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Bad taste of Finsac still lingers
by Julian Richardson Business Observer staff reporter richardsonj@jamaicaobserver.com
Wednesday, July 25, 2007
The bad taste of Finsac still lingers in the mouths of some corporate executives, more than 10 years after the agency was set up to intervene in the meltdown of the financial sector during the mid-1990s.
Last week, several business executives chided the Government for using Finsac, the Financial Sector Adjustment Company, to cover up its own mishandling of the sector during the period and silencing the many private sector interests who were critical of the administration at the time.
Hotelier Godfrey Dyer (left) shares a light moment with Audrey Marks, Paymaster CEO, and Gordon 'Butch' Stewart, Observer chairman, at last week's luncheon hosted by Stewart at the newspaper's head office in Kingston. Both Dyer and Stewart were highly critical of Finsac during the luncheon.
At a luncheon hosted by Observer chairman Gordon 'Butch' Stewart at the company's Beechwood Avenue headquarters in Kingston, corporate players said they were still livid at the way the country's most costly financial crisis was dealt with.
"What you have to recognise is that we had a banking crisis which was mismanaged," Sandals group finance director Patrick Lynch charged. "The problem could have been handled in a way that would have been less devastating to all the parties. It had the unfortunate effect of demonising some of the indigenous bankers who are now living overseas, and are treated like thieves when they are not all crooks," Lynch insisted.
"Much of the indigenous ownership of the financial sector has since dissipated. It is regrettable, but we may have gone back in time," he added.
Several financial entities, including four indigenous banks - Workers, Island Victoria, Citizens, and Eagle - collapsed during the meltdown, after which the Government demanded from persons who were indebted to these institutions, amounts that represented significant multiples of the initial principal balance.
Godfrey Dyer, former Jamaica Hotel and Tourist Association president, was one of the many businessmen compromised by the situation.
"In 1994, I borrowed J$15 million; by 1998 I repaid J$47 million and was owing $147 million," noted Dyer, who owned the Wexford Court Hotel in Montego Bay.
"If it were not for the courts in Jamaica I would be begging on the streets today. I had to fight tooth and nail and when they couldn't prove anything, they finally surrendered and arrived at a settlement," he declared.
Financial analyst Dennis Chung was of the view that the private sector should have had a stronger voice at the time in opposing how the government was managing the crisis.
"Finsac is the worst thing that has ever happened to this country," said Chung. "I think that business people should have come out and spoken against that, that was a cruel act."
However, Stewart argued that the Government used Finsac to gag any such opposition from the private sector.
"There are people, and I am one, who believe the advent of Finsac compromised so many business people, large and small," said Stewart. "It was used as a tool in many instances to muffle the sounds of (business people)," he said.
"...But let us not forget that the Government, during that period, was promoting Finsac as the saviour of the nation. Out there, the propaganda from the Government was so powerful that the larger community thought that this was the only way forward... So don't think for one minute that it was a simple game," Stewart added.
Chung said that the Government had successfully used such strategies for years to keep the business community at bay, but urged the private sector to put up a united stance to prevent it from continuously happening.
"(The Government) always divides and conquer," said Chung. "Everyone remains in their own corner and saying that they are going to protect their own interest to the point where politicians think they can say anything they want to and have us on a leash.
"I draw a parallel to the war in Iraq: When the war was being propagated, everyone thought, with the exception of a few, that this thing was the right thing to do for the United States," said Chung. "This is why you have leaders, some people have to come out and say that this is wrong and organise a campaign against it," Chung suggested.
by Julian Richardson Business Observer staff reporter richardsonj@jamaicaobserver.com
Wednesday, July 25, 2007
The bad taste of Finsac still lingers in the mouths of some corporate executives, more than 10 years after the agency was set up to intervene in the meltdown of the financial sector during the mid-1990s.
Last week, several business executives chided the Government for using Finsac, the Financial Sector Adjustment Company, to cover up its own mishandling of the sector during the period and silencing the many private sector interests who were critical of the administration at the time.
Hotelier Godfrey Dyer (left) shares a light moment with Audrey Marks, Paymaster CEO, and Gordon 'Butch' Stewart, Observer chairman, at last week's luncheon hosted by Stewart at the newspaper's head office in Kingston. Both Dyer and Stewart were highly critical of Finsac during the luncheon. At a luncheon hosted by Observer chairman Gordon 'Butch' Stewart at the company's Beechwood Avenue headquarters in Kingston, corporate players said they were still livid at the way the country's most costly financial crisis was dealt with.
"What you have to recognise is that we had a banking crisis which was mismanaged," Sandals group finance director Patrick Lynch charged. "The problem could have been handled in a way that would have been less devastating to all the parties. It had the unfortunate effect of demonising some of the indigenous bankers who are now living overseas, and are treated like thieves when they are not all crooks," Lynch insisted.
"Much of the indigenous ownership of the financial sector has since dissipated. It is regrettable, but we may have gone back in time," he added.
Several financial entities, including four indigenous banks - Workers, Island Victoria, Citizens, and Eagle - collapsed during the meltdown, after which the Government demanded from persons who were indebted to these institutions, amounts that represented significant multiples of the initial principal balance.
Godfrey Dyer, former Jamaica Hotel and Tourist Association president, was one of the many businessmen compromised by the situation.
"In 1994, I borrowed J$15 million; by 1998 I repaid J$47 million and was owing $147 million," noted Dyer, who owned the Wexford Court Hotel in Montego Bay.
"If it were not for the courts in Jamaica I would be begging on the streets today. I had to fight tooth and nail and when they couldn't prove anything, they finally surrendered and arrived at a settlement," he declared.
Financial analyst Dennis Chung was of the view that the private sector should have had a stronger voice at the time in opposing how the government was managing the crisis.
"Finsac is the worst thing that has ever happened to this country," said Chung. "I think that business people should have come out and spoken against that, that was a cruel act."
However, Stewart argued that the Government used Finsac to gag any such opposition from the private sector.
"There are people, and I am one, who believe the advent of Finsac compromised so many business people, large and small," said Stewart. "It was used as a tool in many instances to muffle the sounds of (business people)," he said.
"...But let us not forget that the Government, during that period, was promoting Finsac as the saviour of the nation. Out there, the propaganda from the Government was so powerful that the larger community thought that this was the only way forward... So don't think for one minute that it was a simple game," Stewart added.
Chung said that the Government had successfully used such strategies for years to keep the business community at bay, but urged the private sector to put up a united stance to prevent it from continuously happening.
"(The Government) always divides and conquer," said Chung. "Everyone remains in their own corner and saying that they are going to protect their own interest to the point where politicians think they can say anything they want to and have us on a leash.
"I draw a parallel to the war in Iraq: When the war was being propagated, everyone thought, with the exception of a few, that this thing was the right thing to do for the United States," said Chung. "This is why you have leaders, some people have to come out and say that this is wrong and organise a campaign against it," Chung suggested.
DAVIES. I played an integral role in the establishment of FINSAC and hence I speak from a particular vantage point
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