FINSAC lost $22 million in 2021-2022
Published:Saturday | July 22, 2023 | 12:08 AM
The Financial Sector Adjustment Company Limited (FINSAC) recorded a loss of nearly $22 million for the financial year ending March 31, 2022.
At the same time, the financial statements of the company for the similar period reflect total income of $26 million, comprising mainly interest income on investments of $9 million, foreign exchange gain of $9 million and $4 million recovered from a former employee who committed fraud some years ago.
FINSAC was established by the government in the mid-1990s to resolve major liquidity and solvency issues that affected the financial sector in the early to mid-90s.
In its annual report ending March 2022, the company reported that there were expenses totalling about $48 million, with the primary items being staff cuts of $26 million, including $6 million for accrued gratuity, legal fees of $13 million, travel and accommodation of $4 million for attorneys to attend the Privy Council and audit fee of $2.2 million.
The operations of the FINSAC are now being managed by two employees who ensure that timely and accurate management reports are prepared or filed for the board, finance and audit committee, auditors, Ministry of Finance and the Public Service and regulatory bodies.
Privy Council
FINSAC currently has two matters before the Privy Council, one for which the appellant is seeking a ruling on whether compound, and not simple, interest should be awarded on his claim. In the other case, the appellant is seeking to have the government reimburse his costs in an appeal which has been declared null and void, as the judges who heard it proceeded on statutory retirement without writing the judgment.
The former was heard at the Privy Council on May 12, 2022 and a formal decision is awaited. The latter was heard on June 23, 2022 and a decision was handed down on July 18, 2022 dismissing the appeal.
Ciboney Bids
In its annual report, FINSAC reported that its 72-per-cent shareholding in Ciboney Group Limited (CGL) is still pending.
In response to advertisements in October 2021, five bids were received and the necessary due diligence was undertaken on the first and then the second highest bidder, both of whom were eliminated based on adverse reports.
The third-highest bidder was then selected and, following a favourable due diligence exercise, the board of FINSAC agreed to sell to this bidder, but sought final approval from Cabinet.
Eventually, approval was granted, but by then, the bidder had withdrawn its offer noting it had no further interest in acquiring these shares.
The directors were prepared to sell to the fourth bidder and would undertake due diligence before a recommendation was again made to Cabinet for approval.
Meanwhile, the final of five annual mandatory advertisements seeking to locate the beneficiaries of the former Jamaica Mutual Life Assurance Society pension schemes was done on March 27, 2022.
The company revealed that there were still 154 members to be located and, in line with requirements of the relevant regulations, the funds for beneficiaries who are still not located within six months of the final advertisement will be paid over to the Supreme Court.