Posts Tagged corruption
Property ownership is a critical ingredient of the society we are trying to build. No one can deny that. The wealthiest people and companies in this society have made a great part of their wealth through property dealings – buying, leasing, sub-dividing, selling, renovating and so on. We all know that property is critical to amassing and holding wealth.
The single largest owner of all classes of property in the Republic is of course, the State. Those properties are described as ‘Public Property‘ in the Public Procurement & Disposal of Public Property Bill 2014 which is now being debated in Parliament. The penultimate paragraph of the Private Sector Civil Society group (PSCS) group statement of 13 June 2014, is clear -
“…Whilst very pleased with the progress to date and while not having sight of the amended bill we note two areas that remain of serious concern; the Role of civil society and the acquisition and disposal of public property…“.
At pg 7 of that Bill – “public property” means real or personal property owned by a public body;”
‘Real Property’ usually means real estate (freehold or leasehold), while ‘Personal Property’ usually means all other types of property such as licenses, concessions and tangible items of worth.
‘Owned’ usually means literally owned, as in the case of a freehold or leasehold interest, but there are other important types of property which are not literally in the ownership of a public body. Public Property is important because it is extremely valuable. The power of the State or its agencies to allocate those Public Properties must therefore be exercised in an equitable and transparent fashion if we are to foster proper conduct of our country’s public affairs.
In relation to real estate, it is important to note that the system of Crown Grants was used during the colonial period to encourage immigrants of a particular type. Immigrants who were of acceptable race, religious belief or station in life were allocated public lands for the purpose of agriculture. The actual documents are called ‘Crown Grants’ and they can be seen in our country’s records. The allocation of those lands to those selected people established a pattern of substantial wealth which took generations to displace. Of course such a system of property allocation, on the basis of ones’ external appearance and belief system, would be incompatible with our Republican status.
That history and the important role which property plays in today’s society are both reasons why the ‘disposal of public property‘ is an inescapable part of the new law, so that we can ensure good governance in these matters.
The Maha Saba Episode
This is a good example of a type of Public Property not literally owned by a Public Body. The dispute was over the decision of the previous administration to allocate radio licenses overnight to the Citadel Group, which was owned by a PNM member, at the same time as delaying the grant of broadcast licenses applied for by the Maha Saba. The Maha Saba had to take legal action all the way to the Privy Council to obtain a favourable judgment as to the breaches of principles of good public administration by that PNM government.
A new law intended to control dealings in Public Property as defined above would be one which extended beyond those literally owned by Public Bodies to include species of property in the ‘care, custody or control‘ of those bodies. That would allow future occurrences of a ‘Maha Saba episode’ to be rapidly rectified, also at less expense, by the Procurement Regulator as that type of property transaction would be within oversight of the new law.
In point of fact, it was reported that the Citadel group which comprised three radio stations was sold in 2012 to the CCN group (owners of this newspaper) in 2012 for a sum reported to be over $50M. So it is clear that these species of property have serious value, quite apart from any other aspects.
When Caroni Ltd. was closed in August 2004, about 76,000 acres came out of cultivation and become available for alternative uses. The Caroni lands stretch from Orange Grove at Trincity (near the large new Blue Water facility) as far south as Princes Town.
Given the fact that Chaguanas has been our fastest-growing town for almost 20 years now and the ongoing growth of investment in San Fernando and its outlying districts, it is clear that the Caroni lands have a critical role to play in our medium to long-term prospects. But those possible outcomes would be conditional on just how the Caroni lands are allocated in the short-term. As far as I am aware, a decade after abandoning sugar cultivation, there is still no strategic plan for how these lands are to be utilised. In the absence of a proper strategy for the management of those important State lands, there is scope for missed opportunity in terms of development and re-distribution.
The decisive land allocation issues would include -
- How does the allocation policy work together with the State’s broader economic policies?
- To whom are the lands allocated?
- On what terms are the lands allocated – i.e. for how long are the lands to be leased and with what restrictions? Some of the ex-Caroni workers are demanding grants of freehold interests from the State, but no decision seems to have been made on that.
- Does the State have the right to repossess the lands upon expiry of the lease?
- Does the allocation strategy have dynamic measures to control speculation? This is to prevent the growth of ‘flippers’ who just acquire property to hold and re-sell. There is a serious view that ‘flippers’ are a part of the market, but there is also a way that their presence can retard development as they do not typically improve or maintain their properties.
All of those issues must be located within equitable and transparent arrangements as required by the new law.
State Leases of offices
When the State leases offices or other property it is in fact procuring property via a transaction in Public Money. Those transactions must take place within a modern system which ensures good governance by attaining accountability, transparency and value for money.
There is a huge oversupply of offices in greater POS as a result of the State’s overbuilding during the last regime and the current administration is now shifting significant public offices out of POS. The combined impact of those ought to be a steady decline in both the gross amounts paid to landlords via State leases and the amounts paid per sq. ft.. That kind of change can only be obtained and monitored if the State’s leases of offices and other property are also part of the new Procurement system, so that the details are published as part of the database of State contracts.
The State-owned reclaimed lands at Invader’s Bay in west POS are another pregnant example of how the use of improper land allocation processes can injure the public interest. The JCC has mounted a legal challenge to seek publication of the legal advice obtained by the Ministry of Planning & Sustainable Development as to the legality of their activity ‘thus far’ in respect of that 70-acre parcel of prime land.
It is interesting to recall that one of the legal opinions on which the State seems to be relying, notes that this proposal was to grant long leases (about 99 years) to the successful bidders at Invader’s Bay. That was not considered a disposal since the State would have retained the freehold interest. Now that is probably the best example of why these types of transactions must be controlled by these modern and effective laws. The attempt to conflate a residual freehold interest with ownership, while at the same time denying the tremendous commercial value of a 99-year lease over prime lands was scandalous.
