On April 12^th I received via fax a copy of a letter to the Jamaica Observer from Patrick Hylton, the managing director of FINSAC LTD. It stated that I “published certain libelous statements regarding this organization” in my article of April 9, 2001 entitled ‘Jamaica Needs the NDM’.

To quote

“We make particular reference to the statements in the second and third columns, namely

(a) “… [the NDM] should have… vowed to tell the public the truth about FINSAC and played up its real strengths  - managerial excellence and an absence of corruption”

(b) “… FINSAC represents nothing less than a gang-rape of the taxpayer by the PNP and JLP. All it would take is one MP of integrity to table a bill to make the details of those disgraceful dealings public.”

The clear implication of the extract is that FINSAC has acted in a corrupt manner in the conduct of its operations. This is, in our view, libelous of FINSAC, its Board of Directors, and its management and staff, and is entirely without justification.

In the circumstances, we demand the publication of an apology by the Daily Observer and your columnist, Mr. Chang retracting the statements made.”

Before addressing any of these issues I think it is important to define exactly what FINSAC is. FINSAC is a company formed by the government of Jamaica to clean up and ultimately rescue the financial sector. Its primary mode of operation was to buy assets – primarily non-performing loans - from insolvent and struggling financial institutions. It paid for these assets by issuing bonds which ultimately will have to be paid for by the taxes of ordinary Jamaicans. This process has already cost over 120 billion dollars. Some of the underlying assets will be recovered. But the net cost is now estimated at over 80 billion dollars. Measured as a percentage of GDP it is one of the most expensive financial sector rescues ever undertaken anywhere in the world. I maintain as a citizen of a liberal democratic country that the public has the right to know in detail how this money has been spent.

Now as to point a), my reference to one of the NDM’s strengths being an “absence of corruption” had no connection with FINSAC, as earlier in the article I had stated that “...the party was untouched by political scandal”. 

Here is reference a) to FINSAC in context - “Now the NDM indisputably failed to address issues that resonated with the Jamaican people. God knows why the party thought constitutional reform was a burning issue among the masses. It should have promised to fix the roads properly, vowed to tell the public the truth about FINSAC, and played up its real strengths - managerial excellence and an absence of corruption.”

In other words “to tell the public the truth about FINSAC” was postulated as a possible campaign slogan. The word “truth” was here used in its meaning of “facts”. I was suggesting that the NDM should have promised to tell the Jamaican public - who have supplied or will eventually have to supply all the funds disbursed by FINSAC – exactly which persons benefited from these funds, why they benefited, and how much they benefited. Calling for full disclosure in the expenditure of public funds is surely not the same thing as making accusations of corruption. Does not every member of the Jamaican public have the right to ask for transparency in the disposition of his or her taxes?

As to point b), my statement that “FINSAC represents nothing less than a gang-rape of the taxpayer by the PNP and JLP” refers to the fact that none of the elected representatives from either party has shown any interest in letting the details of how the taxpayers’ money was being disposed of by FINSAC be made public to the taxpayers. Surely the public has a right to know and ultimately a right to pass judgment on how its taxes are being spent.

Fundamental to any definition of rape is the lack of consent. And because the public has no access to details as to whom our taxes are being disbursed by FINSAC and how much individuals involved have received, our taxes in this matter are by definition being used without our consent. “Gang rape” suggested the collusion of PNP and JLP elected representatives in this process. For certainly none of them have asked for such details in parliament, and they are the only ones who can.

Someone cannot give consent if they do not know what they are giving consent for. This was what “disgraceful proceedings” referred to. Because is it not disgraceful that in an advanced democracy like Jamaica billions of dollars of taxpayers’ money can be disposed of without the taxpayer having a detailed accounting of what it is being used for or having any access to the records of how it has been used? I was decrying the lack of publicly stated clear-cut criteria as to how individual decisions to disburse FINSAC funds are made or how such decisions are carried out. I fail to see how this can be said to be implying corruption on anyone’s part, for what is not known cannot be judged in either positive or negative terms.

Indeed all my criticisms in the article focused not on FINSAC but the political directorate. After all it is the political directorate that created FINSAC, determined its objectives and provided its terms of operation. Its board, officers, and employees can only work within that framework and I have no doubt that they did so earnestly. My quarrel is that this mandate was too narrow to serve the public interest as it did not deal with the public’s right to know how its taxes and the taxes of generations to come were going to be spent. At no time was it my intention to make any express or implied accusation of corruption. Any such impression given to FINSAC or the public is regretted.

