FINSAC witness says debt was more concern than interest rate

KINGSTON — Accounts lecturer, Anthony Hutchinson, told the FINSAC Enquiry Wednesday April 13 that although he never challenged the right of the Jamaican Redevelopment Foundation (JRF) Inc. to charge interest on his bad debt, he was not sure that it was entitled to do so.

“My first issue was to pay off the debt. That interest rate, as unreasonable as it was… my concern was to pay off the debt,” he told the Commission. He added that, even if the debt was to include the 25 percent interest rate (later increased to 30 per cent) which JRF charged him, he wanted to pay it off.

Mr. Hutchinson, who teaches accounts at Northern Caribbean University (NCU) in Mandeville, where he lives, was returning for the third time to the enquiry at the Jamaica Pegasus Hotel, New Kingston, looking into the 1990s financial meltdown and the role of the Government’s Financial Sector Adjustment Company (FINSAC) in recovering the bad debts.

The JRF was formed by late Texan millionaire, Dennis Joslin, in 2002 to handle the bad debts he bought from FINSAC at a greatly reduced price.

Mr. Hutchinson had borrowed $1.6 million from National Commercial Bank (NCB) in 1995, to refinance an existing overdraft. His loan ballooned to $5.5 million by May, 1999, when it was sold to Recon Trust Limited, a subsidiary of FINSAC Limited. He tried to sell two acres of his 17-acre property in Mandeville to the Government for a playfield for the May Day All Age School to pay the debt but, by the time the deal was done in 2008 and he was paid the $5.5 million, his debt had soared to $12 million.

Mr. Hutchinson has also told the enquiry that after subdivision of his property was approved in November, 2004, persons paid down on the lots, but he had to refund their deposits, as JRF would not release the titles and allow the sales to go forward.

Asked by attorney for the JRF, Gavin Goffe, if he had challenged JRF’s right to charge him interest rate, Mr. Hutchinson insisted that at the time his primary concern was paying off the debt.

He said he was told there was a contrary position to JRF charging interest on the bad debts, but he refused to say who told him so. When Mr. Goffe insisted, Commission attorney, Judith Clarke, objected on the grounds that it could be communication related to legal advice Mr. Hutchinson had obtained, which he had a right not to disclose.

“My understanding is that there are certain legal issues, after a certain point, whether interest can be charged or not,” Mr. Hutchinson responded, after the Commission allowed the question.

He disagreed with a letter from the Ministry of Education that the long delay in settling the sale of the two acres to the Government, was due to his lawyers’ tardiness. He also disagreed that Ministry of Finance was willing to allow interest on the bonds the Ministry of Education offered to pay for the land in 2002.

“We waited for years, I even tried to call them (Ministry of Finance) to find out what was the situation…we tried to get them to address the issues and they never gave a response,” he said. However, he admitted that there was no documented evidence that the Ministry of Finance rejected the idea.

Mr. Goffe suggested that Mr. Hutchinson had no dispute with JRF over the interest on his loans, nor with the Ministry over payment of interest on the land bonds, until he came to the Commission of Enquiry. But, the witness described the suggestions as “ridiculous”.

The enquiry resumes today at 10.30 a.m. when former head of the Eagle Group, and much anticipated witness, Dr. Paul Chen, is expected to testify via video conferencing from North America.

By BALFORD HENRY, JIS Reporter & Editor