Archive for category Public Procurement Reform
This article is to engage the issues of falling national revenues due to price declines for fossil fuels, the ongoing commentary and the PM’s 8 January 2015 statement with its attendant criticisms. I am going to focus on the role of the real estate and construction sectors in this unfolding series of serious challenges.
This is the graph and table from my previous budget commentary ‘A Fistful of Dollars‘ to illustrate the trend in terms of how successive governments have attempted to balance revenues and expenditure.
The Public Procurement & Disposal of Public Property Bill was passed by the Senate on Tuesday 16 December 2014, completing its journey through the legislative process. That is an historic achievement for our country, so it is essential that we take our bearings and properly record the moment.
This important new law to control transactions in Public Money was the objective of a long-term, collective campaign by the Private Sector Civil Society group (PSCS) of which JCC was a member. The JCC met with the leaders of the Peoples Partnership in April 2010, with one of the key promises emerging from that meeting being that new Public Procurement laws would be passed within one year of an election victory. It has taken four and a half years for the government to achieve that.
This achievement was only possible because of our collective efforts. Ours was a diverse group which resolved to campaign together for this critical reform of our country’s laws to ensure effective control over transactions in Public Money. Read the rest of this entry »
The proposed development of Invader’s Bay will be the largest in our Capital City in living memory. The entire process is tainted by fundamental irregularities, any one of which ought to be enough to stop the development.
Some of those irregularities at Invader’s Bay include an improper and voidable tendering process; failure or refusal to hold Public Consultations; breach of the Central Tenders’ Board (CTB) Act and most recently, a wrong-sided policy on legal advice.
The State has appealed the High Court decision of Justice Frank Seepersad on 14 July 2014 to order publication of the legal opinions on which they had been relying thus far. That hearing is now set for Wednesday 28 January 2015 at the Appeal Court in POS. At the preliminary hearing on Thursday 20 November, the State was represented by a seven-member team of attorneys, led by Russell Martineau SC.
Minister Tewarie has repeatedly told the public that the Appraisal rules for the Invader’s Bay development were first announced in his speech to the Annual Dinner of the T&T Contractors’ Association on Saturday 5 November 2011. That is true, I was there and heard the Minister do just as he said. The issue here is that the closing-date stipulated in the Invader’s Bay Request for Proposals (RFP) was 4 October 2011, which was over one month before the rules were published. Given that fact, the proposers would not have known the rules of the competition and it is fair to say there was no competition at all. None. Just imagine the rules for a Calypso competition being distributed the week after the singers had performed. The RFP process for Invader’s Bay was therefore improper, voidable and illegal.
The most disturbing aspect of this nonsense, is that it raises disturbing questions as to what is fast becoming a new normal in our society. To my mind, there are two possibilities.
The first is that the Minister was simply unaware that he was describing improper and unlawful acts. If that is the case, one has to wonder at the quality of advice available to our Cabinet. Are we now to accept that this is the proper way to proceed?
The second possibility is that the Minister was properly-briefed that the late publication of those rules was improper and that the entire RFP process was therefore voidable, but chose to act as if the whole process was ‘above-board’. That Minister continues to insist that there is nothing improper taking place at Invader’s Bay and so on. I tell you. Read the rest of this entry »
Next Monday, 8 September 2014, is carded for the Finance Minister to deliver his 2015 Budget Statement to the country and of course speculation is great as to whether this will be an ‘election budget‘ or if a more restrained approach might be taken.
In preparing to write this column, I took a look at our budgets since 2005 and it was really striking that many of the key issues identified a full decade ago are still at the fore of the more recent budgets. Some of those issues were the imperative to reduce our dependence on the energy sector; the constant push to upgrade our infrastructure; the demand for more resources dedicated to national security and of course, the repeated statements about this or that program to reduce white-collar crime.
These expenditure and revenue figures were drawn from the Budget Statements, so no account has been taken of either actual outcomes or supplemental appropriations – this is the process used by the Government to obtain authorisation from the Parliament to exceed the approved spending limits in the national budget.
Clearly, we are seeing a trend as to the constant increases in expenditure, with only one decline, in 2010. Given that background, it also appears that surpluses are rare, occurring only twice, in 2006 and 2009.
The reality that we are on the verge of a national election which is sure to be strongly-contested, leaves me in little doubt that the 2015 budget is also likely to be a deficit budget, with the State spending more than it earns.
The recent scandals at LifeSport, Eden Gardens, THA/BOLT, CAL, CL Financial and of course, the Beetham Water Recycling Project, all show the extent to which the Treasury is being targeted by well-connected parties.
