Archive for category Corruption

Privacy Pros & Cons

The recent high-level of public concern over the SSA Amendment Bill was of limited concern to me, until I started listening properly. In the event, the proposed law was passed by the Parliament and there is some threat from the Opposition of a lawsuit to test its constitutionality. We will see.

Two very interesting stances surfaced during the heated debates and it is at these kind of moments that I sometimes think of our so-called political divide. Those were the Right to Privacy stance disclosed by the AG and the private briefing of Parliamentarians as a legislative tool.

Sen. Faris Al Rawi, Attorney General

Faris Al Rawi, Attorney General

The AG, Faris Al Rawi, was emphatic on 2nd May 2016 that we have ‘…no enshrined right to privacy under the law…‘. He was almost immediately contradicted by former CJ, Michael de la Bastide QC, who relied on Section 4 (c) of the Constitution which specifies ‘the right of the individual to respect for his private and family life’. In ‘The creep of Tyranny‘ on Monday 9th May 2016 in this newspaper, my colleague Michael Harris also made strong objections to the AG’s stance. Of course we have rights to privacy and those are entrenched in our Constitution, but now those rights can be limited by the new law, intended to promote national security.

This is all a part of what I have come to call the Global Information War or World War Three. In this phase, citizens’ rights to privacy and the space to consider, discuss, disagree and plan is all being challenged and effectively undermined by the incredible reach of the large surveillance agencies. I did not limit it to state agencies because there are a significant number of huge private sector entities which constantly read private information crossing their networks for their own private purposes.

The best single book on this which I would recommend is Glenn Greenwald’s ‘No Place to Hide‘. The title says it all.

Here in T&T we have known since the disturbing revelations of 2010 that private communications of a wide range of persons have been intercepted by the SSA and this recent furious debate in Parliament was to place those surveillance operations within a legal framework. It is also clear that we are beset by rising levels of increasingly violent and sophisticated crime, so this approach would be generally welcomed by beleaguered citizens.

The AG’s statement on ‘No Right to Privacy‘ alarmed and intrigued me. As AG, Al Rawi is the legal adviser to Cabinet so his views on this issue can readily be accepted as representing the views of the government.

In respect of the alarming aspect, I was struck by the tenor of the statement as it did not fit well with the notion that the SSA Bill was intended to target the ‘serious criminals’. It seemed to foreshadow a more general approach of broad-band surveillance and its tone alone gave me pause.

What was intriguing was the question –

‘Exactly who has no right to privacy?’

It seemed that the AG was speaking, on behalf of the government, in support of a great relaxation of possibly outdated notions as to the right to privacy. Do those new standards of openness apply to the State and its organs? How about the Cabinet? How about the very briefing of Parliamentarians in pursuance of this SSA law? It seemed to me that we were being told that the right to privacy previously assumed by citizens was in fact not guaranteed and further, that the State had rights to delve into one’s business.

No privacy rights for citizens and enhanced protections for the State and its organs is wrong-sided behaviour in a Republic. The Two taken together, taste terrible.

Of course there are many wrinkles and swerves which can be put onto this criticism, but the State is our creature, or ought to be, so its conduct must be exemplary and lawful.

Revisions to the Freedom of Information Act are upcoming and I would expect those to strengthen the rights of citizens to obtain information held by public authorities and to stipulate serious penalties for failure or refusal to do so.

All of which touches and concerns the second of my issues, the government’s invitation to privately brief Independent Senators and Opposition Parliamentarians on the proposals. Despite the ironies, given that the subject was national security, it may only have been possible to have private briefings.

The Opposition (UNC) made the strongest possible objections to this Government (PNM) proposal to host private briefings. The AG reminded the Opposition that when they were in government, the same procedure was used to obtain support for two new laws related to the CL Financial bailout in September 2011. I also remembered the 2013 objections of then leader of the Opposition, Dr Keith Rowley, on the very same proposal to host private briefings for the Independent Senators.

