Davies testifies at FINSAC Enquiry

**Dr.Dudd** · 12-10-2009, 02:25 PM

Re: FINSAC sells $145mil property for $35mil

Whoever it was sold to is certainly not one of the ruling clan.

Otherwise nobody would have the cahjunas to complain.

they only have strengh for the people that look like themselves.
A bunch of cowards.<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: RichD</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Dr.Dudd</div><div class="ubbcode-body">When it is regularly sold to the political financiers, we hear nothing about it. just because it is a foreign outsider, that is why they are trying to behave as if it was unusual. Just like the Trafigura affair<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Rich</div><div class="ubbcode-body">more interesting is who it might have been sold to </div></div> </div></div>

well in this particular case it does not seem it was sold to a "foreign outsider" </div></div>

**evanovitch** · 12-10-2009, 02:57 PM

Secretary to face the FINSAC Enquiry

Secretary to face the FINSAC Enquiry
Thursday, 10 December 2009

Shirley Tyndall.It will be former Financial Secretary Shirley Tyndall's turn to take the stand Thursday when the FINSAC Commission of Enquiry continues.

Miss Tyndall was Financial Secretary during the banking and insurance crisis of the late 1990's.

She also served as Vice Chairman of FINSAC's Board.

The Commission will resume hearings on Thursday afternoon after two days of interrogating FINSAC's General Manager Errol Campbell.

Mr. Campbell again came under fire Wednesday as he faced questions from legal counsel.

He appeared ill-prepared to answer the onslaught of queries from attorney, Anthony Levy.

Mr. Levy, who was representing Thermo Plastics Limited which went under in the 1990's and had properties owned by it sold by FINSAC, came armed with a sheaf of documents and questions for Mr. Campbell.

One of the documents, a transfer of property located at Twickenham Park in St. Catherine was the subject of much comment at the enquiry.

The document stated that the property had been valued at $145 million by the Tax Department but was in fact sold by a FINSAC subsidiary for a mere $35 million.

Mr. Campbell was unable to shed any light on the vast differences between the value of the property and the actual sale price.

**evanovitch** · 12-10-2009, 03:06 PM

'An incestuous affair!':Attorney accuses Finsac of insider d

'An incestuous affair!'

Attorney accuses Finsac of insider dealing

By PATRICK FOSTER Observer writer [email protected]

Thursday, December 10, 2009

ANTHONY Levy, the attorney-at-law representing Thermo-Plastics, yesterday charged that the Financial Sector Adjustment Company (FINSAC) undervalued and sold the assets of the company to connected parties in an incestuous affair after the 1990s financial meltdown.

Levy was posing questions to FINSAC general manager Errol Campbell in the ongoing enquiry at the Jamaica Pegasus hotel in Kingston.

According to Levy, National Investment Bank of Jamaica (NIBJ), then headed by Rex James, acquired the assets of Thermo-Plastics from FINSAC and sold two properties at Twickenham Park in St Catherine for $35 million and $9.4 million respectively.

The attorney, however, contended that the assets were grossly undervalued, saying that the tax department had a valuation of $145 million for the property that NIBJ sold for $35 million. He added that the combined value of both properties was closer to $183 million.

Levy, who told the enquiry that the case was now before the courts, said that records show that James was also a director of FINSAC-subsidiary REFIN as well as a director in the company that purchased the $9.4-million property.

"This was an incestuous affair," Levy commented during the proceedings, adding that public notice was never given, as required by law, nor was the sale advertised.

Thermo-Plastics, a container manufacturing company considered at the time the largest of its kind in the Caribbean, was sold in 2002 after racking up over $100 million in debt.

Campbell, when asked if he knew who did the valuations for the sale of the properties, told the enquiry that he did not have that information.

In his second day of testimony, the FINSAC general manager was again hauled over the coals for an apparent lack of preparation or intentional evasiveness.

In response to question after question, Campbell said that he was either unaware or did not have records to adequately answer.

Commission chairman Justice Boyd Carey, forced to intervene, read the mandate of the enquiry and instructed Campbell to either answer questions or provide information to the Commission.

"Somebody has to answer," Carey remarked.

Levy, in the meantime, suggested that James as well as Thermo-Plastics receiver Richard Downer be called to give testimony in the enquiry.