There is a constant stream of allegations of ‘Grand Corruption’, which is little surprise in our society in which an unsupported allegation is so often used to discredit an opponent. There is no comfort to be had in that observation, since the other reality is that thorough investigations and prosecutions are only done against ones political enemies, inside or outside the ruling party. That is the sobering reality in our Republic, in which we should all enjoy equal rights and be held to common standards. Different strokes for different folks, just like back in the ‘bad-old-days‘.
It seems to me that the defining question, in terms of whether the various financial crimes are taken seriously, is whether the accused persons are ‘members in good standing‘, so to speak.
The extent to which our Treasury is protected from being plundered by criminal elements is a serious question which should concern every citizen, given that the Public Money in the Treasury belongs to us as citizens and taxpayers. The frequency with which these financial crimes are overlooked is nothing less than scandalous, as any of the Auditor General’s Reports in the previous decade would attest. Permanent Secretaries approving payments in breach of financial regulations; payments made with no documents (leases, contracts or agreements) on file; failure or refusal to produce documents as required by law upon the Auditor General’s request and so many other types of lawbreaking. The same types of conduct is also rife in State Enterprises, which is why so many of the larger ones are unable to produce accounts as required by the very Ministry of Finance which sets those rules and continues to fund them.
The wicked part is that these Public Officials are virtually never charged with breaking the law or made to face any other serious consequences for their misbehaviour in Public Office. We need a new beginning in terms of how we handle the reality of our country’s wealth and its intentionally-degraded laws for controlling how our Public Money is used. A big part of that would be a political dispensation in which full investigations and prosecutions were the norm, especially when key members of the ruling party are the target of allegations.
Our budgeting process now shows all the signs that our system of Public Financial Management is ineffective in dealing with the seasoned criminals who are hard at work helping themselves to our money, whatever the political party in power. At that level, at least, there is little evidence of discrimination.
The growing complexity of the budget is of no comfort. For example, the 2014 documents totalled some 2,997 pages, yet the Billion-Dollar-Plus Beetham Water Recycling Project (BWRP) was omitted. Despite questions as to what did he know and when did he know it, the Minister of Finance continues to ignore the fundamental requirement to provide for this huge project within our national accounts. There has been no attempt to give the public the necessary explanation as to how the BWRP is to be paid for, since the underlying commercial arrangements which are driving this project remain obscured. The BWRP also shows a strong theme as to the privatisation of our nation’s water supplies, which is a growing area of concern globally. Not the first one, it is true, since we had DESALCOTT before, but this second, huge project implies a trend, in my mind.
The inescapable question is ‘To what extent can we rely on our national accounts, if huge projects like BWRP are omitted?‘
All of which brings us to the continuing and unexplained delay in passing the Public Procurement & Disposal of Public Property Bill. That new law would play an important part in greatly reducing the scope for waste and theft of Public Money. The JCC and its Kindred Associations in the Private Sector Civil Society group continue to call for this law to be passed without any further delay.
Of course all of this is driven by the political parties’ imperative to raise money from various financiers to fund election campaigns, so Political Party Financing laws are essential to control those influences. The Parliament recently unanimously approved a Private Members’ Motion laid by Independent Senator, Helen Drayton, to appoint a Joint Select Committee (JSC) to start the long-overdue process of agreeing just what are the new laws we need to deal with this influence, described by President Carmona, in his inaugural address as a ‘veritable juggernaut‘. The JCC continues to call for the JSC to be appointed so that this critical work can be started to control Political Party Financing.
Having observed the two-week spectacle of prolonged debate in the Parliament on the recently-approved Constitutional Amendment Bill, one can only wonder as to the priorities which are being displayed.
Hence my title – ‘For a Few Dollars More‘.
After a flurry of attempted explanations from the Minister of Planning & Sustainable Development, Dr. Bhoe Tewarie, as to the real meaning of the High Court’s 14 July ruling on the Invader’s Bay matter, the State has now appealed that ruling and applied for expedited hearing of the matter while having the judgment stayed.
What that means is that the State is asking the Court to agree an extension of the Stay of Execution until the appeal is decided, so that the requested information could be withheld while the case is being heard. Presumably, the State has asked for a speedy hearing so as to avoid any impression of them encouraging needless delay in this matter of high public concern.
This article will focus on the three critical findings in the judgment. I will be examining Dr. Tewarie’s statement to Parliament on Friday 18 July, alongside the facts and the actual High Court ruling.
