Businessman tells enquiry how J$4mloan turned to $1b debt
A Mandeville businessman told the commission of enquiry into the 1990s financial sector collapse on Wednesday how a J$4-million loan from the Eagle Commercial Bank, in 1994, turned into J$1 billion of unmanageable debt in 2008.
Michael Levy, who owned the Bankhouse Mall on Manchester Road in Mandeville, said that after learning that, despite paying back more than J$20 million over three years, the debt kept growing and so he wrote Minister of Finance and the Public Service Audley Shaw, seeking his assistance.
His lawyer, Rafael Codling, quoted extensively from a statement Shaw made in the House of Representatives, that said thousands of Jamaicans had suffered severe financial losses from the meltdown, and noting the subsequent sale of the bad debts to a Texan firm, Jamaica Re-development Foundation (JRF), for 20 cents in the dollar.
Levy told the commission that his mall at Manchester Road was taken from him, he and his staff were chased off the premises and it was eventually sold for far less that the J$1 billion owed to JRF.
"I can't understand how a man has borrowed J$4 million and has repaid tens of millions to the bank, could still end up owing the bank more than J$1 billion," he said.
No support from gov't
He said that the finance minister had stated that some depositors and debtors had received support from the then Government by way of 90-100 per cent of deposits, plus interest in some instances, leaving the Government with more than J$60 billion in debt, but that he had received none of this support.
Levy told the enquiry that he could not understand how a firm based in Texas was named "Jamaica Redevelopment Founda-tion", and how it could acquire the bad debts at 20 cents on the dollar, when no such offer was made to the thousands of Jamaican debtors who had already repaid huge sums on their loans.
JRF is the vehicle used by the Beal Bank of Texas, to which the Finsac bad debts were sold by the finance ministry to manage the portfolio.
The Manchester businessman said that he has taken the Government to court for allowing JRF to tack on 50 per cent compounded interest on his debt. He is still awaiting a ruling.
The Finsac Commission of Enquiry resumed its sittings in November after being stalled for more than three months. Retired Justice Boyd Carey has been replaced as chairman by Worrick Bogle. Retired Justice Henderson Downer and investment manager Charles Ross are the other commissioners.