KINGSTON — Former head of the defunct Horizon Merchant Bank, Elon Beckford, admitted Wednesday (May 4) that the bank's high interest rates contributed to the demise of creditors in the 1990s, including developers whose loans were, eventually, sold to the Jamaican Redevelopment Foundation Inc. (JRF) as bad debts.
“If we knew these rates would have continued, we would not have made those loans,” Mr. Beckford confessed to the enquiry, which is being held at the Jamaica Pegasus Hotel, New Kingston, as he was cross examined by attorney for JRF, Gavin Goffe.
Mr. Goffe, who provided Bank of Jamaica figures showing the average lending rate for the merchant banks moving between 70 percent in March 1994 and 44 percent in March 1998, asked the Commission to take a careful look at what really accounted for the housing developers, who borrowed from Horizon, having so much difficulty in repaying, as well as the concentration of developers at that bank.
He suggested that part of the difficulty faced by the Horizon Merchant Bank debtors, was that Horizon was not willing to risk a “fairly thin” profit base, by keeping interest rates low. But, Mr. Beckford responded that the bank only made prudent banking decisions. He said that the interest rates remained high, because of the prevailing conditions, but there were reductions, subsequently.
Asked by Mr. Goffe whether, in retrospect, he would have done anything differently, Mr. Beckford reacted, “the only thing we would have done differently would be to reduce the concentration (of housing developers)”.
In his initial appearance at the enquiry on March 24, Mr. Beckford told the Commission that the intervention by the Bank of Jamaica into the sector in 1995 was a “game changer”.
He said that it was theconsidered opinion of the financial institutions then that the Government’s high interest rate policy was not sustainable. But, he said that the institutions were of the view that the policy makers, being fully aware of the long term implications, would not have maintained the high interest rate policy for any prolonged period.
Mr. Beckford’s testimony, however, ended much sooner than anticipated, because former Solicitor General, Michael Hylton, who has also represented former Minster of Finance and Planning, Dr. Omar Davies, at the enquiry, was absent.
Dave Garcia, the Attorney for former FINSAC head, Patrick Hylton, told the Commissioners that Mr. Michael Hylton had informed him that he only learnt of Mr. Beckford ‘s appearance on Tuesday night, and was not in a position to attend Wednesday’s sitting. Mr. Hylton had requested Mr. Beckford’s return.
Mr. Beckford told the commissioners that he had postponed several appointments in order to attend, after being subpoenaed by the Commission, and was not sure he would be able to return in May.
The Commission resumes Thursday morning with FINSAN’s current General Manager, Errol Campbell, scheduled to testify.
By BALFORD HENRY, JIS Reporter & Editor