Legal Professional Privilege
The very first point to be made in relation to this is that the reason given by the State for refusing the JCC’s request for this information was not originally ‘legal professional privilege’.
That reason for refusal was only advanced after the litigation started, literally arising out of the very briefcase of the State’s attorney, on his feet before Justice Seepersad on 4 December 2012.
We contested the State’s late introduction of these new reasons for refusal, but the Court ruled at para 37 –
- The Court…is of the view that the Defendant is entitled to rely upon additional reasons with respect to the refusal to disclose the said information…
The question of whether the legal opinions are privileged was ruled-upon by Justice Seepersad –
- It cannot be disputed that the said information requested, is information that would ordinarily attract legal professional privilege…
So that issue is not in dispute, in the Court’s mind at least. I continue to hold the view that it is highly-questionable to easily accept this notion of client confidentiality, given that the State ought to be acting on our common behalf.
In fact, no evidence was tendered nor was any real case made by the State as to the difficulties which would result from publishing the requested information. None. It is only now, with a ruling in the JCC’s favour, that we are getting these positions being advanced.
For the record, the JCC’s original request under the Freedom of Information Act (FoIA) was for the legal advices and the letters of instruction.
Consider this, from Dr. Tewarie’s opening statement –
The very first point that I wish to make with regard to the high court ruling is that there is no issue of disclosure here. There is no issue of failing to disclose or of wanting to withhold disclosures. The Government is not seeking to prevent disclosure of any matter nor is the Government fearful of making any disclosure of fact.
The only issue we are contesting is whether the advice of an Attorney to his/her client, which is generally regarded as privileged information, is subject to the jurisdiction of the Freedom of Information Act or whether, since it is a privileged exchange of information between Attorney and Client, it is exempt from the Act…”
If that is truly the case, with the State’s only concern being the possible adverse impact of releasing the legal advices, the question has to be – ‘Why not publish the letters of instruction now?’
Waiver of Privilege
A significant aspect of the case was as to the impact of Dr. Tewarie’s statement to the Senate on 28 February 2012, in reply to a question by then Independent Senator Dr. James Armstrong – see pg 716 of Hansard –
The answer to (c); the publication of the request for proposals was not the subject of nor required to be in conformity with the Central Tenders Board Act. Advice to this effect was received from the Legal Unit of the Ministry of Planning and the Economy, and subsequently from the Ministry of the Attorney General…
The point being advanced by the JCC was that a statement like that one, which purports to publicly disclose the very essence of the advice, has the effect of extinguishing the State’s right to suppress the document as being exempted.
The Court ruled clearly on this –
- The gist and nature of the legal advice was in fact revealed when the Minister’s response was made and this amounted to conduct that is inconsistent with the stance that the said legal advice is exempt from being disclosed under the Act by virtue of section 29(1)…
So, the High Court found that Dr. Tewarie’s statement to the Senate neutralized the State’s ‘legal professional privilege’. That is an important aspect of this ruling, given the frequency with which legal opinions and names are brandished by our leaders, always when convenient, of course.
The Public Interest Test
This ruling is significant in that Justice Seepersad weighed the existing ‘legal professional privilege’ – making a clear ruling on that at para 41 – against the ‘Public Interest Test’ set out in S.35 of the FoIA.
At one point it was widely reported that Dr. Tewarie was insisting that the ruling had nothing to do with transparency, but was only on the narrow issue of legal professional privilege.
The substance of Justice Seepersad’s ruling was at paras 85 & 86 –
- The nature of the project in this case and the process adopted by the Defendant to pursue the Request for Proposals process without regard to the provisions of the Central Tenders Board act, requires disclosure of all the relevant information that was considered before the said decision was taken and the refusal to provide the requested information can create a perception that there may have been misfeasance in the process and any such perception can result in the loss of public confidence. Every effort therefore ought to be made to avoid such a circumstance and if there is a valid and legally sound rationale for the adoption of the Request for Proposals process, then it must be in the public interest to disclose it and the rationale behind the process adopted ought not to be cloaked by a veil of secrecy.
- The public interest in having access to the requested information therefore is far more substantial than the Defendant’s interest in attempting to maintain any perceived confidentiality in relation to the said information…”
The real point here is that Justice Seepersad has carried out the Public Interest Test, as mandated at S.35 of the FoIA and ignored by the State in this matter, to find that the ‘legal professional privilege’ is subordinate to the Public Interest in this case, given all the evidence submitted to the Court.