The most valuable properties in the capital are the leaseholds in St. Clair and Woodbrook, that much is indisputable, which is why we have guard against this kind of evasive advice to facilitate arrangements to escape proper oversight.
The Landed Interests
The ill-fated 2009 proposals for a new Property Tax would have required an updated and open database of the entire country’s property holdings. The campaign to ‘Axe the Tax’ was successful and that database never saw the light of day, which entirely suited the Landed Interests who are wary of any system which would expose their operations to easy scrutiny.
We need to be vigilant to ensure that the Public Procurement & Disposal of Public Property Bill 2014 does not leave a gaping, purposeful loophole thorough which our Public Money will continue to pour.
Given that our political parties receive financing from business-people, how will those party financiers be rewarded? In a situation which properly controls the award of State contracts for goods, works and services, how can they be rewarded?
The answer is Public Property.
One of the big unanswered questions arising out of the recent ‘grand corruption’ cases in relation to the Public Sector remains – ‘How can we lawfully punish those wrongdoers who are looting our country?‘
Most discussions proceed along the lines of what I call the ‘bag of money‘ idea, in which we are looking for the actual stolen money. The belief being that the stolen loot can actually be located and linked to the thieves, who will then face a harsh penalty. My preferred solution is for full disgorgement of all the stolen monies as a starting-point, even if that is a remote goal.
In re-examining the issue practically, one has to ask “Why do we persist in these ‘pipe-dreams’, while ignoring the ‘low-hanging fruit’ all around us?” So I am considering a new strategy for action on these critical issues.
‘Public Money’ is the term used to describe money due to or payable by the State, including those sums for which the State would be ultimately liable in the event of a default. Public Money is sometimes called Taxpayers’ Money, it is our Money. Read the rest of this entry »
On Wednesday 11 June 2014, the Senate unanimously approved the Public Procurement & Disposal of Public Property Bill 2014 and that Bill is soon to go to the House of Representatives for their deliberation. I was present to witness the collective efforts made by Senators on Tuesday 10 June and it was a really thought-provoking experience for me. I started to wonder just how much we could achieve if the banal point-scoring and ritual picong was to become a thing of the past. The basis of decision-making on public issues would have to shift to a fact-based one, which would be a huge, healthy step away from the sad formula of ‘might is right’.
What a day that would be for us all, just imagine.
But we have to exist in this place, as it is, with all its imperfections. Which leads me to discuss the constant questions put by people who want to know if ‘this law we are fighting for‘ could prevent this-or-that corrupt practice. So the two projects which I would use to give worked examples are -
- the THA/BOLT office project on which the High Court recently ruled;
- Calcutta Settlement/Eden Gardens land purchase by HDC.
This project was analysed in a previous article, which set out certain questionable aspects of those arrangements. In my opinion, the greatest areas of concern were -
- Size – THA stated that the Divisions for which this building was being leased now occupy 28,500sf, yet the completed project is to comprise 83,000sf – almost three times more space.
- Quality – The new building is projected to cost $143M, which equates to $1,723 per sq ft and that is at the upper end of office costs, even when we consider that the contract was reported to be for a fully fitted building.
- Rent – The current rent paid by the THA for the Divisions to be located in the new facility is an average of $8.17 per sq ft. The rent for the new facility was agreed at $15.61 per sq ft, which is almost twice the rate now paid. It was telling that the THA relied on the statements of a Civil Engineer, Peter Forde, who sought to justify that rent by reference to the fact that $10 per sq ft was being paid for some offices in Scarborough. Mr. Forde is an esteemed engineer with whom I have worked well in the past, but that is like relying on my advice, as a Chartered Valuation Surveyor, as to the correct steel to use in some complex structure.
- Total Costs – The total monthly rent now paid by THA for those Divisions is $231,788, while the new project is set to cost a monthly rent of $1.295M – more than five times more.
All of these arrangements being made by a public authority which makes a compelling case that the Central Government has starved them of financial resources over a considerable period. The THA, starved of money, is justifying a deal which will hugely increase their monthly rent bill, for an office building three times larger than required at a higher quality than any other in Tobago. That is the sense of this deal.
The recent litigation over this project was altered after it started, to two questions of ‘construction’, being ruled by the Court to be issues of public interest -
- Finance Ministry approval – Is THA required to obtain approval from the Ministry of Finance before entering a BOLT arrangement?
- Tendering procedure – Is THA required to follow the procedures of the Central Tenders Board Act (CTB Act) in entering a BOLT arrangement?
The High Court ruling on 30 April 2014 was claimed by THA to be an endorsement of their course of action, but this is what it actually meant.
|ISSUES||High Court Ruling||Proposed Public Procurement Law|
|Preliminary considerations||No ruling by the Court.||A Needs Assessment would be required to take account of a life-cycle costing, which includes both initial and cost-in-use aspects.|
|Ministry of Finance approval||At para 33, the Court ruled that THA is not required to obtain approval of the Minister of Finance. In that respect, one can understand THA’s claim to have been vindicated.At para 29, the Court makes the inescapable point that since this is a 20-year recurrent commitment which would have to be paid for by financing from the Central Government, it would be prudent for the THA to consult with the Finance Ministry before entering such arrangements.||This is a transaction in ‘Public Money’ via a ‘Public Private Partnership’ which is included in the remit of the proposed law.|
|Tendering Procedure||At paras 48 through 51, the Court was emphatic that the THA was required to follow the provisions of the CTB Act.||The proposed law abolishes and replaces the CTB Act and would include this kind of project under the oversight of the Office of Procurement Regulation.|
In this case, the THA’s claims of victory appear unrealistic, but the good news is that the proposed arrangements will act to prevent a recurrence of this wasteful type of project.
This 2012 purchase of 50.5 acres (comprising 264 residential lots with ancillary uses) by the Housing Development Corporation (HDC) was also the subject of a series of articles in this space, which highlighted these questionable aspects -
- Private sales as individual lots – Eden Gardens lots were being offered for sale in 2011 at $400,000.
