KINGSTON — Former owner of the famous Little Pub Hotel and Restaurant in Ocho Rios, Keith Foote, told the FINSAC Enquiry Tuesday (March 8) how a $5 million National Commercial Bank (NCB) loan cost him his $10 million penthouse apartment in 2002, after he had repaid over $40 million.
Mr. Foote was one of two witnesses testifying at the enquiry being held at the Jamaica Pegasus Hotel, New Kingston. Commissioners Worrick Bogle, chairman, Charles Ross and Justice Henderson Downer are reviewing the impact of the 1990s financial meltdown, the Government-owned Financial Sector Adjustment Company (FINSAC) and the sale of the non-performing loans to Texan firm Jamaica Redevelopment Foundation, Inc.
The other witness, businessman Albert Jonas, said his family is on the verge of homelessness, as their home in Irish Town, St. Andrew is being auctioned to repay a $500,000 loan which has grown to $2.5 million.
Mr. Foote was a popular St. Ann tourism figure up to 2002, when fire gutted the Little Pub Complex in Ocho Rios, leaving him with $20 million in losses, just four years after he had borrowed $5 million from NCB to repair the complex following Hurricane Gilbert. He said he serviced the loan for several years until FINSAC took over the 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 told the Commission. By that time, he had repaid $15 million, but at a meeting in Kingston, arranged by the Jamaica Tourist Board (JTB) to help him, he was told he still owed $33 million.
“I tried to urge the FINSAC representatives to grant me some reprieve, as I had by now paid more than three times the amount I borrowed. This was to no avail. FINSAC demanded that I pay $33 million to settle the debt,” he informed the Commission.
He said that faced with the prospect of losing his business, he went to Capital and Credit Merchant Bank and borrowed $30 million. He paid $26 million to FINSAC on his debt, and used $4 million for bank charges, quantity surveyors, accountants and property taxes. However, he admitted that he lost a number of those documents in a fire in 2004.
He said that with the $26 million payment, he had repaid over $41 million on the principal debt of $5 million. However, FINSAC insisted that he pay an outstanding $7 million, or face the prospect of losing the Complex. He was given two weeks to pay.
He said he told FINSAC’s representatives that he could not find the remainder, and was told the only option would be to transfer his penthouse apartment at Fisherman’s Point to FINSAC.
“I pleaded with them to allow me to keep my apartment and to settle the remainder by paying in monthly installments. They refused to allow this,” he stated.
Mr. Foote said that his “back was against the all”. “I could not afford to lose the complex, which was the source of my livelihood. I had no choice but to accede to FINSAC’s demand. I transferred the apartment to FINSAC in about 2002 and moved out,” he told the Commission.
FINSAC sold the apartment, which he valued at between $10 million and $12.5 million, for $3.3 million to a real estate broker. He noted that after the sale, the purchaser of the apartment secured a mortgage for $10 million on the security of the property. The property was again mortgaged for $14 million in December, 2007.
Mr. Foote said he felt he was treated unfairly by FINSAC, as he was coerced into giving up his home, even after he had paid in excess of 75% of the amount “which they claimed I owed.”
“Other FINSAC debtors got write offs of over 98%, what would have operated to disqualify me from a 25% write off? What were the qualifying criteria for write offs?” the hotelier asked the Commission.
Mr. Jonas, who had borrowed $500,000 from the Jamaica Citizens Bank in 1995 to import a 1988 Ford pick-up for his family handcraft business, says he still owed the Jamaica Redevelopment Foundation $2.5 million in October, 2010.
“I am now faced with the prospect of homelessness, in the event that my home is sold. I would have nowhere to go,” he informed the Commission.
He said he is “desperately seeking help to find any means, measures, policies or help” to be spared homelessness.
By BALFORD HENRY, JIS Reporter & Editor