The entire process possesses all the ingredients for corruption, I maintain that view.
Dr. Tewarie has repeatedly claimed that the process was transparent because he disclosed the assessment rules for the Invader’s Bay development at the T&T Contractors’ Association Dinner on Saturday 5 November 2011. That assertion is perfectly tautological, in that it is entirely true that the rules were revealed for the first time on that occasion, but it does not explain anything of substance. The decisive fact is that the closing-date for the Invader’s Bay RFP process was 4 October 2011, a full month before the rules were disclosed. That fact alone renders the entire process voidable and illegal.
What is more, we have to consider the widely-advertised public consultations on the redevelopment of King’s Wharf in San Fernando; the South-Western Peninsula development; the issue of ‘City-status’ for Chaguanas; Constitutional Reform and of course, the latest one, the Civil Society Board. The glaring question has to be – ‘When is the State hosting the first in its series of Public Consultations on the Invader’s Bay development?’
Finally, will this development process continue, while the legal arguments continue?
It seems to me that we are entering a sustained and hard-fought Information War, global in extent, but with local flavour. The main features of this are the attempted redefinition of Privacy as a defunct notion, right alongside the State’s duty to know all about us, but tell us as little as possible of their own operations. That is the name of the game, so these issues are going to be challenged strongly as we go forward.
The High Court ruled on 14 July 2014 that the Minister of Planning & Sustainable Development must provide the legal advice which was said to have justified the development process at Invader’s Bay. This case was brought by the JCC after the Ministry refused to publish the legal advice obtained in response to our challenge that the Invader’s Bay development process was in breach of the Central Tenders’ Board Act. Given the repeated statements that the legal opinions supported the State’s actions in relation to the CTB Act, the obvious question is ‘Why the secrecy and refusal to publish those opinions?‘
The JCC requested the legal opinions and the letters of instructions under the Freedom of Information Act and the judge applied the ‘Public Interest Test’ in deciding that the public right to that information eclipsed the accepted point as to the existence of ‘legal professional privilege’. There have been many comments on what has been described as a landmark ruling and it appears that the question of just what is an official secret is once again up for discussion.
We are now being told that the right of the client to maintain the confidentiality of legal advice is now under threat, so the State is reportedly considering an appeal of that High Court ruling. Read the rest of this entry »
Property ownership is a critical ingredient of the society we are trying to build. No one can deny that. The wealthiest people and companies in this society have made a great part of their wealth through property dealings – buying, leasing, sub-dividing, selling, renovating and so on. We all know that property is critical to amassing and holding wealth.
The single largest owner of all classes of property in the Republic is of course, the State. Those properties are described as ‘Public Property‘ in the Public Procurement & Disposal of Public Property Bill 2014 which is now being debated in Parliament. The penultimate paragraph of the Private Sector Civil Society group (PSCS) group statement of 13 June 2014, is clear –
“…Whilst very pleased with the progress to date and while not having sight of the amended bill we note two areas that remain of serious concern; the Role of civil society and the acquisition and disposal of public property…“.
At pg 7 of that Bill – “public property” means real or personal property owned by a public body;”
‘Real Property’ usually means real estate (freehold or leasehold), while ‘Personal Property’ usually means all other types of property such as licenses, concessions and tangible items of worth.
‘Owned’ usually means literally owned, as in the case of a freehold or leasehold interest, but there are other important types of property which are not literally in the ownership of a public body. Public Property is important because it is extremely valuable. The power of the State or its agencies to allocate those Public Properties must therefore be exercised in an equitable and transparent fashion if we are to foster proper conduct of our country’s public affairs.
In relation to real estate, it is important to note that the system of Crown Grants was used during the colonial period to encourage immigrants of a particular type. Immigrants who were of acceptable race, religious belief or station in life were allocated public lands for the purpose of agriculture. The actual documents are called ‘Crown Grants’ and they can be seen in our country’s records. The allocation of those lands to those selected people established a pattern of substantial wealth which took generations to displace. Of course such a system of property allocation, on the basis of ones’ external appearance and belief system, would be incompatible with our Republican status.
That history and the important role which property plays in today’s society are both reasons why the ‘disposal of public property‘ is an inescapable part of the new law, so that we can ensure good governance in these matters.
The Maha Saba Episode
This is a good example of a type of Public Property not literally owned by a Public Body. The dispute was over the decision of the previous administration to allocate radio licenses overnight to the Citadel Group, which was owned by a PNM member, at the same time as delaying the grant of broadcast licenses applied for by the Maha Saba. The Maha Saba had to take legal action all the way to the Privy Council to obtain a favourable judgment as to the breaches of principles of good public administration by that PNM government.
