Jack. His handling of the entire process, Lalor says, “reinforced my view of him as a man of integrity”.

Adds Lalor: “He is a representative of what I think Caribbean business people should be.”

Earlier this year the deal was finalised, and in the aftermath of the change in government after national elections in the twin island republic, Lok Jack resigned from the board of the airline in May, “to allow the new government to make its own decision as to who should lead the airline”.

Moses Jackson is the co-founder of the Business Leader Award programme, the founding and former editor of the Business Observer, and a member of the Business Leader Award Selection Committee. He may be reached at moseshbsjackson@yahoo.com