Finance MInister Audley Shaw has been dragged into the legal battle between businessman Michael Levy and bad-debt collector Jamaica Redevelopment Foundation. - File

Mandeville businessman Michael Levy, who borrowed $4 million from a commercial bank in 1994, is now facing a lawsuit for $1 billion arising from the loan transaction.

The loan related to a mortgage on a 40-shop commercial complex in Mandeville, Manchester, owned by Levy.

Levy is contending that he does not owe that much, but the Jamaican Redevelopment Foundation Inc (JRF), which took over the loan from the defunct Eagle Commercial Bank, says otherwise.

already paid millions

Levy contends that he has already paid millions to service the loan, including on one occasion in 1997, a payment of about $16 million by his lawyer Anthony Pearson.

In August 2007, the JRF appointed a receiver to take charge of Levy's property, saying he owed more than $800 million on the loan.

With interest charges, the loan would now amount to about $1 billion, said Levy in court filings.

The legal battle between the JRF and Levy has extended to include Minister of Finance Audley Shaw.

On November 17, the Supreme Court granted leave for Levy to apply for judicial review to quash an order made by the minister in January 2008.

extended an exemption

The minister is purported to have extended an exemption given to the JRF in 2002 from the provisions of the Money Lending Act.

That exemption allows the bad-debt collector to apply interest of 50 per cent or more against loans.

Without the exemption, the applicable rate would have been capped at 20 per cent.

Levy says in court documents that he wrote to the minister in February this year outlining his plight, but so far, he has not received a response.

Levy, who is being represented by attorneys-at-law Raphael Codlin and Melissa Cunningham, is contending that the law enables the minister to exempt accounts and not individuals or companies.

Indeed, Levy has cited Shaw's past position on the high cost of capital and its adverse impact as part of his defence.

The Mandeville businessman claims in court documents that the minister of finance has been quoted on several occasions criticising the high interest rates that were present under the former administration and also outlining the adverse effects that it had on the economy and the Jamaican people as a whole.

It is also Shaw's view, he contends, that some borrowers from the failed financial entities were treated differently, depending on their connections, because some loans were reduced or written off while others were forced to pay "hideously" high interest rates.

"They were sold to the Texans like cattle," Levy quoted the minister as saying.

appeal filled

Levy has filed an appeal in the Court of Appeal seeking an order to bar the JRF from selling his property until the case has been decided in court.

Supreme Court Judge Jennifer Straw, after hearing an application from Levy's lawyers, granted him leave to go to the Judicial Review Court for an order to quash the minister's decision to exempt the JRF from the provisions of the Money Lending Act.

The hearing has been set for April next year.