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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Charting our losses: ‘A picture is worth a thousand words’

The last four articles in this series have focused on what I call ‘two sides of the same coin’ – the coin being the large-scale and improper use of Public Money.

I examined the THA/BOLT office project called MILSHIRV being undertaken with the Rahael group and the Calcutta Settlement land scheme in which the HDC acquired developed lands at several times the proper price the State could have paid.

Throughout this type of critique one has to strive for effective balance and fundamental integrity.  The extent of the waste and/or theft is never easy to pinpoint when one is working from outside and relying solely on published documents, but my best efforts to establish those facts is what is presented.  Of course it is impossible to say for sure that any amount of money was stolen in a particular project, hence the phrase ‘wasted or stolen’.

Objectively, it does not matter whether the money is wasted or stolen, if it is ultimately unavailable for the benefit of the Public.  Once spent, that Public Money is gone forever, which is why Value for Money is of such importance in any proper Public Procurement system.

Subjectively, however, the errors of inexperience or poor process must be differentiated from an active conspiracy to defraud.  Although the objective measure of loss might be identical in terms of the dollar-amount, there are different long-term consequences.  Innocent errors and miscalculations can be rectified over time by ongoing review processes.  Deliberate conspiracies to defraud require concerted and well-grounded attacks in order to be eliminated.  What is worse about the deliberate conspiracies is that they affect the very atmosphere in which public business is conducted.

We end up with a situation where it pays to pay a bribe and the decision not to pay is to suffer delay.

That is why we are where we are today.  Simple so.

One of the important lessons emerging from the Wall St disaster is that the variety of financial regulators with their varying rules and experiences allowed financial players to engage in ‘Regulatory Arbitrage’. That was  the scenario in which financial players shopped for pliable or suitable regulators within which to channel their products, resulting in the unprecedented financial disaster we are all living through.

Here in T&T we have seen a similar pattern in our financial markets, but the point being made here is that it has also emerged in the Public Procurement arena, with TIDCO paving roads; the rising profile of State-owned entities which were deliberately excluded from the formal procurement controls; those same companies breaking their own rules and so on. That is the emergence of a toxic kind of ‘Procurement Arbitrage’, which is the reason why we must have over-arching regulations to control all transactions in Public Money.

So, there are two types of losses being charted here –

  1. Firstly, inexperienced officials or poor processes can approve wasteful uses of Public Money through sheer ignorance.
  2. Secondly, there is deliberate conspiracy to defraud the Treasury of our precious Public Money.

Only a Court can establish whether the lost Public Money was wasted or stolen, so I have ventured no opinion as to which is which. Readers can reach their own conclusions.

These charts illustrate the extent of the waste or theft of Public Money in the THA/BOLT and Calcutta Settlement projects.

A good example is worth a thousand words

THA/BOLT – MILSHIRV Project

Rental Rates THA- BOLT chart
Occupancy Excess THA-BOLT
Rental increase chart with table THA-BOLT

 

Click on the charts above to see full size version


Calcutta Settlement Land sale – Eden Gardens

stamp duty Eden gardens Chart 1 20130405-1
Acquisition options HDC chart 2 20130405

 

Click on the charts above to see full size version

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From THA/BOLT to Calcutta – tangled webs: Part 1

tha-bolt1

Artist Impression of THA Admin building courtesy Amera Caribbean Development Ltd.

With the THA elections having become a kind of national contest, the issues of governance and integrity loom large.  The two relevant controversial issues, both of which emerged late last year, were the THA/BOLT office project and the HDC’s proposed purchase of land at Calcutta No. 2 Settlement.

Both those projects have given me serious cause for concern in terms of proper public procurement practice, so much so that I see them as being two sides of the same coin.  Both these cases are models of inadvisable dealings in Public Money of a type which no prudent or reputable company would undertake.  I am choosing my words carefully since recent reports are that litigation has already started on both projects.

