Clarke explains why no recovery yet in $3 billion SSL fraud case
Published:Wednesday | April 17, 2024 | 4:53 PM
Finance Minister Dr Nigel Clarke is reporting that recovery of the more than $3 billion lost from 200 accounts in the alleged fraud at Stocks and Securities Limited (SSL) cannot start until after a criminal conviction.
In an update on Wednesday, Clarke explained the processes behind recovery of proceeds of crime.
"Any recovery could only come by way of identification and pursuit of the proceeds of the fraud in accordance with Jamaica's Proceeds of Crime Act (POCA)," he said, noting that the Financial Investigations Division (FID), through its role as the Asset Recovery Agency, is empowered under POCA to deal with criminal proceeds.
He said: "The procedures to effect these mandates are set out in POCA. While the tracing of fraudulently obtained assets can begin before the conclusion of court proceedings in the criminal matter, the "benefit investigation," which is integral to the forfeiture and recovery process, can only start after criminal convictions are obtained in connection with the fraud."
"However, civil proceedings are open to aggrieved parties and can be started at any time," he said.
Only one person, Jean-Ann Panton, a former client relationship manager at SSL, has been charged so far.
Regarding civil matters, Sports star Usain Bolt is among several persons with accounts at SSL who have filed lawsuits against the investment firm.
The finance minister reiterated that a file was last year submitted to the Office of the Director of Public Prosecutions for the consideration of criminal charges against individuals linked to the SSL network of companies under the Proceeds of Crime Act, Larceny Act and financial sector legislation.
The DPP's office has reportedly sought more information from the investigators.
The FID and the Financial Services Commission, which regulates investment houses, are leading the probe, which was triggered after Panton reportedly confessed in January 2023 to stealing from clients.
International investigations firm, the UK-based KROLL Associates conducted a forensic audit of the SSL and provided a report to the authorities last November.
Meanwhile, Clarke said at the time when the fraud became public, SSL held approximately $30 billion of client assets as part of its off-balance sheet portfolio. Off-balance sheet items include assets that are not directly owned by the company.
The minister said the "orderly winding down" of SSL requires the transfer of the off-balance sheet assets.
He said about 1,230 client accounts have been refunded approximately $15.4 billion of local equity and fixed-income securities.
In terms of Jamaican dollar cash, Clarke said funds amounting to $665 million for 338 clients have been paid over to those clients.
The finance Minister said transfers began in September 2023 and, as at April 16, 2024, a total of about $16 billion, or 70 per cent in Jamaican dollar denominated assets held in SSL's off-balance sheet portfolio have now been transferred to clients.
For the remaining Jamaican dollar securities, totalling $7.6 billion, Temporary Manager, Ken Tomlinson "is pursuing an agreement with a trust company for the en bloc transfer of these remaining Jamaican dollar assets which will be held by the trust company in custody for clients,” Clarke said.
Turning to international securities, Clarke said that prior to April 11, the portfolio of international equity, fixed income, and other securities, held by SSL on behalf of clients, totalled approximately US$32.8 million.
He said as at April 11 some 98 per cent of the international portfolio had been liquidated. He said once accounts have been reconciled, funds will be remitted directly to clients based on their instructions.
The FSC took temporary management of SSL on January 17, 2023. It is currently in a court fight with SSL and its appointed trustee over who has legal control of the company.
The trustee and the FSC have also separately sought the winding up of the investment firm.
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