- HDC Valuations or Offers? – HDC obtained a private valuation of the property at $52M in November 2011. In January 2012 Eden Gardens is offered to the HDC at $200M. So why did HDC order a valuation in November 2011? Was there an attempt to offer the site to HDC before November 2011 and at what price?
- The State valuer exceeds the opinion of a private valuer? – Of course that is virtually unknown, but the fact is that the Commissioner of Valuations issued an opinion of value in April 2012 placing the property at $180M.
- HDC Purchase – The HDC buys the property in November 2012 at $175M, which equates to $663,000 per lot. Given that those lots were available in 2011 at $400,000, that is a 66% increase in the value of those lands within one year, which can make no sense. It makes even less sense when one considers that HDC was buying the all that land at once, so a discount would be the rational and expected commercial practice. So what was the basis on which this price was settled?
- Plan ‘B’ – The State had the power to compulsorily acquire the land if it was required for a public purpose, which housing is. The point being that the State could have lawfully acquired Eden Gardens for no more than $35M, if they had chosen to use their powers of compulsory acquisition. So, why did they choose to go the Private Treaty route?
- The ‘Ultimate Beneficial Owner’ – The basic business practice required of bankers and other finance professionals is to ‘Know Your Customer’ as a fundamental part of ‘Anti Money Laundering’ (AML) laws now in force in this country. Those laws and professional practices have now extended to cover the activities of real estate agents, so anyone selling land would be required to conform. The vendor of Eden Gardens was Point Lisas Park Limited, but from my research at the Registrar General’s Dept, it seems that PLP Ltd. has never issued shares. Which means that we can only speculate as to who was the ‘Ultimate Beneficial Owner’ of Eden Gardens and indeed, who received $175M for that property.
The proposed new laws do not contain any provisions to govern the State in ‘acquiring public property’, which was the case in Eden Gardens, since the State was buying land.
This is one of the outstanding serious concerns as to the proposed new law, which would not act to prevent this type of corrupt practice. Our Parliamentarians need to consider these aspects in finalising this law.
The public is being told that the CL Financial bailout is being resolved, while at the same time the Minister of Finance & the Economy is withholding the fundamental information which any prudent person would need to make a decision. So, what is the secret?
Apart from the details I have been asking for, there are other questions which occur to me -
- Directors’ Fees – What is the comparative level of Directors’ fees before and after the bailout on 30 January 2009? In particular, what are the fees & expenses payable to CL Financial Directors? Have those increased? If so, to what level and on what rationale?
- Related Party dealings – We were told that one of the main causes of the CL Financial collapse was excessive related-party transactions. Has that pattern of dealings has really changed? What are the contracts between the group and companies in which Directors hold an interest? Does the group, or the Minister of Finance, keep a record of these connected contracts? Does the group have a robust procurement procedure which would ensure value for money in all its significant transactions?
- Asset disposals – Which of the group’s assets have been disposed-of since the bailout and on what terms? Were proper valuations obtained before these disposals?
The original complaint is here -
From: Afra Raymond <firstname.lastname@example.org>
Date: Mon, Sep 10, 2012 at 11:12 PM
Subject: Compliance of CL Financial Directors with the Integrity in Public Life Act
The Integrity in Public Life Act requires that “Members of the Boards of all Statutory Bodies and State Enterprises including those bodies in which the State has a controlling interest” are required to file returns and declare interests with the Integrity Commission.
Clause 3.1. of the CL Financial Shareholders’ Agreement of 12th June 2009 – see http://afraraymond.files.wordpress.com/2010/03/mou21.pdf – specifies that the Board of Directors of CLF shall consist of seven Directors, four of which shall be nominated by the Government. The GORTT has a controlling interest and it is public knowledge that the GORTT has exercised those rights, amounting to strong influence evidencing control.
It seems clear that the directors of CL Financial Ltd are therefore persons who should file declarations, and therefore also the directors of subsidiaries under their influence and control, but having visited your offices earlier today to examine the Register of Interests it seems that these Directors have not been filing returns with you.
For your information, your staff confirmed to me today that none of these people have filed declarations or been required to file such for 2009, 2010 or 2011 -
- Gerald Yet Ming (CLF’s current Chairman)
- Hayden Charles (CLICO Director)
- Ronald Harford (Republic Bank’s Chairman)
- Dr Euric Bobb (former CLF Chairman)
- Rampersad Motilal (Managing Director of Methanol Holdings Limited)
I am therefore requesting, in the public interest, your confirmation that Directors of CL Financial and the companies within its control are required to file declarations or your confirmation that those Directors are not required to file or such other informative response that will satisfy this complaint of apparent non-compliance.
I await your early reply.
From: Afra Raymond [mailto:email@example.com]
Sent: Thursday, 20 March 2014 09:56 PM
To: Registrar, Integrity Commission
Subject: Fwd: Compliance of CL Financial Directors with the Integrity in Public Life Act
Dear Mr. Farrell,
I am seeking an update from you on your progress in relation to this formal report made to the Integrity Commission on 10th September 2012.
Apart from a brief telephone conversation we had a few days after its submission, I have had neither acknowledgment or reply to this report.
I await your early reply.
On Fri, Mar 21, 2014 at 4:54 PM, Registrar, Integrity Commission <Registrar@integritycommission.org.tt> wrote:
Dear Mr Raymond
Our recollection in the office is that a response was sent to you and we are examining our records.
In any case, a response will be sent to you.
On Fri, Mar 21, 2014 Afra Raymond <firstname.lastname@example.org> wrote:Hello Mr. Farrell,
I appreciate your early attention to my query.
From: Afra Raymond <email@example.com>
Date: Thu, May 22, 2014 at 11:44 AM
Subject: Re: Compliance of CL Financial Directors with the Integrity in Public Life Act
To: “Registrar, Integrity Commission” <Registrar@integritycommission.org.tt>
Hello Mr. Farrell,
I wrote to you on 20th March 2014 seeking an update to my formal report of 10th September 2012 to the Integrity Commission on this matter. You replied the next day indicating that you thought that a reply had already been sent but that in any case a reply would be sent to me.
