Anthony Tharpe, chief executive officer, Caribbean Real Estate Investment Fund Limi-ted, is seen here at a Private Sector Organisation of Jamaica job creation awards ceremony June 27, 2006 at the Terra Nova hotel, St. Andrew. - File

National Commercial Bank (NCB) has locked down the bank accounts of Caribbean Real Estate Investment Fund Limited (CAREIF), but has refused to give the company an explanation for its actions, according to bank correspondence obtained by the Financial Gleaner.

CAREIF, which is one of two doze investment schemes that the Financial Services Commission says have been avoiding regulation, was told November 29, that NCB would lock down its three accounts in mid-December.

"I write to advise you that the bank has decided that it does not wish to continue operating your accounts numbered at caption," wrote Phyllis Smith, manager of the Half Moon, Montego Bay branch.

"We will therefore close the accounts on December 17, 2007 (unless you do so before) and on that day issue two managers cheques and a draft payable to you ..."

NCB further refused to explain its actions to CAREIF, whose Cheif Executive Officer, Anthony Tharpe, had queried the decision, saying in another letter on December 10 that it was "not the bank's practice to set out the reason for closure of any account".

Checks with CAREIF Tuesday indicated that the bank had followed through on its decision. The company said a credit letter prepared by NCB to smooth the transition of its funds to another local bank was to be collected.

NCB was initially unwilling to comment, but later the bank's head of group corporate communications in Kingston, Sheree Martin, said such action was rare and that NCB did not always find it advisable to be frank with clients.

Examples of termination

"We may, for example, be terminating the relationship because of regulatory requirements or for unsatisfactory conduct of the account as in the case of habitual unauthorised overdrafts," said Martin.

"Any decision to close the account of a customer is reached after very careful consideration. While our decision to close is communicated in writing, and reasons may not always be given, it is not to be assumed that reasons are not communicated."

The action followed a November 12 decision by the Jamaica Bankers Association, whose president, Patrick Hylton, is also managing director of NCB, "not to knowingly facilitate transactions" with unregistered schemes.

Days later, a list of 10 such investment clubs was circulated, but CAREIF's names was not among them.

Subsequently, the FSC would announce a list of twice that number of schemes, including CAREIF, at a public forum to alert investors to the level of risk associated with those types of operations.

The schemes hardly divulge information, and CAREIF even this week was unwilling to comment on the size of its clientele, the source of its funds, nor its funds under management, neither would it say where its accounts were being transferred.

But unlike Cash Plus, another high-yield investment club, which sought an injunction from the courts to bar NCB from closing its accounts, CAREIF said it would not contest the decision.

Not fighting

"We are not fighting the bank to keep our money with them," said Damion Simms, CAREIF's marketing officer. "There are others who would want to do business with a legitimate company like ours."

Similarly, Olint Corporation's CEO Wayne Smith advised club members earlier this month that the company's accounts at First-Caribbean, First Global and NCB were being closed, and promised a further advisory on "alternative channels" for transactions.

richard.deane@gleanerjm.com