VIDEO: JCC Press Conference – 02 May 2012

The JCC hosted a Press Conference recently to discuss issues in the country in the construction industry. Afra Raymond’s contribution to the press conference is here. 02 May 2012. Video courtesy JCC

• Programme Air Date: 2 May 2012
• Programme Length: 0:13:33

JCC Press Conference 2 May 2012

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VIDEO: First Up Interview – 6 March 2012

JCC President Afra Raymond speaks on Procurement revelations in the Parliamentary debate on No-Confidence in the Prime Minister on First Up with Paul Richards and Jessie-May Ventour.

• Programme Air Date: 6 March 2012
• Programme Length: 0:26:32

First Up Interview: 6 March 2012

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Property Matters – State Enterprise Accounts

In the next few weeks, this column will cover some of the issues which are likely to have a bearing on the 2012 Budget.

In my view the State and its Agencies must perform in an exemplary fashion if we are to progress.  A good example is worth a thousand words.

At page 22 of the 2010-2011 budget statement, the Minister of Finance said -

…Mr. Speaker, no coherent, co-ordinated planning or strategy for state enterprises exists.  As a result we have begun to rationalise the state enterprises, including the special purpose companies, which will incorporate a new accountability system that goes beyond the presently operating company ordinances. It is these loopholes in public accountability that resulted in the UdeCOTT scandal. This must never again happen in Trinidad and Tobago…

The Ministry of Finance has now published a new State Enterprises Performance Monitoring Manual 2011, it is over three times longer than the previous edition, so it will be something to consider in weeks to come.

Certainly, there are stricter requirements in relation to the filing of accounts – at pg 30 of the 2011 guidelines -

3.2.5 AUDITED FINANCIAL STATEMENTS

State Enterprises are required to submit the following:

1. Audited Financial Statements (2 originals and 120 copies) to the Minister of Finance within four (4) months of their financial year end. These reports are to be laid in Parliament and subsequently submitted to the Public Accounts and Enterprises Committee for consideration;
2. Copies of their Management letters issued by Statutory Auditors…

At pg 16 of the 2008 edition -

1.3.10 Publishing of Financial Statements by State Enterprises

Government has agreed that State Enterprises be required to publish in at least one (1) major daily newspaper a summary of the audited financial statements within four (4) months to the end of their financial year and a summary of the unaudited half-yearly statements within two (2) months of the mid-year date.

Such summary statements must be in accordance with the requirements of the Securities Industry Act, 1995.

The new guidelines appear to be stricter, but the requirement to publish to the press seems to have been removed.

There are swirling issues on this -

• No accounts for years – As I have pointed out before, some of the largest State Enterprises have published no accounts for years.  UDECOTT and NHA/HDC are just two examples of this flagrant breach of the shareholders’ instructions as set out above. In the case of HDC, there is a greater concern in my view, since sections 18, 19 and 20 of the HDC Act require the audited accounts to be produced and published.  Anyhow you try to spin it, those are terrible signs.  For a private company to have no accounts, for even a few months, is indicative of poor performance at the very least.  No accounts for years is unacceptable.  One can only wonder how clearly could anyone plan if basic information is being obscured in this fashion.  We expect better from the chiefs of these State Enterprises and certainly we expect better from the Peoples’ Partnership.  In his preamble to the 2010-2011 budget, Minister Dookeran said -

…We must at all times remember who we work for. We must make Government work for the people.  As our Prime Minister always says: serve the people, serve the people, serve the people…

• Serious debts outstanding – There are continuing reports, despite some efforts, that contractors, consultants and suppliers are owed substantial monies by State Enterprises for extended periods.  That has a disastrous effect on our local economy both on an immediate tangible level and in terms of the more subjective element of confidence.
• Ambitious new projects continue to be announced, even as the basic accounts are incomplete and substantial bills remain unpaid.

Apart from the evident confusion, at the very highest levels of the State and Government, the unacceptable part is that there is not even an attempt to explain what is the hold-up or what areas of the accounts remain unresolved.  The few times anyone in authority has attempted to explain the delays in those accounts, it has been a model of vagueness and ambiguity.  That uncommunicative behaviour does not augur well.  These State Enterprises are not building a wartime bunker or a new spy satellite, only new homes and offices.

But there is more, according to S. 99 (1) of the Companies Act 1995

1. every Director of a company shall in exercising his powers and discharging his duties act honestly and in good faith with a view to the best interests of the company; and
2. exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

Those provisions make mismanagement of a company an offence.  It is literally impossible to manage or direct the affairs of a multi-billion dollar company in the absence of audited accounts.  So there must be serious concerns as to how the Directors of those State Enterprises without accounts could have properly discharged their obligations under S. 99 (1).

Apart from these points, there is now the fact that the SEC has made Orders in respect of Contraventions of the Securities Industry Act 1995 and the Securities Industry Bye-Laws 1997.  Those Orders are in relation to the failure of these huge State-owned Enterprises to publish their accounts -

1. 19th March 2010 against HDC, with fines totalling $121,000 – see http://www.ttsec.org.tt/content/pub100326.pdf.
2. 15th June 2011 against UDECOTT, with fines totalling $120,000 – see http://www.ttsec.org.tt/content/Order-for-settlement-re-UDECOTT.pdf.
3. 25th July 2011 against HDC, with fines totalling $400,000 – see http://www.ttsec.org.tt/content/Order-for-settlement-re-Trinidad-and-Tobago-Housing-Development-Corporation.pdf.

I was pleased to see the SEC taking this firm action against these offending State Enterprises, it is an important and necessary intervention.  I am not at all sure what, if any, ongoing penalties are being applied.  If there are no ongoing punishments or fines, this important regulator needs to take a tougher stand.  It is simply not good enough in my view for the regulator to levy these fines and allow the companies to carry on with ‘business as usual‘.  That would be like a dutiful policeman ticketing a motorist for smooth tires, no seatbelt and no headlights – issuing the ticket and then letting that motorist drive off.  The SEC needs to consider heavy daily fines and banning orders against Directors of these companies in breach of the law, if such do not already exist.

