There has been a powerful and positive response to the first column in this series. The reflections continue, as they must. No time for distractions, in this election season.
Last week I paused with the promise to spend some time examining the Special Purpose Entity (SPE) model and its role in national development. This week, I continue the reflection with focus on the Directors of these companies as key players in the sector.
One of the fascinating aspects of the Uff Report is its discussion of the nature and extent of the independence of the Special Purpose Entities. Obviously, that discussion was mostly focused onto UDeCOTT and the reporting relationship with its line Ministry.
Some main points would be –
- Multiple Directorships –
One thing which is clear from the Calder Hart episode is that one individual had control of a vast slice of State resources. Hart was Executive Chairman of UDeCOTT, Chairman of the Home Mortgage Bank, Trinidad & Tobago Mortgage Finance, the National Insurance Board (NIB) and the National Insurance Property Development Company (NIPDEC). He obviously enjoyed a tremendous level of confidence at the very highest levels of government. It is equally clear, from the Uff Report, that that confidence was woefully misplaced. Even in the early days of ‘Corporation Sole’ we have never had an individual invested with so much power. It seems that this individual never had to answer to a Chairman, since he was head of all the Boards he sat on. Is that a healthy precedent? For those who would be quick to say that he has been found guilty of nothing, please note that this is the same individual who described himself to the Uff Commission as –
Q. Yes. But your lawyers misdescribed you in these proceedings as a financial expert. You would not agree with that description?
A. I would not describe myself as an expert of anything.
See – ‘End-notes on the Uff Commission‘ at http://www.raymondandpierre.com/articles/article77.htm
Yes, that is the same individual who stated, under oath, that all outstanding issues with the audited accounts of UDeCOTT had been resolved and that we could expect those in February 2009. Yes, that is the man who was in charge of our national savings and pensions. And yes, I will write it – He could not do such in Canada. I am saying that no single individual could properly discharge all those functions. No way. The fact that so much trust was reposed in that particular individual is indicative of a distorted sense of values. Time to think again.
A similar set of contradictions exist with the outspoken Independent Senator, Michael Annisette. See – https://afraraymond.wordpress.com/2008/01/12/an-unhealthy-choice/. Incredible as it might seem, Annisette’s position is even more complicated than Hart’s.
- Over-burdened Directors – Quite apart from the particular issues which beset these two individuals, there is broader issue to consider. Do we draw our Directors and leaders from a sufficiently broad cadre of people? In terms of both the State sector and the private sector, it seems to me that we have similarly narrow channels from which we make these appointments. I am not at all sure that the private sector can claim a superior method or results in terms of over-burdened Directors. The result, as was clearly the case at UDeCOTT, can be a poor quality of strategic decision-making and lax oversight of the company’s affairs. That is a sorry result, given that those are core Board functions.One key lesson we should be able to draw from this is that there is no way people can function with this level of multiple responsibilities. We now need to develop a new set of guidelines for these important roles. The UDeCOTT episode must not only be used to critique the public sector, for there are surely examples of over-burdened within the private sector as well.
- Under-development of our society – A paradoxical aspect of the situation is that the thrust to rapid development is given as the rationale for the Special Purpose Entity, yet the method of deployment is somewhat counter-productive. I am saying that the cadre of people from which we draw our Directors and leaders needs to be wider if we are really to develop our potential as a nation. That also applies to the private sector, since the prevailing instinct seems to be that we pick people with whom we are comfortable for these leadership positions. Very understandable, whether we are speaking about the public or private sectors, but the act of restricting the ranks of leaders is itself inimical to our development.
- The proper role of the State – I am also saying that the State must behave in an exemplary fashion. That is very important, given the corrosion of proper standards we are living through. The State has an indispensable role to play in national development and that is not just limited to construction.
What we saw at UDeCOTT was rampant expediency, with good management and internal controls being violated at every turn. All in the interest of achieving targets and developing the country. Huge contracts granted via sole selective tendering, without competition. That means they gave the contracts to their chosen contractor and consultants. Yes, just so. Huge payments made before works were done or materials purchased.
Yes, expediency was allowed to eclipse good governance and accountability. The interest of the taxpayer was jeopardised, supposedly all for the benefit of said taxpayer.
We can now soberly put the question – ‘What was it really all for?‘
The Ordinary citizen
I am also asking that our Prime Minister give details of his conversation with Calder Hart. Of course, one does not seriously expect an answer. That, too, is a big part of the problem we are trying to probe with only our wits and words.
UDeCOTT’s Audited Accounts
This column is to be published on 22nd April, four weeks after Jearlean John held her first meeting with the UDeCOTT Board. Readers might remember that Ms. John, citing her adherence to good standards of governance and professional conduct, promised to publish UDeCOTT’s audited accounts. Those were last published at the end of 2006. No accounts for 2007, 2008 or 2009. Worse yet, no explanation at all. I have had to dismiss some absurd attempts to explain that the delay has been due to the Uff Commission itself. Those attempts emanated from a member of the Cabinet who definitely ought to have known better. Ms. John is now making me wonder ‘What is the mystery?’ Is this one of those cases which gave rise to our folk saying ‘More in the Mortar than the Pestle’?