‘Unprecedented and unnecessary’
Former Alliance bosses’ attorney slams BOJ action against men and moves to correct ‘misstatements by central bank’ on the matter
THE legal team for the former owners of the Alliance affiliated companies — Alliance Investment Management Limited (AIML), Alliance Financial Services Limited (AFSL), and Alliance Finance Limited (AFL) — is dismissing a recent statement from the Bank of Jamaica (BOJ) about the circumstances which led to it to sanction the former principals of the company Peter and Robert Chin and suspending the licences of AFSL.
In a release to the Jamaica Observer on Thursday, the Chin brothers, through their attorney Sean-Christopher Castle, said he was setting the record straight “to correct the omission of pertinent facts and misstatements made by the Bank of Jamaica (BOJ) in recent publications,” adding that it was “shocking that charges were laid at all” against the men and their former company, AFL, given the events leading up to the central bank’s action. AFL and the Chin brothers were charged with the offences of carrying on the business of lending in foreign currency, in breach of the Bank of Jamaica Act, and accepting deposits without the requisite licence in breach of the Banking Services Act.
“The charges against AFL, for lending in foreign currency, related to transactions conducted between 2013 and 2019,” Castle said in the release as he pointed out that “it was AFL who self-reported to the BOJ certain historic loan transactions which had been made in foreign currency”.
He said the transactions were done consistent with an industry practice and was not prohibited by the Money Lending Act under which AFL operated at the time.
“AFL conducted a review of its procedures to ensure conformity with the new Microcredit Act in June 2021, and the restriction on lending in foreign currency imposed by section 22A of the Bank of Jamaica Act came to light. AFL promptly sought guidance from the BOJ in the interest of conformity with the Bank of Jamaica Act. The BOJ provided directions, which were implemented, and the BOJ acknowledged AFL’s compliance in September 2021, two months before the charges were laid by the FID [Financial Investigations Division],” it was pointed out.
AFL pleaded guilty to the charges and was fined. The charges against Peter Chin and Robert Chin were, however, withdrawn by the Office of the Director of Public Prosecutions (ODPP). The attorney said given the events that took place, “the charges against the Chins were unprecedented and unnecessary”.
Turning to AIML, an affiliate of AFL, which was itself charged with breaches of the Proceeds of Crime (Money Laundering Prevention) Regulations 2007 for failing to make threshold transaction reports, the attorney said that the success of the no case submission in which the charges were dismissed also calls into question the basis for the charges in the first place, as there was no case to answer.
The BOJ suspended AFSL’s cambio and remittance licences as well as its authorisation to operate its electronic payments service within the Fintech Regulatory Sandbox in December 2021 — immediately following the laying of the criminal charges against the Chins, AFL, and AIML.
“Even though AFSL had not been charged with any offence, the BOJ claimed that the charges laid by the Financial Investigations Division (FID) on the Chins, as individuals, rendered AFSL’s principals, Peter Chin and Robert Chin not fit and proper persons to participate in a Bank of Jamaica regulated business, even though they had not been tried or convicted of any offense,” the attorney said.
The BOJ, earlier this week in a press release, said “the regulatory actions became necessary” after the FID charged AFSL’s principals as well as AIML and AFL with several offences under the Bank of Jamaica Act and the Banking Services Act.
“Bank of Jamaica is aware that investigations by the FID into the Alliance Group began around 2018. However, it was only after formal charges were laid against the entities and their principals by the FID following the requisite ruling by the Office of the Director of Public Prosecutions that BOJ took the regulatory action of the suspension of licences to safeguard the financial system. The formal charging of the entities and their principals raised serious “fit and proper” considerations for their continued operation of financial services under the Bank of Jamaica Act and the Banking Services Act,” the central bank said Monday.
Following the suspension of its operating licence, AFSL filed an application in the Supreme Court for leave to institute judicial review proceedings against the BOJ “on the grounds that the decision to suspend its Cambio Licence and revoke its authorisation to operate the electronic payments service was ultra vires, arbitrary, irrational, and unreasonable and that the BOJ had acted in breach of the principles of natural justice”.
The Chins’ attorney said AFSL had a legitimate expectation that it would be afforded an opportunity to be heard before such drastic action was taken peremptorily.
“There was no validation of BOJ’s actions by the court. In fact, the court ruled that AFSL’s judicial review claim had realistic prospects of success and granted AFSL permission to bring a judicial review claim. That judicial review claim would have quite possibly taken months or years to be decided. AFSL would not have been able to operate for that entire period unless an interim injunction was granted by the court. However, the court refused to grant an interim injunction against the BOJ pending the hearing of the judicial review claim. The court recognised that damage would be done to AFSL’s business by not being able to operate until the outcome of the judicial review, but acceded to BOJ’s argument that the potential damage to the Jamaican economy and the financial sector outweighed any potential damage to AFSL’s business.”
He said the impact of the suspension of the licence and the revocation of its authority to operate its e-payment system “without any judicial review hearing happening soon was devastating. A company against which there were no charges was unable to operate. The Chins, as the principals of AFSL, attempted to negotiate with the BOJ terms that would allow the company to continue to operate. The Chins were willing to remove themselves from the management and directorship of AFSL completely”, he continued.
But he said the BOJ refused any compromise of the Chins stepping down from management and directorship of AFSL to save the business. Given that, the attorney charged that AFSL had to immediately cease its operations, which brought its business and the business of its partners to a grinding halt.
“The Chins had no alternative but to sell their company to ensure the continuity of the business they had built and secure employment for their staff/team members and, by extension, their partners. Also, the BOJ’s actions caused severe and debilitating damage to the AFSL brand as well as the reputations of Mr Peter Chin and Mr Robert Chin.”
Concluding the release, the attorney noted that it was interesting to see that both the FSC and BOJ took different approaches towards AIML and AFSL following the charges being laid against Peter and Robert Chin. It was pointed out that the FSC opted to enforce enhanced supervision of AIML — the company with looming POCA charges — while the BOJ opted to immediately suspend the licences of AFSL, which had no charges against it and asked why?
On April 4, 2024, the charges —17 — were dismissed against AIML, with the judge ruling that the prosecution had not made out a case against the company.