THERE WERE early signs that directors of the board of the National People's Co-operative (PC) Bank were operating as a law unto themselves and defying repeated efforts by the Agricultural Credit Board (ACB) to rein in their misuse of millions of dollars of depositors' money.
An ACB audit of the entity revealed that the directors and board members allocated loans to each other, at times in contravention of stipulated rules.
"We did see the signs. In fact, warning letters were issued from as early as March (2015), and there are issues, for instance, with the PC Bank submitting timely information because it is on this information that we base certain situations, so due process did take place," Hugh Graham, chairman of the ACB, told yesterday's press conference, which was hosted by the agriculture ministry at its Hope Gardens head office in St Andrew.
"We gave the PC Bank an opportunity, in fact, to become compliant with our request for information on other things. It was not forthcoming, and when it came for a renewal of their registration, it was denied," he disclosed.
Even the threat of deregistration of the PC Bank did not bring the delinquent directors in line, and it was only after Audley Shaw, opposition spokesman on finance, raised the matter at a recent meeting of the Public Administration and Appropriations Committee that the misuse of $665 million came to light.
"A situation existed before where some of these directors sat on certain committees, and that was a breach of the governance process. They have been dismissed. For instance, we have directors who were in arrears who were part of the credit committee. Now, that can never be acceptable in any jurisdiction," Graham pointed out. He charged that the ACB then "immediately removed those directors, and the collections are ongoing as we speak."
Derrick Kellier, minister of agriculture and fisheries, however, dismissed as frivolous news about the use of the $665 million, which he insists is not missing, but was used "inappropriately". He noted that the sum was "unaccounted for" based on the preliminary findings of an ongoing audit.
"I am pretty positive, based on my preliminary advice and information, that this is not any lost funds or any misappropriated funds. As far as we know, up to this point in time, no money has been misappropriated in this exercise. The findings have not said so, and based on what is coming out, I await the finalisation of the audit before making any further comment on that issue," Kellier declared.
Dennis Chung, president of the Private Sector Organisation of Jamaica, however, has come out strongly against the absence of a corporate governance policy, a situation he believes led to the breakdown in fiduciary operations at the bank, allowing for the directors to operate in open defiance of the regulatory agency.
"We see it as a big issue," the chartered accountant told The Gleaner yesterday. "This thing is unacceptable, and if you have a proper corporate governance framework, it definitely would have ensured that many of these things don't happen."
Continuing, he said that a governance framework encompassed the audit functions and the audit committee should play a critical role in the process.
Chung, who has been appointed to the boards of a number of government institutions, insisted that the irregularities would have and should have been picked up early in any properly run organisation.
"Where was the audit committee in all of this? The audit committee is written into the Public Bodies Management and Accountability Act, so where was the audit committee? And if there was no audit committee in place, the people who are overseeing the PC Bank, why wasn't all of this picked up?
Graham told the press conference that the situation at the PC Bank was a recurring one, and efforts to thwart the ACB's oversight functions were well coordinated and orchestrated.
"This is not the first time that the PC Bank has run into problems and we have had to have interventions from both this minister and the ACB and the Development Bank of Jamaica," he conceded.
"In fact, in our letter to the PC Bank of May 14, I believe there were some 19 terms and conditions that they had to adhere to. Still, they submitted a plan of action as to how they would turn around the organisation. We were, of course, not satisfied and thereafter proceeded to take the action, which was to take over the management and control under Section 17 of the Agricultural Credit Board Act."