DAWN RITCH, COLUMNISTDr. Vin Lawrence, executive chairman of Air Jamaica, has said that the airline's losses are US$847 million, or nearly US$1 billion.
To put these losses into perspective, the finance minister's intervention in the financial sector cost US$1.25 billion (FINSAC's negative net worth in its 1998 audited accounts). By then, many hundreds of customers had long lost their businesses, homes, and their little nest eggs or private pensions. The Air Jamaica debt is sure to grow beyond the cost of that intervention.
I love Air Jamaica, but I'm not sure it's worth the financial sector, nor all those foreclosures on people's homes. Moreover, Finance Minister Dr. Omar Davies' chief advisor George Keith Senior sat on the Air Jamaica board, along with Dr. Vin Lawrence and the country's illustrious Governor of the Bank of Jamaica, Mr. Derick Latibeaudiere. Surely these individuals were aware of the losses as they escalated. Why didn't the minister of finance bring it to the attention of Parliament and the nation?
Air Jamaica is one hell of an off-budget item. Dr. Davies needs to go to the House and spell out all these losses. The nation must be told whether there are further contingent liabilities, what future lease payments remain to be honoured, or any other guarantees and undertakings. By the time all this is brought to book, the Air Jamaica debt could be well in excess of US$1 billion.
repatriation of profits
About half of last year's tourism foreign exchange earnings went back out of the country in the form of repatriation of profits for the new foreign owners of the financial sector, and the debt that has been taken on by the government as a consequence of its punishing interest rate policy of the 1990s. It is difficult to see where Dr. Davies is going to get the foreign exchange earnings to pay the Air Jamaica debt. Has this been included in the figures he's taking to Parliament this year, or will the country be told that these obligations will continue to be treated as off- budget financing?
If most of this money is owed to the government, I guess it will be written off at the expense of the taxpayer. In the meantime, education and other necessary social services such as police, fire and health are short-changed, and have to juggle their income tax remittances and other statutory deductions to make ends meet. This is hardly proper financial stewardship of the public infrastructure. Yet the finance minister now offers himself for the post of prime minister.
This is a frightening situation. The public debt is already monumental. The current Air Jamaica losses will increase the debt load, as well as impair our ability to provide education for our children, and a good health service for the needy.
The recent and second bankruptcy of Dyoll is another black eye for the finance minister. The government saved Dyoll by pumping cheap money into the company the first time round. Dyoll has now gone belly-up again because it did not have adequate levels of re-insurance. The financial ser-vices Commission (FSC) created by Dr. Davies, was specifically established to regulate and monitor the industry after the first financial sector meltdown. The crash of Dyoll at this time demonstrates that the FSC has been derelict in the performance of its duties.
An explanation is required for how the National Insurance Fund (NIF), the pension fund of the working class, also came to be the third largest shareholder in Dyoll. Both the finance minister and the FSC have turned a blind eye to the fact that the public pension purse was invested in a company operating outside the government's own regulations.
JSe asleep
Even the Jamaica Stock Ex-change (JSE) has been asleep at the switch. A very large block of shares in Dyoll was sold just before it went bust, suggesting insider knowledge of the impending disaster. So, on top of everything else, others have taken their money out of Dyoll while the National Insurance Fund remains invested and valueless.
The dereliction of duty is widespread. The finance minister, the financial secretary, the governor of the Bank of Jamaica, the FSC and the JSE ought to have something to say about all of this. They have a public responsibility to ensure transparency and fair dealing. That is their regulatory and fiduciary role. But nobody said a word until it was too late.
another bail-out
Instead, there are reports in this newspaper that Dyoll is to be bailed out yet again, by pouring even more NIF money into it. And this while the executive chairman of Air Jamaica is throwing out huge loss figures that are certain to rise, even as the airline's flight cancellations and delays guarantee higher operational losses now and in the future.
For the entire time that Air Jamaica was 75 per cent divested to the private sector, government remained a 25 per cent shareholder. They had high-level representatives on the board, and chaired its finance committee. They knew what was going on. Yet, year after year, and budget after budget, the finance minister did not level with the country. He neither stanched the losses, nor reported them.
We have a minister of finance who feels that he doesn't have to explain anything, nor explain himself to anyone. He provided no details about the financial meltdown in the late 1990s, just the bill, nothing about Air Jamaica and nothing about Dyoll. Dr. Davies has acted without any accountability to Parliament. Once again the Jamaican people may be asked to pick up the pieces of a financial debacle about which we knew nothing. But that's the one thing we don't seem to mind doing, picking up the pieces after the PNP. Despite all of the above, the party is eight per cent ahead of the JLP based on a recent poll.
The Economist in its issue of February 5-11 2005, wrote that the coming PNP "party conference in September seems likely to choose a successor (to Patterson). As befits what has become JAMAICA'S NATURAL PARTY OF GOVERNMENT (my caps), competition is intense".
Bruce Golding, the newspaper also noted, "looks certain to be anointed at a JLP party conference this month. He is hardly a new face, having left the party 10 years ago over his impatience to become its leader."
Position without responsibility, cell phones, highways, drugs and parties shall be the death of us all. What's another billion U.S. dollars down the drain between friends, eh?
