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LEGAL

FINSAC’s Legal department is staffed by a group of in-house legal counsel, with a wide range of specialist experience including commercial and litigation experience, particularly in the banking sector. The department provides legal advice to FINSAC as a whole and is responsible for the management and co-ordination of all legal work. Demands on the department were high during fiscal 1999/2000, since most transactions entered into by FINSAC required legal support, participation, input and documentation.

ASSET DISPOSAL
FINSAC’s accelerated move into its Divestment phase was significant. The Legal department thus carried out and participated in the sale of several major holdings, providing all required legal expertise and services. 

These included:

• Sale of Holiday Inn Sunspree Resorts Hotel in August 1999 to the Bass Hotels and Resorts company;

• The Plantation Inn in Ocho Rios and Negril Gardens Hotels were also disposed of during the period; and 

• The sale of the Eagle Unit Trust’s Management Company Limited, which also manages two successful Unit Trust Schemes was effected. This was another major accomplishment since interest in acquiring it was widespread. After a process in which purchase bids were invited, analysed and evaluated, the firm of Dehring Bunting & Golding emerged as successful. FINSAC realised $115.25 million from this sale.

• Shares and real estate holdings in various property schemes vested in FINSAC were also successfully transferred in the course of the year.

• An Asset Agreement for the transfer of the assets to be acquired by Guardian Life Limited in connection with its acquisition of the benefits and burden of the insurance portfolio of certain FINSAC–intervened insurance companies was concluded. The Agreement was signed and formally announced to the media on January 31, 2000 at the Guardian Life Centre at Trafalgar Road. However, the transfer of these assets has involved much detailed legal work, and was continuing as fiscal 1999/2000 drew to a close.

During the year ended March 31, 2000, the Department also participated in the drafting and finalisation of the transfer and assumption agreements, standstill agreements, asset transfers, and security documentation with respect to the merger and sale of Dyoll Life Limited, Crown Eagle Life Insurance Company Limited, Jamaica Mutual Life Society life insurance portfolios and the Barbados Mutual Life purchase of Island Life Insurance Company Limited.

Additionally, members of the Department were involved in developing strategies for the newly formed Union Bank and in preparing the Deeds of Assignment and other legal documentation related to the transfer of the merging banks’ non-performing loans to Refin Trust.

REGULATORY
A significant aspect of the Unit’s work has been in support of the jointly funded Inter–American Development Bank (IADB) project to strengthen the insurance supervisory and regulatory framework. 

A FINSAC staff lawyer has overseen the initial drafting of a proposed new Insurance Act working with an international insurance law consultant. Discussions with stakeholder representatives including the Office of the Superintendent of Insurance have taken place to provide input on the proposed new legislation. A committee of local and CARICOM attorneys with expertise in insurance law is also reviewing the new Act. 

The FINSAC staff lawyer has also ensured that the draft of the proposed Act conforms with Jamaican legislative drafting conventions and with the English law tradition.

A presentation on the proposed new Insurance Act was made at the College of Insurance and Professional Studies, as the first of a series of training sessions on the new Act that will be held with the industry.

During the coming year, FINSAC expects to draft the Regulations to accompany the proposed Act. The department’s experts will liaise with the Ministry of Finance and Planning in referring the proposed Act and other drafting instructions to Cabinet and to the Chief Parliamentary Counsel. Work with the Chief Parliamentary Counsel will follow to finalise the Bill and follow it through to consideration by the Legislative Committee, approval by Cabinet and eventual introduction in Parliament. 

Training will then be provided for the Office of Superintendent of Insurance’s staff and the insurance industry to familiarise them with the new Insurance Act and regulations. Additionally, the legal department will assist the Office of Superintendent of Insurance in developing in-house legal capabilities, pursuant to the restructuring programme for the Office. The transition of certain staff and functions from the IADB project team to the Superintendent’s Office upon the departure of the project team leader, will then be supervised.

FORENSIC & PROSECUTORIAL INVESTIGATIONS
Functions of the department in this area are:

• Liaison and oversight of external Counsel;

• Review and marshalling of forensic evidence for prosecution of criminal and civil matters;

• Provision of in-house legal expertise and working with external professionals in this area; and

• Monitoring and recording of all legal bills arising out of work in this area.

DISPOSITION OF PROPERTIES
In this area the Legal department has completed the sale of a total of 73 properties, garnering net proceeds of sale of approximately $170 million. The majority of these sales were conducted at private treaty. Currently there are a further 37 sales in progress, from which we anticipate receiving net proceeds of over $102 million; 116 properties were referred to public auction, of which approximately 15% were sold.

LITIGATION FOR DEBT RECOVERY
On instructions received from the Non-Performing Loans Unit formal demand letters were issued in respect of 460 accounts, and 170 Statutory Notices on mortgages under the Registration of Titles Act were served. 

These courses of action were sanctioned by a resolution of FINSAC’s Credit Committee, which was set up to examine loans acquired by FINSAC and to sanction the strategies devised to establish valuations of such loans and actions for their recovery. In instances where formal demand has expired, no response has been received from the debtors and there is no security, or inadequate security for the debt owed, suits have been filed. By the end of fiscal 1999/2000, 12 suits had been filed by in-house Attorneys to recover the sums of US$2,710,183.00 and J$130,041,282.26.A total of 51 judgements granted by the Supreme Court have been received over the course of the year in suits which had been instituted prior to the transfer of the loans to FINSAC.

RECEIVERSHIPS
As part of FINSAC’s collection strategy, we were instructed concerning the appointment of Receivers in three companies under acquired Debentures. Receivers are operating these companies in the expectation that the indebtedness will be settled speedily.

WILLS PORTFOLIO
The entire portfolio of wills from Corporate Merchant Bank was last year entrusted to FINSAC’s Legal Department for resolution. Efforts to dispose of the portfolio to other trust institutions had been unsuccessful. 

Since FINSAC is unable to offer the service of Executors to the Testators, the Legal department has been forced to advise these Testators accordingly. Three hundred and sixty-two letters have been dispatched advising all the Testators that the service had been terminated with the cessation of activity by the company, and that their wills must, therefore, be collected. 

CORPORATE SECRETARIAL
The shares acquired in the “non-core” companies of the intervened entities give control of these companies to FINSAC. Thus the Legal department also undertakes the corporate secretarial functions of these companies.

This department now provides corporate secretarial services to a total of 10 companies, which meet with varying scheduled regularity. This involves the on-going development and maintenance of proper records for these companies, ensuring that all annual returns are completed expeditiously at each due date.

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