FORMER Eagle Group chairman Paul Chen-Young yesterday said that the Financial Sector Adjustment Company (Finsac) abandoned its mandate to assist ailing financial companies during the 1990s and, instead, sold off local assets to foreign companies.

Chen-Young, giving testimony at the ongoing Finsac Enquiry via videoconferencing from overseas, insisted that Finsac was incorporated with the specific mandate to “resolve the problems of solvency and liquidity being experienced by the financial sector”.

But according to Chen-Young, Finsac instead “abrogated its responsibility” and refused to assist financial institutions suffering from high-cost debt during the 1990s to return to viability.

“In the case of Finsac there was no arrangement for the Government to participate in the financial position of the entities,” Chen asserted in response to questions from his attorney Richard Small.

“Finsac, under its mandate, should have provided support,” said Chen-Young, adding that the economic cost to the country from selling off local assets would continue “ad infinitum”.

He argued that repatriation of profits earned by overseas-based companies would place a burden on the (country’s) balance of payments.

“The economic cost is not a one-off consideration, but continued over the years,” said Chen-Young, who insisted that the Finsac episode has turned off many investors who are now risk-averse.

In addition, Chen-Young contended that the divestment of entities which were taken over by Finsac was done with unnecessary burden on the Jamaican taxpayer.

He argued that Finsac could have assisted, as was done in other countries, such as Sweden, where governments participated in financial companies having insolvency problems.

“Even in Trinidad with CLICO [Colonial Life Insurance Company] the Government of Trinidad provided support with provision for participation if the companies turned around,” Chen-Young told yesterday’s sitting of the enquiry at the Jamaica Pegasus Hotel in Kingston.

“In respect to financial institutions, there was no arrangement for the (Jamaican) Government to participate in any of the entities,” he said.

“In Jamaica, the Government cleaned up the balance sheet and sold off the institutions with no partcipation,” Chen-Young added.

“Finsac failed these individuals and abrogated its responsibility,” said the former banker.

Chen-Young’s financial network, which included Eagle Merchant Bank and Crown Eagle Life Insurance, was one of the indigenous financial institutions that crumbled during the 1990s meltdown and was subsequently acquired by Finsac.

Speaking about his own Eagle Group, Chen-Young commented that it is “a sad story in terms of destroying one of the most successful and diversified companies built from scratch”.

“They tried to discredit the entities,” Chen-Young told the enquiry. “They even raided the offices of the auditors KPMG.”

Chen-Young, who during the 1990s commanded an impressive line-up of companies ranging from banking to tourism, was slapped with a lawsuit by Eagle Merchant Bank and Crown Eagle — two of his companies taken over by Finsac.

He subsequently left the island.