Foote sought debt forgiveness, but was ridiculed instead -Gave up penthouse for rat-infested digs
Published:Wednesday | March 9, 2011 | 12:00 AM
Dionne Rose, Business Reporter
Keith Foote, operator of the former Little Pub Hotel and Restaurant in Ocho Rios, St Ann, testified Tuesday that he was forced to hand over his penthouse apartment to FINSAC and was scoffed at when he appealed for debt forgiveness, despite having paid off 75 per cent of his loans.
Foote, who has been in the food, beverage and tourism industry for some 40 years, told the FINSAC enquiry that he had borrowed J$5 million initially from National Commercial Bank to repair his property, which was badly damaged by Hurricane Gilbert in 1988.
He said for several years he serviced the loan but ran into trouble when the interest rates escalated between 50 and 90 per cent.
"You are saying that the spiralling interest rates made it virtually impossible for you to keep current," said attorney Judith Clarke, who is marshalling evidence on behalf of the commission.
"You recall at time in the 1990s when interest rates rose to as high as 90 per cent?" she asked, with Foote nodding in agreement.
More than $33 million loan
Foote said when FINSAC took over the loan it ballooned to more than J$33 million, but this was after he paid down J$15 million on the principal. He then approached FINSAC to see if he could get some debt reprieve, he said, but was flatly turned down and told he had to pay back all the money.
"I was totally turned down, as a matter of fact, I was laughed at," he said when pressed by Clarke what came out of the meeting he had with FINSAC representatives in the presence of a Jamaica Tourist Board representative who had accompanied him to the meeting.
"They were laughing saying, 'Mr Foote, you are not a good businessman you should be able to run your business,' and I can remember the tourism representative came out and say 'how can you say this? This man is running a business for so many years in Ocho Rios, doing so much for tourism'. The person was really hurt about it and tears came to my eyes, because I was treated so badly," he said sadly.
Foote said he then accessed a loan of J$30 million from Capital and Credit Merchant Bank, out of which he paid down J$26 million of the FINSAC debt.
"When I gave them the J$26 million I asked them if they could take that and settle, because I overheard them saying before that if you can come up with substantial amount of the money then they would forgive some of the debt and I tried that and they said 'no', they need every dime," said Foote.
He said he was then given an ultimatum to settle the J$7 million debt in two weeks or they would sell his business.
"My only option was to give up my penthouse apartment where I lived at Fisherman's Point, and I didn't have any choice," he said.
"They gave me two weeks to move out of the apartment. I had no choice because I could not raise the money, and I tell you something, when I moved out you would not believe what I moved into. I moved with some big rats, you would not believe it; it was horrible," declared an emotional Foote, who said the memories made him feel sick.
Foote said that he bought the beachfront property apartment in 1985 for J$475,000, but that its value had grown from J$7.5 million to J$9 million in 2002. He said he learned that FINSAC sold the property for far less than it was valued in 2004.
"Am I correct that you indicated that in 2004 the apartments were being sold for J$10 million and J$12.5 million, that is, the same year that your apartment at Fisherman's Point was sold to somebody for J$3.3 million?" asked Clarke. "And you are saying that your apartment would have sold at the upper end?"
Fair market value
Foote responded in the affirmative, pointing out that his apartment had three levels, two bedrooms, a bathroom, and a gazebo on top.
Clarke, in making reference to the title of the apartment, which was admitted into evidence, told the commission that in January 2007 the buyer secured a mortgage of J$10 million using the property as collateral, and that it was later mortgage again in that same year for J$14 million.
"One would not want for the record to appear somewhat misleading but the one (mortgage) was discharged to facilitate the endorsement of the other, so it is not a case that they are running at the same time," Clarke clarified.
Foote told the enquiry that he wanted the commissioners to ascertain from FINSAC records what steps were taken to dispose of his apartment at fair market value.
"You want to know if the market value was more than what you ... you want this commission to assist you in terms of investigating whether or not the excess could accrue to your benefit," Clarke said.
Foote said he also wanted to know through the investigation if the apartment was sold cheaply to friends and why he was never considered for debt reprieve by FINSAC.
"Other FINSAC debtors got write-offs of over 98 per cent; what would have operated to disqualify me of a 25 per cent write-off, what were the qualifying criteria for this write-off?" he asked in his statement to the commission, which was read by Clarke.