The era of irresponsibility in high office needs to be brought to a close.  The role of the Treasury in supporting this grossly irresponsible behaviour is questionable.  The silence on the missing accounts is intolerable.  The chapter of getting away with it needs to be ended.

Expenditure of Public money – Accountability – Transparency = CORRUPTION

State Enterprises and Public Procurement

State Enterprises were created to enhance the pace and quality of Public Procurement, yet they are now the scene of the most bedeviling paradoxes in the entire system of public administration.

Some of the key procurement issues which arise in this arena flow directly from the split character of the governance model.

The basic rationale for the existence of State Enterprises is they can be more effective because they are not bound by the strict rules which control the conventional civil service.  The absence of those rules is supposed to allow more latitude in terms of hiring, borrowing and contracting.  State Enterprises can hire professional staff at market rates, enter complex commercial arrangements and borrow on commercial terms, all of which should amount to significant improvements in public services.

The typical State Enterprise is owned by the State, with the shareholding held by the Corporation Sole, an exceptional legal creature which exists within the Ministry of Finance.  Apart from its owner, the State Enterprise will sometimes have a ‘line Ministry’, which would be its sole or main client.  For example, the Ministry of Housing & the Environment is the sole client of the Housing Development Corporation (HDC) and the Ministry of Education is the sole client of the Education Facilities Company Limited (EFCL).

State Enterprises can operate within the existing Companies Act or be established by a separate Act of Parliament, as is the case with the HDC.  That legal framework ought to ensure that a satisfactory standard of corporate governance and accountability is maintained.

The fact is that many of the Directors and Officers of State Enterprises are political appointees, which puts the entire rationale onto a doubtful footing.  Because the salaries and perks are so attractive, not to mention the commercial opportunities, the State Enterprises are prize targets for political appointments and favours.

Some of the main issues which arise when one is considering this sector are -

• the number of State Enterprises – there needs to be a reduction in the number of State Enterprises.
• If the politicians can instruct the State Enterprise, via the Permanent Secretary, on specifics, what is the purpose of the Board?
• Given the preceding point, do the Board members of State Enterprises have the same duties under the Companies Act as in the case of other registered companies?
• In terms of our proposed Public Procurement legislation, what is the boundary between the fiduciary responsibility of the Directors and the contracting powers of an ‘authorised officer’ – i.e. someone identified as having the power to enter certain contracts?

Proceeding along the Procurement Cycle and using the International Waterfront Centre (IWC) as an example –

1. Needs Identification – This is the first stage of the Procurement Cycle and it ought to be an objective assessment of needs.  In this case, the IWC was part of a huge, disastrous boom in building new offices in POS – this is all detailed at ‘Capital Concerns – New Office Buildings’ – here.  Before the boom started in 2005, there was 6.5M sq. ft. of offices in Greater POS, at the start of the boom some 3.2M sq. ft., or an additional 50% of the capital’s office supply was approved for construction.  Please remember that Nicholas Tower, which took 5 years to fill, is only 100,000 sq. ft.  Just under 2.8M sq. ft of new offices was actually built in POS in the last 5 years, with 2.3M sq. ft. of that space (82% of it) actually built by the State.  Every State project identified at the outset was executed, but in stark contrast, virtually half the private sector projects stopped before construction began.  The obvious consequence of that over-building by the State has been a collapse in the office rental levels in the capital, which is detailed in the next point.
2. Reconcile Needs with Funds – This is the stage at which a developer ought to consider critical questions such as the cost of funds, the cost of the project and the returns from it.  That is sometimes called a feasibility test and this is where the IWC dissolves into utter confusion.  When then PM Manning addressed the Senate on 13May 2008, he emphasized that every UDeCOTT project was approved by Cabinet and had been vetted by a Finance Committee on Financial Implications.  That is the most important address if we are to see the depth of the problem with these State Enterprises – see here.  The break-even point on such projects is the rent at which the project can repay its costs of construction – at minimum, those costs would have to include for land, design, construction and finance.  On that ‘bare-bones’ basis, which makes no allowance for maintenance or periods when spaces are vacant, the break-even rent for the IWC is in the $30 per sq. ft. range.  This is the largest single office building ever built in our capital and the best rents ever achieved for space of comparable quality is about half the break-even figure.  There is no way that the IWC project could ever have satisfied any proper feasibility test.  Every new office project started in our capital only increased the supply of offices, which reduced the market rent, which, in turn, increased the gap with the break-even rent.  Under oath at the Uff Enquiry, Calder Hart tried to rationalize the confusion when he confirmed that only one of UDeCOTT’s projects had been subject to a feasibility test and that one was the IWC.  He was even so bold-faced as to estimate a break-even rent in the $20 range, but, when pressed, had to admit that he had left the cost of the land out of the calculations!  That is the extent of the deformed thinking which typified the best schemes of the leading State Enterprise.  Only one of the State’s many office development projects tested for feasibility and in that case, the cost of the land is omitted, yet that same land is included as a part of UDeCOTT’s Assets at $224M in that very financial year.  Political imperatives were allowed to pervert a process which exists to protect the public interest from this kind of empire-building.  But it is in the next part that the full confusion comes to bear.
3. The rest of the procurement cycle – This is the stage at which tenders were invited for design-build and the winning bidder selected, the project built and the complex opened.  According to UDeCOTT’s statements, the IWC project is its flagship and an outstanding success, having been built on time and within budget.  Even if one accepts those assertions as being true, the IWC project is an example of the tragic consequences of a limited application of proper procurement processes.

As a result we have a completed project which is said to have been built on time and under budget, yet makes no economic sense and has a break-even point at some uncertain point in the future, if ever.

