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BOJ governor, Davies to headline Finsac enquiry - Hearings begin November
Published: Wednesday | October 28, 2009
( L - R ) 1 - 5
1. Omar Davies, opposition spokesman on finance and former finance minister.
2. Patrick Hylton, group managing director of NCB and former manager of Finsac.
3. Shirley Tyndall, former financial secretary.
4. Errol Campbell, general manager of Finsac Limited.
5. Derick Latibeaudiere, BOJ governor. - File photos
Central bank Governor Derick Latibeaudiere, who rarely emerges from his high-rise waterfront offices at the Bank of Jamaica, and former finance minister, Dr Omar Davies, will both testify before the commission of enquiry into the financial sector meltdown of the 1990s that led to an expensive government rescue, costing taxpayers an estimated $140 billion.
The commission, led by retired justice Boyd Carey has also requested submissions from retired financial secretary Shirley Tyndall, and top banker Patrick Hylton, former head of the Financial Sector Adjustment Company (Finsac), which was created as the rescue vehicle for institutions in trouble.
It was not immediately clear whether he and Tyndall - both former board members of Finsac - would be required to testify in person when the hearings begin, but current general manager Errol Campbell will.
Latibeaudiere's appearance before the commission was confirmed by Audley Shaw, the current finance minister, while Charles Ross, a member of the commission, later confirmed the other names.
Davies, as minister, was the chief architect of the rescue plan. His takeover of banks and other financial institutions began with Blaise Trust and Merchant Bank in December 1994, though the full crash and subsequent bailouts would not gather steam until a year and a half later in July 1996 with the forced rescue of Century National Bank.
By then, Davies was already in talks with the insurance sector as the liquidity crisis deepened and spread.
Too many institutions, including the National Commercial Bank, which Hylton now runs, profitably, had invested too much short term funds in long term assets, leading to a collapse.
The final cost to Jamaica to right the system was estimated at 44 per cent of GDP.
Now, 15 years later, Finsac and its agents are still being challenged in court and by lobby groups about the disposal of assets that were confiscated under the bailout programme and later sold to Beal Bank of Texas, operating locally as Jamaica Redevelopment Foundation Inc.
Witnesses line-up
Wednesday Business was unable to ascertain the line-up of witnesses, but Commissioner Charles Ross said the first set would include key government officials.
The Finsac enquiry, initiated by Shaw will assess the cause of the crash, and whether the debtors whose assets have been confiscated under the rescue programme have been fairly treated.
Last week, the one-year-old Asso-ciation of Finsac'd Entrepreneurs (AFE), a group of 30 that has lobbied for the enquiry, said they would remain engaged despite having lost its president and chief spokesman, Neville Boxe, who passed away from an embolism.
AFE and other businesses got caught up in the financial crash because of loans that had gone bad, leaving banks with uncollected, and some uncollectable debts.
AFE blames the Government's high interest rate policy for the failure of their businesses, saying their loans went into default because of the constant increase in debt servicing charges as interest rates climbed. Boxe, for example, had said his interest charges had quadrupled.
Davies, however, has consistently argued that much of the financial sector mess was the result of poorly managed institutions.
The enquiry will put the contending assertions to the test.
Yola Gray, secretary of AFE, said the group was resolute in having those who suffered financially from the meltdown obtain some form of justice.
New leader
AFE is to select a new leader.
"The group will stay the course. There is no doubt about it," said Gray.
"We have been through the prime minister and how many ministers for windows of opportunity to restart business and basically we are reaching nowhere," she said. "All we are asking from the prime minister is to give loans to these people because their assets have been tied up with Finsac."
Ross says the hearings would begin early in November, four months after the initial July 1 date announced by Shaw.
The commission delayed the start of the enquiry saying it needed time to review submissions; ascertain the allegations being made and alert the parties of the claims for appropriate response; and determine what persons and institutions would be called to give evidence.
