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Davies responds to Seaga on black market

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Dear Editor,

I was off the island for a short period and it was only on my return that I became aware of the response of former Prime Minister Edward Seaga to my letter to the Editor on the above matter, which was published in your edition of Monday, March 18, 2013.

Mr Seaga made two substantive points in his letter:

(1) That I had erred in naming Sir Alister McIntyre as the person who led the investigation into the Bank of Jamaica's (BoJ's) involvement in the foreign exchange black market and

(2) The purchase of black market dollars by BoJ agents started in 1992, not in the 1980s. (my emphasis).

I now respond to these two points.

As regards point # 1, Mr Seaga is correct, as was confirmed by Sir Alister. There was, indeed, a Commission of Enquiry into the BoJ's involvement in the foreign exchange black market but the sole Commissioner was the late Horace Barber, former Financial Secretary and former BoJ Governor, not Sir Alister. I apologise to Sir Alister for that error.

I now turn to point # 2, made by Mr Seaga, which is that the BOJ's involvement in the foreign exchange black market only started in 1992. Paragraph 10 of Mr Barber's report, as sole Commissioner, totally refutes Mr Seaga's claim:

"...In 1988, the Bank of Jamaica put in place arrangements for intervening in the informal foreign exchange market. The facility was operated under contract by Data Resource Systems International Limited (DRSI). That company through its agents purchased foreign exchange on behalf of Bank of Jamaica from May 27, 1988, through May 31, 1989. The records of the Central Bank indicate that foreign exchange was purchased at varying rates in excess of the daily rates determined by the Foreign Exchange Auction System. For example, in the initial stages, the Agents purchased at a rate of J$5.78 for US$1, and prior to discontinuation of the facility in May 1989, the rate for purchase was J$6.70 for US$1. Note that during that period, the auction system held steady at US$1 to J$5.50. The foreign exchange received was booked at the daily auction rate -J$5.50 = US$1 and the difference placed to a discrepancy account...."

It must be that Mr Seaga was unaware of this paragraph of Mr Barber's report when he penned his letter to the Editor. That paragraph totally refutes and destroys Mr Seaga's claim as to the starting date of the BoJ's involvement in the black market. Simply put, the irrefutable evidence contained in Mr Barber's report, is that this practice started when Mr Seaga was Finance Minister and Prime Minister. However, and more damning, the action by the BoJ officials in placing the difference between the actual rate paid for foreign exchange and the fixed auction rate to a discrepancy account, demonstrates the deliberate intention to conceal the operation and to maintain the myth of an efficient auction.

There is nothing more to say other than that I pass no judgement as to whether Mr Seaga, as Minister of Finance, knew of the activities of the BoJ.

Omar Davies, MP

Davies responds to Seaga on black market

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