Business

Shaw says $150-m FINSAC report could be ready “in weeks”

BY BALFORD HENRY
Senior staff reporter
balfordh@jamaicaobserver.com

Friday, January 19, 2018

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Minister of Finance and the Public Sector, Audley Shaw, says he believes that the long delayed report of the FINSAC Commission of Enquiry will become available in a matter of weeks.

“The commissioners told me that the sheer volume of information that they have to work with is extremely time-consuming. But I do believe that in a matter of weeks the report will be available,” Shaw said Tuesday.

However, more than 20 years after the Financial Sector Adjustment Company (FINSAC) was established to deal with the crisis, which flowed from the 1990s financial sector meltdown under former Minister of Finance and Planning, Dr Omar Davies, and after spending a budget of $150 million, there is still no report emerging from the enquiry.

Dr Davies, in a response to the accusations blaming him for the outcome in 2011, had admitted that, in terms of the context, the first half of the 1990s was characterised by high levels of inflation and instability in the foreign exchange market.

As regards inflation, he noted that Jamaica experienced inflation in excess of 100 per cent in fiscal year 1993/94, and that for some years following the liberalisation of the foreign exchange system, the market demonstrated “extreme instability”.

Davies said that liquidity was tightened under his watch to make it more costly for currency speculators to speculate on the US dollar which, he said, artificially drove up the exchange rate and inflation.

Davies also admitted that there are legitimate questions regarding whether the policy ought to have been pursued as aggressively as it was, under his watch, and for as long as it remained in place.

However, he accused several owners/senior managers of the period, “who egregiously mismanaged the funds of investors/savers” of seeking to “portray themselves as victims of FINSAC”.

One such victim was Dr Paul Chen Young, who told the commission appointed by Shaw in 2008 that “the wholesale take-over of financial institutions by FINSAC was totally contrary to its mandate, its terms of reference and its exit strategy. And as such, FINSAC abrogated its duty”.

Since 2009, the FINSAC commissioners, Worrick Bogle and Charles Ross, have been probing the collapse of the financial sector, which financial experts have stated cost the Jamaican economy some 40 per cent of its gross domestic product (GDP). However, it was suspended in 2012 after the change of government.

Then Minister of Finance and Planning, Dr Peter Phillips, said in 2012 that payment would only be made to cover expenses relating to the completion of the Commission's report. However, with no completion of the work by 2013, Phillips stopped the allocations with the cost up to $100 million.

But in March, 2017, Shaw told the House of Representatives that the Cabinet had approved an additional $35.7 million to complete the process.

Information Minister Senator Ruel Reid confirmed at a post-Cabinet press briefing at Jamaica House in September of last year that Cabinet had granted approval for a recommendation to the Governor General for an extension of three months and a revised budget of $58.4 million for the completion of the report.

“We agonised over this particular decision, and what was presented to us was the actual number of files and the actual work now to be done, which has been costed independently, and on that basis, Cabinet was convinced that yes, the expenditure could be supported,” he said.

However, the report has still not been completed, despite several assurances from Shaw.

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