Ashford W. Meikle, Business Reporter

Left: BOJ Governor, Derick Latibeaudiere: No system breakdown. - Rudolph Brown/Chief Photographer   Right: Raymond Wright, consultant to PCJ, says an informal arrangement has remained in place for Trafigura to lift Nigerian oil for Jamaica. - file

The central bank is downplaying the breach of client confidentiality in the Trafigura/PNP scandal and has brushed aside suggestions of an implosion, even as government tries desperately to stem the political fall-out and manufacturers claimed it could damage business confidence.

On Wednesday, Bank of Jamaica governor and commercial bank regulator Derick Latibeaudiere, said that the revelation of transactions on the CCOC account, linked to Colin Campbell who has since resigned from the Cabinet, was an isolated breach insufficient to worry the central bank.

The leak actually represents what might be Jamaica's first whistle-blower case, and could likely result in a test of stringent banking laws that penalises any disclosures no matter the motivation.

"I wouldn't make a big issue of this," said Latibeaudiere, pointing out that in his more than 10-year history as BoJ governor, there had never been a breach to now.

"I wouldn't want to draw too many lessons from one incident," he said.

But at the very least, some clients are now re-evaluating their relationships with their bankers, as one talk show host publicly declared on radio this week, suggesting that the trust already being tested by stringent reporting requirements on fat banking accounts to the regulator under anti-money laundering rules has eroded further.

A statement Wednesday by the Jamaica Banker's Association skirted the issue, neither mentioning the bank at the centre of the firestorm, FirstCaribbean International Bank (FCIB), nor the issue that sparked the confidentiality questions.

Yesterday, FCIB managing director Milton Brady did not return calls nor respond directly to queries of how the bank was weathering the controversy.

Said a woman who identified herself as his secretary Yvonne Piper: "We are not giving verbal releases at this time."

Piper said she would instruct the bank's PR agency to send copies of previous releases issued by the bank, telling the Financial Gleaner that nothing more would be added to the past statements.

Central banker Latibeaudiere said if there were to be an investigation of a breach, it would be done by the Financial Investigation Division, a unit of the Ministry of Finance.

"The BOJ's role is that of ensuring that the systems are in good shape, and, incidentally, our feel is that the systems are in good shape and have been in good shape," he said, staying on message throughtout the interview.

But on Thursday, FID said it was not investigating any case under the Banking Act, but would not comment on whether it was probing any other elements in relation to the FCIB account.

"The FID has no comment on any investigation," said Christine Chambers, technical director in charge of the unit.

In fact, stringent laws relating to certain reporting requirements by the banks makes it a criminal offence for anyone to disclose whether an investigation is pending or is underway, other than to persons authorised under the law.

Those fines can run to $2 million as well as imprisonment.

The Banking Act also prescribes imprisonment up to two years and a maximum fine of $2 million for confidentiality breaches, underscoring how seriously banking regulators view the issue.

But on Wednesday Latibeaudiere said one case did not amount to a system breakdown.

"É. people are very critical for the system but you cannot legislate behaviour," the BoJ governor told the Financial Gleaner after delivering the main address at a Life of Jamaica function in New Kingston.

The JBA's innocuous statement, crafted it seemed so as not to telegraph any concerns about the breach, was reflective of the subdued tones in which members of the financial sector spoke of the issue.

In fact, the development comes one decade behind the financial sector crash of 1996.

"There are people who, for personal reasons and what their heart is aligned to, will do things and you can't understand why," said a banking executive who spoke on condition of anonymity, given the sensitive nature of the breach.

But the Jamaica Manufacturers Association, led by president Doreen Frankson, was more bald in its condemnation of the disclosure of the transactions, which contravenes Section 45 (1) of the Banking Act, saying it has caused immeasurable damage to client-banker confidentiality and has implications for business confidence in financial institutions.

Saying it was "extremely concerned about the fact that banker customer confidentiality seems no longer sacrosanct", the JMA appeared to suggest that it was FCIB's duty to have ensured no breach occurred.

"The breach of banker client relations at FirstCaribbean International Bank brings into sharp focus the fiduciary responsibility of deposit-taking institutions," read its statement, which concluded that the issue was "a point the society cannot afford to equivocate."

Section 45 (1) of the Banking Act stipulates that "no official of any bank and no person who, by reason of his capacity or office has by any means access to the records of the bank, or any registers, correspondence or material with regard to the account of any customer of that bank shall, while his employment in or, as the case may be, his professional relationship with the bank continues or after the termination thereof, give, divulge or reveal any information regarding the money or other relevant particulars of the account of that customer."

Otherwise, the penalty as stipulated in subsection (3) is a fine and/or imprisonment.

"The breach of confidentiality in the banking system is not something that we can condone," said Latibeaudiere, "but I want to reiterate that system is, for the most part, in very good shape."

Added the JBA: "In the rare cases, in which a customer's right to confidentiality may be breached by an employee, this is regarded as a serious breach and will result in appropriate disciplinary action against that employee."

Brady also did not respond to a request for comment on the fate of the employee alleged to be at the centre of the leak.

Otherwise, industry players expect that the sector will soon shrug off the incident, even as the stock market has barely reacted to the controversy.

"I think it will pass because the organisation involved is up and about. I haven't heard of people withdrawing money from FirstCaribbean," said one banker.

A senior investment analyst says the issue is more likely to money launderers nervous.

"It [might] ferret out a number of businesses from the banking sector who are not legitimate and banks might lose the business," said the analyst. "But these businesses are those that, in the first place, banks could not count on as long-term prospects since these launderers rarely have their money in the system for more than six months."

ashford.meikle@gleanerjm.com