US embassy cable - 05KINGSTON2450

UNCLAS SECTION 01 OF 02 KINGSTON 002450 
 
SIPDIS 
 
STATE FOR WHA/CAR (WBENT), WHA/EPSC (JSLATTERY) 
 
SANTO DOMINGO FOR FCS AND FAS 
 
TREASURY FOR L LAMONICA 
 
E.O. 12958:  NA 
TAGS: ECON, EFIN, JM 
SUBJECT: PRIVY COUNCIL RULES AGAINST PROMINENT FORMER 
JAMAICAN BANKER 
 
1.  Summary:  Don Crawford, former head of the failed 
Century National Bank, has lost his appeal to the Privy 
Council following a 1999 conviction in civil court for 
financial fraud and has been instructed to repay about USD 
45 million to the GOJ.  Although the Director of Public 
Prosecutions has made a ruling on whether criminal charges 
will be filed, that ruling has not yet been made public. 
Crawford, who resides in the U.S., was once the darling of 
the Jamaican banking sector.  He was often lauded by GOJ 
officials for his foray into non-banking areas at a time 
when investors were shunning the productive sector to 
benefit from the high interest rate regime.  However, 
Crawford's bank, which made a number of loans to connected 
parties, was soon to face a liquidity and solvency crisis 
and had to seek assistance from the state.  Recognizing 
the extent of the deficit, the authorities took control of 
the bank and eventually charged Crawford for financial 
fraud.  It is widely believed that his close affiliation 
with the opposition Jamaica Labor Party did not help his 
cause, as no other banker has been charged.  Crawford's 
lawyers are in the process of discussing payment, which if 
made would provide a much-needed windfall to the cash- 
strapped GOJ.  End summary. 
 
2.  The UK-based Privy Council, on October 10, ruled that 
Don Crawford and former top executives of the failed 
Century National Bank (CNB) must pay the GOJ an estimated 
USD 45 million in principal and interest for unsecured 
loans made ahead of the bank's collapse in 1996.  The 
Privy Council is expected to announce the final amount 
payable to the state when it hands down its written 
judgment later this month.  The Privy Council's ruling 
arose from the appeal of a March 1999 decision by 
Jamaica's Chief Justice Lensley Wolfe, in which he berated 
the actions of Crawford and another top executive Caple 
Williams, whom he described as rogue bankers.  "They were 
busy helping themselves to the bank's funds," Wolfe said 
in his judgment at the time.  "These payments constitute a 
misapplication of the bank's funds."  However, Crawford, 
who reportedly resides in Atlanta, was once regarded as a 
model banker and GOJ functionaries viewed his bank as a 
blueprint.  Crawford was often lauded by GOJ officials for 
venturing into non-banking areas such as real estate at a 
time when investors were shunning productive investment to 
benefit from the GOJ'S high interest rate policy. 
 
3.  (SBU) Ironically, it was Crawford's foray into non- 
core activities, which was partly responsible for the 
bank's demise, as a number of unsecured loans were made to 
connected parties to finance these investments.  In 
particular, the bank made loans to companies owned by 
Crawford, his mother and former Opposition Leader and 
Prime Minister Edward Seaga.  One such loan was made to an 
affiliated company to construct the over 700-room 
Renaissance Hotel.  The unsecured loans to connected 
parties took a toll on the liquidity and solvency of the 
bank when they could not be financed.  This prompted the 
institution to approach the GOJ for assistance in 1996 
when funds were not available to pay depositors.  However, 
recognizing the magnitude of the deficit the GOJ was 
forced to take control of the bank. 
 
4.  The Director of Public Prosecutions (DPP), who was 
called in to probe the activities of the bank, ruled that 
Crawford, his mother and top executives were to be charged 
for financial fraud.  It is widely held that his close 
affiliation with the Jamaica Labor Party did not help his 
cause as to date no other banker has been charged despite 
the failure of other institutions.  However, the Privy 
Council ruling could well provide a precedent for other 
financial sector players to be charged.  Head of the 
Financial Fraud Unit in the Office of the Director of 
Public Prosecution (DPP) Caroline Haye was hesitant to 
comment on whether there were other cases pending against 
other former bankers.  She suggested that emboff write to 
DPP Kent Pantry for a response. 
 
5.  (SBU) Lawyers representing Crawford do not expect any 
criminal charges to be brought against their client, 
although he was investigated by the Fraud Squad following 
the collapse of the bank.  The lawyers said the next step 
is for both sides to meet and discuss the final figures to 
be paid by Crawford.  If the debt is repaid it would 
provide a welcome windfall for the coffers of the GOJ, 
particularly given the continued underperformance in 
revenues, a point captured by a cartoonist at the Gleaner 
newspaper.  The cartoon showed an expectant Finance 
Minister Omar Davies inquiring of a distraught Crawford 
when he would be sending the money, while at the same time 
informing him that he could send it through a leading 
remittance company.  Chief Fiscal Economist at the 
Ministry of Finance Courtney Williams told emboff that if 
the money is repaid then it would be more than welcome, 
but he is of the opinion that the GOJ might only receive a 
portion of the judgment amount.  Williams told emboff that 
he was aware of a case against Paul Chen Young of the 
former Eagle Financial Group, who also resides in the U.S. 
and has written a book about the crisis.  When asked if 
there were any political underpinnings in the cases, 
Williams said, "not that I am aware of, but nothing can be 
ruled out." 
 
ROBINSON