I noted the various political swerves with a smile, but that was not really the target of my attention. The substantive issue in 2011 is what concerns me, because it has a strong echo in my current efforts to obtain the details of the CL Financial bailout.

The two new laws the PP government were proposing in September 2011 were –

  1. The Central Bank (Amendment) Act 2011 – to prevent any lawsuits against or Judicial Review of the Central Bank in Relation to the CL Financial bailout;
  2. The Purchase of Certain Rights and Validation Act 2011 – to permit the Minister of Finance & the Economy to borrow an additional $10.7 Billion to fund the CL Financial bailout.

So, what happened in September 2011? These Acts were passed with the full support of the Independent Senators, but the Opposition did not vote for these new laws.

One of the items I requested in my legal challenge to the Minister of Finance & the Economy was the contents of that Parliamentary briefing to the Independent Senators in September 2011. My request was refused on the basis that it was exempt.

It is troubling to read the assurances of then Minister of Finance & the Economy, Winston Dookeran, to the Senate on 16th September 2011 on the question of the briefing –

“…I just want to give you the assurance which I gave to the Lower House when we debated this, that already the Ministry, along with the Central Bank and Clico, have begun the preparation of a public document—many questions that are still to be answered—to provide the necessary information. In addition to that, we did present to the hon. Senators, for those who afforded us the opportunity to accept our invitation, a document that is in the vicinity of 57 pages as of now, outlining all the necessary information that led to the story that assess what is the current challenges and why the proposals to go forward have been put forward.

This document, I assure you, along with the questions and answers, will be converted into a simple, easy to read, hopefully, document for the sake of establishing that this Parliament has mandated us to put this as an anchor document for the purposes of evaluating our performance in the future…”

Yet, despite these clear assurances from the Minister, the presentation used to obtain the support of the Independent Senators was deemed ‘exempt’ and denied me.

The High Court ruled in my favour on 22nd July 2015 and ordered the release of the requested documents. The Ministry quickly appealed and as yet, I have been unable to obtain those documents, despite my constructive dialogue with the new Minister of Finance & the Economy, Colm Imbert.

It is even more concerning to consider the situation in relation to the Central Bank (Amendment) Act 2011 which the High Court deemed ‘unconstitutional‘ as a law which “…infringed the separation of powers and ultimately the rule of law…” in its ruling in the Stone Street Capital v AG case in 2013.

The intention of that Act was to prevent any lawsuit or Judicial Review against the Central Bank and that created a situation in which the Central Bank, acting as agent of the State in managing the CL Financial bailout would be effectively immune from the oversight of the Courts. Carte Blanche.

The entire case was to regain control of some 5.7 million Flavorite shares held by Clico Investment Bank (CIB). Stone Street Capital is owned by Andre Monteil, who was one of the CL Financial chiefs, having been its Group Finance Director and Chairman of CIB up to April 2008. Monteil was certainly one of the PNM’s most powerful ‘sowatees’ in the period up to 2010, serving as Party Treasurer, as well as Chairman of Home Mortgage Bank, HDC and EFCL.

The State appealed that ruling and that appeal continues despite the fact that the PNM, who voted against that law when in opposition, are now in power.

The imperative to control information and oversight certainly appears to be in conflict with the assertion that there is no established right to privacy. Whose privacy? We will see.

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CL Financial Bailout – Duprey’s Gambit

Lawrence Duprey. Photo courtesy the T&T Review

Lawrence Duprey

Last week we learned that Lawrence Duprey and his fellow CL Financial shareholders are victims of a badly-handled bailout. According to the Duprey version, the State must halt all asset disposals and he must regain control of the CL Financial group of companies. In what seemed to be an immediate response, Minister of Finance & the Economy, Colm Imbert, said he was so alarmed at the gross mismatch in the bailout figures that he decided to order a forensic audit on the entire process. These two contrasting stories are the latest big news on the CL Financial bailout.

I have always objected to the CL Financial bailout and is has become a strong example of how the Public Interest can be perverted under a series of disguises.

