Shine a light on Finsac report!
WHILE Finance Minister Dr Nigel Clarke is currently working on a mechanism to allow the public to gain insight into the Financial Sector Adjustment Company (Finsac) enquiry, Yola Gray-Baker, president of the Association of Finsac’d Entrepreneurs, is not expecting any real conclusion on the financial meltdown in the 1990s.
Finsac was set up in 1997 as the Government’s vehicle to intervene in the financial sector which faced a liquidity and solvency crisis that saw several institutions go belly up. Finsac sold US$23 million worth of non-performing loans to US-based Beal Bank which subsequently sold the debt to the Jamaica Redevelopment Foundation (JRF). This represented more than 24,000 loans, with the Government collecting between 15 to 50 per cent of the net proceeds recovered.
The Finsac enquiry was conducted between September 2009 to November 2011 during which former leaders and directors of the failed financial institutions, along with borrowers, gave their account as to what occurred during the 90s and subsequent events. An estimated $150 million was spent on the enquiry and commissioning of the report up to 2019 when the Government didn’t extend additional funds for the completion of the report.
Earlier this month, Dr Clarke explained that the Ministry of Finance and the Public Service is working to ensure the assessment of the data can be made available to the public. While he gave no immediate timeline on the project, it’s the first time since 2018 some timeline has been given on the long-awaited report.
Gray-Baker, whose husband Milton Baker was a Finsac’d entrepreneur, continues to ponder why the report is taking so long, as if it’s being hidden for some reason. She has written to Dr Clarke and the current Prime Minister Andrew Holness on the matter as she attempts to get closure for the hundreds of persons crushed by the endemic financial crisis. She took up the presidency role after Neville Box — who died one year into the position — for the collective formed between 1997 to 2000.
“These are the people you vote in office to govern on your behalf. They’re not there for the people’s good. As far as I’m concerned, they’re there for their own good and to fill their own pockets. A lot of those same ministers benefited from some of the properties,” Gray-Baker stated in an interview with the Jamaica Observer last week.
Gray-Baker was one of numerous persons who took up Prime Minister Michael Manley’s offer of five flights to Miami in the 1970s. She returned only in the later years as her husband’s 43-year-old construction company faced issues relating to his chequing account and his payments being bounced.
“While the funds were being paid, there were months when the interest on the demand loan — the demand loan is separate from the chequing accounts — when the loan [was] not paid on the date specific according to the demand loan agreement, they would add the amount to his chequing account and charge interest on that again. So, interest was being compounded left, right and centre. Additionally, with most of the borrowers who had loans and got into this Finsac issue, they started out with a loan of say 18 to 25 per cent, and within a couple of months the interest rate on the loan was 120 per cent,” she described in vivid memory.
Her husband borrowed $10 million at 35 per cent to complete two contracts which saw his home and two properties pledged as collateral. The two projects went awry, with one owner losing his business to the bank and the other client refusing to pay after being taken to court. Despite the difficulty, the loan was still being serviced. However, the interest being charged eventually reached 120 per cent with the repayments of $52 million not being enough to settle the more than $85 million that JRF demanded. The family home was eventually sold for $20 million despite having an offer of $50 million. Bailiffs and police arrived at 7:00 am to inform them to leave by 11:00 am.
“During the enquiry we learned that certain bank managers of certain banks were pleading with Dr Davies, who was the minister of finance at the time, to let them work out something with the businesspeople so that they don’t lose their properties. He refused to allow that, and the people went from desperation to ‘What next do I do?’ ” Gray-Baker recalled from the enquiry proceedings.
JRF continued to collect on the bad loans, and used the power of sale on properties and other assets pledged by borrowers to sell them to collect on their outstanding balance. Apart from her husband, who went into silence for nearly two weeks after their home was repossessed, she recounted how 15 persons had committed suicide and many persons developed ailments after the ordeal. One man died weeks after from a heart attack following JRF telling him his repayment wasn’t enough due to the compounding interest, with his wife joining him five months later due to cancer. Many persons never testified at the enquiry as they either developed medical conditions or were too embarrassed to detail their stories.
“There was one lady who lived in Stony Hill who called me. When they came to her house in the morning, she was petrified and needed someone to give her moral support. When I went there, she literally stood up outside. It was raining and the police were throwing her stuff out. The urine was literally running down her legs and they were laughing. It’s a heartbreaking situation,” Gray-Baker said.
“These were the people who built this country we call paradise Jamaica. If it hadn’t been for them the country would not have been in a good position, and after Finsac that’s how they got to the IMF. The businesses were killed and to me, it seemed like it was purposeful,” she said, disclosing future plans to never vote for either party which ignored the plights of the entrepreneurs.
The late Dr Paul Chen Young, who headed the Eagle group of companies, stated in the enquiry that Finsac’s approach was flawed as they took over the businesses with no intention of saving them. Instead, they were sold to foreigners rather than attempts made to restructure them. More than 40,000 businesses collapsed or were sold off during or after the financial meltdown, with the entire saga costing about 44 per cent of the country’s gross domestic product.
Gray-Baker hopes that the final report will be used in universities to show how not to govern a country, and as a guide to prevent future catastrophes for Jamaica’s budding entrepreneurial youth. She is planning to write a book on the experience similar to Valerie Dixon, Chen-Young and Gladstone Bonnick.
“I look forward to it [final report] but I’m very doubtful, as I’ve heard that before. Through this God and the strength He has given me, I’m still here. As the Bible says, whatever is in the dark will come to light.
The list of Finsac’d/JRF businesses sold off include West Indies Glass, Thermo Plastics, Highgate Food Products, Homelectrix, Jamaica Transformer Limited, Things Jamaican, SunnyCrest, Beautfit Limited, and Caribbean Chalks.