**evanovitch** · 12-10-2009, 11:31 PM

Tyndall dismisses questions at FINSAC Enquiry

Tyndall dismisses questions at FINSAC Enquiry
Thursday, 10 December 2009

The Enquiry into the Financial Sector Adjustment Company (FINSAC) continued Thursday afternoon with Shirley Tyndall, former Financial Secretary and former FINSAC Chairperson taking the stand.

However it was a repeat of the last two days as many questions were left unanswered by Miss Tyndall who appeared perturbed by much that was asked of her.

Tyndall was asked about the financial sector meltdown of the 1990's and the role of the insurance industry in this collapse.

While many of the questions posed to her were left unanswered, she pointed to insurance companies at the time becoming conglomerates, owning banks which in turn owned other business.

When asked to give specific facts, Tyndall said she did not have such data.

She pointed to the fact that she was now retired and therefore out of the system.

"I am a pensioner who is sitting at my house, minding my own business and doing what I want to do," she said.

Her dismissal of questions did not go down well with Commission Chairman Justice Boyd Carey.

"Well, I'm happy that you're happy with your retirement but regrettably, you held and occupied a very high position in this country and your actions, to some extent, have affected the lives of many people and this Commission is charged with the responsibility of examining the circumstances. What I want to ask you is this, did you receive from us a copy of our terms with a request that you speak to it?" asked Carey.

"What I'm saying to this Commission is that I have not got resources or data with which to do this sort of analysis," Tyndall responded.

The questions continued and Tyndall was asked about the cost of Government's intervention during the financial crisis of the 1980's.

She said the measures adapted were the best at the time as the deposits of thousands of depositor's money was saved.

When asked if there could have been a cheaper alternative, Tyndall said not to her knowledge.

The former Financial Secretary and former FINSAC Chairperson will again be in the hot seat when the FINSAC Commission of Enquiry resumes after the Christmas break on January 12.

**evanovitch** · 12-14-2009, 02:33 PM

Cleaning up after Omar Davies

Cleaning up after Omar Davies

WIGNALL’S WORLD

MARK WIGNALL

Monday, December 14, 2009

ABOUT a year after PJ Patterson had boasted to thousands of cheering PNP supporters in 1995 that he was bidding goodbye to the IMF, "Goodbye, ta-ta, au revoir", he had said then, his much vaunted finance minister, Dr Omar Davies, began to demonstrate to the country just how much he was a square-pegged public servant trying to operate in a round-holed economy.

Evidence coming out of the Finsac enquiry indicates that, at the very least, during the meltdown of the financial sector, which began in 1996, Dr Omar Davies was in charge of something that he knew very little about. Always giving the impression then that he was the smartest guy on the block, he has, while giving evidence at the enquiry, pleaded in at least one instance, naivety.

The convenience of that plea rings quite hollow after the ruination of people's lives and, as more is revealed one gets the impression that PJ Patterson had given him free rein to run like a blind, bolted bull through a china shop.

He has never claimed that he was the train wreck that many now believe he was as finance minister from 1993 to 2007. In fact, even after he admitted in early 2003 that the PNP administration's spending in the months leading up to the 2002 general elections had more to do with winning that election than meeting the grander objective of placing the country on a sound economic foundation, he and the noise of the PNP marketplace continued to sell us the idea that he was anything but 'Dr clueless'.

In listening to evidence coming out of the enquiry one does not want to make the early conclusion that a set of madmen were in charge of the finance ministry during the 1990s. But if this claim cannot be made, we are forced to admit that maybe they were either incompetent, or their objectives were quite narrow and sinister, known only to a select few huddled behind closed doors.

A connection has never been made between the IMF disengagement in 1995 and the mess which the finance ministry under Davies presided over in the years after 1996. What I do know, however, is that the price the country paid, even after many financial institutions were destroyed and thousands of lives of new entrepreneurs and many households were torn apart, has never been settled. And today, this moment, we are in fact still paying for the gross mismanagement of the PNP in the 1990s and beyond.

If the monetary policies instituted by Omar Davies during the 1990s were the train wreck that set the country on a path of high interest rates and made the rich even richer by earning easy money on Government paper, it could be said that Michael Manley, prime minister between 1972 and 1980, was the one who laid the uneven tracks.

Manley's flirtation with Cuba in the 1970s could have been done without the anti-imperialist, anti-USA rhetoric. Having done that while the country was experiencing a critical fall-off in exports, high unemployment rate, a serious shortage of foreign exchange and a very active black market in trading in US currency, he was forced to go to the IMF with its harsh austerity conditions.

