Posts Tagged tobago

Paying the Price

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 -

  1. the THA/BOLT office project on which the High Court recently ruled;
  2. Calcutta Settlement/Eden Gardens land purchase by HDC.

THA/BOLT

tha-bolt1This 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.

EDEN GARDENS

163940This 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.

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Pre-action letter to the minister of Finance and the Economy

This is the Pre-Action Protocol letter to the Minister of Finance challenging his failure to reply to my Freedom of Information Act request of 18 March 2013, seeking details of the beneficiaries of the CL Financial bailout, particularly the EFPA holders.

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Invader’s Bay payday?

invadersbay-smlInvader’s Bay has re-emerged from the shadows via PNM Senator Faris Al-Rawi’s budget contribution on Monday 23 September 2013 (pp. 168-175).  The twists and turns in this controversial proposed scheme are detailed at JCC’s webpage.

Invader’s Bay is a 70-acre parcel of reclaimed State land off the Audrey Jeffers Highway – just south of PriceSmart & MovieTowne – in the western part of Port-of-Spain.  Its value was estimated by the State in 2011 to be in excess of $1.2Bn, so these are prime development lands, possessing these attributes -

  • Water, Electricity and all urban services are readily available;
  • Flat/gently-sloping terrain;
  • Direct access to Audrey Jeffers Highway;
  • Waterfront location.

Before proceeding to the latest revelations, it is important to restate the main objections raised by the JCC and others with respect to this proposed development -

  • The Request for Proposals (RFP) was published by the Ministry of Planning in August 2011 seeking Design-Build proposals for the development of these lands and specifying an entirely inadequate 6 weeks for submissions;
  • There has been no public consultation at all, so the public has not been involved in this, the largest proposed development in our capital in living memory;
  • The RFP was silent as to the other three, extant strategic plans for the POS area, all paid for with Public Money.  Given that the RFP was published by the Ministry of Planning, that is a tragic irony, to say the least;
  • EIA – The RFP is silent as to the requirement for an Environmental Impact Assessment in a development of this scale;
  • The proposals were to be evaluated against the “Invader’s Bay Development Matrix and Criteria Description”, which was only published after the closing-date for submissions.  That is a clear breach of proper tender procedure, which renders the entire process voidable and therefore illegal.

Read the rest of this entry »

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Integrity Threat – Part 4

icttI am fully in support of a vigorous and conscientious Integrity Commission (IC).  I do not want to see the IC abolished or sidelined.  The IC must realign its limited resources to ensure a decisive impact on the conduct of Public Officials.  The proposals contained in its 2012 Annual Report show clearly that the Gordon Commission has started to seriously grapple with that challenge.

The derailment of the IC between 2004 and 2009 is a clear example of what can happen to an Independent Commission if we do not maintain vigilant oversight.

This matter is of the greatest interest for those of us campaigning for Public Procurement reform so as to get effective control over all transactions in Public Money.  The arrangements we are proposing include new Independent Commissions/Officeholders.  It is therefore critical that we learn the lessons from this debacle so as to safeguard the bodies we are proposing.  The stakes are very high for our nation’s Integrity Framework, which must be strengthened, with swifter resolution of allegations.

To continue in the current manner is to drag the system into further disrepute, encourage even more bold-faced thieves, more reckless public officials and we can expect complete loss of the residual respect for the post-independence civilization we have tried to grow.  That would be an ugly and violent future for our society, so this episode requires stern and conscientious examination. Read the rest of this entry »

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AUDIO: Heritage Radio Interview: Treasury Scandal – 27 August 2013

Afra Raymond chats with Joseph Berment-McDowall on Heritage Radio 101.7 FM about the Treasury Scandal article. 27 August 2013. Audio courtesy Heritage Radio 101.7 FM

  • Programme Date: Tuesday, 27 August 2013
  • Programme Length: 1:21:45

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The Treasury Scandal

I wonder if is Bobol?
What dey doing with Taxpayer’s Money at all!?
I wonder if is Bobol?
What dey doing with Taxpayer’s Money at all!?
—Opening stanza of ‘The Treasury Scandal’ by Atilla the Hun (1937)