The Duprey Gambit is just the latest attack on good values in our country. It is a nasty, shocking outbreak of moral hazard. It needs to be dismantled and discredited, nothing less will do.

The Imbert Initiative looks like a welcome move to examine the details of this scandalous waste of Public Money. The proposed forensic audit seems to signal some official appetite for disclosure. However, if this is to properly protect the Public Interest, there are some ‘litmus tests’ which can show the official commitment to disclosure

This article will examine those two proposals so that some meaning might emerge from this utter, deliberate confusion.

The Duprey Gambit

The CL Financial group was the largest commercial group ever in the Caribbean and its collapse in January 2009 had an immense impact across our region. Apart from Lawrence Duprey’s single, brief speech at the press conference to announce the bailout on 30th January 2009, there has been no proper forum at which the CL Financial chiefs have been made to give an account of this catastrophic collapse. Duprey has offered no cogent explanation for this failure, only a series of bizarre periodic interviews. I can even remember one amazing November 2012 interview in which he claimed to be ‘flat broke’ at the same time as enjoying his new life of philanthropy. I have never heard of a flat broke philanthropist, but that just goes to show.

Duprey, Monteil, Sakal

Lawrence Duprey, Andre Monteil, Gita Sakal

Even when the Commission of Enquiry was established under the Chairmanship of Sir Anthony Colman, both CL Financial chiefs, Lawrence Duprey and Andre Monteil, refused to appear to answer questions. Both men invoked their right to avoid self-incrimination, but they were both represented by high-calibre attorneys who seemed to take every point during that Enquiry. At one point, I can remember a slightly bemused Colman describing those two chiefs as ‘The Dynamic Duo‘ and asking CLF’s former Corporate Secretary, Gita Sakal, whether she would agree that ‘Duprey was Batman and Monteil was Robin‘. The room echoed with our startled laughter, but Sakal did not answer.

One of the greatest pieces of mischief in all this is the recurrent attempts to compare our bailout to the Wall Street one. Apart from the refusal to offer any public explanation, there are two further details which separate the CL Financial bailout from the US example.

The CL Financial shareholders have never lost their shares. Which is why they can be confronting us with all kinds of options and proposals, not to mention threats of lawsuits and so on. In the US bailout, the troubled companies were forced to give equity to the Federal Government. In order to receive taxpayers’ money in the USA, Fannie Mae (the huge mortgage company) gave 79.9% of its equity; while AIG (at that time the world’s largest insurer) gave over 85% of its equity; 36% of Citibank belonged to the US government in February 2009.

In addition, in the Wall Street bailout of AIG for example, the Public Money advanced to cover AIG’s exposure was lent at 11.5% interest. At that time, LIBOR (the base rate) was 3%, so it was a clear signal from the State that the bailout was being conducted on the most punitive terms. These details were found in Andrew Ross Sorkin’s ‘Too big to Fail’. In contrast, our government agreed to bailout CL Financial at ZERO-percent interest. In the language of the financial world, that implies a ‘sweetheart deal’. To my eye, it really resembles a marriage. Definitely, the parties appear to be related.

There are three implications of the zero-interest rate enjoyed by CL Financial –

  1. firstly, the public interest was seriously prejudiced by our government effectively ignoring the time value of money;
  2. secondly, the amount of interest which would have accrued over the ensuing seven years would have placed the company completely in the State’s hands – i.e. the interest of the shareholders would have been extinguished by the effluxion of time and,
  3. thirdly, the CL Financial Shareholders’ Agreement of 12th June 2009 has been extended several times and for me, that raises the pregnant question of why the State did not subsequently negotiate a proper interest rate for these vast sums of Public Money being lent to the wealthiest person in the Caribbean. I will return to this issue.
Michael Carballo. Photo courtesy Trinidad Guardian

Michael Carballo

One of the most sobering things about this unfolding crisis is the extent to which the public interest has been diluted to almost a mere talking-point. For those readers who are wondering just how could Lawrence Duprey be insisting on regaining control of his companies, it is interesting to consider this explanation from Michael Carballo, the then Group Finance Director of CLF –

“…Carballo said the government was in control of the management and running of the Caribbean conglomerate, but what has not changed is the ownership.