To date I have had no response to my formal complaint or the request for an update as to its status. In the interim, I have carefully examined the Commission’s 2012 and 2013 Annual Reports and found no mention of my complaint in the sections which provide an outline of the various investigations being undertaken. According to those Reports, the status of those investigations seem to fall into three categories – ‘Closed’ – denoting those matters which have been effectively dismissed, due to lack of evidence or irrelevance; ‘Completed’ – denoting those matters which have been investigated or ‘Continuing’ for those matters which are still under investigation. I am starting to wonder if my formal complaint has been relegated to some new, as yet undisclosed, category.
I am also going to point out that, according to the Integrity Commission’s Public Notice at pg 49 of the Sunday Express of 6th October 2013, the Integrity in Public Life Act applies to State Enterprises. At the fourth para of that Public Notice, which was intended to clarify published concerns as to the implications of the Appeal Court ruling in #30 of 2008, you state that State Enterprises are companies which are controlled by the State, so I would again invite your attention to the particulars of my original complaint in this matter. As you would appreciate from my published analysis, the position taken by the Commission in that Public Notice is one with which I strongly disagree, nonetheless, that position is the Integrity Commission’s formal statement on the matter.
For ease of reference, that Public Notice is here -
http://afraraymond.files.wordpress.com/2013/10/ic-response2013.pdf – since I was unable to locate it on the Commission’s website.
I am closing by pointing out that this is a matter of the gravest possible public concern, since CL Financial has been the recipient of over $25 Billion TTD in Public Money and its affairs remain shrouded in an intentional obscurity which does violence to the modern notions of Transparency, Accountability and Good Governance. That obscurity includes the channelling of those huge sums of Public Money via the Central Bank which is exempt from the Freedom of Information Act; new laws to approve the exemption of the Central Bank from any judicial review of its actions in this matter (that has now been ruled as unconstitutional by the High Court in #4383 of 2012, of course the State has appealed that, so the fight is on); the failure/refusal of CL Financial to publish audited accounts and the failure/refusal of CL Financial’s Directors to comply with the Integrity in Public Life Act.
That is the factual background against which I lodged my formal complaint. The delay and ambiguity with which the Integrity Commission appears to be treating my complaint on this most serious matter is sobering, to say the least.
I trust that you can give this matter your early attention, in the meantime, I will be publishing this as a record of these developments.
Dear Mr. Raymond
On behalf of Mr. Farrell I do apologize for not responding to your query. Please note that your query was not classified as a compliant so you would not find it in the complaints section of the 2012 or 2013 Annual Report. With respect to your query we have sought and obtained legal advice. However the Commission is not properly constituted ( a Commissioner having resigned and not yet replaced by his Excellency the President) at this time and therefore cannot make decisions. As soon as the Commission becomes properly constituted the matter will be placed before the Commission for a decision.
In the interim I would appreciate if you can provide us with a copy of the CL Financial Shareholders Agreement.
From: Afra Raymond [mailto:firstname.lastname@example.org]
Sent: Thursday, 22 May 2014 05:12 PM
To: Registrar, Integrity Commission
Subject: Re: Compliance of CL Financial Directors with the Integrity inPublicLife Act
Hello Ms. Phillips,
I thank you for your swift reply and trust that this matter can now receive proper attention.
The Ministry of Finance made a Press Release on 12th June 2009 -http://www.afraraymond.files.wordpress.com/2011/03/minoffin_pr_12jun2009.pdf – which I received prior to the actual Shareholders Agreement being released to me pursuant to my Freedom of Information request. As requested, the actual CL Financial Shareholders Agreement of 12th June 2009 is here – http://afraraymond.files.wordpress.com/2010/03/mou21.pdf – for your consideration.
I await your reply.
On Friday, May 23, 2014, Registrar, Integrity Commission <Registrar@integritycommission.org.tt> wrote:
Dear Mr. Raymond
Thanks for your understanding. However used the link provided but most of the pages of the Agreement are blank.
From: Afra Raymond [mailto:email@example.com]
Sent: Friday, 23 May 2014 09:06 AM
To: Registrar, Integrity Commission
Subject: Re: Compliance of CL Financial Directors with the Integrity in PublicLife Act
Hello Ms. Phillips,
The Shareholders’ Agreement is showing ok at my end, the scanned copy I was sent seemed a little faded, that was all.
The link I sent you yesterday was included in my original email of 10th September 2012, so it’s not clear whether that actually received proper attention.
I suppose that the Finance Ministry would provide a copy if you asked, seeing that they sent it to me.
Registrar, Integrity Commission May 23
The huge potential supply of State-built, unfinished office buildings in our capital is the ‘Elephant in the Room‘. There are potent elements at play here in terms of the viability of the long-term and large-scale investments which have been made in Port-of-Spain by private and public capital.
At this point, taking account of offices over 25,000 sf in size, there are over 1,500,000 sf of incomplete offices in our capital. This article will examine the likely outcomes for our capital and those investors as the various projects are completed.
The State has 1,329,000 sf of incomplete offices in POS and the private sector has 224,800 sf. The State has virtually seven times more incomplete offices than the private sector and that is the ‘Elephant in the Room’. This chart portrays the reality – the details are set out in the table below.
The legacy of the POS offices built during the previous administration is a matter which deserves serious consideration. The sheer volume of offices built by the State during the previous administration is sobering – 2.3M sf. Given that Nicholas Tower – that elliptical, blue tower on Independence Square – contains 100,000 sf, it means that the State built the equivalent of ‘23 Nicholas Towers‘ in our capital in that period of rapid development.