I took this title from the late 1930’s kaiso by the great Atilla the Hun (Raymond Quevado) on the scandal of some $200,000 missing from T&T’s Treasury.  His outrage was rooted in the fact that the story came-out in bits and pieces and of course, none of the ‘Big-Boys’ was ever jailed, or even charged for that theft.  That was a massive amount of money in the 1930s – at that time a good Woodbrook house cost about $6,000 – so that could give you an idea. Atilla was lamenting the lack of accountability and transparency in how Public Money was being managed.  The ‘Treasury Scandal’ was a true episode from the bad-old-colonial-days of the 1930s, but of course we have progressed a great deal since then, having achieved Independence, Republican status and universal education.

dookeran-portrait

Winston Dookeran, MP

The problem is that despite the obvious movement forward, we are witness to yet another ‘Treasury Scandal’. I am referring to the CL Financial bailout, announced in January 2009 and still ongoing at an anticipated cost of $24Bn – according to paras 21 and 22 of the 3 April 2012 affidavit of then Finance Minister, Winston Dookeran.

It is vital to look back before we go forward.  In 2008 and 2009, the Indo-Trinbago Equality Council (ITEC) campaigned strongly on the issue of the Secret Scholarship Scandal’. The suspicion was that there was a secret scholarship fund operated by the State without any transparency and ITEC used its Parliamentary representatives and the Freedom of Information Act to force the Patrick Manning-led PNM administration to publish the details they had been trying to conceal.

The published details included the names of those who benefited from the funds as well as the amounts, dates of payments and details of the courses of study to be pursued.  Some of the more controversial issues to emerge from the publication of those scholarship details were –
devant-anand

  • From the names given, it seemed that less than 10% of the recipients were citizens of East Indian descent;
  • The PNM administration was never able to demonstrate how those scholarships had been advertised, or for that matter, any objective process used to choose from the applicants;
  • Unlike other Scholarship arrangements, there was no requirement for these scholarship winners to do any kind of national service;
  • A number of people who were reported to have received money, went public to say they had never even applied for, far less received, scholarships. The question arising was ‘Where did that money really go?’;

A total of $46M of Public Money was paid during the 5 year period under examination.  The President of ITEC at that time was Devant Maharaj and its leading attorney was Anand Ramlogan, both of whom now serve in the Cabinet.

I fully supported ITEC in that use of the Freedom of Information Act to force publication of important information on the use of Public Money, which is the property of every citizen.

In my view the failure and or refusal to account for the colossal and unprecedented expense of the CL Financial bailout is indicative of a ‘Quiet Coup‘ against our Republic.  I am deliberately borrowing Simon Johnson’s potent phrase, used to describe the coup of Financial Capital against the USA published in a fascinating and essential article from The Atlantic.  The fact that two successive administrations have remained bound to these arrangements and the low priority given to transparency and accountability in this matter all speak to the potency of the plotters.

“Emerging-market governments and their private-sector allies commonly form a tight-knit—and, most of the time, genteel—oligarchy, running the country rather like a profit-seeking company in which they are the controlling shareholders… As masters of their mini-universe, these people make some investments that clearly benefit the broader economy, but they also start making bigger and riskier bets. They reckon—correctly, in most cases—that their political connections will allow them to push onto the government any substantial problems that arise.”
—Simon Johnson. “The Quiet Coup” in The Atlantic. 2009.

The CL Financial group was able to use its considerable political clout and financial footprint to achieve a binding agreement that our Treasury would be used to pay its debts.  Absolutely unprecedented and all negotiated in less than three weeks, we are told.  That is the official version of this astonishing story.

Given the likely existence of a ‘Code of Silence’ in this tangled affair, I have been making use of the Freedom of Information Act in my campaign for transparency and accountability in the CL Financial bailout.

If we are ever to start to untangle this web of deceit and betrayal, we must get details of who got their money out, how much, on what terms and when.  On 8 May 2012, I applied to the Ministry of Finance via the FoIA – from which the Central Bank is exempt – to request this information -

SIDEBAR: “Cabinet approves Clico plan” courtesy Newsday

newsday-clip

Read the Newsday’s laconic report on this matter here.

