Property Matters – Pay Day?

JCC press conference with Dr. James Armstrong at left. Photo: AYANNA KINSALE. © 2016, Trinidad Express
JCC press conference with Dr. James Armstrong at left. Photo: AYANNA KINSALE. © 2016, Trinidad Express

The JCC has become dormant by today’s standards, with only two items posted to its website for 2016. I was therefore very interested in their 27th July 2016 Press Conference to protest the high levels of State debt to its members.

At a time of apparent crisis for the construction industry, one would think that the JCC would have been publicly lobbying on behalf of its membership since this had been so effective earlier. When Dr Armstrong became JCC President it was surprising that instead of applying continuous pressure to have the debts owed to members paid, the association’s first public action was an attack on me. Perhaps they thought this was a higher priority, but it’s hard to see how the industry benefited.

The JCC issued an ultimatum to the Government to pay the $2.3 Billion dollar debt owed to its members by 30th August or face litigation.

So, has the JCC’s notable silence affected its effectiveness? I was supportive when Dr Jim Armstrong became the new JCC President in mid-December 2015, so it was astonishing to note that the group’s first public action under his leadership was to place a damaging and misleading paid advertisement in this newspaper on 10th January 2016. That advertisement was nothing short of libellious to me and apologised to the UDECOTT Chairman, Noel Garcia. We now know that Mr Garcia never requested any apology from JCC and that could be confirmed. What is more, the actual reason for this unsolicited apology remains undefined.

In contrast with that, there have been huge issues on which the JCC was silent. Just to give five examples –

  1. Public Procurement and Disposal of Public Property Act – This law was amended by the newly-elected administration after an expedited Joint Select Committee process, but there is little or no news on the important steps to its implementation;
  2. Invaders’ Bay – the announcement of new large-scale project/s, even as the Appeal Court ruling is pending in this litigation, which was initiated by the JCC;
  3. EFCL – the reported discovery of a major ‘back-fitting’ operation at EFCL Headquarters;
  4. Sir Solomon Hochoy Highway Extension project – high profile claims and counter-claims on huge expenditures and contract amendments;
  5. Beetham Water Recycling Project – the dismissal of the main contractor for this controversial project.

Given that all of these were matters in which the JCC had taken a strong interest, its silence is striking.

The JCC under Armstrong’s leadership seems to have chosen a lower profile, for whatever reason, so what outcome has that yielded? For instance, the JCC met with the Minister of Works & Transportation on 9th March 2016 to discuss issues, including the monies owed to the industry. That evidently did not deliver a solution, hence the desperate tone in their Press Conference of Wednesday 27th July 2016. We even had the spectacle of a State Enterprise Chairman, TSTT’s Emile Elias, calling on the State to ‘pay your damn bills!‘. Elias also warned that the JCC would consider ‘biting the hand that biting us!‘, which seemed to be a reference to the threatened lawsuits.

It does seem that the JCC attempts at quiet negotiations have been abandoned, that much is clear.

On the actual sums owed, the JCC’s $2.3Bn estimate of State debt to the industry is far below my own estimate which is in the $3.5Bn range. For example, the JCC statement inexplicably omits the EMBD which owed over $898M to contractors as detailed at pg 78 of the JSC Report of 27th May 2015 as at December 2014. In May 2016 EMBD’s leading contractor, Namalco, filed a $1.3Bn lawsuit against it, so the courts will rule on those claims.

ESTIMATED STATE DEBT to the CONSTRUCTION INDUSTRY as of August 2016

MINISTRY/AGENCY DEBT
Works & Transport (includes PURE and NIPDEC) $640M
Estate Management & Business Development Co (EMDB) $900M
Housing Development Corporation (HDC) $800M
Education Facilities Company Ltd (EFCL) $800M
Urban Development Corporation (UDECOTT) $93M
ESTIMATED TOTAL $3.233 Billion

Under the usual terms of contract, properly certified payments are due within a set time. It seems that the State wishes to challenge certain certifications, so the onus will be on them to pursue and prove such claims. The State must be exemplary in its conduct, but if fraud is detected, then I support vigorous prosecution. We have seen far too little of that in our country.

The State indebtedness to the construction sector is no new thing, having been a part of the situation since the mid-1980s. At the time I became JCC President in late 2010, the State debt to contractors was estimated to be over $5Bn – according to then Finance Minister, Winston Dookeran – and we also threatened litigation. We were not being silent lobbyists in the past, so it never actually got to the courts.

This present situation is against a serious decline in national revenue within which we find ourselves. This crisis in the construction industry is highlighting yet another side-effect of the huge allocation of funds to the CL Financial bailout. A serious case of Peter paying for Paul.

A strategic approach is necessary to safeguard the national interest and that of this most important industry. That is the subject of next week’s column.

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7 thoughts on “Property Matters – Pay Day?

  1. Read the article found it once more chilling.  There has been a lot of academic work that create links between ethics and performance and we also have well-established views supported by economic analysis of the cost of corruption.  Both seem intertwined within the JCC saga and organization.  TT will not become a high performing country until we begin to sort out some of these issues.  How can anyone take us seriously and want to do business with the state or even partner with some of these contractors?   One point where our thinking diverges is that “because if the CLICO bailout government cannot meet their obligations to contractors”.  GORTT has always had a cavalier approach to paying contractors.  Even when I was at TIDCO there were several times that we owed contractors large sums and the line minister and board’s position was that ” they could wait”, even when we could have paid.  Also, there is one contractor who had a bill for more than $1B and eventually took the government to court (don’t know if it was settled) which was since the early manning days.  Finally, and frankly no one knows the true extent of the government bailout of CLICO.  There are as many numbers flying around as the space that who knows.  My view is that the GORTT is cavalier and has always been about paying contractors .   Final point, It will be interesting to understand the timeline of the debt to these contractors – when was the work tendered, when was it done, when was it signed off as approved and complete.

  2. Afra I will like to hear your views on the 90mil. to repair the Brian Lara Stadium and the readiness of NAPA for reopening.I am not comfortable that all has been done to ensure structural integrity of the building.

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