We also know that there was no attempt at public consultation or feasibility studies by the State or its agent, UDECOTT. At the Uff Enquiry, the Executive Chairman of UDECOTT, Calder Hart, admitted that a feasibility study had been done for only one of those projects. That project is the International Waterfront Centre (IWC), which comprises the two office towers of 890,000 sf, the Hyatt Hotel, New Breakfast Shed and car-parking/outdoor facilities. Hart also admitted, under oath, that the value of the land had been omitted from the viability study for the IWC, so it was a bogus exercise. The break-even rent is the amount which must be earned by a project to repay the cost of land, construction, professional fees and finance. The IWC, repeatedly boasted-of as UDECOTT’s flagship project, is not a viable project, since its break-even rent exceeds the highest rents now earned by A-class offices in POS.
The Parliament has now relocated there during the Red House repairs and renovations. A number of other Ministries and Public Bodies have also started to occupy those offices.
The Office of the Prime Minister is now in the new 75,000 sf building on St. Clair Avenue, opposite to QRC grounds.
The rationale advanced by the Manning administration for that surge in office construction in our capital is that it would free the State from the payment of large monthly rents to private landlords. Although I made several requests, I was never able to get the actual figures for the rents paid by the State in POS. My own familiarity with that market allowed me to estimate the average rent at that time (2007-2009) at about $8-9 per sf. The break-even rents of those new buildings exceeded $25 per sf, so the costs of those office projects would never be recovered. I have read reports that the estimated cost of the Government Campus Plaza, which is the largest element in the POS offices, was recently stated by UDECOTT’s Chairman, Jearlean John, to be of the order of $3.2 Billion.
We can reasonably estimate that the rate of rents paid by the State for office buildings has now increased since 2007, in terms of dollars paid per sf.
The completion of those State-owned office buildings is therefore a matter of the first importance, given the high carrying-costs. There is also the significant issue of the high opportunity cost of the State continuing to occupy rented offices alongside virtually-completed offices.
Against this background, we are now seeing an active policy of decentralisation of POS offices by the present administration, with several Ministries and Public Bodies being relocated to south and central Trinidad. The decentralisation discussion is one which has been going on since the 1970s and it is an important issue to be pursued, in my opinion. That said, one has to wonder how is the decentralisation to be rationalised, given the existence of this over-supply of State-owned offices in our capital. That is a serious question which needs to be discussed if we are to achieve any proper resolution.
The completion of the State-owned offices is under the management of UDECOTT, the original developers, with recent disclosures from the Finance Minister of plans to sell the buildings and lease them back as a means of financing their completion. The terms of any such proposals would have to be carefully considered to avoid the mistakes and fraudulent behaviour of the past.
The completion and occupation of the State-owned office buildings in POS will pose an existential challenge to those private investors who have built offices for rent. The rental levels for offices in POS are likely to decline significantly, which will impact on the revenues of those investors.
Today is the 30th of January 2014: five years since the State bailout of CL Financial was announced to a shocked nation and region. It is necessary to mark this moment in time with solid facts and stern meditation.
The Carnival season is upon us, so J’ouvert is near the front of my thoughts. J’ouvert is simple, yet tremendous, because of the experience of passing from night into daylight and of course those around you becoming clearer as the light overcomes the darkness. For me, the defining feature of Jouvert is the terrifying portrayals of ‘Devil mas‘ in its various forms – ugly and dirty, covered with mud, oil or paint; real noisy, beating pitch-oil tins and such; forceful, in demanding payment from you before you could pass. You have to pay the Devil to go away. Pay the Devil, so he could leave without dirtying you up.
The vast amount of detail which has emerged in the last five years, means that I can only focus on one key aspect of the CL Financial bailout scandal.
My main theme is that vast amounts of Public Money have been committed to repay the debts of CL Financial, while the chiefs who directed and controlled that conglomerate seem free to come and go as they please. Or, in the case of Duprey, who refused to testify at the Colman Commission, to go and refuse to come. Once again, Trinis in the running for some awards for innovation and so on, with Duprey being the world’s first ‘Penniless Philanthropist‘.
How much Public Money has been spent on this exercise? How much of that Public Money will the State recover? That is my focus.
When the Memorandum of Understanding was signed on 30th January 2009, it was on the basis that CL Financial assets would be sold to recover the Public Money being advanced, which was estimated to be about $5Bn.
Winston Dookeran’s first budget speech on 8th September 2010 was a critical turning-point, as it appeared to me that he was attempting to stem the flow of Public Money out of the Treasury. Dookeran made a case which was based on the huge and unprecedented liabilities facing the State at pg 9 -
“…The total funding provided as at May 2010 by the Government and the Central Bank, excluding indemnities and guarantees to First Citizens Bank amounted to approximately $7.3 billion. As of June 2010, CLICO and British American combined total liabilities were approximately $23.8 billion but total assets were $16.6 billion…” .
Immediately, in protest at Dookeran’s attempt to limit the cost to our Treasury, there were several ‘Policyholders’ and Depositors’ groups‘ formed. The word ‘Depositors’ was soon omitted when it was realised that it would not suit their purposes.
With Dookeran isolated and the government under mounting pressure from these new protest groups, there were new laws drafted to stifle the protestors’ legal options. At this point, we had the historic address to Parliament by the PM on 1st October 2010 – historic because even with the required majority of votes to pass the intended new laws, the PM chose to explain and persuade the public. The bailout was extended to Hindu Credit Union and the Commission of Enquiry was announced to find the causes of the collapse of the CL Financial group and HCU.
Most notable was the PM’s outrage at the mystery of the bailout – at pgs 25-26
“…The $5 Billion has been spent—we are advised—to repay matured EFPA policies in an ad hoc and unstructured manner where payment arrangements were entered into based on levels of funds invested. What criteria did you use to repay investors? Whom did you choose to pay? How were they chosen? These questions need to be answered. Because if it is today after the $7.3 Billion, all these EFPA people, the policy group and so on, they are out there, where is their money? Where is their money? Did you have a priority listing of who should be paid? Why did you go—and you are now crying crocodile tears about trade unions, credit unions, the poor man and the small man—why did you not pay them first? Why did you not pay them first? Where did that $7 Billion go? We need those answers, Mr. Speaker. We deserve those answers. The taxpayers need to know. Because when a parent has to buy school books and bags to send his/her children to school but they have to pay tax out of the little money, they need to know where that money has gone…Where, how and why; we need to know…”
In September 2011 Parliament approved a new law authorising the State to borrow an additional $10.7 Billion to fund the bailout.
