Clarke says 2019 FSC report on SSL delivered, but did not get to him Loop Jamaica

The content originally appeared on: News Americas Now

Black Immigrant Daily News

The content originally appeared on: Jamaica News Loop News

Finance and the Public Service Minister, Dr Nigel Clarke, has admitted that his office received a copy of a 2019 examination report of Stocks and Securities Limited (SSL) which was prepared by the Financial Services Commission (FSC) and submitted in April 2020.

However, Clarke said he was only made aware of such a report being submitted from 2020 on Monday after his policy address.

He said the report was “never ever” brought to his attention.

An official from the FSC’s management contacted him to inform of the report’s submission, Clarke wrote in an opinion piece in a local newspaper on Saturday.

In providing a summary of the article in a Twitter post, as well as further clarity on the development in an audio statement late Saturday, Clarke said the June 25, 2019 report was found during a search of his office on Tuesday.

The report was sent on April 3, 2020, and was stamped received by his office on April 15, 2020.

“This was not a report prepared for me specifically. Rather, it was a copy of an existing FSC report that the FSC uses to do its job,” wrote Clarke in the newspaper.

He added that “The report, which does not contain the regulatory history with respect to SSL that is now in the public domain, found breaches worthy of the recommendation that the FSC meet with the board of SSL to address liquidity issues at SSL, and further recommended that SSL be “issued immediately with regulatory directions in order to have the issues resolved in a timely manner.

“What followed this June 2019 report is worthy of note:

(i) The FSC board implemented the report’s recommendations and approved directions, which were issued to SSL on October 25, 2019, almost six months prior to my office receiving a copy of said report;

(ii) The FSC board implemented directions that were more extensive than the directions recommended in the report in both scope and detail and;

(iii) A later FSC status update confirmed that SSL was compliant or largely compliant with five of the six FSC board mandated directives by April 25, 2020, days after my office received the report.”

But Clarke is adamant that he never received the report.

“The referenced FSC report was never ever brought to my attention, and I did not know of its existence prior to Monday night,” he said in the subsequent audio statement.

“The FSC has brought matters of concern, or matters that require my input, directly to me on several occasions. SSL was never among them,” the minister contended.

“Neither the FSC executive director nor the FSC board of commissioners, nor anyone at the FSC, has ever raised SSL with me,” he added.

The scandal-plagued SSL has been the centre of a multi-billion fraud for weeks, with the US Federal Bureau of Investigations (FBI) being called in to assist with the ongoing probe being led by the Finance Ministry’s Financial Investigations Division (FID) and other local law enforcement agencies.

An estimated $3 billion has gone missing from SSL in the burgeoning fraud case that has reverberated globally, largely because the company’s most famous client – Olympic legend Usain Bolt – is said to have lost US$12.8 million in the debacle.

Usain Bolt

During his policy address on Monday, Clarke insisted that as minister of finance, “neither the FSC board of commissioners nor the FSC executive director nor any person from the FSC, has ever raised Stocks and Securities (Limited) with me in any way.”

Blow is Clarke’s Twitter thread that he wrote on Saturday, summarising his opinion piece in the local newspaper on the FSC report regarding SSL, which he contends he was never notified of.

“Summarising my Op-Ed in Saturday’s publication of the Gleaner: The FSC sent a report in April 2020 about an examination of SSL in June 2019.

“While the report was not brought to my attention, it would not have made a difference if it was as:

(i) By the time the report was sent, the FSC Board had already implemented the recommendations in the report by issuing SSL with directions in October 2019.

(ii) SSL was confirmed by FSC as being compliant/largely with those directions, with breaches being addressed.

(iii) The idea of the minister weighing in on or altering/varying individual prudential decisions made by the FSC is not contemplated by the FSC Act, & is inconsistent with Ja’s (Jamaica’s) G20-endorsed international agreements in which JA has affirmed the operational independence of the FSC

“I wish to make it clear that the referenced FSC report was never ever brought to my attention. And I did not know of its existence prior to Monday night. The FSC has brought matters of concern or matters that require my input directly to me on several occasions.

“SSL was never among them. Neither the SSL executive director, nor the FSC board, nor anyone at the FSC, has ever raised SSL with me.

“The FSC is required by the Financial Services Commission Act to conduct examinations of licensees each year and send the examination report to the minister within 90 days.

“The FSC has approximately 500 licensees, and so this is a legal, though impractical requirement, that the FSC seems to have never met and has no real prospect of ever meeting.

“In any event, the FSC Act does not anticipate the minister’s involvement in prudential decisions. The FSC Act prescribes a policy role for the minister.

“I hope you take the opportunity to read the full article online.

“Any specific action required by the minister would have to be in the context of either (a) a request for, or a determination of the need for policy action, or (b) a necessary coordinated supervisory response involving the BOJ (Bank of Jamaica) and the ministry in its policy role.

“A minister second guessing a regulator on matters of prudential decisions, or instructing prudential decisions is fraught with downside risk and inconsistent with international best practices.

“Such decisions could likely be severely undermined as being politically motivated, rather than technically based. This would structurally undermine regulatory integrity.

“As such, with respect to the FSC, Jamaica is a signatory to G20-endorsed multilateral agreements committing to several principles, including operational independence for the FSC.

“This hangover clause requiring reports to be sent to the minister, while prescribing no power in the Act for prudential decision-making by the minister is an inconsistency that should arguably have been tidied up a long time ago.

“In 2015, for instance, the equivalent clause with respect to the BOJ was amended to make it unambiguously clear that the minister has no role in supervisory matters.”