Blythe's personal travails with FINSAC
Published:Sunday | July 17, 2011 | 12:00 AM
McPherse Thompson, Assistant Editor - Business
Dr Karl Blythe, the former minister of water and housing, said he has been passionately negotiating the settlement of a ballooning debt with FINSAC Limited and debt collector Jamaican Redevelopment Foundation (JRF) for more than 10 years, but the agencies have consistently refused to accept his offers.
The initial loan of J$1 million, acquired from the National Commercial Bank Jamaica (NCB) by his sister Grace, but which he agreed to repay on her behalf, stood at J$43.9 million as at the end of August 2005, with daily interest accrual of just over J$11,000.
It was clear, he said, that it was not in the interests of FINSAC or the JRF to rush to settle the debts of persons where assets used to secure loans exceeded their obligations because the longer they remained on the books, the more money those agencies stood to gain because of the daily accruals.
Blythe was testifying at the commission of enquiry into the financial sector meltdown of the 1990s, which led to the creation of FINSAC, the government agency used to intervene in banks and other institutions to resolve solvency and liquidity problems.
The commission, chaired by chartered accountant Worrick Bogle, and including Charles Ross, a merchant banker, has been mandated to determine whether debtors, whose assets were seized by FINSAC, were fairly treated.
Blythe said the loan in question was secured by land owned by his family and occupied by the Westmoreland Parish Council at Great George Street, Savanna-la-Mar.
However, he illustrated that in correspondence over a two year period - between 1999 and 2001 - in which he offered FINSAC the land or sale proceeds to liquidate, Patrick Hylton, the former managing director, repeatedly refused the proposal, even as the loan kept mounting. Notwithstanding, at all material times, the value of the security exceeded the loan balance.
When the FINSAC loans were sold to the JRF in 2002, Blythe said, he also sought to get the debt collector to use the Westmoreland property, or sale proceeds, to settle the loan. However, that, too, was protracted, with back and forth correspondence between the parties between 2002 and 2009 and without any concrete action on the part of the JRF even after he retained attorney Ronald Thwaites to act on his behalf.
On January 28, 2008, still eager to rid himself of the loan, the Blythe family found a purchaser for the land. As a result, the witness said, he wrote to the JRF advising that F.C. Hamaty of the law firm M.N. Hamaty and Company would be handling the sale.
He also gave the assurance that Hamaty would give an irrevocable undertaking to have the sale proceeds of the land placed in an-interest-bearing account under the joint control of the JRF, or its attorney, and Hamaty.
With no reply to that and other correspondence, Blythe said he took the matter to Crafton Miller, attorney, whom he had separately retained to negotiate with the JRF.
Miller wrote to the JRF pointing out the urgency of dealing with the matter, but still no reply came.
In September 2008, Hamaty contacted the JRF and asked for a payout figure to free the securities so they could proceed to sale of the property. Hamaty also pointed out to the JRF that if failed to respond, "we intend to ask a judge of the high court to intervene and give directions concerning the sale and redemption of the securities."
Still not getting a response, in November 2008, having retained another attorney, Leonard Green, they again wrote to the JRF asking the company to accept US$265,000 in settlement, an offer made a few years earlier, since there was a decline in the value of real estate along Great George Street at that time.
"For the first time in nearly two years, we got a reply from Juliet McCarthy, attorney-at-law for the JRF, stating that she was instructed to advise that the offer was not accepted," Blythe said.
"So, after two years of pleading for permission to sell, two years in which they have charged J$11,006.54 daily, we have got a two-sentence letter rejecting the offer."
Blythe told the commission that as a result, "we must look to the court for permission (to sell)."
He said that when the JRF failed to respond to various pieces of correspondence, Green took the matter to the Supreme Court, asking a judge to order, direct, and approve sale of the Westmoreland property, but he has not said whether the matter has been heard and determined.