  • Accounts – The audited accounts for the CLF group or whatever figures the Minister is relying on;
  • The briefing given to the Independent Senators in September 2011 before debate of the two supplementary bailout Bills;
  • Details of the creditors, especially EFPA holders, to see who got what money;
  • Whether the Minister required CLF’s Directors to comply with the Integrity in Public Life Act.

The Ministry replied on 14 August to say that the information requested is likely to be exempt and I am now challenging them in Court.

If it is right and proper to use the FoIA to force publication of the details of a Secret Scholarship Scheme of some $46M over 5 years, why is it acceptable to conceal the details of some $24Bn in Public Money? That is over 521 times more Public Money being spent in secret…yes, $24Bn is over 521 times more money than $46M.

For all we know, some of the people on the Ministry’s list of persons who have been paid could be the same ones protesting via the various Policyholders’ Groups.

To quote Cabinet Minister Devant Maharaj in October 2011, as part of the ongoing campaign on the Secret Scholarship Scandal:

Maharaj said yesterday that he rejected Williams’ claim thatthen prime minister Patrick Manning’s handwritten note on one of the applications for the matter to be handled quietly was ministry protocol, as was claimed by Yuille-Williams. “It seems as if this was the overriding motto for the disbursement of these funds,” Maharaj added. “This was a blatant attempt to hide the facts from the glare of public scrutiny.”

Russell Martineau, SC

Russell Martineau, SC

At this time the Ministry of Finance is publicising the end of the CL Financial bailout so that all the Public Money spent on this can be repaid and there are various official reports of how this is to be achieved.  At the very same moment, the said Finance Ministry has engaged a high-powered and expensive legal team, headed by Russell Martineau SC, to oppose my attempts to have the basic information published.

That is today’s Treasury Scandal.

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Ministry of Finance Dance

minFaffidavitThis is the 12th July affidavit filed by the Ministry of Finance in reply to my claim under the Freedom of Information Act (FoIA) filed against them in this matter.

This is a most interesting document for several reasons -

  • Attorneys – The legal team is led by Russell Martineau SC, former AG and former President of the Law Association. Martineau was lead attorney for CL Financial’s auditors, PricewaterhouseCoopers, during the recently-concluded Colman Commission and he strongly opposed my submissions as you can see in this revealing clip. His Junior in this case is Gerald Ramdeen, who was Junior Counsel to the said Colman Commission.
  • My recent supplemental application – On 18th March, I made a further application under the FoIA for the details of the creditors of CL Financial, particularly the EFPA holders, in relation to the amounts repaid and claimed. It is interesting that the Ministry of Finance chose to treat with this in their affidavit.
  • The objection – Despite several readings of this 5-page affidavit, I am not clearly able to see just what is the Ministry’s real reason for objecting to the release of the requested info.
  • State-controlled Enterprises – The recent Appeal Court ruling in #30 of 2008 on the meaning of State-controlled Enterprises is a real threat to the public interest in relation to the governance arrangements in situations like this. The final sentence of para #14 is “In any event, CL Financial Ltd. is a private company and is not a public authority under the provisions of the Freedom of Information Act.” Well I tell you.
  • The fundamental position – At the Court hearing on 23rd May, the lead attorney for Finance, Russell Martineau SC, was emphatic in stating to Justice Ronnie Boodoosingh that there was no intention of compromising or considering the release of even some of the requested information. It is going to be a fight for every item of information.
  • Public Secret – We are now being told that the bailout process for CL Financial is nearing its end with a procedure having been agreed for the recovery of the Public Money which has been spent. Serious and justified concerns are being voiced at this time since there is no way to be sure how much money has been spent or the terms of the final settlement. I will be writing more on this shortly. We are being told that the agreed terms of the settlement are solid in protecting the public interest, yet this very Ministry, Finance, is using a highly-paid legal team to oppose the publication of fundamental information.

The burning question remains…

What is the big secret?

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