‘THEY HAVE FAILED’
Heat on FSC as Bolt demands back every cent stolen; Clarke rages at ‘evil fraud’
Published:Wednesday | January 18, 2023 | 12:56 AMEdmond Campbell/Senior Staff Reporter
As the Financial Services Commission (FSC) prepares to face tough questions from journalists today about the nearly J$3-billion investment fraud at Stocks & Securities Limited (SSL), a senior chartered accountant has raised doubts as to whether the sums fleeced are recoverable.
At the same time, top-flight attorneys representing sports legend Usain Bolt want SSL to return the track star’s nearly J$2 billion (US$12 million) in investments, in record time, or face a huge lawsuit.
Another US$4 million in stocks and securities has reportedly gone missing at the beleaguered financial institution now being investigated by the Financial Investigations Division and the Fraud Squad.
Law firm Frater, Ennis & Gordon has given SSL 10 days to furnish the money Bolt invested, starting some 10 years ago.
While not receiving instructions from Bolt to proceed against the FSC, attorney-at-law Linton Gordon said that the regulator failed to carry out its responsibilities and duties in accordance with Section 6 of the Financial Services Commission Act.
“It is a monitoring body and enforcement body and a body to protect the public and they have failed in that regard,” he told The Gleaner Tuesday evening.
“He wants back his money and he expects to have his money returned to him, and that is why he is prepared to go to court to seek to have a recovery of his money,” Gordon added.
But Trevor Francis, managing partner of FIACG, a full-service audit, assurance, accounting, business advisory, management and tax consulting firm, has indicated that based on its eight-page investigative report on the SSL in February 2017, the FSC was armed with enough ammunition to take strong action against the entity that was cited for delinquency.
In a statement late Tuesday, Finance and the Public Service Minister Dr Nigel Clarke said he was shocked and felt a “profound level of anger and disgust at the alarming and evil fraud that has allegedly been committed at SSL and which is the source of public discussion and anxiety at this time”.
However, Clarke said that he had great confidence in the investigative authorities to unravel the fraud scheme and bring all perpetrators to justice.
“At this time, it is tempting to doubt our financial institutions, but I would ask that we don’t paint an entire hardworking industry with the brush of a few dishonest individuals,” he said.
The FSC reported that for the five years and six months leading up to February 2017, the company had been operating under its directions and “has remained a problem institution” for failing to file audited accounts within 90 days of the close of the financial year and granting credit to related parties in violation of orders issued in 2013.
Francis, who has practised as a chartered accountant abroad and locally for more than 30 years, said he had never met Bolt before but was “burnt up about the issue”.
“It is really embarrassing. I feel it for the young man because he won’t see a penny. The man worked hard, put his money there, never touched it for 10 to 12 years and just wipe out,” said Francis.
He argued that even if Bolt sued the company, it would take years for the matter to be adjudicated and a settlement arrived at.
“It could have been prevented because the red flags were there,” Francis insisted.
And while a wealth adviser who was fired last week is to be questioned by investigators on the matter, Francis charged that based on his experience, no one person had the “power to move such a significant amount of money”.
He questioned: “When a person can move such money, where are the internal controls and oversight?”
He said that audited SSL financials submitted to the FSC unearthed evidence that the investment firm had been delinquent.
“FSC themselves disclosed delinquency on the part of SSL, yet they dropped the ball,” the chartered accountant opined.
Section 6 of the Financial Services Commission Act indicates that part of the regulatory body’s mandate is to protect customers of financial services.
Subsection 2 (b) (i) indicates that the commission should at least once per year “examine in such manner as it thinks fit, the affairs or business of every prescribed financial institution carrying on business in Jamaica or elsewhere for the purpose of being satisfied that the provisions of this and any relevant act are being complied with and that the institution is in a sound financial condition”.
Further, it states that the FSC, “within 90 days after the completion of the examination, report to the minister the results of every such examination and any such report may contain such recommendations as the commission considers necessary or desirable to correct any malpractices or deficiencies discovered in the examination”.
On Tuesday, Opposition Spokesman on Finance Julian Robinson expressed concerns about the apparent failure of the FSC to provide adequate regulatory oversight of companies operating in the non-deposit-taking financial services industry.
According to Robinson, the financial services industry operates on the principles of trust and confidence as the repository of the country’s savings and the facilitator of capital for investment.
“It is absolutely essential that there is effective regulatory oversight in the industry,” he added.
The FSC, in its regulatory role, has taken over the day-to-day operations of SSL on a temporary basis with Ken Tomlinson appointed as special auditor.