FSC petitions court to wind up Intertrade
McPherse Thompson, Assistant Editor - Business
The Financial Services Commission (FSC) has petitioned the Supreme Court to wind up operations of securities and fund management outfit, Intertrade Finance Corporation.
A liquidator is to be appointed by the court to identify the assets and manage the payment of Intertrade's debts. The next hearing of the winding up petition will be on May 17.
Intertrade was ordered to stop conducting business back in May 2011. FSC later placed the firm under temporary management.
The FSC, which supervises and regulates the securities, insurance and private pensions industries, has also now confirmed that it has been granted court orders to stay the execution of matters filed by other parties against Intertrade in order to prevent further depletion of assets by numerous creditors.
Those lawsuits include one filed by COK Sodality.
In emailed responses to questions from the Financial Gleaner, the FSC said it is trying to track down the location and value of the company's assets.
"While some of the office furniture has been sold to recoup expenses, most of the assets identified are real estate, which Intertrade transferred to other parties prior to the FSC's temporary management in August 2011, and contrary to the FSC's directions and cease and desist orders," the regulator said.
"The realisation of assets will be done by the liquidator once he is appointed by the court."
Payments to be made
In response to recommendations made by temporary manager Linval Freeman of Ernst & Young, the FSC said redundancy payments will be made to former employees of Intertrade as part of the liquidation process.
Freeman had also recommended that the regulator coordinate its efforts with the police to find former Intertrade chief executive officer Joan Powell "so she can provide, more fully, information on investor funds, bank accounts and other assets" of the company.
The FSC said it has continued to collaborate with the Financial Investigations Division which, "through the Jamaica Constabulary Force, has received assistance from overseas agencies to ascertain the whereabouts of Joan Powell. So far, those efforts have been unsuccessful."
A third recommendation Freeman made was that the staff pension contribution fund, managed by Sagicor Pooled Investment Fund, should be wound up and the proceeds refunded to members and the company if applicable.
The FSC said it has advised former members that it would be exercising its powers to wind up the superannuation fund.
"In keeping with the requirements of the Pensions Act, the FSC will seek leave of the court to begin the winding up of the superannuation fund. This will be done in tandem with the liquidation proceedings," FSC said.
The regulator also said it continues to check to determine whether Intertrade or its principals have bank accounts in institutions such as HSBC in London, and Citibank in the United States.
So far they have been able to establish that there are no funds in the Antigua-based Global Bank of Commerce, and funds in London were placed with an institution which has failed.
The temporary manager had reported that Intertrade "appeared to have invested and lost more than US$4 million in failed projects," including US$2 million in Ejder Group in the United Kingdom, which went into liquidation.
Intertrade operated three affiliated entities - Digitourism Society Limited, a locally registered industrial and provident society; Intertrade Capital Corporation (ICC), a company registered in the US, and Worlddigibeat.com Inc. (WDB), which the temporary manager said appeared to be also registered in the US.
The temporary manager is no longer contracted by the FSC. But the regulator said it is taking steps to follow up on a request made for updated financial statements from Z & L Associates, a registered public accountant in the United States, which prepared the 2007 financials for ICC and WDB.
FSC said, however, that an American company was under no obligation to comply with requests made by a Jamaican regulator.
Meantime, some of the investors have since formed an association to lobby the FSC, the political directorate, the Bank of Jamaica and others to take action to recover their investment.
But president of the Intertrade Investors Association, Lindell Lawrence, says no response has been forthcoming from anyone except BOJ governor Brian Wynter, who referred them back to the relevant regulator, the FSC, for discussions.
The FSC said it has had a meeting with the association and "has also written to them outlining our actions to date. In addition, the FSC has published status updates of all its actions in the print media and on our website."
The association accused the FSC of failing to ensure that Intertrade met its solvency requirements, keep current its financial records, and that it kept backup records off premises.
However, the regulator responded: "There was no indication, based on the information provided by IFC (Intertrade Finance Corporation), that the company was insolvent."
FSC said the company has always maintained adequate capital ratios determined from documents submitted, including the financial statements.
"The company's solvency only became an issue once it was discovered that the liabilities were misrepresented by the company and the qualification of the company's audited statement by its auditors," the FSC said.
'Qualification' of the statements meant the auditors were not satisfied with the information given.
The FSC added: "The commission had attempted on many occasions to ensure that current financials were submitted by the company. The company, on many occasions, promised to improve its submissions but failed to live up to those promises. It was this failure that led the FSC to suspend the company's licence in November 2010. There is no law which requires that a company back up its records off premises."