By the time the PNP was booted out of office in 1980, Manley's economic policies had whittled away 25 per cent of what the country was worth in 1974. Unlike Manley, who had refused to engage the part of the IMF agreement which called for severe cuts in social programmes, by the time it was Seaga's turn to re-engage with the IMF in 1983, he did so with a hard-nosed approach, instituting many of the harsh conditionalities demanded by the international lending agency.

After two years of no growth, he disengaged from the IMF in 1986 and, considering the parlous state of the economy in the mid- to late 1970s under Manley, the Seaga regime chalked up impressive growth in 1986, 1987 and 1988.

Somehow it seems that this country is doomed to take two steps forward and three backward. Under the management of Omar Davies, funds were borrowed at expensive rates in his efforts to close the fiscal gap. In large measure the country was being run like one big Ponzi scheme. Those with huge pools of funds found in Government paper their financial heaven, and all they had to do was roll over those funds (reinvest principal with interest), do nothing and grow filthily richer. If, at any stage, a few of those pools of funds were requested and withdrawn, the country would fall apart like any other Ponzi scheme.

Mark Golding and Peter Bunting should clam up

During the period when Omar Davies was literally given the country to run (down?) by then Prime Minister PJ Patterson, a few did well, damn well, while Davies pulled the plug on those like the Century Group and the Eagle financial entities.

Companies like Dehring, Bunting and Golding (DB&G) did very well and we should never envy them their success. The question is, have we ever identified what companies like DB&G did that other entities like, say, Century National Bank (CNB) did not do?

During the Finsac enquiry, Omar Davies told a stunned audience that NCB was too big to allow to fail. At the same time that Davies had loudly announced, in 1996, that he was withdrawing government funds from CNB which brought about a run on the bank and, with none of the assistance that was given to NCB, its eventual dissolution by the finance ministry, the Government saw raw politics in protecting the 33,000 local depositors in CNB.

All one had to do was multiply 33,000 by three and one would get a rough idea of the number of votes that the PNP would stand to lose if those depositors were not protected. The other question is, if the depositors were protected, could not the bank and its structure be saved by the requested injection of funds? I believe it could have been, but apparently, men behind closed doors had other ideas.

It is very obvious to me that former head of the BOJ, Derick Latibeaudiere, was seen as a part of that hangover from the days of Omar Davies and any new re-engagement with the IMF would need some form of cohesion of policy between the finance ministry and the BOJ.

It is also obvious to me that at some stage in the life of the present administration the high interest rate regime will have to be critically examined with a view to trending it downwards, especially if this country wishes to stimulate its export market in mid-2010 and onwards.

Can PNP senator Mark Golding, a great fan of Dr Davies, and Peter Bunting, Central Manchester MP for the PNP, speak to us with a straight face and tell us that through DB&G of the 1990s they, like a lot of other rich folk and cash-rich entities, were not investors in expensive Government paper? Would that not make these patriots part of that set of people who Central Kingston MP Ronnie Thwaites described as falling on the positive side of the greatest transfer of wealth from the poor to the rich since slavery?

Easy money on Government paper must cease

At some stage it will have to dawn on this country that the easy route of investing in expensive Government paper (20 per cent) will have to cease.

One simple fact of this is, there is no place in the world where these cash-rich entities/individuals can invest and make anything near these returns. Much of this expensive debt to the Government (the people) needs to be replaced with lower earning funds that bear some reality to the exigencies of the time.

Recently we saw where our major banks made super profits in a time of a severe downturn in business nationally due to the global recession. Could these banks have done so well if it were not for Government paper? This madness has to stop, and it needs the efforts of all Jamaicans. Obviously, one does not make an appeal to money because money will always seek out where it can attach more money to itself. But it is obvious that the country cannot continue on this path where people are well-rewarded for producing nothing.

Those who have been the beneficiaries of these high returns on Government paper need to be drawn into the reality that every time they roll over their funds, they make it that much easier for a poor mother to send her children to bed hungry simply because the high rates on these funds are sucking the lifeblood out of the poor, the powerless and the hopeless.

Those involved in manufacturing, like Mahfoods' Wisynco and Bicknells' Tankweld must be given top priority, and a new mantra of actually producing something and linking it into the global chain must be encouraged.

