Karl another FINSACed PNP

[Assasin]

http://jamaica-gleaner.com/gleaner/2...cleisure2.html

[Karl]

Yes!
...his chocolate factory in Highgate crashed and burned...and he like people are wont to do when they fail at aything, aportion no blame to self but blames others for the failure.

[Bricktop]

So every company that failed was due to mismanagement?

[Assasin]

Chen Young said all the banks and insurance company in Ja at the time FAILED.

[Assasin]

The blame's still on you!

Published: Sunday | May 22, 2011


Attorney-at-law Sandra Phillips questions Michael Levy at the FINSAC commission of enquiry at The Jamaica Pegasus in New Kingston on February 22. Levy is one of scores of business persons who have claimed to suffer at the hands of FINSAC after the 1990s financial crash. - File



Davies




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Omar Davies' contribution to the FINSAC debate in the May 15 edition of The Sunday Gleaner was, despite its unavoidably self-serving nature, interesting, informative and, as usual, well argued.

But, he missed the point. It's the same point he accused everybody else of missing. He is correct in that FINSAC is but a current object of political misdirection. Since it didn't exist at the time, it can't possibly be accused of causing the financial collapse nor can it be held responsible for the ruination of thousands of bad debtors who either failed to read the fine print or didn't care. For Dr Davies and for me, the focus of attention should fall on the true causes of the financial collapse.

Now, here's where he adroitly swerved his own issue. He then proceeded on a stout defence of the high-interest rate policy (undisputedly a contributor to the proliferation of non-performing debts) on the oft-repeated grounds that it was necessary to curb inflation and stop rampant foreign-exchange speculation. For the purposes of this column alone, I'm prepared to accept that as gospel, despite my own view that the tougher medicine politically of closing the fiscal deficit or fixing the exchange rate - or a combination of both - would've been the way to go.

But those decisions don't win elections. It's trite economics that high interest rates can only work, if they work at all, in the short term. So, everybody must be taken to have been fully aware of the consequences of continuing this policy into the medium and long term. However, a high-interest rate regime was a credible avenue to the stated objectives, and so, if, in good faith, a government opts for an available path, we oughtn't to be too harshly critical only because it's not the path we would've selected. Unless we can show bad faith - which nobody can - we must begin with acceptance of the high-interest rate policy as the preferred cure.

Mismanagement

Dr Davies goes on to regurgitate his frequently repeated belief that it was the mismanagement, and even fraudulent practices, of the operators of some local banks which resulted in those institutions failing. He cites forensic reports, which I'm prepared to accept, as his basis for making these allegations. Again, I'm prepared, for the purposes of this debate, to concede that mismanagement, and even fraud, was as rampant as he alleges.

Even taking all that as givens, the issues he's repeatedly failed to address include:
When the Government introduced its high-interest rate policy, was it sanguine (or even concerned) that it might be the context within which some banks could/would've engaged in 'bandooloo' tactics? What was done, concomitant with the introduction of the policy, to beef up the regulatory process to try to effectively prevent or punish those who might try?

Dr Davies writes:

"Innumerable violations were identified, some of which, we were advised, would have led to criminal charges in jurisdictions with more rigorous financial legislation."

Why didn't the Government address the issue of our lax financial legislation BEFORE electing to run with a high-interest rate policy? Were these consequential "violations" not foreseen as probabilities in the event that such a regime was introduced and maintained?

Dr Davies himself holds up the internal controls of the foreign-owned banks as the reason why those banks didn't suffer the same fate as some locally-owned financial institutions. Why weren't the Government's regulatory bodies at least as strict on all banks as the foreign banks were on themselves? Why were banks permitted, by the Bank of Jamaica, to have external auditors who were also bad debtors? Why was the persistent "evergreening" of debts not prevented or, alternatively, detected promptly and punished? How come banks were able, with impunity, to transfer loans to connected parties between institutions and so avoid detection? Is this just the banks' fault? Or should the Government bear the majority of the blame for permitting this disgraceful state of affairs to proceed at best undetected or, at worst, without sanction?

