DIRECTOR of Public Prosecutions (DPP) Paula Llewellyn has slammed the Financial Services Commission (FSC) for lacking the “cojones” to take action when needed, adding that its weak supervision contributed to the prolonged fraud at Stocks and Securities Limited (SSL).

Llewellyn made the remarks in an interview with the Jamaica Observer as she responded to questions about the fraud laws being too weak to facilitate prosecution, after former head of the Fraud Squad, Deputy Superintendent of Police Albert Diah told Sunday Finance that fraud continues at the level it does because the “fraud laws have no teeth”.

“It’s not necessarily that the fraud laws are weak,” Llewellyn retorted.

“It is the supervision within the financial sector that is weak,” she added in obvious reference to the lax supervision the FSC extended over SSL which allowed fraud that runs into billions of dollars to be perpetrated over more than a decade at the securities dealer.

“When you have fraud in a financial institution it points to sometimes poor supervision. It may be that their compliance structure is not strong enough, and most importantly, you have to look at the type of people that they put in certain positions — because it is one thing to have on paper all of the possible structures in an organisation [but] it is another thing to put the wrong people in the particular space,” the DPP continued.

Llewellyn said she was not hitting out at any particular individual at the FSC in her remarks about the wrong people in a particular space, but she said events surrounding the actions the FSC took or did not take are reminiscent of what she found out during her dealings with the regulator with regards to the collapse of the Cash Plus ponzi scheme more than a decade ago.

“When I saw this thing happened with SSL and I heard everybody talking about FSC I remember, if you look back at my 30-odd-page document that I published with Cash Plus there is a part of it where I indicated that when the complainants, through the police, came to me…when we checked it out, at least three, four years before Cash Plus had been investigated by the FSC…there was clear evidence under which [the regulator] could have prosecuted Cash Plus for breaching the securities Act — from very early in the day — and I spoke about it. And when we asked them why they didn’t prosecute they couldn’t give us a reason why they didn’t do it. And Mr David Geddes, I never forget it, came out on television and radio to ask ‘What is the DPP talking about?'”, she said stridently.

Her assertion comes as a report from the FSC citing SSL as being a “problem institution” with “a culture of mismanagement of clients’ funds”, dating as far back as 2017, brought no discernible action from the regulator against SSL even though the entity continued its breaches and was only threatened with a suspension of its licence. SSL was also issued with a cease and desist order in 2020 but that order was withdrawn and never put into effect.

“So when I saw [what is] happening with SSL I said, ‘It was bound to happen,’ because [obviously] the thing with the FSC [is] it is not that they don’t have the legislation and they don’t have strong supervisory powers from the legislation [as] they can report to the police, they can send a file to the DPP, they can move and take action if there is a breach of the securities legislation. The problem is the FSC doesn’t have the courage and the will,” Llewellyn insisted.

“You must have the courage and will because what clearly has been happening is a concept we call in law, wilful blindness.”

And having had her experience dealing with the FSC in relation to prosecutions in the financial sector, she said, “I just formed the view that they needed to grow a pair. They need to grow a pair. If you are going to have supervisory powers — whether it is Bank of Jamaica, FSC, or any supervisory entity of the financial sector — it is not that they should not be strategic or not be sensitive but they must be prepared to be courageous and have the sort of will and cojones to rock the boat, if necessary, in the public’s interest.

“You need to look back at the FSC. You ever hear them prosecuting anybody for anything?” she asked as she pointed out, “It could be because the financial sector, for the most part is pretty good, but the thing is, if you are going to have a bad actor the public interest obliges that the persons who are gifted with supervision and laws that assist them with supervision, to not only do their job on paper but to be prepared to have the cojones, the balls, the testicular fortitude to rock the boat in the public’s interest. That is it. And you tend to find in our culture that sometimes it is not in the nature of some people to rock the boat — but if you don’t, things like this will tend to happen.”

She said as it relates to the SSL case, nothing has reached her desk as yet.

“The matter is at the investigative stage. Of course, you know, sometimes we are called upon to do case conferences, but we wouldn’t make any comments.”