‘The shareholding hasn’t changed. There is no intention to change the shareholding. It’s an agreement for about three years whereby the assets are managed and restructured and then the company will be returned to the shareholders,’ he said…
— “Lascelles untouched – Duprey remains chairman.” Jamaica Gleaner. Wednesday June 17, 2009.

Finally, the simple fact is that Lawrence Duprey and the other CL Financial chiefs would not be allowed to regain control of the financial parts of this empire since they can not be considered as ‘fit and proper persons’. That means that CLICO, British American, Republic Bank, COLFIRE cannot lawfully return to the ownership and control of those persons, as detailed in ‘Steal of a Deal‘, earlier in this series.

The Imbert Initiative

Min of FInance, Colm Imbert, MP

Min of FInance, Colm Imbert, MP

I have long campaigned for full disclosure of the details of the bailout – all the details of all of the payments must be published. I therefore have to say that Minister Imbert’s call for a forensic audit of the payments made under the bailout is welcome. That is exactly what I was calling on him for in ‘Finding the Facts‘.

Imbert explained at the post-Cabinet briefing on Thursday 28th April 2016 that the gross differences in the stated amounts paid in the course of the bailout had so concerned him that he had decided to proceed with a forensic audit.

We are now witness to a new appetite for disclosure on the details of this CL Financial bailout and that is good. If we are proceeding along that road, these are the ‘litmus tests’ I am proposing so that this progress can be accepted –

  1. The CLF Shareholders’ Agreement has been amended several times since its establishment in June 2009. I obtained a copy of that Agreement in March 2010 via the Freedom of Information Act and I am now requesting Minister Imbert to publish the subsequent amendments, extensions and revisions.
  2. Colman Commission Report – There was a report in June 2015 that the completion of the Colman Commission’s Report into the failure of CL Financial was being effectively strangled by a lack of resources. I am reliably informed that proper resources have since been made available for completion of that important Report. The Colman Report into CLF must be published.
  3. Forensic Audit – The Report of the forensic audit into the CL Financial bailout must also be published when it is completed.
  4. CBTT (Amendment Act) – One of the most serious steps taken in this entire affair was the Central Bank (Amendment) Act passed in September 2011 to prohibit any lawsuit against or judicial review of the Central Bank’s actions. In November 2013, the High Court ruled that Act to be unconstitutional in a case brought by Andre Monteil’s Stone St Capital, but the State has appealed. The State must reconsider this course of action and withdraw its appeal.
  5. Freedom of Information Ruling – In July 2015, the High Court ruled in favour of my Freedom of Information request to obtain the details of the bailout, but the then Minister of Finance appealed. I have requested that the new Minister withdraw that appeal and publish the requested details.
  6. Interest – Finally, we come to the issue of the various demands and proposals from Lawrence Duprey and the other CLF shareholders. It is my view that the Minister of Finance must now insist on a proper rate of interest for the Public Money advanced in this scandalous situation. That rate of interest must be well in excess of the base rate.

The stage seems set for a legal mangle of epic proportions – we will soon see.

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VIDEO: Update on Invader’s Bay, the Las Alturas Enquiry plus more on 107.7 FM

1077fm-logoAfra Raymond is interviewed by Rennnie Bishop on 107.7FM on Sunday 17, April 2016 to discuss Invader’s Bay; the end of the Las Alturas Enquiry; the Panama Papers and the needs for implementation of the best practice procedures to our public administration.

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Property Matters – Housing Issues – part 5



With apologies to readers, this is to correct my figures in relation to the amount of Public Money which TTMF received in relation to the 2% subsidised mortgage programme. The figures disclosed in TTMF’s Summary Financial Statements are actually liabilities, being the reducing balance on the original allocation of $200M for this programme.