When we have a high rate of violent crime, we rightly blame the Government for not empowering the security forces to reduce the "crime rate". Why should Government escape culpability for failure to empower financial regulators against a high white-collar crime rate that ought to have been anticipated as a probable spin-off from what it must've known would've been an onerous monetary policy?

Dr Davies, in his contribution, commits the same offence of which he accuses others by focusing on defending FINSAC's treatment of the wayward "executive chairmen". He writes:
"FINSAC's treatment of these executive chairmen was not based on arbitrary assessments. The Government of Jamaica (GOJ) engaged international experts in forensic auditing to examine the operations of the troubled institutions."

But, according to his own argument, he ought to be defending the Government's regulatory incompetence that allowed "executive chairmen" to, according to him, corruptly mismanage investors' funds for so long without so much as a murmur.

When did the Government first become aware of the impending crisis?

Info from officialdom

My understanding is that a delegation, led by a well-known head of a local insurance conglomerate, informed the finance minister of the problem and asked for help at least two years before any action was taken by the Government. Is this true? If not, I apologise in advance for relying on information which comes from sources within officialdom at the time. If it's true, Omar Davies must explain to Jamaica why it took so long for the Government to act.

Why not let the natural consequence of this alleged corruption take its course?

It's one thing to bail out failed financial institutions whether because they are 'too big to fail', or whatever. It's another barrel of politics altogether to bail out institutions that you allege failed because of corrupt practices.

Was it the Government's policy to reward corruption? Why not leave these allegedly corrupt banks to fail and their allegedly corrupt executive chairmen for the customers to deal with them?

P.J. Patterson has said there would've been bloodshed. I doubt it. No doubt, bloodshed would've been threatened, as a consequence of which many a foreign ivory tower from whence former reputed financial wizards now pontificate about Government's wickedness to them might've been sold and the funds repatriated to recapitalise those banks. If not and bloodshed there had to be, I say (if Omar Davies' premises are to be accepted), so be it. It's not only poor black boys caught up in bad company who must hang for murder. Sometimes rich black, brown, red, yellow and white boys and girls must pay a personal price for fiddling with other people's money and murdering their livelihoods.

Peace and love.

Gordon Robinson is an attorney-at-law. Email feedback to columns@gleanerjm.com.


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I suggest you read twice

[1of1]

what was his failing?

[1of1]

a him start the war as the new player

[1of1]

I agree

[Assasin]

who Claude? He took over the cadbury and start Higate chocolate. He was doing great and was seen as one of the young and up coming entrepreneur.

He joined the PNP and became minister until he spoke out about Foggy Mullings budget and some other monetary stuff. He resigned and then was FINSACed. Now I hear he owes over 300 million to JRC.

[Assasin]

no not as a new player. He has written 3 books about his experience and FINSAC. He has always had his two cent.

[Karl]

So every company that failed was due to mismanagement?

Why don't you name the ones that were not?

[Karl]

What do you mean the blame is still on you?

Omar amd the PNP?

...and what do you say to Gordon Robinson's recommendation that the banks with corrupt 'managers' being allowed to fail and the 'managers' left to the shareholders, depositors, etc?

[Karl]

who Claude? He took over the cadbury and start Higate chocolate. He was doing great and was seen as one of the young and up coming entrepreneur.

He joined the PNP and became minister until he spoke out about Foggy Mullings budget and some other monetary stuff. He resigned and then was FINSACed. Now I hear he owes over 300 million to JRC.

Highgate Factory was doing great? When?
How long was it in existence?
How many years did it turn a profit?

[1of1]

new player/bank/banker

[1of1]

i dont believe in the too big to fail ting, after the smoke clear the real criminals escape the judgement.,
omar is the head so he has to take the blame for not keeping dem in check, he needs to move on he had his run