Winston Dookeran’s affidavit of 3rd April 2012 specifies that $24 Billion of Public Money is committed to the bailout, at paras 21 & 22…
Para 21 (a) $5.0Bn already provided to CLICO; (b) $7.0Bn paid to holders of the EFPA and Para 22 $12.0Bn estimated as further funding to be advanced.
Recent estimates have now risen to ‘$25b and counting‘ according to the Sunday Express report of 4th May 2013. Given the shock with which the estimated bailout cost of $5 Billion was received a mere five years ago, it is sobering that $25 Billion can now be bandied-about by Public Officials in this fashion.
Will our money ever be repaid? If so, how and when?
Now and again, official statements are made to assure the public that the matter is being resolved and the CL Financial Shareholders Agreement is extended for this reason or that. There is an appearance of diligence and purpose, but there are also other statements which we must consider.
Finance Minister Howai is recorded in Hansard of 30th January 2013, speaking about the CL Financial bailout – at pgs 16-17
“…Mr. President, we shall never recover all the funds that have been put into the group, but our focus is to try and maximize what we can and to reduce the borrowing that we need to do…”.
Even more concerning is that there has been secretive disposal of assets of the CL Financial group – to cite one example, Valpark Shopping Plaza was recently sold to Courts, without any public advertisement.
All the while, the State is mounting strong resistance to my lawsuit to force publication of the details of this bailout. The secrecy is inimical to the wider public interest, which is being sacrificed for the comfort and benefit of the ruthless few.
Every single established mechanism for oversight, transparency and accountability in public affairs has been sidelined in this sordid CL Financial scandal. Integrity in Public Life Act – nothing. Audited Accounts – not available. Freedom of Information Act – legally disputed. Briefing to Parliament – exempted.
Ask yourself – “Would you trust a public official with $1M to spend if there were no requirement for them to account properly?” If not, why should we trust any public official or institution with the authority to spend 24,000 million dollars with no oversight or accounting.
Hence my title – we really Paying the Devil.
The complete overhaul of our country’s public procurement system is urgently required, given the daily reports of large-scale theft and waste of public money.
The last administration lost public confidence due largely to the high levels of corruption, as revealed in the Uff Enquiry into the Public Sector Construction Industry.
The JCC met in April 2010 with the leadership of the People’s Partnership at its request and with the media in attendance.
At that meeting, the People’s Partnership made three significant promises:
- Implementation of the recommendations of the Uff Report – This was the first item at the first post-Cabinet press briefing on July 1, 2010, with the Justice Ministry being tasked to implement those critical recommendations. That promise has been broken.
- Tabling of legislative proposals for public procurement within one month of an electoral victory. Then Finance Minister Winston Dookeran did lay two draft bills — a 1997 draft to repeal the Central Tenders Board Act and a 2006 draft Public Procurement Bill — so that promise was fulfilled.
- Creation of new laws for Public Procurement & the Disposal of Public Property within one year of an electoral victory. Despite the statements at pg 18 of the People’s Partnership Manifesto, the appointment of a Joint Select Committee (JSC) and many public pronouncements, that has not happened. Read the rest of this entry »
On December 11, I wrote ‘Invader’s Bay Review‘ in this space, calling for an immediate public review of that improper large-scale development being proposed on reclaimed State lands in west POS. I also took the opportunity to make the point that there had been no consultation on that proposed development and that UDECOTT’s repeated public statements that its operations are now compliant with the Uff Report recommendations are false.
UDECOTT’s response was to place full-page advertisements in the three daily newspapers, on Saturday 14 and Sunday 15 December, in an expensive attempt to refute my criticisms. My letter to the editor, carried in this newspaper on the Sunday, put UDECOTT’s misleading advertisement in context and reaffirmed the continuing falsehood of their claimed compliance with the Uff Report. The episode is recounted here.
There are several lessons one can draw from this exchange – the sheer hostility to the truth which is now becoming a disturbing ‘new normal‘ in our society; the invisible hand of the bureaucracy in devising large-scale developments, stated to be for the benefit of citizens, without citizen inputs; the inescapable reality that these obstructive forces operate across and within all our political administrations.
Sunity Maharaj wrote a fine overview of these burning issues in ‘Amandla! Now listen to the people‘ in the 15 December Sunday Express. In that article, Sunity detailed the development of a perverse consultation industry “Its specialty is in designing events that look like consultation, sound like consultation but do not actually involve consultation…”.
There is a serious challenge facing us here, since there is no will to implement the beneficial recommendations contained in the Uff Report, despite the repeated false promises. The failure to implement those proposals is deeply detrimental to our society as it entrenches the colonial idea that development is not something which really concerns the people of this country. Worse, the deceptive policy of politicians claiming to intend to do the right thing, while doing the underhanded thing, is imposing a neo-colonial reality. The State has a duty to be exemplary in its conduct and for the State to fail to do so and to act deceptively in that failure, is to increase cynicism and instability in our society.
In addition to failing to implement the Uff Report recommendations, there was also another significant setback. The Enquiry website – www.constructionenquiry.gov.tt – which held all of the proceedings and evidence, became inaccessible at the end of 2010, about 6 months after the Peoples Partnership electoral victory.
The JCC has been pressing for the implementation of the Uff Report recommendations and the restoration of the Enquiry website. Those efforts have ranged from the Attorney General, who directed us to the Minister of Justice, to the then Minister Volney who ignored our three letters on the matter – see http://www.jcc.org.tt/uff.htm. When we pressed-on with Volney’s successor, Christlyn Moore, the exchanges were sobering.