I do not at all agree with the widespread myth that corruption is a minor thing which adds maybe 10% or 15% to the cost of projects.  That misinformation is nothing but public mischief which has blinded us to the scale of the theft of Public Money, so it must be completely demolished.  In the case of the 1970s to 1980s ‘Government to Government Arrangements’ the then PM, George Chambers, told the nation that two out of every three ‘Petro-dollars’ was wasted or stolen.  In the ongoing imbroglio over the $1.6Bn Piarco Airport project, we learned from the DPP’s S.34 statement that $1.0Bn of Public Money had been located in offshore bank accounts.

The DPP’s S.34 Statement on Wednesday September 12, 2012

…These cases involve allegations of a conspiracy to defraud the Republic of Trinidad and Tobago of over TT$1 billion by the fraudulent use of bonds and the rigging of the contracts for the various Construction packages for the Piarco Airport Project…

The DPP’s full statement is here.

Also, from “Cops target MP in $1Bn airport scam” in Trinidad Guardian of Friday 5 March, 2004 –

…TV6 News reported last night that Lindquist and Interpol officers had discovered more than $1billion stashed away in off-shore accounts, arising out of corruption in the airport project…

This article deals with the THA/BOLT project, which is a Public Private Partnership. The PPP is a procurement model now being pursued by this government, according to the strategy outlined in the 2013 budget.

Build Own Lease Transfer (BOLT) is a subset of the PPP procurement method.  Under a BOLT arrangement a client has a facility built by the private sector at their expense – the client makes agreed rental payments so that the developer can cover the cost of building the project and a reasonable profit.  At the end of the agreed lease period, the facility is transferred to the client.

There has been effective use of PPP to produce Public Goods like the Brian Lara Promenade.  BOLT has also been used to procure prominent POS buildings such as NALIS, UTC HQ and Ministry of Works HQ (via Republic Bank) and the AG’s office at Cabildo Chambers (via NIPDEC).

The PPP can be a feasible method of procuring public goods, offices or other facilities in situations where the State is unable to commit to the capital expenditure and there is a pressing need.  The strong selling-point of the PPP is that the private sector takes the risks and is allowed to make a reasonable profit while the public sector can add to its stock of capital goods without the risks of project execution.

These PPP arrangements are now being intensely criticized in developed jurisdictions as having served the public interest very poorly.  The focal point of much of the criticism has been the fact that, despite the rubric, the private sector has seldom taken any genuine risk.

Turning to the actual THA/BOLT deal, I have to say that the decision to publish a large number of the important documents in relation to this arrangement is to the credit of the THA. The 225-page ‘bundle’ is here.

Orville London, THA Chief Secretary

Orville London, THA Chief Secretary

In response to the request from the Minister of Finance, THA leader Orville London said:

…that under the laws and the T&T Constitution the Finance Minister has no authority to instruct him to provide information to him within any timeframe.

However, London said, in the interest of public disclosure and considering that this particular transaction has generated so much discussion he believed that he had a responsibility to make the information available to the public and the Minister…

This is a bold and in my view admirable initiative by a leading Public Official and I have to say that it has tempered my scepticism over this project.  I only wish that Cabinet Ministers took a similar view of their responsibilities.

The THA ‘bundle’ details the ongoing financial shortfall in allocations from Central govt, the main point of which is the fact that the THA is definitely resource-starved in relation to the arrangements with Central govt.  When one considers the financial state of the THA alongside the national economic outlook – we are in our fourth year of deficit financing in relation to the national budget – it is a sobering background to this discourse.

I have spoken with all the main parties to this arrangement and this is a summary of the THA/BOLT deal.  The THA purchased a 3-acre parcel of land at the corner of the Claude Noel Highway and the Shirvan Road from private landowners for $12M and immediately leased it back to them for a 199-year lease at a nominal rent.  The private developers have agreed to erect an 83,000sf office building at a cost of $143M and the THA has agreed to lease it for 20 years at a fixed rent of $15.61psf – an annual rent of about $15.55M, totalling some $311M over the term of the 20-year lease – with the property reverting to the THA at the end of the lease.  Those offices are to be built for the THA’s Division of Agriculture, Marine Affairs, Marketing and the Environment.

There have been recent reports of the AG’s lawsuit to test the legality of the THA/BOLT arrangement, so this is not an attempt to pre-empt the Court in ruling on those submissions.