The recalculated figures for TTMF’s recovery of 2% mortgage subsidy 2007 to 2014 are

YEAR SUBSIDY (cumulative)
2007 $.9M
2008 $5.3M
2009 $16.5M
2010 $34.1M
2011 $52.7M
2012 $70.4M
2013 $87.4M
2014 $105.2M

These figures are far less than those I cited in my article, since only $105.2M has been drawn from the original allocation of $200M, as against my erroneous claim that $1,227.5M of Public Money had been spent on this subsidy.

Last week I examined housing subsidy to illustrate the ways in which Public Money is used to provide better housing opportunities.

The sidebar contains my correction, which shows that a total of $105.2M was spent in this 2% subsidised mortgage programme between 2007-2014. I was also informed that the 2% subsidised mortgage had been granted to 1,466 applicants, who earn less than $10,000 per month, to buy homes under $850,000. In late 2014, TTMF also started offering 5% mortgages to applicants who earn up to $30,000 per month for homes up to $1.2M – 298 of those mortgages have been granted to date.

This revision and the new information will require that we pay even greater attention to the HDC’s operations, since it far outstrips the other agencies providing housing options.

So, what is the proportion of applicants between the lower and middle income groups? At pg 28 of the Vision 2020 Housing Sub Committee Report (2005) that is estimated as follows –

…shows that more than half of the demand for housing to 2020 (57.3%) falls within the low-income group with 30.7% in the middle income group and 12% in the high-income group…”.

It is difficult to reconcile those researched conclusions as to the demand for homes with the actual distribution of new HDC homes, in which only 21.7% were rentals. The pattern of distribution of those homes seems to indicate that the decision was taken to promote home-ownership in preference to building rental units. There is no doubt that this decision was detrimental to the neediest applicants, who were unable to qualify for mortgages, while at the same time being beneficial to those whose earnings qualified them for mortgages.

Of course it is true that income levels increased since the original 2005 Report, so the definition of low and middle income would have shifted. Nonetheless, it is clear that the construction of rental units was a low priority.

That decision to promote home-ownership may well have been rooted in the desire to reduce the ongoing management challenges of renting homes to poorer households. If that is indeed the case, it would represent a significant departure from the housing policy which is intended to serve the needs of both low and middle income persons.

SIDEBAR: Time is Money

One of the significant issues which has impacted the HDC’s programme of building new homes for sale is delays in obtaining clear title to the properties. These cases can result in completed homes which do not have the proper title to allow a mortgage to be granted. In such cases, the HDC has reportedly been allocating those homes to purchasers under a ‘Licence to Occupy’ in which 90% of the Licence Fee (rent) goes towards the purchase price.

This is a sound way to proceed since the new homes are occupied, while the title is organised and most of the rent is applied to the purchase price.

A large number of units have been subjected to these delays, with the anticipated sale postponed and that has a serious financial impact. A sum of money which is received in the future is less valuable than the same sum of money received instantly. That decline in the value of money with delay is due to such elements as the reality of inflation, the risk of devaluation and of course the sheer uncertainty of being paid.

According to the Joint Select Committee’s 2015 Report into TTMF

…In 2008 we had established what we called an HDC Unit in anticipation of 3500 mortgages from HDC within three years. Three years later we had to disband that Unit because the HDC did not have the title that would afford mortgages…” (testimony of TTMF Managing Director, Ms Ingrid Lashley, at pg 126)

This is a limited insight, but it can give us some idea of the scale of the issue, if 3,500 homes did not have proper title over a period exceeding three years. One can scarcely imagine a private developer surviving if that sort of situation ever occurred.

The fact is that issues such as these are a potent warning of the dangers of the rush to development in which the numbers game and output targets can eclipse good practice.

There is also the fact that some of these HDC homes are used as investment property by owners who live elsewhere, perhaps even owning other property. The HDC leases prohibit renting-out, even in parts, those properties without prior written consent being obtained. A casual search on the internet can show many such properties offered for rent on the market by agents. Is the HDC managing its portfolio properly in relation to this issue?