But, when asked about the volume of submissions, secretary of the commission, Fernando DePeralto, last week referred queries to Boyd Carey, who in turn was said to be off the island.
dionne.rose@gleanerjm.com
Published: Wednesday | October 28, 2009
( L - R ) 1 - 5
1. Omar Davies, opposition spokesman on finance and former finance minister.
2. Patrick Hylton, group managing director of NCB and former manager of Finsac.
3. Shirley Tyndall, former financial secretary.
4. Errol Campbell, general manager of Finsac Limited.
5. Derick Latibeaudiere, BOJ governor. - File photos
Central bank Governor Derick Latibeaudiere, who rarely emerges from his high-rise waterfront offices at the Bank of Jamaica, and former finance minister, Dr Omar Davies, will both testify before the commission of enquiry into the financial sector meltdown of the 1990s that led to an expensive government rescue, costing taxpayers an estimated $140 billion.
The commission, led by retired justice Boyd Carey has also requested submissions from retired financial secretary Shirley Tyndall, and top banker Patrick Hylton, former head of the Financial Sector Adjustment Company (Finsac), which was created as the rescue vehicle for institutions in trouble.
It was not immediately clear whether he and Tyndall - both former board members of Finsac - would be required to testify in person when the hearings begin, but current general manager Errol Campbell will.
Latibeaudiere's appearance before the commission was confirmed by Audley Shaw, the current finance minister, while Charles Ross, a member of the commission, later confirmed the other names.
Davies, as minister, was the chief architect of the rescue plan. His takeover of banks and other financial institutions began with Blaise Trust and Merchant Bank in December 1994, though the full crash and subsequent bailouts would not gather steam until a year and a half later in July 1996 with the forced rescue of Century National Bank.
By then, Davies was already in talks with the insurance sector as the liquidity crisis deepened and spread.
Too many institutions, including the National Commercial Bank, which Hylton now runs, profitably, had invested too much short term funds in long term assets, leading to a collapse.
The final cost to Jamaica to right the system was estimated at 44 per cent of GDP.
Now, 15 years later, Finsac and its agents are still being challenged in court and by lobby groups about the disposal of assets that were confiscated under the bailout programme and later sold to Beal Bank of Texas, operating locally as Jamaica Redevelopment Foundation Inc.
Witnesses line-up
Wednesday Business was unable to ascertain the line-up of witnesses, but Commissioner Charles Ross said the first set would include key government officials.
The Finsac enquiry, initiated by Shaw will assess the cause of the crash, and whether the debtors whose assets have been confiscated under the rescue programme have been fairly treated.
Last week, the one-year-old Asso-ciation of Finsac'd Entrepreneurs (AFE), a group of 30 that has lobbied for the enquiry, said they would remain engaged despite having lost its president and chief spokesman, Neville Boxe, who passed away from an embolism.
AFE and other businesses got caught up in the financial crash because of loans that had gone bad, leaving banks with uncollected, and some uncollectable debts.
AFE blames the Government's high interest rate policy for the failure of their businesses, saying their loans went into default because of the constant increase in debt servicing charges as interest rates climbed. Boxe, for example, had said his interest charges had quadrupled.
Davies, however, has consistently argued that much of the financial sector mess was the result of poorly managed institutions.
The enquiry will put the contending assertions to the test.
Yola Gray, secretary of AFE, said the group was resolute in having those who suffered financially from the meltdown obtain some form of justice.
New leader
AFE is to select a new leader.
"The group will stay the course. There is no doubt about it," said Gray.
"We have been through the prime minister and how many ministers for windows of opportunity to restart business and basically we are reaching nowhere," she said. "All we are asking from the prime minister is to give loans to these people because their assets have been tied up with Finsac."
Ross says the hearings would begin early in November, four months after the initial July 1 date announced by Shaw.
The commission delayed the start of the enquiry saying it needed time to review submissions; ascertain the allegations being made and alert the parties of the claims for appropriate response; and determine what persons and institutions would be called to give evidence.
But, when asked about the volume of submissions, secretary of the commission, Fernando DePeralto, last week referred queries to Boyd Carey, who in turn was said to be off the island.
dionne.rose@gleanerjm.com
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