FINSAC hits back

FINSAC Limited has denied charges made by businessman Keith Foote, that his penthouse apartment at Fisherman's Point in the fabulous Turtle Beach area of Ocho Rios was undersold in 2002 to help pay his debts arising from the 1990s meltdown.

The bailout company's general manager, Errol Campbell, agreed with the suggestion put forward by the company's attorney, Brian Moodie of the law firm Samuda & Johnson, that Foote's allegation was "not accurate".

And, he also defended the handling of the KLAS transaction as he continued testimony at the enquiry in defence of FINSAC's disposal of assets confiscated during the 1990s financial meltdown.

Campbell last Friday, July 8, refuted claims from 'Finsac'ed' victims including: Foote; Neville James of Island Broadcasting Limited/KLAS FM; businessmen Michael Hendricks, Llewellyn Bailey, Albert Jonas, Mesches Willis and Aubrey Smith; Milton Baker of Ancar Limited; Trevor Donegal, Trevand Limited and Accurate Concrete Limited; Bentley Rose of Benros Limited and Macro Finance Corporation Limited; Lascelles Poyser, New World Limited; Mandeville businessman Michael Levy; George Hugh of Homelectrix and Rayton; and Anthony Hutchinson, a farmer and accounts lecturer.

Foote previously testified that he was treated unfairly by FINSAC and coerced into giving up the apartment, after paying off 75 per cent of his debt and even after he tried to take advantage of a window of opportunity offered to him.

The former owner of the once famous Little Pub Hotel and Restaurant in the heart of Ocho Rios, told the commission in March that a J$5-million National Commercial Bank Jamaica (NCB) loan eventually cost him the Little Pub as well as his apartment, which he valued at J$10 million to J$12.5 million in 2002, after he had already repaid the bank more than J$40 million.

The Little Pub Complex was gutted by fire in 2003, leaving the owner with J$20 million in losses, just four years after he had borrowed the J$5 million from NCB to repair it following Hurricane Gilbert of 1988.

Foote had told the enquiry that the apartment was sold for J$3.3 million or less than a quarter of its worth, and that FINSAC failed to account to him how the proceeds of the sale were applied to his debt.

forced sale value

Campbell countered, however, that a valuation done by realty firm D.C. Tavares & Finson estimated its worth at J$2.5 million to J$3 million, with a forced sale value of J$2.2 million. He said that a FINSAC memo dated June 15, 1999 revealed that Foote owed the company J$48 million.

"The property was transferred to FINSAC in part settlement of debt, and so it was FINSAC's to sell," he told the commissioners.

Campbell said that when the apartment was sold, some fixtures needed repair and the walls needed painting, but admitted that it was "only one of a kind in the complex", with a loft and an attic offering "a commanding view of the harbour and the hills" around Ocho Rios.

Foote said he serviced the loan for several years, until FINSAC took it over from NCB.

"The rapidly rising interest rates had made it virtually impossible for me to keep up with the payments. I remember a time in the 1990s when interest rates rose to 90 percent," Foote testified in March.

The FINSAC boss also defended the handling of the sale of radio shares in KLAS FM.

James had claimed that his proposal to restructure his debt and buy back shares in KLAS, which was owned by his company, was rejected. He also alleged corruption in the sale of the radio station to Wilmington Corporation for J$6.7 million, saying Comtech had made a better offer of J$17 million in cash.

But Campbell testified last Friday, that by the time FINSAC received James' proposal, on November 1, 1999, a decision had already been taken to go to the open market to dispose of the debt and shares of KLAS FM.

He said James was "well aware" of FINSAC's intentions before submitting his proposal.

As for Comtech's J$17-million bid, he said the offer related to the purchase of the company's assets, not the shares, and that FINSAC was in no position to transfer the assets other than by appointment of a receiver under debenture held, or by proposing a restructuring of the company to the shareholders.

"Due to the likelihood of the decline of the business if a receiver was appointed, Comtech's bid was not considered a viable option," Campbell told the enquiry.

He said that Wilmington's bid was considered the best offer, given the need for a quick sale and the fact that it had already got Cabinet approval.

- JIS