The two previous Ministers of Justice – Volney and Moore – both claimed that the Uff Report recommendations were to be implemented by the impending Public Procurement legislation. Quite apart from the inordinate delay in bringing these critical new laws into being, that claim is entirely false, since only one of the recommendations, the 56th, relates to new Public Procurement laws. 90 of the 91 recommendations could have been implemented by now with no need to get any new laws passed or any use of valuable Parliamentary time. The JCC’s repeated offers to assist and advise in any working party for that purpose have also been ignored. The implementation of those 90 recommendations would have greatly reduced the criminal theft and waste of Public Money with which we are now beset. The failure to implement those recommendations is probably the largest single ingredient in the continuing decline in our ‘morality in public affairs‘.
Even worse is the steadfast refusal to reinstate the Uff Enquiry website. There is no way to tell if the website was deliberately removed or if there was a mundane technical reason for its disappearance. What we do know for sure is that there is solid official resistance to even offer a sensible explanation for the continuing refusal to reinstate.
It is critical for us to learn from our errors if we are to avoid a repetition and it is therefore important that we excavate those lessons so that they can be considered. To fail to do that is to thwart the entire move to a ‘developed nation status’. Our nation’s primary information needs to be properly documented and published so that anyone who wants to learn the lessons can do so.
The evidence in the Uff Enquiry offers a deep, unprecedented insight into the state of affairs in our country and the conduct of our substantial business dealings. That information is first-class primary source material for research and teaching in critical fields such as Government, Finance, Engineering, Surveying, Planning, Economics, Sciences, Law and Management. We cannot become a ‘learning society‘ if first-class primary information is suppressed. It does not matter how many universities we build or how many pupils we certificate, the ignorance of our own primary information will frustrate the drive to a higher level of education.
On 26 March 2013, then Minister Moore replied to the JCC -
“…It is inappropriate to make available the evidence revealed in the Uff Enquiry at this time as they may ground future criminal enquiry…”
On 23 May, we invited the Minister to reconsider her position, pointing out that -
“…To quote from the final remarks of the Enquiry Chairman, Professor John Uff QC Ph.D. – “…Finally we would like to thank the Press for their continued and expert coverage of the Enquiry; and the public for their unflagging interest in the proceedings. There are few countries in the world where an Enquiry into the construction industry could fill a prime time television slot for over a year. For me it has been a unique experience and I am personally honoured to have had the opportunity, as I hope, to serve the interests of the construction industry and the people of Trinidad & Tobago…” There can therefore be no doubt that the entire proceedings of the Uff Enquiry were published widely…”
This is the Minister of Justice, claiming that our request to reinstate this invaluable website, would amount to ‘making the evidence available‘. Evidence which had been widely televised, all day long and rebroadcast at night. I tell you.
The Minister promised to revert to us by the end of June 2013, but that reply never came.
So now UDECOTT’s stance is clearer, given the overarching policy of the State on these critical matters of public concern. I maintain that UDECOTT did not conform to the 17th Uff recommendation in its involvement in the Couva Children’s Hospital. That recommendation is -
“User groups and other interest groups should be properly consulted on decisions regarding public building projects, to ensure that relevant views can be expressed at the appropriate time and taken into account before decisions are made.” (emphasis mine)
But the current concern goes beyond the ongoing Couva Children’s Hospital, since UDECOTT is playing a leading role in the Invader’s Bay development. In December 2013, UDECOTT published full-page Requests for Proposals in the newspapers for Designers for Infrastructure Development of Invader’s Bay. UDECOTT is seeking to hire a designer for the infrastructure element of this large-scale development which means that the selected designers would have to conform to the client’s instructions in preparing their plans. The client’s instructions would have to be based on some kind of concept, proposal or outline. That raises the obvious questions of when were these concepts, proposals or outlines conceived and by whom? Most importantly, who approved these? We know for sure that there has been no consultation with the public, user groups or other interest groups.
So, we are witness to yet another episode of large-scale development being undertaken, in this case by UDECOTT, with none of the promised consultation.
Hence my title – The Uff Bluff.
In response to a full page UDECOTT advert (embedded below) in response to my article “Invader’s Bay Review” (excerpted above), also published in the Business Express.
From: Afra Raymond <firstname.lastname@example.org>
Date: Sat, Dec 14, 2013 at 9:30 AM
Subject: Letter to the Editor – UDECOTT’s failure to consult
To: Editors of daily newspapers. Email addresses withheld
The 17th recommendation of the Uff Report is -
“User groups and other interest groups should be properly consulted on decisions regarding public building projects, to ensure that relevant views can be expressed at the appropriate time and taken into account before decisions are made.”
The decisive part is ‘before decisions are made.‘
The Peoples Partnership has not implemented the Uff Report’s 90 recommendations as promised and there has never been an explanation of that failure or refusal to carry out those critical measures. The sod was turned for the Couva Children’s Hospital on 2nd March 2012, at which time the project type, location, size, budget and procurement arrangements were all announced for the first time. Plainly, no consultation took place before those decisions were made, which was the point made in my 11th December article ‘Invader’s Bay Review’.
UDECOTT has now issued full-page newspaper advertisements to attempt to label my irrefutable observation as ‘reckless and damaging’ and so on. Yet another waste of public money, given that UDECOTT provided no examples of consultation before the key decisions were made on this huge project.
That pattern of secret development is inimical to our country’s progress. We must be properly consulted before decisions are made. We strongly criticised the last administration for that pattern of development and we will continue to make the same point. We must become a learning society.
There now needs to be a complete and open review of the Invader’s Bay matter. That is imperative if the public interest is to be safeguarded.
The catalogue of irregular dealings and improper procurement practice at Invader’s Bay has now grown so that we are facing an important moment of decision. At this point there has been no announcement as to an award of contract or grant of any lease, so the threshold of binding legal agreement has not been crossed. In investment language, we are at the ‘inflection point’, which is where the prudent investor has to make a decision to continue or abandon a course of action.