Some collateral damage needs to be noted, to quote one of the former PM’s notable phrases.  Contrary to his statement to the Senate which is cited here, UDeCOTT did not publish its accounts since 2006, which is a breach of both the Companies Act and the Ministry of Finance guidelines.  A total breach of the elementary norms of good corporate governance, which is the protection the private sector structure was supposed to give us taxpayers as a safeguard.  Because of the political element in the operation, we can see clearly that UDeCOTT was carrying-out the instructions of the Cabinet and those Directors have not been punished or censured in any way, apart from their public dismissal.  The consequence of those breaches being condoned at the largest State Enterprises – UDeCOTT and HDC – how does one get the smaller and less-visible State Enterprises to conform to good governance?

If the priest could play, who is we?

This is why we need a complete review of our procurement controls.

An Overview on the CIVIL SOCIETY submission to the Joint Select Committee on PUBLIC PROCUREMENT

This special publication is dedicated to the important issue of Public Procurement.  It is written by the a private sector group, headed by the Joint Consultative Council for the Construction Industry (JCC).  The JCC consists of:

1. Association of Professional Engineers of Trinidad & Tobago (APETT)
2. Trinidad & Tobago Institute of Architects (TTIA)
3.  Board of Architecture of Trinidad & Tobago (BOATT) – observer status
4. Trinidad & Tobago Society of Planners (TTSP)
5. Trinidad & Tobago Contractors’ Association (TTCA)
6. Institute of Surveyors of Trinidad & Tobago (ISTT) comprising Land Surveyors, Quantity Surveyors and Valuation Surveyors.

The private sector group consisted of –

• Joint Consultative Council for the Construction Industry
• Trinidad & Tobago Chamber of Industry & Commerce
• Trinidad & Tobago Manufacturers’ Association
• Trinidad & Tobago Transparency Institute.

The members of that Private Sector group were part of the Working Party on the Public Procurement White Paper, which was published in August 2005 and laid in Parliament the following month.

The Peoples’ Partnership’s manifesto, at page 18, commits to –

Procurement

• Prioritise the passing of procurement legislation and appropriate rules and regulations
• Establish equitable arrangements for an efficient procurement system ensuring transparency and accountability by all government departments and state enterprises…

In keeping with those campaign promises, the Minister of Finance tabled two legislative proposals in Parliament on 25 June 2010.  Those were a Bill to amend the Central Tenders’ Board Act (originally prepared in 1997, when Ramesh Lawrence Maharaj was Attorney General) and the Public Procurement Bill (originally prepared in 2006, after publication of the White paper).  A Joint Select Committee (JSC) was established on 1 October 2010 to examine those proposals, invite submissions and make recommendations.

The stated target of the PP government is to have the new Public Procurement legislation in place by the first anniversary of their electoral victory – i.e. by 25 May 2011.

Our Private Sector/Civil Society group reconvened last year and made a joint submission to the JSC in December 2010 – it is available here from the JCC‘s website.  Our Private Sector group has had several meetings with the JSC – which was chaired by Education Minister, Dr. Tim Gopeesingh – but the results of those are not featured in this publication.

This special publication is intended to inform readers of the necessity for new Public Procurement legislation in our country and to set out the objectives of our proposals.

The guiding Principles

 These are –

• Transparency
• Accountability
• Value for Money

The broad picture

One of the most serious findings of both the Bernard Enquiry (Piarco Airport Project) and the Uff Report (UDeCOTT and HDC) was the extent to which the largest State projects were being executed outside of any normal system of accountability.  The very purpose of setting up these companies and procurement methods was to bypass the Central Tenders Board.  The natural consequence of that way of proceeding being that if the CTB could be sidelined as a deliberate act of public policy, then other important elements of the regulatory framework are violated as a matter of course.  In the case of both UDeCOTT and NHA/HDC, accounts were not filed for years – since 2006 for the former and 2002 for the latter – in flagrant violation of the rules and laws.

These were the largest State projects – often described as being the flagship or centre-piece of this or that government’s policy – yet they were breaking the main rules and getting away with it.  The ‘getting away with it’ is the cloudy part of the picture, because we never hear of any penalty being sought against those State Enterprise Directors who broke the governance rules.

But that is the very centre of the puzzle and we need to understand it before we can try to unlock it.  So, we are told, time and again, that the only way to really get important and urgent projects done in the correct fashion is to go outside the rules.  The stated reasons are that the old rules are too cumbersome, slow etc… and yet, we end up, time and again, in the same mess.

Some of the features of these fiascos are –

• Huge cost over-runs on virtually every project.
• Unfinished projects which virtually no one can make sense of – to date there is no proper rationale for the huge and loss-leading International Waterfront Project, apart from Calder Hart’s bogus explanation to the Uff Enquiry.
• A gross burden on our Treasury going forward – The continuing delay in completing the accounts for these State Enterprises shows how difficult it is to work out exactly what the State owes and to whom.

What all that tells us is that the existing rule-book seems to be blocking progress and the attempts to bypass it have done little better, if not far worse.

The dismal picture on public procurement is not limited to construction projects and can be found in all the other areas.

A new approach is needed and that is what is at the foundation of these legislative proposals.

What is Public Money?

Central to the new proposals is that any new Public Procurement system must be in full effect whenever Public Money is spent.

‘Public Money’ is defined at page 5 of our proposals as money which is either due to, or ultimately payable by, the State.

Our proposals are intended to form part of a financial management reform package to include for a National Audit Office and a Financial Management and Accountability Bill.

The intended move is towards a greater transparency and duty of care in terms of how taxpayers’ money is spent.  Our citizens, particularly the unborn ones who will have to pay for some of the wasteful schemes which are littering the landscape, deserve no less.

