Shaw OPPOSITION SPOKESMAN on Finance Audley Shaw has called for a full investigation into financing company Development Options Limited's "scandalous mismanagement" of the Micro Finance Programme(MicroFin).
Mr. Shaw has called for an investigation by the Fraud Squad, after presenting information in Tuesday's Budget Debate, that the bulk of a $240 million grant from the Netherlands government wasn't being used for the intended purposes.
MicroFin, started in the year 2000, was configured to give local entrepreneurs the chance to access funds and in turn retail it to micro businesses on flexible terms. The grant was contracted to Development Options by the Government.
Development Options wholesales the funds to small intermediary firms for further lending to small business people in micro-enterprise projects.
Mr. Shaw said that the collateral requirements of the formal lending sector would be loosened to allow for greater flexibility in lending, though it was expected that certain standards of prudence would prevail in order to make the fund a viable revolving scheme.
He said however that the management of Development Options has revealed that 30 per cent of the portfolio was at risk of default, added to over half of the Fund being unrecoverable and several borrowers absconding.
He pointed to recent media reports where the head of Development Options had publicly stated that one company, Smart Financial Services, received some $80 million but had loaned only 25 per cent of those funds.
The company he said was placed into receivership by Development Options but no money has been recovered.
In a Gleaner interview last month, Development Options' president Maureen Webber said that the company was proposing a total restructuring of the micro-financing programme in the face of fraud and a tendency by some lenders to default.
Ms. Webber said that Smart Financial owed Development Options $35 million and the firm was in the process of taking legal action against another two agencies and was talking with four others who were in default.
Ms. Webber, who said that there was tendency for lenders to justify defaulting on payments, on the basis that it was Government funds, was not available for comment yesterday.
Mr. Shaw maintains that the Development Options dealings is "just another example of waste and the fiscal looseness and irresponsibility that has become the Government's hallmark in its facilitation of corruption."
He said that the Ministry of Industry and Tourism has advised that the size of the loan portfolio is now $188 million, since the inception of the programme with average arrears put at 30 per cent.
"Wasn't the issue of repayment an important part of the loan programme?" Mr. Shaw questioned. "This is a fund in serious trouble. The information available to me is that, at least, four of the companies to whom substantial funds have been loaned are now in default and the funds amounting to over $120 million - fully half of the fund - is now unrecoverable."
He said that in one case, a lender in Portland who received over $30 million had funds disbursed in some cases to fictitious recipients of loans. Another recipient of large sums of money he said had reportedly absconded to London.
Yet another he said had spent over $30 million in South St. Andrew, the Finance Minister's constituency, and East Kingston and Port Royal represented by the Technology Minister with no trace of accountability and no chance of recovery.
