How can the diaspora invest in a corrupt system?

Frequently, members of the Jamaican diaspora have been urged to invest their hard-earned dollars in Jamaica People have been heeding these urgings by investing in Jamaican real estate, the stock market, banks, and other financial institutions But recent news out of Jamaica that Jamaicans, including sprint legend Usain Bolt, and several residents in the diaspora, have been defrauded of their investments in the private investment company, Stocks and Securities Limited (SSL) has sent off alarm bells

Ironically, instead of helping investors to recoup their investments, FINSAC too failed are no reports of the FSC taking any related action

Did the FSC not take action, because it's board of directors, including the chairperson, include members of Jamaica's ruling party?

Rumors now abound regarding alleged collusion between the FSC, SSL and members of the ruling party

The failure of the banks in the 1990, was followed by the debacle of Cash Plus and Olint Marketed as an investor's dream, offering spectacular returns on investment, these once highly hailed companies turned out to be glorified Ponzi schemes, which ended up defrauding thousands of Jamaicans at home and abroad of millions of dollars

Andrew Karim akarim@cnweeklynews.com

Dr. Garth A. Rose grose@cnweeklynews.com editor@cnweeklynews.com

GRAPHIC EDITOR SPORTS EDITOR

One would believe and expect if over two million Jamaicans living in the diaspora are being invited to invest their funds in Jamaica, the authorities, including the government, would have implemented appropriate checks and balances to ensure the investment system is secure, and investors funds are not at risk

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However, reports even before the debacle at SSL, indicate funds invested by members of the diaspora in Jamaica is done with serious risks

In the 1990s, some small banks that entered the Jamaican banking scene, including Eagle Merchant Bank, Century National Bank, and Workers Bank, failed and were closed Prior to their closure, these banks, aggressively targeted the diaspora to invest with them Some, like Eagle Merchant, and Century National, even had representatives working in the diaspora, including here in South Florida, to entice investors When these banks failed, several people lost their investment

Although the government of the time established the Financial Sector Adjustment Company (FINSAC) to assist in recouping the losses by these banks, and related investor losses, not much was recovered As the Jamaican Gleaner reported in a recent article, “People lost their money, properties, lives and livelihood to the financial meltdown in the 1990s There were more than 40,000 victims ” Several of these victims were members of the diaspora

In 2001, the Jamaican government passed the Financial Services Act which created the Financial Services Commission (FSC), an agency intended to regulate the operations of financial institutions, including SSL, and protect investors funds

With Jamaica's central bank, the Bank of Jamaica, monitoring the operations of the nation's commercial banks, and the FSC monitoring the operations of other financial institutions, investors, in Jamaica and the diaspora, cannot be faulted for assuming it was safe to invest in Jamaica Sadly, this isn't so

In recent years there were warning signs which went mostly unheeded These signs included frequent reports of senior bank executives defrauding millions from bank deposit accounts It became apparent that many of these frauds were being committed on deposits made by people living in the diaspora

The warning signs crested with the reports of the massive fraud at SSL Besides defrauding Bolt of over US$12 million, the SSL staffer who confessed to defrauding millions from the company, listed the names of several investors living in the diaspora whose accounts she compromised Interestingly, Bolt's name wasn't included among the investors whose accounts she defrauded

The CEO of the FSC, who has subsequently resigned, indicated at a press conference last week, that the FSC was aware of irregularities with the operations of SSL since 2017 But they

The environment currently in Jamaica, isn't one that encourages investment from the diaspora If the government wants significant investments from the diaspora, it must reset the table Investors must be assured their investments, even a portion, are insured against fraud, and there are checks and balances within the system to avoid such fraud The boards of all financial institutions must enforce implementation of systems within these institutions to eradicate what seems too easy opportunities to defraud investors, especially those living overseas Most unfortunately, Jamaica is currently reputed as one of the more corrupt countries in which to do business The authorities, public and private, must seek immediately to remove this stain, which is added to the stain of violent crime

Undoubtedly, members of the Jamaican diaspora are interested in investing in Jamaica, but this interest will wane the more people realize their investments are not secured or guaranteed

The Jamaican government, the parliamentary Opposition, the financial sector, the general private sector, now has the urgent responsibility of streamlining the investment system

If Jamaica wants investments from its diaspora, fix the investment system now