The new equation confronting us is –

Expenditure of Public Money
minus            Accountability
minus            Transparency
equals         CORRUPTION

We must fix that.

So, what is at stake here?

Our society is beset by large-scale corruption, which sustains wrong-headed decision-making.  The wider social consequences of that toxic culture are now hatching, with a vengeance, in the naked violence and wily crimes which pre-occupy our head-space.

The killing-fields of East POS, the decimation of African urban youths, the URP and CEPEP gangs and the battle for turf are all part of this picture.

As long as our society continues to applaud and reward dishonest, corrupt behaviour, we will continue sliding downhill.

The structure of our economy is that most of the country’s foreign exchange is earned by the State in the form of oil & gas earnings.  The rest of the society relies on the State and its organs to recycle those earnings for the benefit of those of us not directly engaged in the energy sector.

For that reason, the State casts a very long shadow in our country, far more so than in other places.  Virtually every substantial business relies on the State and its organs for a significant part of its earnings.  A healthy connection with the State is essential for good profits.

But that is where the particular problem is, since the conduct of the State and its organs is often found to be lacking in the basic ingredients of fairplay, accountability and transparency.

If the State is the biggest source of funds in the place and the State is not playing straight at all, a serious question arises – How can we hope to uplift our society?

The State has an over-riding duty to behave in an exemplary fashion in its policy and operations.

Due to its tremendous footprint, the State has to behave in that exemplary fashion if we are to move out of this mess.  A positive shift in State conduct will have a salutary effect on the commercial culture and wider society, one that is long overdue.

So, who spends Public Money?

We have a vast, expensive and confusing array of organs, all of which are authorized to spend our money.  For a country of about 1.4M people, we have 26 Ministries.  Just consider that the UK, with a population of about 65 million, has 19 Ministries and the USA, with a population of about 300 million, has 16 Ministries.  For a Caribbean example, Jamaica has twice our population and 16 Ministries.

Quite apart from the number of Ministries, there are two further layers of agencies which also have the power to spend – our country has 73 Government Bodies and 58 State Enterprises.

Given the vast range of operations undertaken by these agencies, any new system would have to be flexible in order to cover all those types of transactions.

The main features of the new system

Three new independent organs will be created –

1. The Procurement Regulator (PR), with the duty to create overall Guidelines and a common handbook to guide the public procurement process.  The Regulator is appointed by the President in his own discretion and reports only to the Parliament.  Agencies can create their own procurement handbooks, once these conform to the overall Guidelines, as approved by the Procurement Regulator.
2. The Public Procurement Commission (PPC) will be the investigative arm of the new apparatus to which complaints will be directed.
3. The National Procurement Advisory Council (NPAC) will be purely advisory and comprises 14 members from a broad range of named private sector/civil society organisations – the JCC, Manufacturers’ Association, Chamber of Commerce, Transparency Institute – as well as the Ministry of Finance and the Tobago House of Assembly.

All expenses are to be drawn on the Consolidated Fund, with the Procurement Regulator and Advisory Council required to report annually to Parliament.

A vital part of our proposals is that Cabinet, Government Ministers or politicians are prohibited from instructing or directing these new agencies in any way.

They are intended to be entirely independent of political influence, which conforms to the proposals in the White Paper.

That freedom from political influence was also specified in both the 1997 and 2006 draft legislation.

A Complaints Procedure

The proposed system will create clear rights to make complaints or report wrongdoing.  Those rights are an important aspect of any modern procurement system and we propose three types of complaints/investigations –

1. Potential tenderers/suppliers can complain, in the first instance directly to the Agency with which the tendering opportunity resides, then, if that is not dealt with satisfactorily, they can complain to the Public Procurement Commission.  Ultimately, the right to seek the protection of the High Court is preserved, once the established complaints procedure has been followed.
2. The Whistleblower – We are proposing that whistleblowers be given legislative protection and practical means to bring their complaints direct to the Public Procurement Commission.
3. The Public Procurement Commission can also, on its own initiative, start an investigation into an area of concern.

There are strict time-limits for acknowledgement and resolution of complaints.

Our proposal is for the Public Procurement Commission to have powers to punish both frivolous complainants as well as parties found to be in breach of the new system.  Those can range from fines to embargoes, during which offending parties can be banned from tendering opportunities.  Offending public officers can be subject to both fines and/or imprisonment.

The concern over the cost of the new apparatus

One of the most frequently expressed criticisms is that as critics of the rationale and operations of significant State Enterprises, we seem to be proposing a new series of state-funded agencies.  Some people have pointed out that these offices are unlikely to be cheap, particularly the PPC, which is to be constituted as a standing Commission of Enquiry under those existing legal provisions.

Yes, there will be new agencies and yes, they will cost money.

Given the recent revelations as to the cost of the Uff Enquiry – already estimated to exceed $50M – there are genuine concerns that we could soon have three new state-funded agencies which could absorb maybe $100M a year.

The challenge here is to move beyond the obvious and factual observations so that we can consider the decisive factors.  Our proposals have the promotion of Value for Money as one of its founding principles and that is good for the public.  So, how can we measure the value for money of these proposals, at this stage?

The scale of public procurement spending

In the case of expenditures direct out of the Ministries, the 2011 Budget has an anticipated capital expenditure for the Ministries of $7.050Bn, as per para 8 at page 4 of the Public Sector Investment Program (PSIP).

Also in that Budget there is an anticipated capital expenditure for the State Enterprises of $6.725Bn, as per the Foreword at page 4 of the Supplementary Public Sector Investment Program (Supplementary PSIP).  The combined figure of $13.775Bn is only for projects, so it excludes the salaries, rents and normal running expenses.  Please note that other elements in public expenditure, beyond just capital projects, will be covered by these proposals.  The guiding principle being that those activities involve the expenditure of Public Money.

There are very limited exemptions from the proposed provisions and those can be viewed at the JCC website.

