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Commission to probe 1990s financial sector collapse
Contractor general to investigate sale of Air J's London route
BY BALFORD HENRY Observer writer
balfordh@jamaicaobserver.com
Thursday, April 24, 2008
THE Government is to appoint a commission to enquire into the financial sector collapse of the 1990s.
At the same time, the administration has asked the contractor general to investigate the sale of Jamaica's seven slots at Heathrow Airport in London to Virgin Atlantic for US$10 million, last year.
Minister of Finance and the Public Service Audley Shaw made the announcements as he closed the 2008/2009 budget debate in the House of Representatives, yesterday.
"We maintain our stance and will implement, this year, a commission of enquiry that will specifically pinpoint the causes of the collapse and will assist us, as a country, to set rules to avoid such a catastrophe ever befalling Jamaica, again," Shaw said on the financial sector collapse.
He blamed the collapse on "the most prolonged period of high interest rates" which he blamed on "inappropriate policy decisions" made by Dr Omar Davies, the former minister and current Opposition spokesman on finance.
He said that interests rates during the period rose to between 70 per cent and 140 per cent, and that small and medium businesses, which could not afford it, became bankrupt, triggering a ripple effect throughout the banking sector.
In February this year, Shaw told the House that the Government had ordered an external forensic audit into the operations of FINSAC and the Financial Institution Services (FIS) Limited.
He said that the purpose of the audit was to examine and report on the "probity, and legality of sale agreements and management decisions made by the company and whether the Government of Jamaica suffered any loss that could have been avoided".
He said that a report on the audit would be tabled in Parliament, once it is completed.
During the mid-1990s, a meltdown in the financial sector resulted in the closure of several banks and the bankruptcy of a large number of Jamaican entrepreneurs. FINSAC was formed by the then Government of the People's National Party to manage the distressed assets held by the struggling financial institutions.
On the sale of the Air Jamaica slots at Heathrow, Shaw said that while the Government sold the slots in March last year for US$10 million, because of their high demand, they could have fetched as much as US$364 million or J$26 billion.
"This could have paid off 75 per cent of the US$473 million liabilities of Air Jamaica that your Government left behind," Shaw claimed.
He said that the sale was not subject to public tender and it appeared that only two companies were courted, and that Parliament's consent was never sought nor were the legal officers of Air Jamaica and other senior Government technocrats involved in the negotiations.
"This was a significant asset of the people of Jamaica that was given away and all we got out of it, apart from the US$10 million, is the kiss that the minister of transport got," he said.
Contractor general to investigate sale of Air J's London route
BY BALFORD HENRY Observer writer
balfordh@jamaicaobserver.com
Thursday, April 24, 2008
THE Government is to appoint a commission to enquire into the financial sector collapse of the 1990s.
At the same time, the administration has asked the contractor general to investigate the sale of Jamaica's seven slots at Heathrow Airport in London to Virgin Atlantic for US$10 million, last year.
Minister of Finance and the Public Service Audley Shaw made the announcements as he closed the 2008/2009 budget debate in the House of Representatives, yesterday.
"We maintain our stance and will implement, this year, a commission of enquiry that will specifically pinpoint the causes of the collapse and will assist us, as a country, to set rules to avoid such a catastrophe ever befalling Jamaica, again," Shaw said on the financial sector collapse.
He blamed the collapse on "the most prolonged period of high interest rates" which he blamed on "inappropriate policy decisions" made by Dr Omar Davies, the former minister and current Opposition spokesman on finance.
He said that interests rates during the period rose to between 70 per cent and 140 per cent, and that small and medium businesses, which could not afford it, became bankrupt, triggering a ripple effect throughout the banking sector.
In February this year, Shaw told the House that the Government had ordered an external forensic audit into the operations of FINSAC and the Financial Institution Services (FIS) Limited.
He said that the purpose of the audit was to examine and report on the "probity, and legality of sale agreements and management decisions made by the company and whether the Government of Jamaica suffered any loss that could have been avoided".
He said that a report on the audit would be tabled in Parliament, once it is completed.
During the mid-1990s, a meltdown in the financial sector resulted in the closure of several banks and the bankruptcy of a large number of Jamaican entrepreneurs. FINSAC was formed by the then Government of the People's National Party to manage the distressed assets held by the struggling financial institutions.
On the sale of the Air Jamaica slots at Heathrow, Shaw said that while the Government sold the slots in March last year for US$10 million, because of their high demand, they could have fetched as much as US$364 million or J$26 billion.
"This could have paid off 75 per cent of the US$473 million liabilities of Air Jamaica that your Government left behind," Shaw claimed.
He said that the sale was not subject to public tender and it appeared that only two companies were courted, and that Parliament's consent was never sought nor were the legal officers of Air Jamaica and other senior Government technocrats involved in the negotiations.
"This was a significant asset of the people of Jamaica that was given away and all we got out of it, apart from the US$10 million, is the kiss that the minister of transport got," he said.
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