It is often said that one never sees smoke without fire for there is usually more to a story than that which appears at the surface. The press conference convened by the People's National Party (PNP) four Thursdays ago is a perfect illustration of this.

Opposition Spokesman on Industry and Commerce, Senator Mark Golding, and the party general secretary and opposition spokesman on national security, Peter Bunting, took the limelight at the press conference where they set out to defend their embattled colleague Dr Omar Davies - opposition spokesman on finance.

This attempt to run to Davies' rescue came in the aftermath of yet another revelation involving the former finance minister. In a statement in Parliament, Prime Minister Bruce Golding disclosed some rather disturbing, unacceptable and embarrassing provisions in respect of an employment contract between the Government of Jamaica (GOJ) and Derick Latibeaudiere, former Bank of Jamaica (BOJ) governor. This contract has its origins in 1996 and was approved by Davies then. By the time prime minister made the disclosure a few weeks ago, the former governor's compensation package amounted to a whopping $38 million per year, at a time when the rest of us, including the prime minister himself, have had to hold strain.

I am certain many were left wondering why Bunting and Mark Golding felt compelled to mount such a callous defence and, in the process, add insult to injury. After all, the matter is not one that concerned their respective portfolios, and ought properly to have been addressed either by Davies himself or Opposition Leader Portia Simpson Miller.

Bunting and Golding failed in their attempt to salvage the situation and merely ended up compromising their own credibility and political capital. So what prompted that travesty of a press conference? What is the real link between Davies, Bunting and Golding?

Let us take a trip down memory lane as we seek to 'connect the dots' and put the pieces of this puzzle together. Davies, as you may recall, assumed office as minister of finance and planning back in 1994. His tenure spanned just under 14 years; a period he and his colleagues would want us to forget much sooner rather than later. Davies was quickly dubbed a "world-class" finance minister by his supporters in the PNP.

Having served as director general at the Planning Institute of Jamaica (PIOJ), and prior to that in academia as senior lecturer in economics, Davies seemed to have been well-placed to assume the mantle at National Heroes Circle. He was to demonstrate quickly, however, that the national interest was secondary to PNP loyalty and myopia.

In the early 1990s then Opposition leader, Edward Seaga, cautioned the PNP against what he described as premature foreign-exchange liberalisation. Those calls fell on deaf ears apparently, as then Finance Minister P.J. Patterson did things "his way". Patterson proceeded "full speed ahead" with liberalisation which came in the form of an "Exchange Control (Removal of Restrictions) Order" which was implemented on September 25, 1991.

Significant changes

By the time Davies came to office in '94, the economy was in a quagmire and getting worse. As we are all aware, Davies did very little to "change course". Admittedly, the new architecture of the world (fall of the Berlin Wall), in addition to significant changes in the world-trading system and the global capital markets, exacerbated Jamaica's plight. The changes to which I refer, include adjustments at the level of the World Trade Organisation that served to reinforce the potent neoliberal ethos which was in full swing.

As a result of the premature liberalisation, the Jamaican dollar came under tremendous pressure. Individuals and businesses alike scrambled to hoard hard currency for varying reasons. Our purchasing power became eroded over time as it kept costing us more to purchase the United States dollar. The inflationary effect not only saw the cost of goods and services soaring to unprecedented highs, it also stymied investments and economic growth.

The world-class finance minister responded by bringing 'Economics 101' to bear. He sought to leverage aggregate demand and effect contractionary monetary policy in a bid to combat inflation. The BOJ was called upon to mop up liquidity in the market by issuing extremely attractive instruments. And so, Jamaica's untenable and suffocating high interest-rate regime began. It was a creation of Davies and the PNP administration.

This high interest-rate regime continued well throughout the '90s as Davies recruited as central bank governor in 1996, Derick Latibeaudiere. Interest rates at commercial banks would in turn reach unprecedented highs. They soared even further during the financial sector meltdown of the mid-90s, as rates averaged in excess of 50 per cent at commercial banks.

