Judgment against FINSAC leaves Government with $2-billion bill
A massive judgment handed down by the court totalling $2.19 billion in favour of a claimant who brought a lawsuit against the Financial Sector Adjustment Company Limited (FINSAC) has left the special vehicle company reeling as it racked up losses amounting to $1.54 billion for the period ending March 31, 2015.
In its financial statement ending March 31, 2015, FINSAC reported that a "significant increase of $1.69 billion in shareholders' deficit as at March 31, 2015 is due to the increase of $2.19 billion in provision in a litigation matter for which an adverse judgment was handed down".
A FINSAC source told The Gleaner yesterday that information about the litigant could not be disclosed at this time.
The report stated that FINSAC had shareholders' net deficit of $2.12 billion and net current liabilities of $3.43 billion as at the reporting date.
"Continuation as a going concern, therefore, may be uncertain and preparation of the financial statements on the going concern basis may not be appropriate," said auditors KPMG.
Additionally, KPMG said: "No provision has been made for the effects, if any, the resolution of this uncertainty might have on the carrying values of the assets and liabilities of the company as at reporting date."
FAR FROM OVER
FINSAC's litigation woes are far from over, as there are matters being pursued in the courts against the company and its affiliated entities.
However, FINSAC has also approached the court to resolve legal issues.
In one instance, there is a case inherited by FINSAC against the former Eagle Commercial Bank for allegedly withholding customers' funds for four years and the claim for resultant loss of business/profit. Judgment was handed down in favour of the claimant, requiring FINSAC to pay certain sums, including costs and interest compounded monthly over the period.
FINSAC has appealed the decision and has since engaged another attorney to manage the appeal process.
Dates for hearing of the appeal are still being awaited.
In terms of asset disposal, 21 of the 31 Enchanted Gardens units which netted $18.6 million and Epsom Holdings' property, which realised $47 million, were sold.
Properties not yet disposed of are the other 10 Enchanted Gardens units, four half-acre lots at Drax Hall, St Ann, a 16-acre lot at Culloden, Westmoreland, and the Mutual Life warehouse at Osbourne Road in Kingston.
FINSAC was established in the wake of the financial-sector meltdown in the 1990s to address liquidity and solvency problems.