Tweet
Cash Plus collapse could lead to further fall out
2008-04-12 Written by: Ralston Hyman
Carlos Hill
The collapse of Cash Plus Group Limited with some $16 billion in principal sums, $23 billion in outstanding interest and acquisition cost of $5.2 billion as at the end of September last year, and the subsequent arrest of its founder, Carlos Hill, could lead to further erosion in confidence in the other alternative investment schemes.
This could lead to runs on the other schemes, like that which took place at WorldWise Partners Limited on Thursday, leading to liquidity problems and further collapses and arrests. It would also exacerbate the decline in real disposable income and consumption spending caused by the galloping food and energy prices, as well as the government’s aggressive tax collection drive, since these schemes were managing almost $200 billion or 25 per cent of last year’s GDP.
Many creditors/investors used the returns from their loans or investments in the informal investments schemes to supplement their income, in order to facilitate the purchases of cars, houses, appliances and even to pay utility bills, wages/salaries and school fees. These investors/creditors span the entire socio economic spectrum range and include pastors, teachers, lawyers, entertainers, taxi drivers and dons.
The Cash Plus Group saga, which commenced in May 2007 when Hill took the Financial Services Commission (FSC) to court, contending that it had no jurisdiction over his operations, took a rather new and dangerous twist last Wednesday, when Hill announced that he could not meet tomorrow’s deadline to start repaying his 40,000 creditors/investors.
The failure to meet tomorrow’s deadline followed a similar failure to meet the March 31 deadline, which resulted in the court appointing a receiver manager in response to a request made by Hill. The developments came hard on the heels of other missed dates in December and November last year.
In a release on Wednesday, receiver manager Kevin Bandoian stated that Hill advised him that he would not be able to meet tomorrow’s payment deadline, which was premised on loan inflows from an institution in the Turks and Caicos Island.
The receiver manager also said he had identified some 800 subsidiaries and affiliates of the Cash Plus Group in different countries, with very little assets or business activity. He also pointed out that the identification of the assets and liabilities of Cash Plus Group Limited was a very complex and sensitive assignment, and that the 35-day time line he had to complete the job was very tight.
Detectives from the Organised Crime Division, led by Superintendent Fitz Bailey and supervised by Assistant Commissioner of Police, Les Green, swooped down on Hill’s Norbrook Drive residence in Kingston and eight other locations leased by him at about 6:00 a.m. on Thursday, following the issuance of the release by the receiver manager. Hill and his brother Bertram Hill and the Cash Plus financial controller are currently being held at the Horizon Adult Remand Centre.
ACP Green said the local police would be seeking assistance from their international counterparts to track down any assets which Hill may have hidden overseas. Green, however, appealed to investors in the scheme to be patient, given the complexity and time-consuming nature of the case.
Copyright 2007-2008 Sunday Herald. All Rights Reserved
2008-04-12 Written by: Ralston Hyman
Carlos Hill
The collapse of Cash Plus Group Limited with some $16 billion in principal sums, $23 billion in outstanding interest and acquisition cost of $5.2 billion as at the end of September last year, and the subsequent arrest of its founder, Carlos Hill, could lead to further erosion in confidence in the other alternative investment schemes.
This could lead to runs on the other schemes, like that which took place at WorldWise Partners Limited on Thursday, leading to liquidity problems and further collapses and arrests. It would also exacerbate the decline in real disposable income and consumption spending caused by the galloping food and energy prices, as well as the government’s aggressive tax collection drive, since these schemes were managing almost $200 billion or 25 per cent of last year’s GDP.
Many creditors/investors used the returns from their loans or investments in the informal investments schemes to supplement their income, in order to facilitate the purchases of cars, houses, appliances and even to pay utility bills, wages/salaries and school fees. These investors/creditors span the entire socio economic spectrum range and include pastors, teachers, lawyers, entertainers, taxi drivers and dons.
The Cash Plus Group saga, which commenced in May 2007 when Hill took the Financial Services Commission (FSC) to court, contending that it had no jurisdiction over his operations, took a rather new and dangerous twist last Wednesday, when Hill announced that he could not meet tomorrow’s deadline to start repaying his 40,000 creditors/investors.
The failure to meet tomorrow’s deadline followed a similar failure to meet the March 31 deadline, which resulted in the court appointing a receiver manager in response to a request made by Hill. The developments came hard on the heels of other missed dates in December and November last year.
In a release on Wednesday, receiver manager Kevin Bandoian stated that Hill advised him that he would not be able to meet tomorrow’s payment deadline, which was premised on loan inflows from an institution in the Turks and Caicos Island.
The receiver manager also said he had identified some 800 subsidiaries and affiliates of the Cash Plus Group in different countries, with very little assets or business activity. He also pointed out that the identification of the assets and liabilities of Cash Plus Group Limited was a very complex and sensitive assignment, and that the 35-day time line he had to complete the job was very tight.
Detectives from the Organised Crime Division, led by Superintendent Fitz Bailey and supervised by Assistant Commissioner of Police, Les Green, swooped down on Hill’s Norbrook Drive residence in Kingston and eight other locations leased by him at about 6:00 a.m. on Thursday, following the issuance of the release by the receiver manager. Hill and his brother Bertram Hill and the Cash Plus financial controller are currently being held at the Horizon Adult Remand Centre.
ACP Green said the local police would be seeking assistance from their international counterparts to track down any assets which Hill may have hidden overseas. Green, however, appealed to investors in the scheme to be patient, given the complexity and time-consuming nature of the case.
Copyright 2007-2008 Sunday Herald. All Rights Reserved