I am also sure that there are other ways in which Public Money is being expended which are not shown in the national Budget, so the amounts are surely larger than that estimate.

The potential for savings

The scale of the public transactions, involving Public Money, which will come under the control of this new system is huge, at least $14Bn in size.  Even if the new system only saves 5% of that sum every year, we can easily justify an annual running expense in the $100M range, as mentioned earlier. 5% of $14Bn is $700M.

In the next 30 days, we expect our Legislators to make the crucial decisions on this series of proposals and we all need to be vigilant to preserve the key points.

Those key points would include –

• Heads of Independent organs to be appointed by the President
• Separation of the Regulator from the Investigator
• Regulations laid in Parliament for negative resolution, with no Ministerial or Cabinet approval required.
• Independent Organs funded from the Consolidated Fund, with no requirement to seek a Ministerial approval or Budget vote.
• Accountability is ensured by the requirement to report annually to Parliament.
• Private Sector/Civil Society oversight via the National Procurement Advisory Council.
• Proper provisions for complaints and Whistle-Blowers.

The ultimate question, given what we know now, is – Can we afford not to take this step?

At this unique and challenging moment in what has been a long, twisted journey, the prospects of more corruption and waste are grim.

For these proposals to succeed, the legislators will have to vote in favour of a new law which reduces their power and discretion.  To some, that might be an impossible contradiction and an unreasonable thing to expect, but there will be considerable political credit to the account of those who make this change happen.  Our citizens deserve no less.

2010 Review

This is the time to reflect on the changes we have witnessed in the last year and the several challenges arising from those. This column will attempt to combine the ‘Property Matters’ concerns with the ongoing examination of the CL Financial fiasco.

The Uff Report

Professor John Uff

For me, the largest single event this year was the completion of the work of the Uff Commission of Enquiry into the Public Sector Construction Industry, with particular reference to UDeCOTT and the HDC.  The controversial Commission of Enquiry was at the centre of widespread public concerns as to the level of corruption in the State construction sector.  To his credit, the Enquiry Chairman, Professor John Uff QC, PhD, insisted that the proceedings be televised and the results of each day’s hearings were also posted to its website.

The Uff Report made history in this country, since it is the first time that a government has published the Report of a Commission of Enquiry.  That is no small accomplishment and despite the fact that these massive wrongdoings took place under the last PNM administration, the act of publication has to be welcomed.

But there are still challenges, because, for whatever reason, the Uff Commission’s website, www.constructionenquiry.gov.tt has now been shut down, which is a real pity, since it contains the important testimony of many witnesses on the issues in this area.  That website needs to be re-opened and I am calling on the Attorney General, under whose Ministry the Enquiry was operated, to ensure that takes place.  It is no large expense to have these important documents made available to the public.  In light of their educative content, I would suggest that the actual documents be housed at UWI, as they have a direct bearing on the deliberations of the Engineering and Social Sciences Faculties.

Of course we had the sight of a fleeing Calder Hart and a defeated Patrick Manning, his PNM cohorts drinking  bitter tea for his fever, all attributable in my view to the groundbreaking Uff Commission.

Looking forward, we have the fact that the 91 recommendations of the Uff Report were adopted by the Peoples Partnership in the run-up to the 24^th May General Election.  We have now been promised that those are to be implemented by Minister of Justice, Herbert Volney.  We await Volney’s early report as to the implementation.

In that connection and taking from the PNM example, I am, once again, calling for the publication of the report of the Commission of Enquiry into the Piarco Airport project.  The Bernard Report must be published now.

CL Financial bailout
The other huge event of the year was the budget speech on 8^th September 2010, in which Finance Minister, Winston Dookeran, disclosed publicly that he was revising the terms of the CL Financial bailout.  That bailout was a hugely suspect act, the largest financial commitment ever undertaken in this country, without proper due diligence or even any proper ventilation in the Parliament.  Our Republic had never been so financially violated and in broad daylight.  It was encouraging to see the Finance Minister take the point to its logical conclusion and of course that brought about the large-scale organisation of various aggrieved groups to put their point.

That series of organisations, committed to the doubtful mantra of the guaranteed investment – whatever that is – took on a series of bizarre and increasingly combative stances.  The signature theme being that ‘We are not responsible for our decision’.  We were being treated to a spectacle worthy of any of the ‘Ole Mas’ presentations of yore, in which successful investors – on average at least $700,000 was invested by each of these ‘protestors’ – having benefited from the operation of the capitalist system were seeking 100% redemption from the State.

The entry of the Prime Minister into this debate on 1^st October was in my view a turning-point in our development.  For the first time in my memory a politician, who had the majority, to achieve the significant changes which had been tabled, stepped back from that act of sheer power to attempt an act of persuasion.  It was a signal lesson in the reality of possibility in our lifetime.  Even if one is amongst the Clico Policyholders’ Group (CPG) and feeling aggrieved, the calm audacity of the Prime Minister’s decision must be respected.

Most importantly, we now have a one-man Commission of Enquiry established with the eminent UK jurist, Sir John Colman QC sworn in.  That Commission is to examine the causes of the CL Financial and Hindu Credit Union collapses.  The Colman Commission is expected to start sittings in January 2011 and the Attorney General has directed that its report be delivered in 6 months’ time.

The Manning Factor

Patrick Manning

The most comical event of the year is the bold-faced attempt by the former Prime Minister, Patrick Manning, to shift attention away from the PP’s revelations as to the illegal spying activities of various State agencies.  Manning, the original PM, attempted to show-up the Prime Minister, Kamla Persad-Bissessar, with a series of allegations on the status of a house being built with private funds on private lands for a private purpose.  The Prime Minister effectively dismissed Manning’s concocted concerns with the telling observation that all the refutations she quoted were available from the public record, if the accuser had ever been interested in examining that open source.

