During the financial meltdown of the mid-1990s, then Prime Minister PJ Patterson seemingly ducked below the radar, deliberately some believe, while Dr Omar Davies, the finance minister, took on the role of de facto prime minister.

Now Opposition spokesperson on finance and chairman of the Public Accounts Committee, Dr Davies’ confident attitude in opening up before the enquiry indicates a man quite certain that his management of his portfolio during the time of the financial meltdown warrants a Nobel Prize. Or better yet, another bite of the political cherry.

On the other side of the ‘aisle’ were tears of woe and the reality of what his monetary policy wrought – the destruction of an uncomfortable number of hard-working people, and the fragmentation of their families. At one level are the bankers, men like Don Crawford of Century Group and Dr Paul Chen Young of the Eagle Group, men who have been severely reduced by the stroke of Dr Davies’ pen.

At the other level are the depositors, like one man I know who borrowed $5 million for a development, paid back $45 million and, courtesy of Dr Davies’ monetary policy, still owes $150 million. Somewhere in between GSAT and a PhD, reason must bare its pragmatic side and confirm that that was sheer madness. Not even loan sharks with their army of baseball bat-wielding thugs operate that way.

According to Dr Davies, it was mismanagement of the banks that led to the failure and the toppling of the stack of dominoes. In Dr Davies’ case, if we are to buy into his present stance, it was prudent fiscal management and even better monitoring of the mood at the times that led to interest rates shooting up from 20 per cent to 90 per cent. His monetary policy, fit only for the textbook, was designed to ease the pressure on the Jamaican dollar, while trying to purchase US dollars.

Did his policy ever do such a thing? Certainly not! Yet, look at the price those bankers and a host of entrepreneurs paid: Damaged lives.

One reader writes, “Omar Davies’ apparent arrogant attitude in his testimony at the hearings on FINSAC is quite irritating. I find it unbelievable that no one has challenged him on his reasoning for FINSAC, by slamming him with The RTC (Resolution Trust Corporation).

“The RTC was a United States Government-owned asset management company charged with liquidating assets (primarily real estate-related assets, including mortgage loans that had been assets of savings and loan associations (S&Ls) declared insolvent by the Office of Thrift Supervision, as a consequence of the savings and loan crisis of the 1980s.

“Davies copied it but made an abysmal show of this idea, but no one is challenging Omar Davies, who needs to declare that he did just that.

“Dr Omar Davies is adding severe insult to irreparable injury on the bankers and other businessmen who, at the time of FINSAC, were only interested in fostering the viability of their businesses. By stating that the bankers should not have been trusted, without stating why, he is attempting to widen the partisan wedge. He ran off a list of supposed benefits attributable to his tenure. They are easily nullified if placed in context. Everything Dr Davies did was based on a pattern of borrowing and begging.

“I worked at one of the leading investment banking firms in New York and learned a lot about the practices of those companies. Dr Davies’ claim that he created a good atmosphere relative to borrowing is correct, but at what cost and on what foundation? Begging and borrowing?

“Before the credit bubble burst in the mid-1990s, anyone could get credit. As a matter of fact, you could easily find yourself with credit you didn’t ask for. Omar treated Jamaica’s finances the way an irresponsible household head would cultivate a borrowing relationship with credit card companies, by having many cards and paying for one with money from another.

“At some point the practice will have to end and the practitioner will be left with bad credit. Unfortunately, Omar was playing with public finances and not his personal finances. I am certain that Dr Davies would have treated his personal finances differently.

“I think this country needs to see Omar Davies exposed for the failure he has been as a finance minister. The gain is not political, I have no affiliation. It is not monetary, I have no need to chase money, and it is not personal.

“The gain is the understanding by Jamaicans that they cannot continue to borrow without producing and still expect a better standard of living. The ridiculously boyish lack of killer instinct in the current JLP administration portends a PNP administration sooner than expected.

“Possibly with Omar as finance minister, yet again. How about Omar Davies as prime minister with the finance minister’s portfolio? All well-intentioned Jamaicans should try to keep this man from ever attaining a ministerial position within a Jamaican Government, if what they are seeking is to lessen the public debt. Jamaicans, be warned!”

PCJ gives green light on E10

In wending my way through the controversy on E-10, I visited the PCJ website for further information.

It begins with, “E10 is a blend of 10 per cent ethanol and 90 per cent gasolene. Ethanol may be produced from locally available products such as sugar cane biomass and other agricultural feedstock. This therefore means the need to rely on imported fossil fuels is significantly reduced and the necessity of MTBE (Methyl Tertiary Butyl Ether), an oxygen enhancer acknowledged as a carcinogen may be phased out over time, as is the intent of many other countries.”

It has a section under the heading Frequently Asked Questions (FAQ). The first two are:

Q: What does Jamaica use to produce ethanol?