Apart from the issues as to the types of homes built in the HDC’s large-scale development programme, there are other concerns as to its operation.

At pg 71 of the Vision 2020 Housing Sub Committee Report (2005)  it is stated –

…It is apparent that the cost of administration of the public housing programme (costs related to the Ministry of Housing, NHA, LSA, SILWC and UDeCOTT) is extremely inefficient when expressed in terms of cost per unit produced. It is estimated that $0.71 out of every dollar spent on housing is spent on administrative costs…

Which means that in 2005, over 70% of the money spent on public housing was going to recurrent expenditure.

The HDC was created in October 2005 as a successor agency to the National Housing Authority (NHA) and there were specific provisions in the HDC Act to avoid some of the management issues with which the NHA had been beset.

The then Housing Minister was Dr Keith Rowley, our newly-elected Prime Minister, so his remarks at the inauguration ceremony for HDC are noteworthy –

…There are a lot of things that did not go right in the NHA and one of those things had to do with accountability…The HDC is not going to function like that. We are required by law to have the accounts ready in a certain period of time. The CEO will be held accountable and the Cabinet will hold the minister accountable and the Parliament will hold the Cabinet accountable. That is what the HDC means…

According to the provisions in the HDC Act, its audited accounts are required to be published at a set date every year, within 6 months of its financial year-end. Despite the legal requirement, the HDC’s audited accounts have never been published. Which means that we are unable to tell if there has been any improvement in the NHA’s ‘efficiency ratio’ of only 29% of its spending going directly to build new homes. Is the HDC doing any better? There is simply no way for the public to know.



AUDIO: The Breakfast Roundtable interview on Sky 99.5FM – 23 March 2016

sky995fmAFRA RAYMOND, Immediate Past President of the Joint Consultative Council (JCC), comments briefly on the firing of Jearlean John by the new HDC board, after being on administrative leave for a couple of months. He says we should not be too quick to believe the Marlene McDonald dismissal is a sign of greater accountability to come on the part of governments. Mr. Raymond also lauds Government’s proposal to use the housing sector to create opportunities for construction industry, to help pull T&T out of recession.

  • Programme Date: Wednesday, 23 March 2016
  • Programme Length: 26:04

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Property Matters – Housing Issues – part 4

hdc-logoAlthough the HDC is the State’s main implementing agency for its housing policy, there are other important elements to be considered. The main one I will examine here is the role of public subsidy in the housing program.

Given that we live in a relatively wealthy and very densely-populated small island state which operates a free market system, the prices charged for property sales or rentals have moved upwards historically. One of the objectives of the housing policy is to assist those who are unable to compete in the market, so it is justifiable to apply State resources to reduce the cost of housing to those needy persons.

That allocation of Public Money and land to the housing program is intended to create the new homes for the applicants. In addition to the direct construction of the new homes, Public Money is also used to reduce the cost of housing.

These additional applications of Public Money are called Housing Subsidy, the three main types are –

  1. The five-year tax allowance of $25,000 per annum is available to first-time home-buyers. That is about $6,250 more cash each year for first-time buyers of homes in the open market or from the HDC. I have been unable to locate any official estimates of how many people benefit from these provisions. All first-time buyers are entitled to this tax allowance, whatever the actual price of the home being purchased. This subsidy is therefore widely enjoyed and not at all targeted to the needy.
  2. Subsidised mortgages at a 2% interest rate are available from TTMF for persons earning less than $10,000 per month who are buying homes under $850,000. This is substantially below the market rate of interest, so TTMF is subsidised by the State to compensate for the difference.This program started in 2007 to provide a ready stream of affordable funding for the anticipated output of the HDC’s large-scale construction program. This table shows the Public Money spent on this subsidy in the eight years for which TTMF’s audited accounts are available –

    State Subsidy of 2% Mortgages for low-cost housing
    (via TTMF)

    2007 $199.1M
    2008 $194.7M
    2009 $183.5M
    2010 $165.9M
    2011 $147.3M
    2012 $129.6M
    2013 $112.6M
    2014 $ 94.8M
    TOTAL $1,227.5M

    With apologies to readers, this is to correct my figures in relation to the amount of Public Money which TTMF received in relation to the 2% subsidised mortgage programme. The figures disclosed in TTMF’s Summary Financial Statements are actually liabilities, being the reducing balance on the original allocation of $200M.