Having stirred to life and found his voice, it is important to note the several matters on which Manning maintains a stony silence -

• Calder Hart – Where is Calder Hart?  The nation was told solemnly by Manning that he knewCalder Hart’s whereabouts and further, that Hart was not a fugitive.  We are now told that Calder Hart cannot be located and Manning needs to speak on this.  Is it true that Hart gave Manning his location?  Has Hart changed locations?  Or is it that Manning has not shared that information with the correct authorities?
• Election rationale – What, if any, was his rationale for calling the general election at mid-term?  I am not sure that anyone knows the answer to this one, but it is surely of continuing interest.
• Guanapo Church – What is the truth behind the ill-fated Guanapo Church?  It is not my habit to wax scriptural, but that was a ‘house built on sand’ if ever we saw one. The reason for the State Grant of this land and the rapid grant of full planning permission – a record of only one month between the date of application and the grant – remains unexplained.  As for the architect’s plans for this huge church in the grounds of the PM’s residence, the mind boggles.  Where is Pastor Pena? We need to insist that Manning tells us more about this miraculous church.
• Cleaver Heights – Another area is the wild allegation Manning made, at the close of the 2008 budget debate, as to a ‘missing’ $10M at an HDC project at Cleaver Heights in Arima.  Or was it $20M?  After inserting that case into the ongoing Uff Commission and having the embarrassment of having the allegation evaporate under cross-examination, Manning needs to tell us just how he came to learn of this allegedly missing money.
• CL Financial bailout – Manning’s conduct in this matter has been the crowning-point of his administration, in my view.  The then Minister of Finance, Karen Nunez-Teshiera, was accused of using ‘inside information’ to make early withdrawals of her own funds from the CL Financial Group and to compound the mischief, being a shareholder of the CL Financial group in the sum of over $10M.  Manning’s steadfast defense of his beleaguered Minister of Finance was a display of loyalty which is seldom seen in higher political circles.  We need to know if the Minister told her colleagues that she was indeed a shareholder of the troubled group.  Did she or did she not recuse herself from the Cabinet’s deliberations?  My reading of the events, as told by the very Minister, is that she did not.

For Manning to fail to come clean on these questions, he would run the risk of damaging his hard-won reputation for upstanding values and leadership.

White Collar Crime
The obvious connection between these various events is the fact that White Collar Crime – which is sometimes, mistakenly, called victim-less crime – is  afflicting our country in a big way.

The year ahead holds significant challenges as we try to go forward in this morass, to escape the conspiracy which I have titled The Code of Silence.

The only way political rulers can carry on as they do, wasting the country’s money for the benefit of their friends and family, is because they are sure of each other’s silence.  The people in the private sector who were responsible for the financial collapse are no different.  The financial collapse is not, as some have falsely claimed, in any way connected with the Wall Street crisis.  That is only a handy coincidence.  If our regulators and politicians were doing their jobs we would not be in this position.

Please remember that the alarm bells on CL Financial were sounded by Trevor Sudama, since the 1999 budget debate.  More to the point, many of the people who still inhabit the Parliament were there at the time.  Again, I give this administration credit for appointing a Commission of Enquiry into this sordid affair.

Also, please remember that both UDeCOTT and the HDC failed to file accounts for years, in breach of the law and State guidelines.  That failure was not remarked upon by members of the then Opposition.  More to the point, we have now had a change in administration, with no word on the UDeCOTT accounts.  I do acknowledge that certain HDC accounts have now been published and that is to be the subject of upcoming commentary.

The Code of Silence must be broken if we are to progress.

VIDEO: Morning Edition Interviews

VIDEO: Morning Edition Interviews – March 2010

AfraRaymond.com, at this time chooses to re-issues these interviews on Morning edition on TV6 CCN, Trinidad and Tobago, to keep readers up-to-date on issues surrounding Uff Report and UDeCOTT Affair respectively.

1. Afra Raymond sits with senior journalist Andy Johnson to discuss the “UDeCOTT/Calder Hart Affair” on Morning Edition television show on TV6.
   • Programme Date: 10 March 2010
   • Programme Length: 0:28:16
   Morning Edition Interview: 10 March 2010

   

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2. Afra Raymond sits with guest host, William Lucie-Smith on the Morning Edition television show as part of a panel with senior counsel Israel Khan, to discuss the leaked Uff Report.
   • Programme Date: 31 March 2010
   • Programme Length: 0:26:52
   Morning Edition Interview: 31 March 2010

   

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VIDEO: First Up Interview – 18 May 2010

Afra Raymond sits down with Jessie May Ventour and Derek Ramsamooj for a discussion of matters pertaining to the construction industry prior to the national elections. Topics include UDeCOTT, the controversial Guanapo church and the Uff Commission Report.

• Programme Air Date: Tuesday, 18 May 2010
• Programme Length: 0:40:33

First Up Interview – 18 May 2010

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Seeing the Big Picture – Learning the Lessons of the SPE fiasco: Part 5

I have set out the key findings of the Uff Report, insofar as the elements of governance go.  Those were combined with recently published news to offer a picture of the manner in which our leading Special Purpose Entities (SPEs) are being governed.

The picture is an unflattering one, which few could seriously seek to emulate. It brings to mind the question raised here some time ago – ‘What was it really all for?‘  I continue to believe that the State must behave in an exemplary fashion, but that is not all.

The concerns over governance being raised in this series ‘Learning the Lessons’ are part of an attempt to query the true purpose and effect of the SPEs.  The point I am making in this final installment is that there are pre-conditions which ought to eclipse even important points like missing years of audited accounts, unsigned contracts, ‘back-fitted’ financial documents, publication of massively-inflated achievements, bogus feasibility studies and the like.  Just listing the important principles which have been violated, the whole situation seems incredible.