A: Jamaica uses the by-product molasses from the sugar cane to produce ethanol for the spirits industry, but fuel ethanol is usually produced directly from the pressed cane juice.

Q: What is E10?

A: E10 is gasoline blended with 10 per cent ethanol. Ethanol contains oxygen which raises the octane level of gasoline to prevent engine knocking.

The controversy swirling seems to be linked to certain cars, older models which some believe are not ‘comfortable’ with E10. Another FAQ is:

Q: Does the use of ethanol create engine corrosion over time?

A: The potential for corrosion due to ethanol has, in the past, been due to improper use by retailers of lower quality ethanol at inappropriate blend ratios without corrosion protection. In Jamaica, anti-corrosion agents will be added to the ethanol before blending with gasoline.”

In the 1970s and 1980s the faster cars were fuel-injected ones. Today, fuel injection is a feature among compacts and even the cheaper models. Another FAQ is:

“Q: Will ethanol work in fuel-injected engines?

A: Ethanol does not contribute to burning or fouling of port fuel injectors. Fuel injectors are manufactured to very exact tolerances, so it takes a very small amount of deposits to affect the efficiency of an injector. Since 1985, all ethanol blends and nearly all non-ethanol gasoline have contained detergent additives that are designed to prevent injector deposits. Ethanol itself acts as a detergent.”

Personally, I have not seen a gain or lessening of compression by using E10 in my 11-year-old Toyota. I expect, however, that PCJ will be carrying out surveys to determine feedback from motor vehicle owners so that any misunderstandings will be cleared up before we move to E25 and E85.

Rubbish talk on elections

Twenty-six months ago when the JLP won the September 2007 general elections, if someone had told me that two years later the PNP would be seeing itself as a viable choice as a ruling administration, I would have laughed in his face and proceeded to a different topic.

Even worse, had someone told me then that two years later, the JLP administration would be looking like a tired boxer after only the first two rounds, I would have laughed him to scorn.

Remember now, it was the ‘bright one’ we elected. Bruce Golding had dispatched Portia Simpson Miller into a crude second place after that fateful debate. Two years later, with our expectations shattered, the question is: If we elected the ‘bright one’ but we have not been able to see even a glimmer of what he promised, would we have been better off had we re-elected the PNP under Simpson Miller?

I cannot imagine this country being worse off than it is now. OK, maybe I should not have said that. We have had no food riots, no mass blocking of roads and, based on the tepid performance of the Government, remarkably, it is facing little pressure, either from the PNP or civil society.

It is my belief that the politics Simpson Miller learned under Michael Manley would have made her the darling of the masses now but a terrible failure at the macro level. I say this because too much of her politics is ‘distributionist’ rather than geared to wealth creation.

In the present tough times she would have been tempted to hasty ‘make work’ policies which, in the long run, would build nothing, create no institutions and be bad for the market economy. But voters would love it.

That aside, the very fact that two years into the JLP administration we are considering Portia as an option must be seen as testament to the poor leadership of Golding.

Where is the creativity he threatened? Where is the inventiveness? What major policy initiative has he proposed or put forward to advance the cause of this nation and pull us together in these treacherous times?

The times are rough and money is tight. Two years into the global recession, 40,000 less jobs is a reality. Over the next year or so it is likely that that number could double if we are to add the mass layoffs of workers from the 117,000-strong civil service.

It is a cop-out on my part to surmise that under a Simpson Miller-led PNP, we would have been worse off. A cop-out, in that nothing that the JLP administration has put forward indicates that it is sufficiently charged with leadership. This has to be placed squarely at the feet of Prime Minister Golding when most of what we want is inspiring leadership, if not hard policy firmly in place.

Should Omar Davies answer for Latibeaudiere?

Again the NDM has come forward to fill in the gap with research on a matter that plainly shows that former finance minister Omar Davies possibly acted illegally in the contract with former BOJ head Derick Latibeaudiere.

The NDM stated, “Former Prime Minister PJ Patterson announced during the last ‘Fat-cat pay scandal’ in 1999 that all contracts above $6 million would require Cabinet approval. That announcement would immediately become a policy decision and binding on all subsequent Cabinets.

“If the current prime minister was accurate that the contract signed by Dr Davies in 2006 for former governor Derick Latibeaudiere was not sent to Cabinet and never got Cabinet approval, then that would make the contract unapproved and invalid. It stands to reason that any amount above $6 million collected by Latibeaudiere would also be unapproved and invalid.

“Latibeaudiere should be requested to return all the money he collected above $6 million. The former governor should also have known that his contract required Cabinet approval and should not have collected monies above $6 million. The former governor acted in a selfish and unconscionable manner.

“Dr Davies demonstrated disrespect to his former Cabinet colleagues and a reckless disregard to a policy position of a prime minister.”

Dr Omar Davies has a lot of unfinished business, and we need to hear much more from him.

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