Mon | Jun 5, 2023

Alfred Dawes | You should be worried about FSC

Published:Sunday | January 29, 2023 | 1:28 AM

Gautam Adani is the world’s fourth richest man and the richest in all of Asia. Currently, his fortune is in a freefall, with $20 billion dollars wiped out in two days. The meteoric rise in Adani’s fortune occurred over the last three years and has...

Gautam Adani is the world’s fourth richest man and the richest in all of Asia. Currently, his fortune is in a freefall, with $20 billion dollars wiped out in two days. The meteoric rise in Adani’s fortune occurred over the last three years and has propelled him from obscurity to a man heading a conglomerate deemed too big and valuable to India to fail.

The selloff, erasing more than $51 billion in market value, has been fuelled by a scathing report by US short seller Hindenburg Research. The investigators reported that the “Adani Group has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades” through the use of shell companies and various schemes to pump up the value of the stocks as well as manipulate financials. The as much as quadruple digit percentage increases for some companies in the Adani Group in three years has left them with sky-high price to earnings ratios and a massive downside should there be a correction. It would be a massive hit to India’s financial market and economy on a whole.

The situation in India is merely mirroring what has taken place in other markets. China’s real estate behemoth Evergrande Group almost caused a meltdown of their entire housing market, saved only by a restructuring proposal with creditors. The infamous accounting gymnastics at Enron is a classic, and Bernie Madoff was able to defraud investors over $50 billion dollars over possibly 20 years, while regulators ignored warnings from analysts. Fresh in our memories is the 2008 global financial crisis that revealed the underbelly of conflicts of interest between financial institutions, rating agencies and mortgage originators in the US housing market. These and other greed-driven irregularities and outright frauds have occurred in well-developed financial centres with well-run regulatory bodies.

Red flags are missed by auditors and regulators because of wilful blindness, or because logic is subconsciously impaired by what the emotional beings desire. Human behaviour is not driven by logic, it is by emotions, with logic as the navigator. This Nobel prize winning theory forms a pillar of behavioural psychology and guides the work of economists, marketers and psychologists. It also explains why the SSL fraud was able to take place over years of intense supervision, and why I am fearful of other disasters in the local financial sector.


The Financial Services Commission (FSC) was created out of the ashes of the financial sector meltdown of the 1990s. The crisis demanded that there be greater regulation and supervision of the financial sector. With a roughly one-billion-dollar annual budget, the self-financing entity is tasked with the regulation of Jamaica’s insurance, pension and securities industries. It has the power to investigate and sanction entities and has focused on risk management, solvency and corporate governance. By its last published report in 2019, the FSC is doing a darn good job, with listed targets achieved and the entire organisation hard at work. Going by the report, there would have been very little to fear about practices at SSL or any other entity under its jurisdiction. That conclusion has not aged well.

Although an ultimatum was given should the company not correct the deficiencies earlier raised by the FSC, a shadowy figure or group decided that they would not revoke SSL’s licence. As to why this extraordinarily atypical decision was made by the regulator, we will never know. It is not a priority of the massive probe into the SSL fraud that has roped in, at no expenses spared, the FBI and other international agencies. The fact that such a glaring breach was deliberately overlooked has me worried as to what else has been given a “blye” in our notoriously corrupt country. I am no financial expert; I am however fairly good at connecting signs and symptoms with subclinical diseases.


For one, it is clear that somewhere in the room there is or was a conflict of interest. At what level, we will never know given the scope of the investigations. When such incidents arise, it is the preservation of self-interest that usually prevails. Is it possible that blyes were given to other entities and this will not be disclosed to prevent a run on them or a fall in their market cap? I am concerned about the financial health of some entities that were being supervised by the FSC, despite them all issuing releases about the SSL fraud being far from their offices. However, it is not the barefaced SSL type fraud of which I am concerned. It is a complex deception, the likes of which characterised the aforementioned examples, that I fear is currently taking place. I have very little confidence that the FSC can unravel such a plot, that is, if they choose to look in that direction at all.

Little old Jamaica had the best performing stock market in the world not too long ago. There are listed companies that have seen Adani-like growth in valuations. There are companies like Adani’s who have offshore shell companies with obscure ultimate beneficiaries holding large blocks of shares. There are companies with pricey shares pledged as collateral for loans. There are companies posting paper gains as if they are realised profits. And the only thing keeping the party going is investor confidence in a country with a perpetually anaemic growth rate. I am sure the experts will say that the Jamaican financial sector is healthy, and I am spouting uneducated nonsense. Precisely what they always say before financial disasters. And that, more than any other symptom, has me worried.

- Dr Alfred Dawes is a fellow of the American College of Surgeons, and CEO of Windsor Wellness Centre. Follow him on Twitter @dr_aldawes. Send feedback to and