My concerns arise at the level of the Needs Assessment, which must be the first stage of any proper procurement process, public or private.  The purpose of the Needs Assessment is to determine the rationale for and scope of the project so that preliminary consideration can be given to the key elements before any high costs are incurred.  In this case, we are told that the developer approached the THA, which is unusual to the extent that best practice requires that extra care be taken with unsolicited proposals.

The main points concerning me are that once again we are seeing large-scale expenditure of Public Money without a proper business case having been made.  The opinion of Hamel-Smith & Co as to the legality of the transaction is of no comfort to me, this is a matter of making a sound investment decision.  A legal opinion is necessary but not sufficient.

Senate president, Timothy Hamel-Smith

Senate president, Timothy Hamel-Smith

That 6-page legal opinion,dated 3 January 2011,by Timothy Hamel-Smith (who was appointed Senate President on 18 June 2010) is at page 168 of the ‘bundle’.

  • Quantity of space – at pages 68 and 69 of the THA ‘bundle’ there is a ‘Note for Executive Council’ which summarises that the offices occupied by that Division – a total of 22,500sf is detailed, while a further 6,000sf can be reasonably surmised for the last Department.  The average rent being paid by the THA for this Division is $8.17psf, also please note that a total of 28,500sf is now occupied by the Division for which the THA is procuring an 83,000sf office building.
  • Quality of space – The cost of $143M for that space equates to $1,723 per square foot and I am reliably informed that the contract calls for a fully fitted and finished office building.  That figure is at the absolute upper end of the range of costs for office buildings.
  • Rent levels – According to the THA’s adviser on this project, Peter Forde, at the THA Press Conference on 10 September 2012 – see

    …the monthly payment of $15.61 per square foot per month was not an unreasonable rate because there were properties in Scarborough where tenants were paying as much as $10.00 per square foot. He stressed that even if there was inflation the rate will remain the same…

    The first issue I have with that is the attempt to use the $10psf comparable to justify the $15.61psf rent.  That is an unreasonable ‘stretch’ by my standards as a professional valuer.  Did the THA seek the opinion of the Commissioner of Valuations?  Secondly, the fact that the rent cannot be increased in the event of inflation is a distraction, since the likely effect of this new, huge THA office building is that the rental market in Tobago will become saturated with the offices they vacate.  The result of that is the decline in office rental values, so in the absence of any provisions of provisions for rent adjustments, the burning question has to be ‘What real risk is this developer taking?’.  Risk Allocation remains a real issue.

So, in summary, we have a semi-autonomous Public Authority contracting, at a time of tremendous financial strain, to build first-class facilities three times larger than the second-class ones it currently occupies.  Finally, please note that according to the ‘Note’ I cited earlier, the current monthly rent bill of the THA Division is $231,788, while the new monthly rent under this arrangement will be $1.295M – over five times more.

At the start of this article, I gave examples of the ratio at which Public Money was wasted or stolen, so just compare this project to those figures.

My next article will delve into the Calcutta Settlement land deal and its own peculiarities.

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CL Financial bailout – Colman’s endgame

We are entering the endgame of the Colman Commission, so we need to maintain full vigilance.  We must bear witness in a sober manner.

The PNM element

Former PNM Ministers Danny Montano, Conrad Enill and Mariano Browne were recently named by Commission Chairman Sir Anthony Colman as having declined to testify.

“It is noticeable that there has been a remarkable lack of cooperation from others, who were responsible for political decision-taking — to mention a few names: Mr. Enill, Mr. Browne and Mr. Montano in particular — have not offered to come and give evidence,” Sir Anthony said at Winsure Building, Richmond Street, Port-of-Spain.

“It is surprising perhaps that those who were the political representatives of the people of Trinidad and Tobago have not been able to provide assistance to the Commission in circumstances where it might have been expected of them,” he added.

Colman chides 3 ex-ministers.” Trinidad and Tobago Newsday. October 23 2012.


Colman then named three former Cabinet ministers who had been previously named in testimony at the enquiry in relation to the HCU.

“To mention but a few names Mr (Conrad) Enill, Mr (Mariano) Browne and Mr (Danny) Montano in particular have not co-operated to come and give evidence,” Colman said.

