FINSAC Enquiry - Facing eviction after 47 years as debts double
Published:Sunday | March 13, 2011 | 12:00 AM
Dionne Rose, Business Reporter
Albert Jonas, a craftsman who assembles handcraft items in Irish Town, St Andrew, says he is about to become a homeless man if he doesn't clear a $2.57 million debt owed to the Jamaican Redevelopment Foundation Inc (JRF).
Jonas, who testified before the FINSAC enquiry last Tuesday, related how he became involved in this predicament where he is now faced with the reality that his family home, in which he has lived for the past 47 years, is now on the auction block.
In 1995, he borrowed $500,000 from the now-defunct Jamaica Citizens Bank, which was taken over by FINSAC to pay import duties on a pickup truck he had purchased to be used in his business. The loan was also to assist in the construction of a workshop, and to facilitate an overdraft account.
Jonas, along with his brothers, had been operating the business for 10 years prior to taking out the loan. The company, which traded under the name Calabash Creations, made items such as handbags, bowls, and other household items from calabash for sale.
The loan comprised an overdraft of $270,000 with interest rate of 50 per cent per annum, and a $230,000 demand loan priced at 45 per cent. Jonas said his family home in Irish Town was used as security for the loan.
He told the commission that during the first two years of the loan, he and his brothers made regular payments but ran into problems shortly after.
"Due to the unfavourable economic conditions at the time, the business, which my brothers and I operated, experienced severe downturn as about 1997 we were not able to make the monthly payments as regularly as we have been doing before," he said, reading from his witness statement.
"About 1998, I received correspondence stating that FINSAC had taken over the management of Jamaica Citizens Bank. In response to this letter, I went to the FINSAC office in the hope of negotiating the restructuring of the debt."
He offered to settle the debt by paying 50 per cent of the amount owing, but the proposal was rejected. He had no further communication with FINSAC until 1999 when he was informed by a friend that FINSAC had advertised his home for sale in the newspaper.
"My brothers went into FINSAC and made a substantial payment totalling $51,797.36. Our house was then removed from the auction block," he said.
Two years later, he received a letter from the JRF indicating that it had taken over the loan and that he owed more than $1.2 million.
Jonas said he make a proposal to pay $500,000 of the amount but JRF managers rejected the proposal and instead verbally offered him a loan of $1 million.
He said that he did not take up the offer but in 2005, he again proposed to the JRF to settle the debt, but requested debt forgiveness for 50 per cent of the outstanding amount, which then stood at $1.4 million. He also suggested that he be allowed to make a lump-sum payment of $100,000 with monthly payments of $8,000 to $10,000 until the debt was settled. Jonas said this proposal was also rejected. He said that since then, he had not made any payments on the loan.
"The reason I have not made any payments was because I was disappointed that all the offers that I made were basically rejected. They were not entertained," he said, responding to a question from Judith Clarke, attorney- at-law, who is marshalling evidence on behalf of the commission.
Auction block
Jonas said that in 2010, he got a letter from the JRF informing him that the debt now stood at $2.57 million, and later, he received a notice from the foundation that his house was on the auction block.
"I'm now faced with the prospect of being homeless. In the event my home is sold, I will have nowhere to go. While I have never sought to escape responsibility for paying my debt when it accrued, I'm of the view that I and my brothers have not been treated fairly and equitably in the aftermath of the takeover of JCB by FINSAC," he said.
"When I went into FINSAC to negotiate, I did this in response to the Government's announcement that there would be a window of opportunity for persons to receive favourable consideration with respect to their debts. FINSAC did not entertain my request for accommodation. I have since learnt that other persons have benefited from substantial write-offs from FINSAC, and it is my understanding that JRF bought debts from FINSAC for cents in the dollar, yet my debt burden seems to have increased substantially and continues to increase as JRF continues to impose high interest rates," he said.
Under cross-examination, Sandra Minott-Phillips, attorney-at-law representing the JRF, suggested that the interest rate applied by the JRF to Jonas' loan was substantially lower than the rate agreed with Jamaica Citizens Bank when he took out the loan in 1995.
"Mr Jonas, at 50 per cent per annum for a $500,000 facility, you are talking about roughly $3.75 million in interest over 15 years, correct?" she asked. But Jonas responded that he could not calculate it at that moment.
Jonas' cross-examination is expected to be completed this week when the commission reconvenes.