Board Games Redux – the NIDCO matter

These recommendations are from the 2010 Uff Report into the Construction Sector.

“…39. The reviewing of tenders and the making of decisions upon the award of contracts should be undertaken in as transparent a manner as possible, including demonstrating clear compliance with procurement rules, so as to allay suspicion of improper actions or potential corrupt influences…”
(The emphasis is mine)

“…54. There should be no doubt (as there presently is) as to the power of Ministers to give instructions to Government agency companies on any matter within the Minister’s remit, including compliance with rules, regulations and procedures. If this cannot be achieved by voluntary means, consideration should be given to creating the agency as a statutory corporation incorporating such powers…”

It is unacceptable that Cabinet is still making decisions on the award of large-scale contracts. What is more, this procedure continues to be the norm, so this week I am deferring any budget commentary to deal with this issue.

I am referring to the recent imbroglio emerging from the award of a $400M contract to KALLCO for a 5-Km (about 3 miles) stretch of the Toco to Manzanilla highway. Minister of Works & Transport, Rohan Sinanan, is related to KALLCO and he declared that he had recused himself from both the discussion and the decision made by Cabinet.

My concern is not Sinanan’s relationships, or indeed, whether or not he recused himself from both the discussion and decision stages of the Cabinet process. I have no good reason to doubt the Minister’s statement, my only point on that issue is that the continuing tradition of Cabinet secrecy has made it impossible to verify Sinanan’s assertions.

The public interest was also fuelled by the 2016 removal of KALLCO from the Maracas Upgrade project and the emerging conflict between the T&T Transparency Institute and NIDCO. There were also comments from Disclosure Today, myself and some erstwhile colleagues in the construction sector. To my mind, the decisive point was that Cabinet made the decision to award that contract, which is a prime example of the bad governance which has beset our society. The new Public Procurement and Disposal of Public Property law is intended to end those bad practices.

That Cabinet decides on the award of major contracts is a large part of the bad governance we constantly lament. As we saw in the recent Tobago Ferry imbroglio – coincidentally emerging from the same Ministry – the dispersal of responsibility between sectors is a recipe for confusion. It is all too easy when accusations arise to have a situation in which the Board blames the Management; the Cabinet blames the Board; the previous administration blames the present one and vice versa, of course. Of course this dispersal of responsibility is also at odds with the current appetite for a ‘single point of responsibility‘ from the delivery side of the Public Procurement formula, usually via using Design/Build arrangements.

If it is the norm that Cabinet decides on the award of large-scale public contracts, then what is the purpose of having State Enterprises and appointing competent, honest people to run those establishments? I am going to delve into the basis for this long-standing arrangement, so as to understand its foundations.

The closest private sector parallel one could draw to this situation would be in a group of companies in which the parent company could have established a limit to mark the level beyond which the subsidiary company would have to get its approval to enter certain contracts. In such a private sector situation, that limit would be clearly marked and understood. Public Money is our money, so it must be accounted for and managed to a higher standard than Private Money.

What is the situation in the public sector?

Starting from the top, the role of the Cabinet is specified at S. 75 of our Constitution –

:…75. (1) There shall be a Cabinet for Trinidad and Tobago which shall have the general direction and control of the Government of Trinidad and Tobago and shall be collectively responsible therefor to Parliament…” (Emphasis is mine).

Under our Constitution, the Cabinet was given a general responsibility for direction and control. There would need to be a specific law to vary a constitutional provision. That is why Statutory Agencies – such as WASA, TTEC or HDC – are established by specific laws which permit Ministers to issue general and specific directions.

The position is different in the case of State Enterprises established under the Companies Act 1995.

The responsibility of Board Directors is defined at S.60 of that Act as –

“…60. Subject to the articles and any unanimous shareholder agreement, the directors of a company shall-
(a) exercise the powers of the company directly or indirectly through the employees and agents of the company; and
(b) direct the management of the business and affairs of the company…”

The Board Directors have the legal responsibility to manage the business and affairs of the company.

The link between the State Enterprises and the Cabinet is via the Corporation Sole which is vested in the Ministry of Finance.

This extract from the State Enterprises Performance Monitoring Manual, published by the Ministry of Finance in July 2011 is relevant –

“…3.1.5 PROCUREMENT PROCEDURES

Policy

GORTT has agreed that the Minister of Finance review and audit contracts awarded by State Enterprises as considered necessary and appropriate.

Compliance Requirement

State Enterprises are required to submit to the Minister of Finance within fourteen (14) days following the end of each month, lists of all contracts which were awarded during the month, together with the value of each contract. Tender rules and any amendments must also be submitted to the Minister of Finance for approval….”

The only real requirement is a monitoring one for the Minister to be notified of contract awards, so why is the Cabinet still involved in this level of governance? What is the point of having solid personnel and procedures at the State Enterprises, if the ultimate decisions are made in a secret chamber called Cabinet?

©2017, Afra Raymond. All Rights Reserved.