    The recalculated figures for this subsidised 2% mortgage programme are –

    TTMF recovery of 2% mortgage subsidy 2007 to 2014

    YEAR AMOUNT of SUBSIDY (cumulative)
    2007 $900,000
    2008 $5,300,000
    2009 $16,500,000
    2010 $34,100,000
    2011 $52,700,000
    2012 $70,400,000
    2013 $87,400,000
    2014 $105,200,000

    These figures are far less than those I cited in my article, since only $105.2M has been drawn from the original allocation of $200M, as against my erroneous claim that $1,227.5M of Public Money had been spent on this subsidy.

    This revision will require that we pay even greater attention to the HDC’s Housing Subsidy, since it far outstrips the other subsidies. There is also a seminal interplay between the HDC and TTMF which needs to be discussed in terms of promoting homeownership.

  3. HDC Subsidy is applied to the actual sale price or rent of the new homes. It can be calculated as the difference between the market value of the new home and its selling price. The same approach can be applied to rental units. Although I have not been able to find any consistent assessment of these figures from my limited interactions with the HDC, it seems clear that most of this housing subsidy is distributed to buyers of new homes.The allocation of the HDC subsidy ought to be an area of interest, since that program is intended to target the needs of ‘low income and middle income’ applicants. There is scarce evidence across the HDC program, so one is driven to use the few examples which become visible from time to time.

The two examples I am citing are –

  1. fidelisheights

    Fidelis Heights

    Fidelis Heights

    This is a 180-unit project at Gordon Street/Bates Trace in St Augustine, opposite the Sir Hugh Wooding Law School (UWI).

    Noel Garcia, the then-MD of the HDC, was reported to have said –

    “…the Government had taken a decision not to subsidise this particular development. It is being sold at market rates in HDC’s thrust to expand and attract an open market clientele…”

    The units were sold for a maximum of $825,000 and they were worth a minimum of $1.7M, so each new home there was sold with at least $800,000 in housing subsidy. The only way those statements could be correct is if one were using the misleading cost-based approach. This is really heavily subsidised housing for the middle-income groups.

    In this example, the opportunity cost is $1,700,000 – $825,000 = $875,000. Over 50% Housing Subsidy!

  2. Victoria Keys

    Victoria Keys

    Victoria Keys

    This is a 264-unit complex at Four Roads, Diego Martin, on an island site opposite to the Starlite Shopping Plaza. Again, this project appears to have been intended for middle-class applicants as per the previous example.

    The substantial construction of these apartments was completed in 2010, but there have been extensive modifications/improvements of the units to a surprising degree, when one considers the HDC mandate. The project is only now nearing completion, so consider these disclosures from the Minister of Housing and Urban Development, Marlene McDonald, in her statement to Parliament on Friday 4th December 2015 (pgs 59-61 of Hansard) –

    “Some three bedrooms were turned into two bedrooms, some two bedrooms were turned into one bedroom; when they were completed there were tiles on all the floors in the 264 units, all those tiles were dug up. No one lived in there you know; all the tiles were removed and replaced by hardwood floors. All the tiles in the bathroom are now porcelain tiles. All the kitchen cupboard—beautiful…it is one of the finest HDC sites in the country…I am talking about the inside of the building…264 units, every one air-conditioned…“to provide a quality living experience”, you had the installation of automatic sprinkler systems; you had the installation of garbage chutes in each apartment; the installation of centralized air-conditioned units for common areas of the buildings; you had two four-storey car parks built, and let me tell you, with elevators. There are two of them, one on the western side of the compound and one on the eastern side. There is a swimming pool and the swimming pool sits on the roof of the eastern side of the car park. So you have the four-storey car park and sitting at the top there is the swimming pool…There is also a clubhouse there. There is also a tennis court. There is also a gym. There is also a sauna-cum-spa…”

