Finsac 'worst' economic disaster, says Wehby

[Karl]

Finsac 'worst' economic disaster, says Wehby
PATRICK FOSTER, Observer writer
fosterp@jamaicaobserver.com
Thursday, January 10, 2008



Douglas Orane (left) greets Don Wehby (centre) at the Lions Club of Kingston luncheon held at the Pegasus Hotel in Kingston yesterday. Looking on is Lions Club president Winston Barrett. (Photo: Karl McLarty)

MINISTER without portfolio in the Ministry of Finance, Don Wehby yesterday said the Finsac period of the 1990s was the worst experience any country in the western hemisphere had ever faced.

"The Finsac experience is the worst disaster to happen to any economy in this hemisphere," Wehby told members of the Lions Club at a luncheon held at the Jamaica Pegasus Hotel in New Kingston.

According to Wehby, the effects of Finsac on local businessmen were not only financial but also psychological, leaving many wary of again investing in the economy.
"We need to overcome that psychological barrier to bring back the entrepreneurial spirit to Jamaica," he suggested.

During the mid-1990s, a meltdown in the financial sector resulted the closure of several indigenous banks and the bankruptcy of a large chunk of Jamaican entrepreneurs. Finsac was formed by the then People's National Party administration to manage the distressed assets held by the beleaguered financial institutions.

Yesterday, Wehby said that his administration now had to mobilise the financial sector to get it going again, having been burnt during the Finsac era.

He added that discussions were currently being held with the Jamaica Stock Exchange to facilitate small and medium-sized enterprises in listing on the stock exchange.
"Access to that capital will help to bring back the spirit that has been so lacking," Wehby argued.

Wehby also outlined several points, which he said had to be addressed to attract investment to help the country attain sustainable economic growth.

Included in his to-do list are sound, predictable macro-economic policy; a simple, competitive tax system; business-friendly bureaucracy; tackling the crime problem and an efficient, effective and affordable energy policy.
Citing fiscal problems due largely to inefficient management of government resources, he said a divestment of assets that did not constitute "core government business" was one approach that would be used to pay down the national debt.

The Sugar Company of Jamaica and Air Jamaica would be the first such companies to be put up for divestment by government.
"We are on track in terms of divesting the Sugar Company of Jamaica by 2008," Wehby said. "That is well underway and we have about eight interested parties."

Concerning Air Jamaica, he added that interest by essential partners have been "tremendous", adding that there were other areas where government was involved but should not be.

[Lazie]

On NNN yesterday, Omar Davis' response was that Finsac was a solution to a problem .. but we all know that when Omar get stumped .. him start stammering. Nuh true Mosiah?

[Gamma]

with all due respect to wehby and to a lesser extent omar davies...this is no news flash!!!

[Lazie]

with all due respect to wehby and to a lesser extent omar davies...this is no news flash!!!

Maybe not for you and I. There are some jokers on this forum namely Jawge, KArl and Mosiah who embarrass themselves trying to paint Finsac in a good light.

1. Forget Jawge .. if the PNP said the earth was flat .. Jawge would run wid it.

2. Karl "...say without fear or favour that Dennis Chung speaks crap the very many of my friends and unfortunately some family members who were saved from losing all their life savings by the actions of the governement is testament to the good works of FINSAC."

3. Mosiah: "Before the Observer insurgency meeting, Don Crawford was Jamaica's most wanted, along with several other bankers who were said to have fleeced the country. At the very least, they were all looked upon suspiciously, Paul Chen Young included. And FINSAC was, if not smart, it was indeed a necessary way to save the country from further banking
turmoil." .

[Mosiah]

He stammers all the time. Stammer or not, at least he does not have to sit the CAPE.

[Mosiah]

3. Mosiah: "Before the Observer insurgency meeting, Don Crawford was Jamaica's most wanted, along with several other bankers who were said to have fleeced the country. At the very least, they were all looked upon suspiciously, Paul Chen Young included. And FINSAC was, if not smart, it was indeed a necessary way to save the country from further banking
turmoil." .

