'FINSAC ruined me' - Man loses business, home during '90s me

[Willi]

Karl

There can be no justification for the catastrophe of Finsac.

Waste of time to argue what was the worst thing to happen to the Jamaican economy. Caused by poor policy and implemented via spite and vindictiveness.

We will pay for this for generations to come.

[Jawge]

In short you are saying: When one enters a business venture (which is to make profit), if one takes out a loan (in which the banks is looking for a profitable return also) as Mr. willis did. This loan should be financed by the public purse to ensure that Mr. Willis business stay viable? Is that what you are saying Willi? Why should tax payers bail out every business that's heading for failure? Did Omar say sign this loan or else I close your business? This is akin to going to the WC and blaming FIF for not wining. Not all teams will make it o the final, some will drop out from the first round. A fact of life.

Regardless of who is in power; there are some very unethical business paractices within Ja's banking sector (this has its roots in colonial times). Small business owners should seriously think about "pardner" and leave banking alone. Now if you are addressing it from this end I can work with you.

[Gamma]

there is no way that bank should have been allowed to be able to make a 480K loan should ballon to 7 million in a year. that is unconsionable!!! those respinsible for the financial sector let down the economy as well as the business community. maintaing high interest rates, ARTIFICALLY high and extreme interest rates boggles the mind when one considers that the marketplace could not support that with the (lack of) productivity in the jamaican economy. quite simply put, where was the money to come from to support these interest rates?!!!

then came finsac! the same ministry that facilitated he high interest rates turn around and "finsacced" it???! why? i think it was to try and cover the ministry and the minister's ass!! they were just as complicit as the greedy businessmen and facilitated that nonsense for far too long...finsac was the manifestation of a problem that had been going on for some time.

i think that more effective regulation should have been an option rather thn destabilising the financial sector en masse

[Assasin]

added to that the bail out of their friends and fellow politicians, both PNP and JLP.

[Lazie]

Finsac horror stories

BY PATRICK FOSTER Sunday Observer writer fosterp@jamaicaobserver.com

Sunday, November 29, 2009

During the ongoing enquiry into the 1990s collapse of the financial and business sectors and the events that led to the formation of the Financial Sector Adjustment Company (Finsac), it was revealed that approximately 24,000 loan accounts were sold to overseas debt collector Dennis Joslin, founder of the Jamaica Redevelopment Foundation Inc (JRF).


Grey-Baker

The bad debtors, as they were called, included thousands of entrepreneurs who followed the prescribed tenets for doing business and obtained loans endorsed by the financial institutions. On the basis of business plans and all that was required, including the ability to repay, the entrepreneurs were approved.

However, rapid increases in interest rates - up to 120 per cent - on the loans pushed the monthly payments way above the projections in the entrepreneurs' business plans. The higher rates sustained over an extended period, a Government policy at the time, rendered many unable to properly service their loans, thus compromising revenue to commercial banks.

While depositors were protected in the fallout, the affected entrepreneurs have long contended that their plight has largely been ignored by the State, which caused the problem in the first place by implementing a bad policy.

Yola Grey-Baker

Borrowed $10 million; repaid $52 million; house repossessed and sold for $20 million; still owes JRF $85 million.

Life was relatively good for 70-year-old Milton Baker between 1952, when he started his construction company, and 1995.

During the 43-year period, construction contracts were steady and Baker was able to construct his dream home without having a mortgage to worry about.

With his home free of debt and jobs to do that required capital, Baker, in 1994, decided to borrow $10 million at 35 per cent interest to do two contracts, using his home along with two other properties as collateral.

No way could Baker and his wife Yola Grey-Baker, now married 12 years, ever envisage that their quest to continue the business that was so good would lead them to ruin.

The two contracted jobs - one a commercial building in Kingston, the other a shopping mall in Montego Bay - proved their downfall.

In the first case the owner of the building - a printery - was unable to pay Baker and eventually lost his printery to the bank as the economic noose tightened in the mid-1990s.

According to Grey-Baker, the other client simply refused to pay, even after being taken to Court.


Mechesk Willis

Grey-Baker, now a member of the Association of Finsac'd Entrepreneurs (AFE), insists that although difficult, the loan was being serviced when it was sent to Finsac.

According to Grey-Baker, she has documents from the bank informing that interests being charged on the loan had reached a whopping 120 per cent.

Their debt was one of the 24,000 eventually sold to JRF.

As the interest clock ticked the Bakers repaid close to $52 million in cash and insurance policies, but the balance kept growing.

Pressured to keep up payments on the loan, which had reached $75 million in 2007, the Bakers decided to sell their Grosvenor Terrace family home but were informed by JRF that the home was not theirs to sell.

