Ashford W. Meikle, Business Reporter

Two of Kingston's top financial sector bosses have acknowledged the loss of business from customers diverting funds to offshore foreign currency investments, but said it is having "a marginal effect" on their banks.

"We are aware of a few customers who have gone into those types of activities," said Peter Bunting, chairman of the investment bank Dehring Bunting and Golding.

"At the end of the day ... the impact on DB&G has not been significant - really not material," said Bunting, who insisted that these dealers do not "compete with his firm's core business.

The investment banker says DB&G refers such investors to websites like the U.S. Securities and Exchange Commission "which describe many similar scams," he said.

High-risk schemes

"Our investors work too hard for their money over their lives to put into these kind of high-risk schemes, pyramid schemes, these Ponzi schemes," he said.

Weighing in on the issue, president of the Bank of Nova Scotia, William Clarke, who was also at the press conference, expressed similar sentiments as Bunting.

"From BNS' perspective, we have heard and have known of cases where people come and take out money to put into these schemes ... but these have not in any way affected the operations of the bank," noted Clarke, adding "BNS is a big bank," to indicate that it can withstand competition.

Press conference

Both men were speaking last Thursday at DB&G's headquarters on Holborn Road in New Kingston at a press conference called to update the media on BNS' offer to acquire a 75-80 per cent stockholding in the investment and merchant bank.

Although they did not explicitly identify the companies, they would have been speaking of companies like Olint Traders, operating out of the Turks and Caicos Islands and CashPlus, which has its head offices in New Kingston.

Investors in both companies have reportedly earned returns of 10-17 per cent monthly.

Clarke and Bunting's statements essentially represent the first public acknowledgement by senior bankers of the effect that Olint and CashPlus have had on the operations of the banking sector, although a month ago, chairman of the National Commercial Bank, Michael Lee Chin, warned investors that the returns promised by speculative foreign currency trading were unsustainable.

"Be careful of your greed. I see a mania developing [and] it is going to end in disaster - I don't know how much plainer I can get. I am very passionate about this!" Lee Chin said at an investment briefing hosted by the wealth management arm of his banking group.

His competitor, Bill Clarke, echoed similar statements last week.

"What bothers me is that I understand that there are small investors who are being pushed, dragged and encouraged by others to join the scheme and at the end of the day when the house of cards come down as it must and will ... somewhere along the line somebody is going to get hit."

But Bunting was even more scathing in his criticisms, likening the operations of foreign currency traders to gambling and insisted that they should not be compared with regulated companies such as DB&G and BNS whose management team have to submit to the 'fit and proper test' of regulators such as the Financial Services Commission and the Bank of Jamaica.

"These operations ... are more in line with casino gambling [and] we are not in the casino business. Regulated institutions operate in a very careful, very responsible way. We publish all our audited information regularly ... and I really take offence to [the comparisons] which really, properly, should be compared to CashPot or some other products of Supreme Venture," charged Bunting.

"As regulated entities we have to abide by the rules. We publish data, the regulators can walk through our gates anytime. They know where to find all of the directors, management, everybody. I am not so sure these people know who they are dealing with," added Clarke.

- ashford.meikle@gleanerjm.com