The case of multiple frauds and skulduggery at Stocks & Securities Limited (SSL) has dominated both Jamaica and the world’s attention, more so with sprint legend Usain Bolt said to be scammed of US$12.7 billion.

As of this week, over J$3 billion has gone missing from investor’s accounts at SSL which has 9,000 accounts.

How was this allowed to happen? Why was senior management none the wiser? Where were both the internal and external auditors? How did the FSC allow this to happen right under its nose after warning that SSL was a mismanaged and distressed entity whose licence should be revoked?

The credibility of the sector is now under the spotlight and many agencies were slow in coming forward in expressing concern. They now say they were waiting for a more comprehensive report on what transpired. Meanwhile, a deadline given by Usain Bolt to get back his funds from SSL has now come and gone.

NO ONE ARRESTED AND CHARGED YET

The SSL imbroglio places Jamaica in a terrible light in the international community and plays into its reputation as one of the major crime provinces of the world where politics and finance are comfortable bedfellows and there is an absence of probity – all the hallmarks of a banana republic.

To date, no one has been arrested and charged for what took place at SSL. The Minister of Finance has said that the FBI will be brought in to conduct investigations. Will it take the lead over local law enforcement officials, thus deferring to a first world approach to detection and apprehension?

Wealth adviser Jean-Ann Panton has admitted defrauding investors of millions of dollars, changing emails and breaching cyber security. To date there has been no arrest, and she has not been brought before the courts or gone to jail for that matter.

Is she still at large?

Despite the red flags, the FSC failed to move to close down SSL. Here there were a confluence of concerns – capital adequacy, absence of best practices, management deficiencies, clear breaches but still it was allowed to operate.

Why?

Compare this stance with Alliance Financial Services Limited (AFSL), run by Peter and Robert Chin.

On the very Friday in December 2021, the Chin Brothers and Alliance were charged with irregularities by the Financial Investigation Division (FID), the Bank of Jamaica (BOJ) moved swiftly to suspend its licence to operate a cambio and remittance business.

Alliance’s infractions were far less egregious than SSL’s, but the hammer came down on it with the principals having to secure the services of top criminal lawyer Tom Tavares Finson KC to represent them in court weeks after being charged.

LICENCES SUSPENDED

“Bank of Jamaica advises that the cambio and remittance operating licences issued to Alliance Financial Services have been suspended December 3, 2021 until further advised.

“This has become necessary given the charges recently laid by the FID at the principals of the company. Consequently on the suspension, AFSL is no longer authorised to conduct the business of buying and selling foreign exchange. AFSL is also not authorised to continue offering Monygram remittance services.”

This move was made to address several deposits made between 2014 and 2017 said to be in the US$8 million range.

AFSL ran afoul of the Bank of Jamaica Act, The Proceeds of Crime Act and other alleged breaches.

Foreign currency transactions were not correctly processed in accordance with regulatory requirements.

In the end, that Alliance business was sold to Sagicor and the Chin brothers struck a deal with the courts.

But one sees the clear difference in approach with SSL. One characterised by decisive action, the other with reticence, uncertainty and parties looking to absolve themselves.

Former SSL CEO Zachary Harding is stressing he had nothing to do with this and was unaware of accounts associated with Bolt. He says it did not come to his attention during his watch and his reputation should not be sullied by this sordid affair.

Harding is vociferous in his declarations that he did not participate in any fraudulent activity concerning SSL.

Minister of Finance and the Public Service Dr Nigel Clarke initially said that he had no knowledge of the SSL situation but now is letting it be known that the matter did come into his office but was not drawn to his attention.

George Chai, a leading principal at SSL, did not, as was widely reported, insist on Hugh Croskery selling residences to make restitution to those scammed at SSL. Rather, Our Today has come to understand, it was a private matter involving collateral and terms.

The whole SSL saga becomes more confusing by the day.

INEPT, INCOMPETENT, UNSCRUPULOUS PEOPLE

As of to today, no one has accepted culpability and responsibility, despite heinous wrongdoing occurring. Maybe the FBI will get to point the finger and the worms will come out from under the rock.

Bolt has attracted the headlines and that is understandable, but the other investors who lost out have not been paid attention to. That is most unfortunate.

SSL was riddled with inept, incompetent and unscrupulous people and was allowed to conduct business this way for years, notwithstanding the obvious.

In 2017, the FSC noted in an eight-page report that “a culture of non-compliance and mismanagement of client funds,” marked SSL.

Opposition Spokesperson on Finance Julian Robinson makes the point that the FSC has never had a systemic problem, and it has moved decisively on offending institutions in the past but for some reason did not elect to do so in this instance.

Alliance Financial Services was expeditiously shut down and the principals hastily brought before the court.

“Character is like a tree and reputation like a shadow. The shadow is what we think of it; the tree is the real thing,” said Abraham Lincoln.

What was the real thing at SSL? Did it ever exist?

POTENTIAL SOURCE OF CONTAGION

It is instructive to read what the IMF had to say about situations like SSL and what must be done to ensure they are not repeated.

“Risks arise from concentrated ownership, related party and large group exposures and off-balance sheet positions. Even with proper separation between bank and nonbank group members, direct and indirect exposures could be a source of contagion.

“Strong efforts are needed to finalise adoption of a legislative framework for the special resolution regime for the orderly resolution of distressed financial institutions and group-wide supervision and continue advancement with data gathering and analytics particularly of inter-institution linkages and cross-border exposures.”