Exorbitant costs

What continues to intrigue me is that while all this was unfolding, an investment firm Dehring, Bunting and Golding (incorporated in 1992) with which Bunting and Mark Golding were closely associated, enjoyed tremendous fortunes. That investment firm under Davies enjoyed extremely attractive returns on government paper and literally gorged itself. Could you blame that firm though? It was simply feeding from a trough.

But who suffered while they basked in this bountiful harvest? The poor taxpayers of this country - taxpayers who were called upon to offset the exorbitant costs associated with Davies' poor judgment and mismanagement. We bear this humungous debt burden to this very day.

It is no wonder that by the time the current administration took office in September 2007, the composition of our debt stock stood diametrically opposed to what it was in 1989. When the Manley-led administration took office in February 1989, approximately 75 per cent of our total stock of debt was held by the multilaterals (relatively cheap debt) and the remaining 25 per cent by private creditors. The latter category includes both domestic and foreign holders of GOJ debt.

By September 2007, virtually 75 per cent of our debt was held by private creditors, and this, of course, is extremely expensive money, while the multilaterals accounted for a paltry 25 per cent of our debt.

Evidently, when Davies and Patterson said "ta-ta" to the International Monetary Fund (IMF) back in 1995, they failed to present the full picture to the nation. They failed to convey to the Jamaican people that we were not only bidding farewell to the IMF, but to good governance and cheaper credit as well. Davies' retreat from the IMF also meant a retreat from any meaningful relationship with the other multilateral institutions, such as the World Bank and the Inter-American Development Bank.

By retreating, Davies opted for more expensive money from private creditors as opposed to cheap money ranging from two to five per cent from the multilaterals.

What may appear to some as "youthful exuberance" on the part of Bunting and Golding at the recent press conference should be seen simply as their defence of Davies for his policies. One good turn deserves another.

What is incontrovertible though is that Davies' judgement, and stewardship as a public official have been called into question once again. While he remains keen on chiding the current finance minister for not being in the classical mould of finance ministers - contending that Shaw "curses too much" and "talks too much", he has had his own run in with "lip control".

Lest we forget, Davies' now infamous "run wid it" comment gave us a clear picture as to what was really going on in that PNP administration. It was a run that saw the public-sector wage bill balloon within just a few years, moving (in millions of J$) from $35,163.8 in 2000/01 to $42,588.2 in 2001/02, and to a further $51,496.7 in 2002/03.

It is important to note that the size of the wage bill only increased by 0.4 and 1.9 per cent in 1999/00 and 2000/01, respectively - the period predating the alarming increases. The "run wid it" increases on the other hand represent 12.7 and 14.2 per cent year-on-year increases in the public-sector wage bill, as Davies and the PNP sought to secure victory at the polls in 2002. They clearly sacrificed the national interest for political expedience.

As a result, Davies and his colleagues had no alternative but to "call a truce" by 2003/04; a truce that culminated in the signing of the first memorandum of understanding between the GOJ and public-sector workers in 2004.

Mismanagement

The recurring spectre of revelations suggesting mismanagement lingers at this time. Many feel betrayed, while others have been left dejected and incensed.

Among the repugnance in that series of Davies-related tragedies are: i) the Clarendon Alumina Productions agreement which provided for the forward sale of bauxite - an arrangement that virtually wiped out the $4.4 billion earned in direct revenue from the bauxite levy last year; ii) FINSAC which added 33 per cent to our total stock of debt owing to the absorption of $140 billion; iii) the "run wid it" expenditure; and iv) the sale of Air Jamaica's London Heathrow slots to Virgin Atlantic.

Many are calling on him to retreat from public life. Indeed, he has been called on to step aside as opposition spokesman on finance and recuse himself from further work of the Public Accounts Committee, a committee of Parliament chaired by Davies himself.

While others, understandably, are calling on him to step down as opposition spokesman on finance and retreat - I think we should let him stay! Wasn't he the embodiment of a world-class finance minister?

Marlon Morgan is a former parliamentary intern and graduate fellow in the Department of Government, UWI Mona. He is chairman - Generation 2000 (G2K) Policy Committee and technical adviser to Audley Shaw, minister of finance and the public service.