    According to the Minister, the total costs were –

    	• Original Cost of Construction of the buildings: $299M
    	• Cost of modifications of the buildings:         $141M
    	• Cost of External Works:                         $170M
                                                        TOTAL $610M

    The total cost of $610M, when divided by the 264 new homes at this project, equates to an average cost of $2.3M! Please note that these estimates given by the Minister do not seem to have included the cost of what would be very valuable land. That is how far adrift this housing program is from focusing on the urgent needs of our less fortunate citizens.

    According to Dr. Rowley, speaking about the valuations of those units on 21 November 2015

    …The cheapest unit is $1.6 million and the top units are valued at $4.5 million,”

    One can only hope that those units will be sold at market prices so that HDC can recover some of these exorbitant costs. Given the location and the high-quality finishes, there Is no rational case for any housing subsidy to be expended at Victoria Keys.

How is Housing Subsidy managed?

The standard HDC lease, under which its new homes are sold, contains provisions at clause 22 which prohibit the purchaser from selling the property for ten years. The owners of these new HDC units who wish to sell within the first ten years have to obtain the HDC’s written consent. In the event of such an application, the HDC has the option to repurchase the property at the original price. That option is open to the HDC for three months, after which the homeowner can sell.

The purpose of that clause is to give the HDC the option of recovering housing subsidy in those cases.

For example, an HDC home worth $1.2M in 2009 and purchased for $720,000, represents a $480,000 housing subsidy. If that owner wished to sell today for $2M, the HDC could exercise its option to repurchase the property for $720,000 and sell-on to the prospective purchaser for the agreed price of $2M. The proper exercise of that option would allow the HDC to receive a net sum of $1.28M, within which its original subsidy of $480,000 is recovered.

This property management clause is intended for the replenishment of the HDC’s funds and the discouragement of profiteering on public housing. The fundamental principle being that the State, having made the initial heavy investment, is entitled to recover its monies and any capital gain within a reasonable period. The ten-year period represents an intended embargo on profiteering, after which time the homeowner is free to sell without penalty.

I have seen at least six HDC consent letters in cases of persons selling those units within the ten year time-limit, but none of the persons I spoke with had any idea what I was speaking about in terms of the HDC having those rights. No penalty charges were made. This means that valuable public property rights are either subject to public officials who do not understand the provisions of the fundamental documents created by the HDC, subject to arbitrary decision-making processes in which some fortunate people are able to sell within ten years and without penalty and others are not. Which is worse, inept officials, or erratic, possibly corrupt, decision-making? I tell you.


I have been critical of the HDC’s cost-based approach to pricing its units, because it sets the prices by reference to the cost of construction. Apart from the land element being effectively omitted, that is an inappropriate approach, because it does not identify the housing subsidy allocated to successful applicants. The value-based approach better satisfies those basic requirements, since it is based on the market value of the completed homes. The housing subsidy being the difference between the value and the actual HDC selling price.

It is essential to establish the size of the overall housing subsidy and then, to determine how that subsidy is allocated. A clear analysis of housing subsidy is used in the advanced jurisdictions to monitor housing programs and review the policy as necessary. When one juxtaposes the sharp competition for public housing with the drastic reduction in available Public Money, it is now imperative that data-driven approaches are adopted to better inform the design, allocation, funding and partnership aspects of the housing program.

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VIDEO: Update on CL Financial bailout and court matter on 107.7 FM

1077fm-logoAfra Raymond is interviewed on Sunday 14th February 2016 by Rennie B on the issues relating to the CL Financial bailout and his ongoing litigation with the Minister of Finance & the Economy to ensure publication of the details of that massive payout of $25Bn + in Public Money.

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