"We had an offer for $50 million, but JRF sold it for $20 million," Grey-Baker said.

At about 7 o'clock one morning in August last year, she said, the police and a JRF bailiff visited her home and changed the locks. "We were told we had to leave by 11:00."

Grey-Baker said that after the sale of the house she received a notice from JRF demanding further payments of $85 million that is owed to the debt collecting agency.

Grey-Baker has since taken on the battle alone as her husband, she said, has taken the entire episode extremely hard.

"For almost two weeks after they put us out of our house he did not speak a word, he just walked around in silence," she said.

Mechesk Willis

Borrowed $480,000; repaid $1.5 million; house repossessed and sold for $3.5 million; still owes more than $7.5 million

Mechesk Willis and his family of five now live in one room in the New Haven community of St Andrew. Physically disabled, the 59-year-old is unable to work and is barely eking out a living.

His daughter, who helped in supporting the family, recently lost her job and Willis now fears for his two young sons, saying that he is in no condition to adequately assist and has nothing much to offer.

But in 1994 Willis owned a four-bedroom Patrick City house and a small fabric business with strong potential for growth. That's where his problems began. Wanting to expand his business, Willis took a $480,000 loan from a commercial bank that year to purchase material, using his house as collateral.

At the prevailing interest rate Willis was able to meet the agreed monthly payments from the proceeds of his fledgling business. However, mere months after negotiating the loan the bank told him his monthly payments had increased - interest rates had gone up.

The small business could not carry the higher payments and instalments were invariably missed. During that period Willis said he was informed that his loan was with Finsac.

As he struggled to meet the payments demanded by the collectors, further misfortune hit Willis in 2001 when an accident left him paralysed, effectively ending his business.

He said he made payments of $1.5 million to the JRF on the $480,000 loan, but by then the amount owing had reached $11 million and they wanted to settle immediately.

His house was now in jeopardy. With discussions about a sale of his house on in earnest, Willis said he tried to block any such transaction through the Courts, but the ruling went against him.

In 2005, the JRF sold his house for $3.5 million and turned up later one rainy morning telling him he had to leave. He contends that his house was worth more, a position held by real estate professionals who valued a typical Patrick City house at the time between $5 million and $6 million.

According to a still distraught Willis, everything, including school books, was thrown out of the house into the downpour where they were destroyed.

Interestingly, in the Commission of Enquiry last week former finance minister Dr Omar Davies testified that directives were given to Finsac not to sell residences valued under $5.8 million.

"I never knew about that directive," Willis told the Sunday Observer. "All I know, small people like me don't get any help at all. I have nothing now."

The JRF, Willis said, told him he still owes them more than $7.5 million as interest continues to accrue on the balance.

Trevor Donegal

Borrowed approximately $80 million; repaid $89 million; now owes JRF just over $1 billion

Along Upper Waterloo road in St Andrew the Palermo townhouse complex stands as a stark reminder to Trevor Donegal of how his life changed dramatically.

In 1995, Donegal started the housing project, just as he had done for numerous others in his career as a housing developer.

But this one, which turned out to be his last, was different. In the middle of construction, interest rates on his $80-million loan began to skyrocket.

By the time the complex was finished his debt had ballooned and potential purchasers were unable to take up mortgages as the rates of 20-odd per cent from building societies made loans difficult to service.

His housing units were not moving while the interest rate on his loan climbed.

Donegal said in desperation he arranged a special deal with a bank to sell the houses, but by that time it was too late.

"When all the houses were sold the total amount I received was far less than I owed the bank," said Donegal.

"There was no overrun on the construction cost or anything like that, it was just that the increased interest rate on the loan at the time pushed up the debt," he added.

Donegal, making it clear that construction is capital-intensive and financing typically has to be sought to do major developments, reminded that stable interest rates played a critical role in projections.

"Remember, there is very little income while the project is under construction," Donegal said.

[Lazie]

Lets just sweep all this stuff under the carpet. Wha yuh say Karl ... Omar innocent in all a dis?

Shatta and Jawge used to talk about the Economic Hitman ... were they talking about Omar?

[Lazie]

Crawford labels financial meltdown holocaust



Sunday, November 29, 2009

Former banker Don Crawford has described the 1990s collapse of the business and financial sectors as a holocaust that unleashed mayhem, severe pain and suffering on hundreds of thousands of Jamaicans of all ages, locally and overseas.

Crawford, whose Century National Bank (CNB) was one of several local financial institutions that went under during the crisis, also described as "unjustifiable and unwarranted" the decision by then finance minister Dr Omar Davies to take control of CNB on the ground that the Century Group - comprising CNB, CNB Holdings, CN Building Society and Century National Developments - was insolvent.


