Finance Minister Brian Manning yesterday rejected opposition Senator Wade Mark’s call for an inquiry into First Citizens’ decision to lend an additional $45 million to Cornerstone Financial Holdings Ltd, a private Jamaican company, saying that the majority state-owned bank has made a “good investment”.
Mark made the call in a motion on the adjournment of the Senate yesterday, in which he quoted at length from a March 20, 2022, Sunday Express article.
“We need an investigation into this matter: how can the First Citizens take our money and invest our money in a hunch that is offshore, that is not known to the world… This is a criminal act that took place,” he said. .
“It is important to note that Cornerstone Financial Holdings, which is an offshore company whose directors are anonymous and faceless; there is no transparency and accountability in this company,” Mark added, describing the company as a “night fly” company, as its shareholders are also unknown.
He said that nearly $500 million of FCB depositors’ money has been invested in this company.
Mark said he had his savings at First Citizens and had been banking there for over 30 years and wanted to protect his deposit and that of hundreds of thousands of others.
He read what he said were Cornerstone Financial Holdings’ financial statements for the year ending September 30, 2020, which show the company’s asset base is US$557 million.
“Do you know what the share capital of this company is? In 2019 the equivalent of $5,034 and in 2020 it was $6,534. How can you get our First Citizens Bank to invest in such a company whose stake and equity are so low on their balance sheets? ” He asked.
He said the company is heavily indebted and borrowing money “from everywhere”.
In response, Manning said, “Madam President, now for the truth. Cornerstone Financial Holdings Ltd is the parent company of Barita Investment Ltd.
He said Barita Investments is listed on the Jamaica Stock Exchange.
The Minister said via three purchases – in September 2020, December 2020 and the final purchase in September 2021 – First Citizens Investment Services (FCIS) purchased shares of Barita at a weighted average price of $64.45 JA. FCIS is a wholly owned subsidiary of First Citizens.
“Since acquiring a total of 90,795,154 shares, the value of the shares has appreciated significantly and one share is now trading at $87.95 JA, a gain of $23.50 JA over the stock price. average purchase of $64.45 JA. What is clear is that this was a sound investment decision made by First Citizens Investment Services, as this company enjoyed a 36.5% capital gain on top of the payouts. regular dividends, which were also received from said investment. All this despite the fact that investments were only 7.44% of the business,” he said.
Manning also took issue with Mark’s wording of his motion which called for an “investigation” into FCB’s loan to Cornerstone Financial Holdings Ltd.
He said that under Section 55(1) of the Financial Institutions Act, licensed financial institutions are not allowed to share confidential customer information.
Manning told Mark that “we are required by law to maintain confidentiality between licensee and customer.”