FINSAC changed course, and derailed ‘Jamaicanised’ financial sector – Chen Young

The former head of the defunct Eagle Finansial Network has accused the Financial Sector Adjustment Company (FINSAC) of abrogating its duty to protect locally owned businesses in the 1990s, resulting in the life insurance and banking institutions being sold out to overseas interests.

"The wholesale take-over of financial institutions by FINSAC was totally contrary to its mandate, its terms of reference and its exit strategy. As such, FINSAC abrogated its duty," Dr. Paul Chen Young  told the FINSAC Commission of Enquiry at the Jamaica Pegasus Hotel in New Kingston  on Thursday.

The Commissioners, accountant Worrick Bogle and investment banker Charles Ross, are looking into the 1990s financial meltdown and the role of the Government-created holding company, FINSAC, in disposing of the assets and debts it acquired during the period.

Dr. Chen-Young, an economist and investor who built the Eagle Financial Network from scratch, was testifying via video conferencing from Vancouver, Canada.

He has been living abroad since the 1990s, after a lawsuit was brought by two of his former companies which were acquired by FINSAC, and him being stripped of his assets.

Dr. Chen Young earlier submitted to the Enquiry that the collapse of the financial sector was largely due to two major policy actions by the then government.

Of the two he believes, is a statement by Dr. Omar Davies, former Finance Minister in his 1996/97 budget presentation which was the core reason for the problems experienced with the high interest rates.

Dr. Chen-Young said within a short period the manufacturing sector lost more than 50,000 while the agriculture sector lost more than 40,000 jobs.

This was in addition to the devaluation of the dollar.

He further argued that there was a trickle down effect on insurance companies and insisted that insurance companies were forced to seek sources of funding to meet their obligations.

According to Dr. Chen- Young the matter was brought to the attention of Dr Davies, whom he accused of offering no assistance which led to the collapse of the industry.