DRAC takes Finance Ministry, FINSAC to high court

Donna Ortega, News Editor

The Debtors Resolution Action Committee (DRAC) is taking its case against Finance Minister Dr. Omar Davies and the Financial Sector Adjustment Company (FINSAC) to the Constitutional Court instead of the Supreme Court and an injunction DRAC obtained against them is no longer in force.

DRAC members, who are also involved in the Returning Residents Association, originally charged that both the Minister and FINSAC were guilty of breaching the secrecy provisions of the Banking Act

In May the group filed a class action suit in the Supreme Court to challenge FINSAC's authority to transfer debtors' accounts to a foreign company. The court prevented the agency from doing so for 14 days. Leave was also granted for the plaintiffs to challenge the matter in the Judicial Review Court.

The plaintiffs, Pamaco Ltd; Professional Management Consultants Ltd; Universal Merchants Ltd.; and Junior Campbell, argued that FINSAC, by its action, was purporting to transfer their accounts and that the transfer would violate the Banking Act, specifically Section 2 of the Act which deals with secrecy and precludes the divulging of confidential information about a client's account. They argued that FINSAC, not being a commercial bank or specified financial institution, has, since its inception, violated these provisions.

However, following an appearance in the Supreme Court on Wednesday, Percival LaTouche told Sunday Business that the matter would be brought to the Constitutional Court. Constitu-tional lawyer Berthan MaCaulay Q.C. is appearing with Oswald James, attorney, for the DRAC.

Sunday Business understands that the affidavits in this regard are currently being prepared for action to be filed on tomorrow.

DRAC took legal action following reports that FINSAC was studying expressions of interest from more than 20 local and international companies said to be willing to buy its billion-dollar bad debt portfolio. Subsequently they wrote to the Finance Minister calling for FINSAC Managing Director, Patrick Hylton, to delay his departure from the organisation. The letter, a copy of which has been obtained by the Financial Gleaner asked that he remain in office so that he could be available to "give an account and answer to the general public regarding the transactions for which he has been responsible."

Almost a year after he denied reports that he would be leaving the top post at FINSAC, Mr. Hylton was again reported to be on his way out of the organisation.

Last year he was said to be contemplating further studies at Harvard University and at the end of May this year it was reported elsewhere in the press that Mr. Hylton would be leaving his job in June to pursue an MBA degree at Wharton Business School in the United States.

The move is expected since FINSAC is scheduled to be wound up over the next few months, following completion of the bulk of the sector's restructuring with the Financial Institutions Services (FIS) charged to complete outstanding matters.

However Mr. Hylton, in an interview with the Financial Gleaner, said on Thursday, "I have no imminent plans to leave.

"I'm still at work and I hope to remain until the exigencies of the job no longer require my input. I don't think that will be a long period of time," he said.

Mr. Hylton said his decision to remain at the helm of FINSAC had nothing to do with DRAC but was purely personal.

"I still have some major objectives to achieve which would be easily facilitated if I were around," he said.

Though FINSAC had more or less completed its mandate, Mr. Hylton said he wanted to follow through with the divestment of shares in Life of Jamaica, National Commercial Bank and the non-performing loan portfolio. The unpaid principal balance was almost $20 billion, he said.

The FINSAC boss strongly denied that the DRAC motion and court injunction had delayed the divestment process. The debt portfolio would not yet have been sold as negotiations were still under way. The injunction was against the sale of four specific accounts (named in the suit) until the judicial review was carried out and did not apply to other areas of the FINSAC portfolio, Mr. Hylton stressed.

He said that FINSAC had been ready to go to court and challenge the issue brought by DRAC as "we felt we had a strong case", he said.

However, DRAC has decided to take their grouse to the Constitutional Court. However, Mr. Hylton said Thursday that he had not yet seen any documents to that effect.

As to whether Wharton would be keeping his place open while he wraps up FINSAC business, Mr. Hylton said: "I don't have that confirmation." But he confirmed that he had given up a place at Harvard last year when he decided to stay on at FINSAC. "It's not a commodity you're selling. They're institutions and there are a lot of issues involved," he said by way of explanation. "I'm trying to take it to the appropriate stage, to complete my responsibilities."

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