FINANCE-JAMAICA: When Dreams Are Turned to Ashes

By IPS Correspondents Reprint | | Print |

Neville Johnson

KINGSTON, May 24 1998 (IPS) - Dorothy McCarthy is 68 years old. For 30 of those years she worked in England, trying to accumulate enough wealth for the day when she retired so that she could return to the land of her birth and live in relative comfort.

By the time she was ready to return to the place she still called home, she had accumulated 63,800 dollars. She figured that if she placed that amount of money on fixed deposit or in some other interest- bearing account she should be able to achieve her dream. The rates offered then by the Century National Bank seemed most attractive and so she deposited her life’s savings into that institution on her return to the island

Her hope of a comfortable life was soon to be dashed however, as shortly after, in 1995, the Century National Bank was ordered closed by the Finance Minster, Omar Davies as it was deemed no longer a viable operation.

The story from then on has been one of grief for McCarthy and hundreds of others like her who had similar dreams. They all left this Caribbean island for greener pastures many years ago with the hope of one day returning in a better financial position. Many did.

“I have worked in England almost all my life until I was retired and decided to invest my money in these institutions in my country. My intention was to return home, purchase some real estate for my old age investment, but things have not been going so well at all. The money I got back cannot buy what I had set out to buy, because have not received all my money back, and I have not got any interest on my savings for all of those years that my money was in the institutions,” says McCarthy.

Depositors in many of these failed institutions have received between 65 and 80 percent of their deposits, in many cases minus interest.

While the crisis in the financial sector in this northern Caribbean island pales in significance when compared to crises elsewhere in the world, say the Asian countries for instance, for the hundreds of depositors who have had their dreams shattered it takes on monumental proportions.

Of the more than 100,000 persons who had money deposited in places like Century National Bank and the other banks, which over the last two years have either been closed as they were no longer deemed to be viable or taken over by the government’s Financial Sector Adjustment Company (FINSAC) most are returning residents who had reached retirement age and had decided to return to the land of their birth to enjoy the remainder of their days.

Between 1995 and 1997, more than 50 financial institutions have either been closed or taken over by FINSAC as they became insolvent. Century National Bank, Eagle Financial Network and the Blaise entities were among the larger ones.

The Blaise entities were closed following claims of corrupt management and fears that they were heading into a liquidity crisis. At that time the entities were reported to have a combined deficit on assets to the tune of 16.6 million dollars.

Century was closed as it was deemed to be insolent.

President of the Association for the Resettlement of Returning Residents, Percival LaTouche says like McCarthy hundreds of other Jamaicans who lived overseas are wringing their hands in despair and wondering which step they should take next.

“They have lost millions of dollars in investment in these financial institutions. This is money that they have been saving for many years, so that one day they would return to the land of their birth and resettle, and have some assets to fall back on. It is very unfortunate that any such development has taken place, leaving many without any real confidence in the financial sector of the country,” says LaTouche.

Desmond Young is one such person. He had worked for 28 years in England. He returned home in 1989 and deposited some 83,000 dollars in to the Blaise Financial Entities.

“I have lost thousands of dollars in investment in Jamaica and there is no way I can recover any of it. If I had let my savings stay in England I would not have found myself in this position. I have lost over 800,000 Jamaican dollars (22,000 US). This is a lot of money. It is impossible for me to work that kind of money again,” says Young.

Doreen Thompson is a 67 year-old widow, who, like the others spent most of her life in England. She had deposited 361,000 dollars in the Blaise and Century entities. “I only received 90 percent of my money from Blaise and 65 percent from Century. It has been psychological nightmare for me. I came back home to enjoy my retirement, because I have worked very hard in England for a long time.

“Money in England is very hard to come by, I had to work in heavy snow for seven days per week. Coming back home for me was all I wanted, but things have not been going so well sine of late and I was under severe pressure when my money was closed in these banks,” she says.

Thompson says the whole idea of putting her money in the financial entities was that she would be able to acquire enough interest each month to take care of her day to day expenses. Right now her monthly expenses, including utilities and food amount to 1,800 dollars.

“At the moment I am spending, but nothing is coming in. At this rate of expenditure I will soon go broke and that is the reason for me to have put my money on special deposit accounts so that I could get interest on my principal and be relaxed without having to be thinking on what next,” she says.

Doreen Telpha is another depositor who has had her dreams turned to ashes because of the fall-out in the financial sector. She owns a guest house and employs 12 workers. She had been saving at the Century National Bank from 1989 until it was closed in 1995.

“I have lost a lot of money in Century and as a result, I have lost millions of dollars in business opportunities. I do business in the tourism industry, and since the closure of the bank my earnings have been totally wiped out. It is very difficult for me to recover in the near future. I had 12 workers and had to lay off most of them…” she says.

And, apart from the government, no one seems to be predicting a change in the crisis now facing the country anytime soon. In fact, some financial experts are predicting more closures.

“The financial services sector in Jamaica will eventually e concentrated around three or four major institutions which will see a return to the days of monopoly control and this is as a result of the failure of a lot of the small banks and near banks to main profitability and capital adequacy requirements. Over the next three to five years there will be mergers with other entities, take-over by bigger entities and others simply going out of business,” says one financial analyst.

Meanwhile, for those who are worst affected by the crisis, it is not a story soon to be forgotten. “I have spent half of my life in Canada and decided to return to my country to set up myself and live easy, only to make the wrong decision by putting my money into Century (National Bank). That has left me in a worse position financially than before,” says 72 year old Alfred Buchanan.