Our elected representatives are after all elected to protect the public’s interest. A most important part of this duty entails letting the public know how the taxes it has paid are being disposed of. But no one has seemed interested in doing this with regards to FINSAC. In this situation the Jamaican public truly is in a position of taxation without representation.

Mr. Hylton is not the appropriate party to answer such concerns. He was never elected by the voters of Jamaica to protect our taxes and see that they were properly and prudently spent. Indeed I sympathize with public officials carrying out the narrow mandate of the politicians. And I have no doubt that the staff and officers of FINSAC are very capable and efficient public servants. My entire concern is with a mandate which involves patching up a huge problem with public funds where there is no accountability as to how those funds are disbursed.

A call for transparency can only be construed as an allegation of corruption if the perception has arisen among some members of the public that the organization in question is not completely honest. And any organization that is cloaked in secrecy inevitably invites speculation about whether its operations have been conducted in a manner completely above board. With regards to FINSAC the public has absolutely no idea if all persons who had dealings with FINSAC were treated in the same manner.

Have ordinary citizens been given the same fair shake as persons with political connections? Has full care been taken to make sure no conflicts of interest have been involved in the dispersal of funds by FINSAC? We the taxpayers don’t know and in the absence of information can never know. It is no wonder that, as a Gleaner front page article by Delroy Alexander on February 3, 2000 stated, “Allegations of political interference and bias have surfaced a number of times since FINSAC was set up in 1997 to administer the Government’s bail out plan”.

The same article reported that “The International Monetary Fund (IMF) wants the Government to publish the names and the amounts of all defaulting borrowers aided by the Financial Sector Adjustment Company (FINSAC) to enhance collection and accountability. This is contained in the recently released annual IMF staff report on Jamaica…

Minimal detail of who has benefited from the restructuring has been given out by FINSAC. FINSAC boss Patrick Hylton argued last July that that depositors could not be named because of legal considerations. ‘We have maintained that the law pertaining to banker-customer confidentiality prevents us from disclosing the information to the public.’ However that defence does not appear to have stopped the IMF from calling for the names to be published with full details of which companies and individuals have benefited from state aid.”

Persons who ask for taxpayers’ money can be named if politicians make their exposure a pre-condition of them receiving this assistance. In other words one of FINSAC’s pre-conditions for acquiring non-performing loans could have been a consent agreement from the debtor allowing his name and details of the loan to be published. This important point again speaks to the mandate of FINSAC’s operation. 

In addition informed legal sources maintain that the confidential relationship existing between bankers and their customers does not prevent the publication of the names of those customers who are indebted to the bank for one reason or the other.

Indeed the Students’ Loan Bureau has not only disclosed the name of debtors of student loans but also threatened to publish pictures of the debtors and their guarantors. So we have a situation in Jamaica where the recipients of billions from taxpayer funded FINSAC are permitted to remain completely anonymous, yet students owing a few thousand dollars are threatened with public exposure. Where is the equality of treatment by state agencies in these comparative instances?

Indeed this may well be a contravention, at the very least in spirit, of Section 24 (2) of the Jamaican Constitution. This states that “…no person shall be treated in a discriminatory manner by any person... in the performance of the functions of any public office or any public authority”. According to Section 24 (3) “… the expression… ‘Discriminatory’ means affording different treatment to different persons attributable wholly or mainly to… political opinions, colour or creed whereby persons of such description are subjected to disabilities or restrictions… or are accorded privileges or advantages which are not accorded to persons of another such description”.

In the US Savings and Loan crash of the1980s Resolution Trust Corporation made full disclosure of everyone responsible and the amount of their involvement with many leading figures being implicated. The USA was not unique in this. Prominent political figures were named in several of the Latin American countries which underwent financial sector crises.

RTC was of course given a free hand to operate and to publish its findings. Here is how its mandate was described in a RTC document dated September 15, 1995

“Under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) the RTC was given powers to adopt such rules, regulations, standard policies, procedures, guidelines, and statements as the Corporation considers necessary or appropriate to carry out its mission. Twice each year, the RTC publishes an agenda of regulations to inform the public of its regulatory actions and to enhance public participation in the rulemaking process.”

What a contrast to the straightjacket of secrecy which has been thrown around FINSAC. The question which every tax paying Jamaican must ask is why similar powers were not granted to FINSAC and why it was given such a narrow mandate. Do Jamaican taxpayers not have as much a right to transparency, accountability and justice as their American counterparts were granted by their legislators? changkob@hotmail.com