Colman praises Nunez-Tesheira for co-operating.” Trinidad Express Newspapers. October 22, 2012

That refusal to appear before a Commission of Enquiry amounts to a kind of contempt of court, since it is wilful disrespect for a lawful enquiry.  These are PNM Seniors, whose testimonies would have been invaluable in unraveling this series of financial collapses.

Here is why those missing testimonies are so important –

  1. Mariano Browne is a Chartered Accountant who left a successful career as a Banker – including a significant part of that career spent at CLF, Browne was the first head of Clico Investment Bank and CLF’s Barbados Banking arm – to become Minister of Trade and Minister in the Ministry of Finance after the 2007 general elections.  In addition, he is PNM Treasurer, so he could have given a rare insight into the linkages between these collapses and the large-scale donations made by both the CL Financial Group and the Hindu Credit Union (HCU).
  2. Conrad Enill comes from a Credit Union background, was also Minister in the Ministry of Finance up to the 2007 general elections and served as PNM Chairman up to their 2010 election loss.  Enill called for an investigation into the finances of HCU as far back as mid-2002, but swiftly withdrew from that course of action after reportedly being pressured by then PM Manning.
  3. Danny Montano is also a Chartered Accountant, who was Minister of Labour at the time of the HCU collapse (that Ministry has supervisory responsibility for Credit Unions).

“…THE Hindu Credit Union (HCU) financed Karen Nunez-Tesheira’s successful campaign to become the Member of Parliament for D’Abadie/O’Meara in the 2007 general election.

However, Nunez-Tesheira was not the only People’s National Movement (PNM) candidate who secured campaign financing from the HCU during that election.

This was revealed yesterday as the commission of enquiry into the collapse of CL Financial and the HCU resumed at the Winsure Building on Richmond Street in Port of Spain.…”

Karen: HCU financed my election campaign.” Trinidad Express Newspapers. October 22, 2012


“….THE Hindu Credit Union (HCU) financed the campaigns of the country’s two major political parties—the People’s National Movement (PNM) and the United National Congress (UNC)—in the 2007 general election, former HCU president Harry Harnarine said yesterday….”

Harnarine: HCU financed UNC and PNM.” Trinidad Express Newspapers. October 23, 2012.

It is clear that the testimony of these three former PNM Cabinet Ministers would have been crucial to the Colman Commission unravelling this financial fiasco.  I am convinced that the matter of what Cabinet knew at the time it took the bailout decision is crucial.  For one thing, was Cabinet told that the beleaguered CL Financial group had paid a dividend on 16 January 2009, three days after they had written to the Central Bank for the bailout?  If the Cabinet knew of the illegal dividend payout, why were no provisions made in the MoU of 30 January 2009 for the recovery of those monies?  If the Cabinet were not told, then we are contemplating what might be a prior case of a senior Minister misleading colleagues to get the required result.  A kind of pre-S.34 situation.

Both Browne & Montano are Chartered Accountants, so this reported refusal to give evidence seems to be a case of ‘conduct unbecoming a professional’.

The PNM is now making serious efforts to market itself as a party which stands for good values in terms of Accountability, Transparency and Good Governance.  Given the PNM’s track record that is a great challenge.  These reported refusals are doing great damage to those efforts.

Ironically enough, at this moment Dr. Bhoe Tewarie and Karen Nunez-Teshiera, are both looking better than these three former Ministers, given that they have appeared before the Commission.  Just imagine that.

Sir Anthony Colman was reported to have issued subpoenas for certain missing witnesses in the HCU matter and held them in contempt of court when they failed to appear.  I am waiting to hear whether the same treatment will apply to these PNM Seniors.

“…THREE witnesses have been held in contempt of court for not responding to subpoenas issued by the Commission of Enquiry into the collapse of CL Financial and the Hindu Credit Union.

A commission of enquiry has the same status as that of a High Court.

