Finsac’d entrepreneurs ask questions
President of the Association of Finsac’d Entrepreneurs, Yola Gray-Baker has suggested that in the absence of a preliminary and/or final report coming out of the FINSAC Enquiry, there are several pertinent questions that should be answered by the Government.
In a lengthy statement sent to the Jamaica Observer recently, Gray-Baker stated:
“I endeavour here to ask some pertinent questions from the powers that be, and/or any persons in whichever position in any organisation who may have the answers to help us put this sordid issue to rest, and I hope, in penning this article which represents the inconvenient truths of these entrepreneurs, they will be able to get some sense of closure, and the souls of those gone before can rest in peace,” she said.
She listed the questions as follows:
1. Is it a fact that in the 1980s, the banks and life insurance companies were financially healthy and there were no systematic problems associated with the sector as was in the 90s?
2. Is it a fact that, among others, the then Government’s inappropriate stabilisation policy is the villain that caused the financial services sector’s problems, as initially BOJ provided extensive liquidity support for affected banks; however this was insufficient to stop the continued drain that caused the collapse of the financial sector, therefore making unavoidable insolvencies of the several banks?
3. Is it a fact that the macro-economic policies, and in particular the high interest rates, and moreso sustained high interest rates and high reserve requirements, were factors that undermined the viability of the institutions and therefore contributed highly to the loans of debtors becoming delinquent?
4. Is it a fact that FINSAC’s intervention, although vital, was too late and did not articulate nor demonstrate a coherent policy to tackle the problems of the financial sector, nor did it have a structural operational plan, eg the bailing out of financial institutions that were clearly insolvent [and] protected the interest of shareholders, directors and management of favoured entities?
5. Is it a fact that by the time FINSAC intervened in early 1997 the capital base of the domestic financial institutions were already facing serious runs — high interest costs, declining value of investments, rising loans, mortgage defaults and higher operational costs. In so doing, their losses accumulated to the point where shareholders’ equity was either completely wiped out or well on the path to it?
6. Is it a fact that FINSAC’s debt worsened as interest rates continued to rise to over 120 per cent, leading to a public debt increase of over 140 per cent of GDP by the early 2000s?
7. Isn’t it a fact the then finance ministry’s mismanagement of a crisis, and the failure to provide leadership to restructure the sector, have ultimately, among other things, led to where Jamaica is today economically?
8. Isn’t it a fact that the domestically controlled financial institutions were fully supported and encouraged by the then Government, but when the crisis came it turned its back on these institutions?
9. Is it a fact that, although FINSAC was to have a lifespan of five to seven years, and although it sold its portfolio of so-called bad debts to an overseas entity, it still had several properties to be sold; its administrative costs were still increasing to the taxpayer, it still has millions of dollars holding for the depositors it “supposedly claimed it had to protect”, and has made no effort to contact those depositors? Why and what has it done with these funds?
10. Is it a fact that the then minister of finance and planning was aware that the mandate governing FINSAC and its responsibilities were not being adhered to?
Gray-Baker stated that the Association of Finsac’d Entrepreneurs sought both Governments’ help to undo the existing situation with a view to re-engage and re-energise the business sector, creating a possible solution to the almost two decades of problems. “Instead, we were left on our own with no means of financial support for human survival,” she said.
“With the threat of general elections, and I refer to it as “threat” because the dictionary’s meaning of that word – a statement of an intention to inflict pain, injury, damage, or other hostile action on someone in retribution for something done or not done; a person or thing likely to cause damage or danger. That is what the Finsac’d Entrepreneurs have suffered by the hands of those elected to represent them. Most have no intention of casting votes. We have nothing to gain. We have nothing to give. We have nothing left to lose,” Gray-Baker stated.