KINGSTON — The Financial Sector Adjustment Company (FINSAC) 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.
FINSAC's current General Manager, Errol Campbell, agreed with the suggestion put forward by the company’s attorney, Brian Moodie (Samuda & Johnson), that Mr. Foote’s allegation was “not accurate”.
Mr. Campbell was responding to statements made by Mr. Foote, during his testimony in March to the FINSAC Commission of Enquiry meeting at the Jamaica Pegasus Hotel, New Kingston.
Mr. Foote said that he was treated unfairly by FINSAC and coerced into giving up the apartment, after paying off 75% of his debt and even after he tried to take advantage of a window of opportunity offered to him.
He had told the Enquiry, which is reviewing the 1990s financial sector meltdown and FINSAC’s role in the crisis, that the apartment was worth up to $12.5 million, but was sold for $3.3 million and that FINSAC failed to account to him how the proceeds of the sale were applied to his debt.
But, Mr. Campbell said Friday (July 8) that a valuation done by realty firm, D.C. Tavares & Finson, valued the property at between $2.5 million and $3 million, with a forced sale value of $2.2 million. He said that a FINSAC memo dated June 15, 1999 revealed that Mr. Foote owed the company $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.
Mr. 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.
Mr. Foote, former owner of the once famous Little Pub Hotel and Restaurant in the heart of Ocho Rios, told the Commission in March that a $5 million National Commercial Bank (NCB) loan eventually cost him the Little Pub as well as his apartment, which he valued at $10 million to $12.5 million in 2002, after he had already repaid the bank over $40 million.
The Little Pub Complex was gutted by fire in 2003, leaving the owner with $20 million in losses, just four years after he had borrowed the $5 million from NCB to repair it following Hurricane Gilbert. He 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,” Mr. Foote told the Commission in March.
On Friday, Mr. Campbell also refuted claims from several other meltdown victims, including: Neville James (Island Broadcasting Limited); businessmen Michael Hendricks, Lewellyn Bailey, Albert Jonas, Mesches Willis and Aubrey Smith; Milton Baker (Ancar Limited); Trevor Donegal (Trevand Limited and Accurate Concrete Limited; Bentley Rose (Benros Limited and Macro Finance Corporation Limited); Lascelles Poyser (New World Limited); Mandeville businessman, Michael Levy; George Hugh (Homelectrix and Rayton); and Anthony Hutchinson, a farmer and accounts lecturer at Northern Caribbean University (NCU)
Mr. James had claimed that his proposal to restructure his debt and buy back shares in KLAS FM, which was owned by his company, was rejected. He also alleged corruption in the sale of the radio station to Wilmington Corporation for $6.7 million, as Comtech had made a better offer of $17 million in cash.
Mr. Campbell responded that by the time FINSAC received Mr. 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 claimed that Mr. James was “well aware” of FINAC’s intentions before submitting his proposal.
He said that Comtech’s $17 million bid was for the purchase of the company’s assets, and FINSAC was not in a position to transfer the assets, other than by appointment of a receiver under debenture(s) 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,” Mr. Campbell said. He said that Wilmington’s bid was considered the best offer, given the need for a quick sale and the fact that bid was already given cabinet approval.
Mr. Donegal had complained that he failed to receive accounting from FINSAC in relation to the sale of his company’s Palermo Apartments, the proceeds of which went to FINSAC. He said that no accounting was received either, in respect of the proceeds from the sale of his Montrose property, which was sold by NCB and the balance remitted to FINSAC.
He said, too, that FINSAC rejected his proposal to sell his securities, totalling $192 million, leave him with the assets of Accurate Concrete and forgive the remainder of approximately $11 million. He also alleged that FINSAC undersold his Barbican Road property.
Mr. Campbell claimed that FINSAC had extended a facility to Mr. Donegal and his wife for $20 million to purchase equipment for Accurate Concrete and complete start-up operations. However, he said that no payment was made towards the outstanding debt.
“Only $1.6 million was realised from property sold by NCB,” he said, claiming that FINSAC sent copies of the sale agreements of the Palermo Apartments to Mr. Donegal in September, 1999.
He said that FINSAC’s Credit Committee minutes, dated September 17, 1999 revealed that the Donegals’ proposal to sell all securities and write off the balance would mean writing off a balance of $211.7 million.
“A decision was taken to reject their proposal, sell all their properties and sue the directors for the balance,” Mr. Campbell said.
By BALFORD HENRY, JIS Editor & Reporter