It is time that the political leadership in Prime Minister Golding and Finance Minister Audley Shaw lead the charge in bringing about the philosophical prelude which will adjust this evil situation of sucking many thousands of poor people dry while a handful of financial entities report super profits. All must bear the burden.

Has the IMF really changed?

Make no bones about this one. The JLP administration's ability to deal with the present crisis is directly tied in to the failed economic policies of the last Government, and Omar Davies stands out as the fly in the ointment.

That, of course, is not to let the JLP, and especially Golding, off the hook in terms of their ability to engage the people on the realities facing us. The times are tough, and in the near future I do not see them getting better.

There are some who believe that the IMF is the same old ogre of the 1970s that saw little merit in a Government initiating social and poverty-alleviation programmes if the Government took IMF money. I have been reliably informed that the IMF is not the one-size-fits-all entity that it was in the 1970s. Apparently it has learnt from its errors of that time, plus the global recession has also taught it new lessons.

Having painted the country into a corner, Omar Davies now has the luxury of sitting on the sidelines, and even has the temerity to criticise the present administration. Having found ourselves in this corner, our only hope is the IMF and we will have to deal with the international lending agency very soon.

Prime Minister Golding must live up to his promise and announce speedily the agreement and the terms of engagement so that this country can, at the very least, face up to what is ahead of us. The prime minister also needs to make an announcement of the cuts that MUST COME in the civil service. It is going to be hard, but the truth is that the civil service has been, for years, more a place of employment than someplace where productive work is actually done.

Those workers who are actively engaged in stymieing the efforts of the Government while producing nothing must be removed without apology. Too much of the public sector is unresponsive to the real needs of the people and where this is so, the Government needs to be bold and say goodbye to them.

I happen to know that some of the activist ones in place have made no bones that they are acting in the worst interest of the Government and hence the people. They need to go! Prime Minister Golding must be made aware that he will suffer serious political fallout from this but, in the long run, history will be kind to him.

In Puerto Rico where the economy is much stronger than in Jamaica, significant job cuts to the tune of 25 per cent have taken place. Next year, 12,000 more job cuts are planned. The point is, if an action is inevitable, let us not keep it hanging over our heads. Just do it.

If 25,000 jobs must be unavoidably cut, what other way out is there?

Give credit where it is due

As much as I have criticised the present JLP Government for inaction on many fronts, there are some realities that we have to face.

Like it or not, manifesto promises such as free health care, free tuition in high school, the Constituency Development Fund, increase in domestic agricultural production, some reform in local Government and increased accountability plus added collection of fees, increased viability of the tourism product, enquiry into Finsac, and even the building of an office for the Opposition Leader have been kept.

But yes, I know, the manifesto did say jobs, jobs and a bag a jobs. That has not happened, but due to the global recession it has not happened anywhere else on the globe.

While I would have like to have seen more engagement from the prime minister, his information minister Daryl Vaz has been pretty open and has shown a willingness to speak to the people. It may not be all good news but at the very least, from the media point of view, the information and telecoms minister has been quite open on most matters.

Is an increase on GCT coming?

Faced with falling revenues, a high rate of non-tax compliance and the resourcefulness of our people in walking between the tax raindrops, I cannot see the Government avoiding an increase in GCT.

The fact is, if the Government cannot catch Quako before he collects his paycheque, the Government will have to catch him when he spends that money. For that reason, and this is not just my advice, it is just good sense in the circumstances that the GCT rate should be increased to 20 per cent.

I can hear the criticisms even as I write, but I cannot see any other way out. I know that the Government is not popular at this time, but for the time being we have to live with it. If we have to live with it, we have to constantly nudge it into an appreciation for the broader problems facing us. In doing this, the hope is that it will either move in the directions suggested or reject them, but give us reasons and alternatives.

The last two years have been lacklustre, but guess what? They are gone. We have to live with our present. There are tough times ahead, and as much as I believe the prime minister may feel that he is buffeted on all sides by harsh criticisms, the fact is, he needs us, and sacrilegious as it may sound, we need him.

If it means that we must all band our bellies and bawl, tell us the truth, Prime Minister, and do what cannot be avoided. Talk to us, Prime Minister. Deal with matters like you just won the election and are all fired up and ready to move into the trenches.

Act now, PM.

[email protected]

Davies testifies at FINSAC Enquiry

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