A new law intended to control dealings in Public Property as defined above would be one which extended beyond those literally owned by Public Bodies to include species of property in the ‘care, custody or control‘ of those bodies. That would allow future occurrences of a ‘Maha Saba episode’ to be rapidly rectified, also at less expense, by the Procurement Regulator as that type of property transaction would be within oversight of the new law.
In point of fact, it was reported that the Citadel group which comprised three radio stations was sold in 2012 to the CCN group (owners of this newspaper) in 2012 for a sum reported to be over $50M. So it is clear that these species of property have serious value, quite apart from any other aspects.
When Caroni Ltd. was closed in August 2004, about 76,000 acres came out of cultivation and become available for alternative uses. The Caroni lands stretch from Orange Grove at Trincity (near the large new Blue Water facility) as far south as Princes Town.
Given the fact that Chaguanas has been our fastest-growing town for almost 20 years now and the ongoing growth of investment in San Fernando and its outlying districts, it is clear that the Caroni lands have a critical role to play in our medium to long-term prospects. But those possible outcomes would be conditional on just how the Caroni lands are allocated in the short-term. As far as I am aware, a decade after abandoning sugar cultivation, there is still no strategic plan for how these lands are to be utilised. In the absence of a proper strategy for the management of those important State lands, there is scope for missed opportunity in terms of development and re-distribution.
The decisive land allocation issues would include –
- How does the allocation policy work together with the State’s broader economic policies?
- To whom are the lands allocated?
- On what terms are the lands allocated – i.e. for how long are the lands to be leased and with what restrictions? Some of the ex-Caroni workers are demanding grants of freehold interests from the State, but no decision seems to have been made on that.
- Does the State have the right to repossess the lands upon expiry of the lease?
- Does the allocation strategy have dynamic measures to control speculation? This is to prevent the growth of ‘flippers’ who just acquire property to hold and re-sell. There is a serious view that ‘flippers’ are a part of the market, but there is also a way that their presence can retard development as they do not typically improve or maintain their properties.
All of those issues must be located within equitable and transparent arrangements as required by the new law.
State Leases of offices
When the State leases offices or other property it is in fact procuring property via a transaction in Public Money. Those transactions must take place within a modern system which ensures good governance by attaining accountability, transparency and value for money.
There is a huge oversupply of offices in greater POS as a result of the State’s overbuilding during the last regime and the current administration is now shifting significant public offices out of POS. The combined impact of those ought to be a steady decline in both the gross amounts paid to landlords via State leases and the amounts paid per sq. ft.. That kind of change can only be obtained and monitored if the State’s leases of offices and other property are also part of the new Procurement system, so that the details are published as part of the database of State contracts.
The State-owned reclaimed lands at Invader’s Bay in west POS are another pregnant example of how the use of improper land allocation processes can injure the public interest. The JCC has mounted a legal challenge to seek publication of the legal advice obtained by the Ministry of Planning & Sustainable Development as to the legality of their activity ‘thus far’ in respect of that 70-acre parcel of prime land.
It is interesting to recall that one of the legal opinions on which the State seems to be relying, notes that this proposal was to grant long leases (about 99 years) to the successful bidders at Invader’s Bay. That was not considered a disposal since the State would have retained the freehold interest. Now that is probably the best example of why these types of transactions must be controlled by these modern and effective laws. The attempt to conflate a residual freehold interest with ownership, while at the same time denying the tremendous commercial value of a 99-year lease over prime lands was scandalous.
The most valuable properties in the capital are the leaseholds in St. Clair and Woodbrook, that much is indisputable, which is why we have guard against this kind of evasive advice to facilitate arrangements to escape proper oversight.
The Landed Interests
The ill-fated 2009 proposals for a new Property Tax would have required an updated and open database of the entire country’s property holdings. The campaign to ‘Axe the Tax’ was successful and that database never saw the light of day, which entirely suited the Landed Interests who are wary of any system which would expose their operations to easy scrutiny.
We need to be vigilant to ensure that the Public Procurement & Disposal of Public Property Bill 2014 does not leave a gaping, purposeful loophole thorough which our Public Money will continue to pour.
Given that our political parties receive financing from business-people, how will those party financiers be rewarded? In a situation which properly controls the award of State contracts for goods, works and services, how can they be rewarded?
The answer is Public Property.