Those deemed to be in contempt of court yesterday by commissioner Sir Anthony Colman are former chief executive officer of HCU Communications, Gawtam Ramnanan, former HCU financial consultant Jameel Ali and Dave Jagpat…“

Colman to deal with 3 witnesses in contempt.” Trinidad Express Newspapers. June 15, 2012

It seems like this is yet another episode of inconsistent behaviour which serves to reinforce my belief in this potent ‘Code of Silence’.  Let me explain with these facts set out above.  One group of witnesses have offered weak excuses of the familiar kind – questionable medical certificates and so on – they were served with orders compelling their attendance (those are called subpoenas) and when they failed to respond, Colman made a ruling that they were in contempt of court.  That group was HCU witnesses.

Another group of witnesses took a different approach….they actually have decided not to testify and communicated that to the Colman Commission as described above.  Why has Colman not issued subpoenas or made any adverse rulings against these reluctant witnesses?

They are former member of the PNM cabinet, so I have to ask myself if there is a tacit agreement as to areas which will not be ventilated in this Enquiry.

Those areas which are seemingly off-limits now seem to include serious questions as to whether the Cabinet was misled.  This is a sobering example of the channels of power.  We have to bear witness.

The DPP’s role

The intervention of the DPP in this situation is now cause for concern since he is reported to have written to the Colman Commissionto say -

Roger Gaspard, SC, DPP

“…I am particularly concerned that an otherwise credible prosecution might be stopped by the court on the grounds that a defendant’s right to a fair trial had been fatally compromised by the publicity attendant upon your enquiry. As such, I shall be issuing a press release warning the media against the publication of any material which may jeopardise the police investigation and any potential criminal proceedings…

We also read that “…Gaspard also issued a stern warning to media houses last night to cease publication of “anything which might jeopardise, hinder or otherwise prejudice the investigation or any possible proceedings which might result from it…“.

The Colman Commission has maintained the modern standard of Public Enquiries in that the public can choose from attendance in person, live TV, streaming webcasts, online transcripts and online witness statements.  It seemed to me that the position being taken by the DPP could jeopardise the public interest in having this information broadcast in the widest possible terms.

On 10 November, my mind churned as I read this – “…Meantime, the Commission of Enquiry is set to restart on December 3 with former Central Bank Governor Ewart Williams and Inspector of Financial Institutions Carl Hiralal expected to take the witness stand…

At this stage we are expecting to hear the testimony of the Chiefs in this series of disasters – Lawrence Duprey, Ewart Williams, Carl Hiralal, Robert Mayers, Ram Ramesh, Faris Al-Rawi, Amjad Ali, Anthony Rahael, Andre Monteil.  I am very concerned that we are now seeing what appears to be a detrimental development in terms of complete transparency.

I was encouraged to read the DPP’s statement that

I remain mindful of competing public interest factors including the fair trial rights of potential defendants, the freedom of the press and the requirement of open justice.

This is definitely an aspect which needs our most intense scrutiny.

The former CLICO CEO

Gene Dziadyk

Finally, we come to the matter of former CLICO CEO, Gene Dziadyk, with whom I have been in correspondence, writing and offering to tell the inside scoopon what went wrong inside CLICO.

I have read his material and he takes a completely opposite view to me as to what has happened here.

My own view is that the CL Financial group was able to use its track-record of huge political donations and other links to obtain full State support on favourable turns when the inevitable crisis emerged.  The CLF group was able to use its links to take advantage of the State.  Dziadyk’s view is that the State used the crisis to take advantage of the CLF group in general and the CLICO policyholders in particular.

I cannot see any way that we could both be right.  The critical point is that only the publication of the audited, consolidated accounts and other details I have been pursuing will allow us to see the truth of this matter.

But the fact that Dziadyk is a trained actuary, who was at the centre of the scene for so long, makes his testimony invaluable for the insights it will allow the Colman Commission.  I was therefore very surprised to read that he is not going to be called as a witness.

Readers who are interested in having the testimony of Gene Dziadyk form part of the Colman Commission to state their support for that to happen – the Secretary to the Enquiry is Judith Gonzales and her email address is comsecclfhcu@gmail.com.

These kinds of issues are exactly the ones on which the public input of Seenath Jairam, SC is sorely missed.  Having decided to take the Ministry of Finance brief and later deciding to return it, any of Jairam’s subsequent public utterances will be coloured by those decisions.

That is the point I was making in the previous column on the sacrifices which leadership demands.

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