Important as it is to eradicate those unprofessional and dishonest practices, there has to be more to the development process.  Yes, even if the main ingredients of good corporate governance were practiced at our SPEs, it would all be for naught, unless those companies are operating in accordance with a sound strategy for national development.  Good corporate governance is necessary, but not sufficient, if we are to achieve the sound development which every right-minded citizen would desire.

To illustrate this point as to the importance attached to strategy, I am going to shift focus from UDeCOTT and the HDC.  I am going to consider the operations of NIDCO in terms of examining this issue.

In her maiden budget speech on 22^nd September 2008, the Minister of Finance set out the main elements of this government’s ambitious transportation plans.  These were in four parts – the rapid rail project, the coastal water taxi, the building of more highways and a significant expansion of PTSC’s fleet.  The Rapid Rail, Coastal Water Taxi and Highway building program are all being handled by NIDCO.

“…another slew of ambitious, extremely expensive and long-range plans being carried out supposedly for our benefit, but once again, we are witness to fundamental dishonesty on a huge scale.”

 

In ‘P3 and the Proposals’- published in this space on 23^rd October 2008, see http://www.raymondandpierre.com/articles/article58.htm – I wrote -

“The National Infrastructure Development Company’s (Nidco’s) high-profile advertisements for rapid rail are now giving one pause. Hear this: “As part of a holistic plan to ease traffic congestion and create a more modern, efficient, transportation network, the Ministry of Works & Transport…signed a design-build-operate-maintain contract on April 11, 2008, for the implementation of the Trinidad Rapid Rail Transit System.

Where is this holistic plan?

Were public comments ever invited on that plan?

Where can the public see that plan?”

It was plainly the intention of NIDCO, in this series of advertisements, to promote the belief that these four huge, expensive initiatives are all part of a comprehensive strategy.

I was very sceptical and continued to call for the ‘Holistic Plan’ to be published.  All to no avail.

On 27^th November 2008, I submitted my application, under the provisions of the Freedom of Information Act (FoIA), for a copy of the said ‘Holistic Plan’.  My application was sent to both the Ministry of Works and Transport (MoWT) and NIDCO, its implementing agency.

That FoIA application and NIDCO’s reply also dealt with the Rapid Rail contract, but that is for another time.

On 2^nd January 2009, I was ‘phoned by a civil servant from MoWT, who advised that they were ‘working on my application’; she confirmed by email later that day that “…we are still gathering the information and working on your request…”.

Just imagine that.  9 months after signing a major contract, reportedly ‘…as part of a holistic plan…’ and three months after publishing advertisements to that effect, I get an email from MoWT to say they are putting the plan together.

On March 6^th 2009, the Permanent Secretary of MoWT wrote me to apologise for the delay (these FoIA applications are supposed to be dealt with in a month) and direct me to pursue NIDCO for a reply.

On 4^th August 2009, NIDCO’s Vice-President Legal, Nirad Samnadda-Ramrekersingh, wrote in reply to my application for the ‘holistic plan’ -

“…please note that same does not exist either as a formal document or series of documents and that the term as used in the newspaper advertisement to which you have referred is simply a descriptive reference to the Rapid Rail Transit System, the Water Taxi Service, the Interchange Project and the existing PTSC and Maxi Taxi networks also described in the said advertisement.  We are satisfied that this is the case…”

“…simply a descriptive reference…”  Take that.

So there we have it, another slew of ambitious, extremely expensive and long-range plans being carried out supposedly for our benefit, but once again, we are witness to fundamental dishonesty on a huge scale.  Just like UDeCOTT, with its bogus feasibility studies, we can see that NIDCO’s claims are also highly questionable.  In the absence of real development strategy, we can only hope for a lucky accident.  That is no proper road to national development.  Particularly in the arena of physical development, where decisions have long-term physical, environmental and financial consequences.

As our servant with special responsibilities, the State is responsible for carrying out those developments in accordance with some sound strategy.  We must raise questions which are fundamental if we are to do better.  If we are to do better, we have to think and act differently.  Big changes are essential if the State is to deliver the future we need.

SIDEBAR: National Infrastructure Development Company (NIDCO)

NIDCO is a State-owned company, established in 2005 and under the control of the Ministry of Works and Transport.

According to its website – www.nidco.co.tt – its vision is -

Vision
To be a key enabling vehicle for the development of infrastructure that enhances and sustains Trinidad and Tobago’s economic development and quality of life.

Its core values are –

• Transparency.
• Professionalism & Quality.
• Integrity, Trust, & Honesty.
• Meritocracy.
• Teamwork.
• Commitment.
• Communication & Participation.

No reasonable person could object to those principles.

The Chairman of NIDCO is Professor Chandrabhan Sharma, of UWI’s Engineering Department; Professor Sharma is also a Director of Republic Bank Limited, TTEC and several other companies.

NIDCO’s President is Kaisha Ince, Attorney-at-Law.

Learning the Lessons: Part 4

Last week I promised readers some details of the scale of the failure at the HDC and UDeCOTT.

The failure is systemic and exists at every level.

“That is nothing less than scandalous and deceptive behavior from those we trusted with our national wealth. It is like doing a business plan to open a ‘Chicken and Chips’ outlet and leaving-out the cost of the chicken. Bogus.”

The Special Purpose Entities (SPEs) were established to achieve a more rapid rate of national development.  The idea was that we, the public, would benefit from the ‘best of both worlds’, so to speak, in that the ‘best practice’ of the private sector would be used in the SPEs to satisfy the requirements of the public for better roads, housing or other goods or services.

Starting at the level of underlying purpose of these SPEs –

1. HDC was established in 2005 as the successor agency to the NHA.  The target set in the 2002 National Housing Policy is for 100,000 new homes to be built in a decade, but that annual target was reduced in the first year to 8,000.