Century Financial Group boss Don Crawford (left) greets then Finance Minister Dr Omar Davies at a Century function in 1996. (Photo: Observer library)

"I have categorically denied each and every allegation of Mr Davies from the very inception of his unjustifiable and unwarranted unique attack on CNB, myself and my family," Crawford said in an e-mail response to Davies' testimony to the commission of enquiry into the financial meltdown.

Davies had last Tuesday told the enquiry that it was the executives of the financial institutions who were to blame for the meltdown, accusing them of bad management and, in some cases, "criminal" actions.

The former finance minister listed the principals of Caldon Financial, Century National Bank, Blaise Trust and Horizon, among those whom he said should be held responsible for the collapse and added that those responsible for the mess should be brought before the commission to give account.

He also defended the high interest rate regime of the then administration, saying that it did not wreck the economy, but helped to provide stability.

Davies said that the only error his ministry made was to trust the word of the executives that new investments were being made in their institutions.

He said also that the bankers could not be trusted as they gave commitments to the finance ministry then backed out at the last minute.

However, Crawford, who moved to Atlanta a few months after his bank collapsed, pointed out that Davies - whom he described as "the unrepentant ex-minister" - was not specific as to the nature of the malpractices, illegalities, or crimes committed.

"He accuses me of never keeping a single commitment .when we were close to a solution. and quoted me as saying, 'they were trying to steal our bank, when the whole thing collapsed'," said Crawford.

Noting Davies' call for the former bankers to "appear before the commission and tell the truth", Crawford told the Sunday Observer yesterday that he has been summoned to appear before the commission and that he will.

"I intend to be there," he said. "I consider it a serious and critical obligation to the [former CNB] shareholders and the people of Jamaica. I intend to tell the whole story without malice, and without prejudice. There is much to be disclosed."

Crawford, in his e-mail, said he hoped and expected that the commission's findings, resulting from authentic fact-based information, "will shed some revealing light on the real issues which have created a holocaust, mayhem, severe pain and suffering to hundreds of thousands of Jamaicans of all ages, locally and overseas".

Added Crawford: "I have great faith in the integrity of the officers and commissioners, and pledge my all to the well-being of our people and our country."

Crawford also questioned the role of Michael Hylton as Davies' attorney, given Hylton's previous job as solicitor general of Jamaica. According to Crawford, Hylton's current role places him in a conflicting, or otherwise inappropriate position.

"Is there a basis for review here?" asked Crawford who said he had twice written to Hylton while he was solicitor general - in 2004 and 2006 - requesting that a public inquiry be established to investigate the actions of Finsac, its agents and officers.

On both occasions Hylton refused the request, said Crawford.

The former Century boss said too, that while he bears no malice towards Davies he remained "very disappointed at the professional dishonesty and lack of credibility which Dr Davies has earned for himself over recent years".

[Gamma]

is my father's VERY good friend but him hands nuh clean either...far from it. there are no good guys...only victims

[Lazie]

is my father's VERY good friend but him hands nuh clean either...far from it. there are no good guys...only victims

Yes, his hands may well be dirty, however, seeing that FINSAC has increased our debt by 40% we all need to look at the genius called Omar.

[Gamma]

oh his hands ARE dirty..i sincerely believe so...FINSAC and the financial melt down are the results of a love affair gone bad between the finance sector and the mof known as omar davies.

[Sickko]

I knew an idiot like you would jump on that point but I never doubt whether the man's business was vibrant or not..all i am saying is that the report never gave any example of the vibrancy.

As for banks lending people who are not qualified/vibrant, you be the judge of that and see how many cars and house are repossessed and business fail even under the best of times...

[Jawge]

Following your logic:Not reall unconsionable seeing that he was able to pay 1+ mil in that year.
Please point where in the article;where it said Mr.Willis loan balloned to Seven million in a year. Thanks.

[Gamma]

sorry it did not say in one year...it said it balloned to 7 million. did not say over what period.

[Muadib]

You need to listen more talk less.

I am not arguing the case for the depositors...read it again.

I am asking why there was no protection plan for the medium and small businesses that had loans for productive ventures.

I never said that Ponzi schemes were good for Jamaica's economy.

Mi hear seh Orthodondist and man selling Solar systems and Range Rover was doing quite well during the Olint days doh..

hmm.....

[Willi]

Why yuh putting words in my mouth.

I simply said the policy you are quick to defend is an ABOMINATION.

The end result speaks for itself.

Jamaica is a basket case now and man like Bunting laughing after the faithful apologists like you now. Mi tun billionaire off whose back?

Who buy the man house for $20m when he had $50 buyer lined up? If you cant smell the rat, you nostril is blocked up.