Members of the Association of Finsac'd Entrepreneurs (AFE) have again brought their plight to the public, this time urging people to refrain from purchasing properties being sold by the Jamaica Redevelopment Foundation (JRF).

AFE chairman Neville Boxe said that the association has written to the Bar Association of Jamaica and the Realtors Association, as well as individual attorneys, asking them not to participate in any further sale of the assets of its members.

Members of AFE from left Milton Baker, Carvel Stewart of CFC Construction, Winston Donneghan and Charles Bromfield in discussion during a meeting held last Thursday at the Medallion Hall hotel in Kingston. (Photo: Joseph Wellington)

"We have advised our members and supporters to avoid doing business with any member of those two groups which continue to work with the JRF," Boxe said at a press conference held on Thursday at the Medallion Hall hotel in Kingston.

The JRF bought debts incurred during the financial meltdown in the 1990s at a highly discounted rate from FINSAC and proceeded to recoup assets while maintaining high interests on the loan balances.

As a result many entrepreneurs, unable to sustain payments, have since lost their homes as well as business operations, as the JRF seeks to make healthy returns from the purchase of the loan portfolio.

Contending that the JRF charges prohibitive interest rates and use onerous methods in collecting debts, the entrepreneurs have suggested that a Chapter 11 bankruptcy system, similar to that used in US, be adopted in Jamaica. Under Chapter 11, more prominently used by corporate entities, the debtor retains ownership and control of its assets while it is allowed to reorganise.
"If you have assets but no cash, the Chapter 11 holds everything as you repay," said attorney-at-law Anthony Levy, an AFE member.
Boxe at the same time labelled as "cruel" a response by a JRF legal officer Sandra Minott-Phillips that many of the members did not want to pay outstanding amounts to the JRF.

"This is clearly not so and is a cruel response to an unjust situation when one considers that the vast majority of the 30,000 borrowers who suffered the misfortune of being 'Finsaced' through no fault of their own, were hard working loyal Jamaicans who meant well," said Boxe.

Boxe argued that the same entrepreneurs referred to by Minott- Phillips had previously borrowed, expanded their businesses and repaid loans prior to the 1990s financial meltdown.

"Why would these persons or entities suddenly, since that time, decide not to repay loans, not to expand their business or acquire assets and to lay-off workers," he questioned.

"Is it not obvious that something must have gone wrong," said Boxe. "Is it not obvious that there are clear similarities with what have happened to us and what has happened to the vast majority of locally owned financial and other institutions in the country," he added.

Boxe contended that starting in the 1990s, entrepreneurs were required to pay exorbitant interest rates averaging 51 per cent sustained over eight years.

He said that loans which were offered at approximately 20 per cent interest soon rose to 70 per cent under government's high interest rate policy.

"In that scenario a loan of $1 million obtained at 20 per cent would attract $200,000 in annual interest payment but with rates moving up to 70 per cent would attract an interest payment of $700,000 for the same level of economic activity," said Boxe.

"During that period a borrower who was unable to service a $10 million loan would be called upon to pay $251 million at the end of the period," he charged. "This explains the magnitude of the excessive payments that the banks were demanding from borrowers which lead to the explosion of non-performing loan portfolio of many banks and their subsequent demise."

The entrepreneurs also took issue with former Finance Minister Omar Davies' recent statement on the 1990s financial meltdown, saying that he sold out the country's business sector to foreigners while not offering local businesses a similar deal.

"At no time were we ever given that deal of paying five per cent of the principal that was given to JRF," contended AFE member Carvel Stewart. Davies had said in a newspaper report that offers were made to FINSAC debtors to have their loans restructured and that the bad debt package had been advertised for bids both locally and overseas.

Meanwhile, following on the heels of demonstrations at JRF's New Kingston office three weeks ago, the entrepreneurs yesterday charged that the FINSAC debacle and resulting contraction in business activity and lay-off of workers have contributed largely to current rising crime rate in the island.

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