This is the exact moment we should be calling for an open review of this major public project, before any binding commitments are made.
The Commission of Enquiry is an often-used device to probe into matters of serious public concern. In relation to construction and property development, we have had recent CoEs into the Piarco Airport Project, UDECOTT, Land-Date and the Biche School Project, to name a few.
The public has a sceptical attitude to these Commissions, since they never seem bring the desired results in terms of arrests of prominent public officials or disgorgement of stolen monies. Many people dismiss CoEs as ‘talk shops’ set up to enrich lawyers, but I do not dismiss them as effective ways to serve the public interest. Despite the imperfections of the Enquiry process, including the fact that key witnesses can refuse to appear without incurring any serious penalties, there are real benefits. The main one, in my view is that a CoE allows us in the public to learn about major matters of public concern which would likely have remained hidden.
That is the reason we need to retain this process so that the wrongdoing of the past can be exposed, so that we can have the possibility of avoiding those in the future. The weak point of the process is that it always takes place after the crimes have been committed, so during the Bernard Enquiry we were learning about the already-constructed Piarco Airport Terminal. Too late to prevent the massive theft and waste of Public Money.
That is why we need to consider a shift in our approach to the question of enquiries into questionable public projects, since the process is a reactive one, completely unable to stem wrongdoing.
At the ‘inflection point’ now occupied by the Invader’s Bay project, we have an opportunity to examine this large-scale development before any significant expenditure of Public Money so that we can detect and deter wrongdoing. I am not yet settled in my mind as to exactly what type of review is best here, but whatever happens, it must be independent and committed to publication of its findings.
Some of the main issues which such an Enquiry or Review should examine are -
- Consultation – The complete lack of consultation in this large-scale development proposal for our capital city would be addressed by the process. The land is vested in UDECOTT via a lease and that organisation has repeatedly claimed to have implemented the recommendations of the Uff Report. The 17th of those recommendations states “User groups and other interest groups should be properly consulted on decisions regarding public building projects, to ensure that relevant views can be expressed at the appropriate time and taken into account before decisions are made”. Given the swiftness with which the Couva Children’s Hospital – which is being executed via UDECOTT – emerged in March 2012, we know for sure that those recommendations are not being observed by UDECOTT. Even looking beyond UDECOTT and its conflicting ‘versions’, we can see the contradictory actions of the Ministry of Planning & Sustainable Development supporting a public consultation process at King’s Wharf in San Fernando, yet refusing to hold public consultations on Invader’s Bay in Port-of-Spain.
- Environmental Concerns – The Invader’s Bay lands are extensive waterfront holdings in State property. They proper development of those lands must take full account of drainage issues and the impact on the environment, including the marine-life issues arising in any waterfront project. I have before me the EMA’s letter of 14 November, which confirms that there have been no requests or Certificate of Environmental Clearance (CEC) applications for the Invader’s Bay lands. In addition, the EMA records provided to me show that the most recent application for a CEC at Invader’s Bay was in January 2007. It is not possible to obtain planning permission without EMA approval, so there are other implications of the lack of these approvals.;
- There is no link between the RFP and the other three strategic plans for the POS area. That violates the fundamental notion of strategic planning in that existing plans are ignored for no given reason. Piecemeal planning and development is detrimental to the Public Interest. So, who was the author of that RFP and who in the Ministry of Planning approved such a document?;
- The Request for Proposals (RFP) published by the Ministry of Planning in August 2011 seeking Design-Build proposals for the development of these lands specified an entirely inadequate 6 weeks for submissions. Whose recommendation was it to truncate the development process in this fashion?;
- The evaluation rules were only published after the closing-date for the tenders, so how did the proposers know what criteria to meet? That late publication is in breach of proper tender procedure, so the entire process is voidable and therefore illegal.
- Legal Instructions and advice – Also critical to any review process would be the details of the legal advice sought and obtained at various stages of this process. The Ministry is adopting a bizarre, secretive stance in which the advice is claimed to vindicate their actions ‘thus far’, yet that legal advice is being suppressed. The JCC has taken legal action to challenge that unacceptable secrecy in this most public matter.;
- Infrastructure – The 2014 Budget discloses a $50M allocation for infrastructure at Invader’s Bay, which of course is only a small part of this substantial cost. In the absence of environmental or planning approvals, it is difficult to establish the cost for proposals of this nature, since a design cannot be completed.
- Allegations of squatting – Finally, we turn to one of the most vexed phrases in our lexicon where land is concerned. The issue of squatting, which is the unauthorised occupation of land not in your ownership. From the sequence of images shown below, we can trace some elementary conclusions:
- the first (left) is a map/plan, which uses a dotted line to illustrate the boundary between the Invader’s Bay property and adjoining Port Authority lands to the north…the physical boundary is occupied by a watercourse/ravine and those ‘Port’ lands are occupied by MovieTowne/PriceSmart, a green play park and the Marriott/BHP-Billiton building
- the second (middle image) is an aerial photo which shows the Invader’s Bay land bare of vegetation
- the third (image at the base) is an aerial photo which shows the Invader’s Bay land re-vegetated with mangrove and what appears to be a bare excision, immediately south of MovieTowne’s western carpark…that is a gravel-paved area, which is south of the watercourse I mentioned earlier…it is accessed via a basic bridge from the said MovieTowne carpark.
(Click on images to expand)
I am asking whether MovieTowne has a lease, licence or tenancy agreement to occupy those lands. Does MovieTowne pay any rent, licence fee or charge of any sort for the use and occupation of those lands? What action is UDECOTT taking on this? What action is the Commissioner of State Lands taking on this? It would be unacceptable for an entity in breach of State policy to benefit from the decisions of the State. I hope that is not what we are seeing here.
We need a full, independent and open review of this Invader’s Bay matter. Do you agree?