And who was offering other alternatives to mitigate the impact of the meltdown?

Thanks for your response.

[Assasin]

It nuh matter who was offering advice, there is always alternative and Dr.Davis know that too but he took one road so others can be critical of it.

[Lazie]

And who was offering other alternatives to mitigate the impact of the meltdown?

Thanks for your response.

Don't come wid that. This is about Finsac that has caused the taxpayers alot. Pity some of you cannot admit it.

[Mosiah]

If nothing else, that was courage. To this day, I have not heard one person offer a sensible alternative. It is easy to criticise. How about stepping to the plate when it matters?

[Mosiah]

A dumbass response was expected. You did not disappoint.

[Gamma]

hmmmm if him stammer when him stumped and him stammer all the time......

[Assasin]

Mosiah courage is one thing but it didn't work out as well as he thought. He was the finance minister with the responsiblity to find solution and if he didn't he has to take responsibility.

We can talk about what others think, but I can assure you he had other advice but he took the one he thought was best.

[Lazie]

A dumbass response was expected. You did not disappoint.

hehehe .. when Omar in a bind him start stammering ... you ... get emotional. But then, when out of stupid loyality yuh gonna put yuh foot in yuh mouth ... yuh should be upset wid yuhself .. not at those who kept it real. As mi say ... unuh continuously prove why one fool lead many is a reality in Jamaica.

[Bricktop]

And who was offering other alternatives to mitigate the impact of the meltdown?

Introducing Partnership With People (PWP)
The Govt will set up PWP corporation. PWP will in turn form subsidiary corporations specifically to provide goods or services at a profit. These PWP corporations would be relatively autonomous but under the umbrella of PWP. Some features of these PWP corporations will include:

• -extensive feasibility study to ensure profitability potential
• obtain marketing and other technical expertise on short term contract
• -take advantage of Govt contacts and access
• - determine formula for success by comparison with like corporations not only in Jamaica but worldwide
• - this formula will then be followed rigidly
• -PWP would run the corporation for a limited time to ensure profitably and high standards
• -PWP would then sell the enterprise to private individuals, partners, but maintain control by an iron-clad contract which would spell out very rigid terms such as:
• -the name (Trademark) of the enterprise could not be changed
• - sale to a partner would be in the form of a down payment with a % of sales coming to PWP in perpetuity or for some defined period.
• -PWP would control management style deciding such fundamentals as training standards and salary of employees
• -PWP would provide advertising, and state of the art professional marketing and management
• -Supplies would be bought only from PWP sources
• -Buildings would have to be maintained according to PWP standards with no changes without PWP authorization
• -Since PWP policies and management techniques are obtained from established successful companies, failure to follow to the letter would void the contract and the private partner could even lose the enterprise and forfeit their deposit. This is a vital aspect of this plan as it depends on following what works, and models like these have a greater than 90% success rate.

An important aspect of PWP is that since unlike other Govt. operations, this one is for profit, employees salary would depend on the profits of PWP. Basically, the bigger the profits, the better the pay. Given a certain time to turn a profit, PWP should not only pay for itself but provide revenues to the Govt.

In a nutshell, PWP is a franchise operation in which the Government is the franchiser and private individuals, partners, would be franchisees. Currently franchises are very expensive, making it difficult to find partners. So, creative financing. substituting products and services for financing, manipulation of fees and royalties, and such flexibility might have to be used to ensure supply of partners, each with a real stake in the business.

[Gamma]

that is moot now...the damage is already done.....i know for a fact that an alternative course of action was discussed by the minister and several businessmen up until the day before and there was on the table at least one alternative which all the parties found common ground on.

that is another reason why it was such a blow to the economy and to confidence in the financial sector..because one thing was agreed in principle and a completely different course of action was pursued.