   In the seven years between 2003 and 2009, there should have been an output of 56,000 new homes, but the total output claimed was repeatedly given by the PM and the Minister of Planning, Housing and the Environment as being about 26,000.  In March, I publicly challenged the accuracy of those claims and the new MD of the HDC, Jearlean John, released revised figures – see http://guardian.co.tt/news/politics/2010/03/28/unc-claims-hdc-voter-padding-opposition-strongholds-marginals – which showed a total of 15,394 new homes built in the period.  An annual average of about 2,200 new homes, about a quarter of the reduced target.

   That is at least 10,000 less new homes than the HDC’s chiefs had been claiming.  What trouble is this?!  Now, at the same time as we thanked Ms. John for setting the record straight, just try to imagine the record-keeping and integrity of an organization which could repeatedly overstate its achievements in this fashion.

   That is the scale of the problem.

2. UDeCOTT’s mission is to develop the structures that form part of Vision 2020 and which “…will be achieved in accordance with…commercially viable principles…” – see http://www.udecott.com/index.php/cc/cc_sub_level/C6.  Those claims are equally baseless, since Calder Hart admitted under my cross-examination that only one of UDeCOTT’s many projects had been the subject of a feasibility test.  Only one.  That was the International Waterfront Complex and my further questioning revealed that the value of the land had been omitted from the equation.  That is nothing less than scandalous and deceptive behavior from those we trusted with our national wealth.  It is like doing a business plan to open a ‘Chicken and Chips’ outlet and leaving-out the cost of the chicken.  Bogus.  Our PM went to great lengths when he addressed the Senate on 13^th May 2008 to point out that UDeCOTT’s projects were all approved by Cabinet, after a thorough review process – see http://www.ttembassy.org/051308.htm.  Additional claims were also made as to the ways in which Cabinet monitored UDeCOTT’s operations.  As I wrote in this column, early in my critique of UDeCOTT – There is either a sobering naivete or a lack of rectitude in the highest chambers in our Republic.

   That is the scale of the problem.

In both cases, we are witness to fundamental dishonesty on a huge scale.

Moving on to the findings of the Uff Report –

Looking at the controversial Cleaver Heights project, at para 25.30, the Report states

“…The absence of a written contract was put in context in the cross-examination of Minister Dick-Forde when she confirmed advice from HDC to the effect that none of their large projects and none of the small projects either had a signed contract .   It was subsequently confirmed that as at January 2009 HDC had 64 large projects ongoing and 591 small projects, none of which had a signed contract. Large projects were those over $50m in value. Thus, while there appeared to be no good reason why a formal contract was not signed between NHA and NHIC, it seems clear that to have done so would have been a highly unusual step and one which was presumably regarded, both by NHA and HDC, as unnecessary.…”

Not one HDC contract has been formally drawn up or executed.    Not one.

My colleague, Ken Ali, put out a hard-hitting exclusive on the ‘HDC’s Silent Projects’, published in last Monday’s Guardian at http://guardian.co.tt/news/general/2010/04/26/capacity-firms-weak-non-existent.

UDeCOTT was also involved in its own widespread and unconventional practices, namely ‘back-fitting’ of data, as described in the sidebar.

On the blighted Brian Lara Cricket Academy (BLCA), being built by Hafeez Karamath Ltd. (HKL), we are told –

• Para 16.16 – referring to advance payments to the contractor –
  

  “…As a result money was advanced in circumstances which do not appear to have been governed by any ascertainable rules and amounted effectively to very substantial loans to HKL. Such a procedure is quite unique in the experience of the Commissioners. It calls for explanation but none has been offered…”

• Para 16.17 – referring to UDeCOTT’s accounting system –
  

  “…UDeCOTT’s administration and recording of the payment process was “appalling” and required a great deal of detective work to get to the bottom…”

• Para 16.21 – referring to UDeCOTT’s attempts to explain its management of the BLCA -
  

  “…does not by any means explain why UDeCOTT staff had gone to such extraordinary lengths to ensure that HKL was paid as soon as the money became available; why UDeCOTT was seemingly so anxious to make payments substantially beyond the value of work carried out (and in circumstances where the contractor was already in default such that TAL had long since recommended termination); and why UDeCOTT chose to disregard the opinions of the appointed engineer (TAL)…”

• Para 12.45, citing the work of MacCaffrey –
  

  1. Of 79 Certificates issued for advance payments, 39 were wrong in relation to the sum for payment of advance payment, 60 were wrong in relation to the amount of advance payment made to date and only 4 out of 79 correctly recorded the advance payment and the amount of repayment.
  2. UDeCOTT’s contemporaneous reporting of advance payment is materially wrong (i.e. under-reported) by tens of millions of TT$ for the vast majority of the duration of the project.
  3. UDeCOTT decided to back-fit Payment Certificates in February 2008. Those back-fitted Certificates also materially under-reported the amount of advance payments made. All the back-fitted Certificates have been endorsed by at least two signatories and in some cases three.

Little wonder that UDeCOTT’s audited accounts have not been published since the end of 2006.

The Cancerous Cozy Consensus

Given the scale of the bobol revealed in this single Enquiry, one can only wonder what else is taking place at other SPEs.  The relationships are so cozy that one seldom, if ever, hears of anyone being made to repay the monies stolen or even face the Courts.  I am repeating my call that it is time for us to review the performance and proper role of the SPEs.

It might also be useful at this stage, for those of us who exist in the ‘comfort zone’ of private sector superiority to reflect on how seldom, if ever, we act against ‘White-collar’ crime.

SIDEBAR: ‘Back-Fitting’ of Financial Documents

One of the hidden practices of UDeCOTT which was revealed in the Uff Report was that of ‘back-fitting’ of payment certificates so that various erratic and unsupported payments could continue, all under the veil of accountability.  For readers who are unfamiliar with this sort of practice or surprised that such could be the practice at the ‘best-performing SPE’, they might find it easier to understand if the colloquial phrase is used…Yes, ‘Ratchefee”…