Property Matters – Cycle of Consequences

This article will delve deeper into the State Enterprise sector and its role as an agent of government policy with huge transactions in Public Money. I will do so by continuing my focus on the State-owned hotels and their performance, drawn from the official record.

The poor quality of investment decisions with our limited Public Money has left us saddled with projects no private investor would have contemplated beyond an initial appraisal stage. Public Money ought to be managed to and accounted for to higher standards than those applicable to Private Money. That standard learning appears to have evaporated in our country.

ppp

The Public Private Partnerships (PPPs) in relation to our State-owned hotels are evidently beneficial to the hoteliers but of limited, if any, benefit to the Public as shareholders. PPPs here in T&T are ones in which we have privatised the profits and nationalised the losses. That is what happened at Tobago Hilton and, in significant respects, at Carlton Savannah – as detailed in ‘Carlton Savannah Swirl‘ published in this space on 15 February 2015. What is more, some of the leading beneficiaries of those arrangements, such as Arthur Lok Jack, can declare – “Government has to get the hell out of private sector business.”.

In my previous article on this issue, I disclosed certain important details on the Hyatt Regency and UDeCOTT. The UDeCOTT role needs to be framed in these terms if one is to understand the seriousness of this situation –

  • then PM Manning repeatedly stated that UDeCOTT was the best-performing State Enterprise and its Chief, Calder Hart, to be one of his top performing officers. Yes, the same Calder Hart;
  • current PM Dr Rowley made loud and pointed objections to UDeCOTT’s improper dealings. Those objections eventually led to Dr Rowley’s dismissal from the Cabinet and the fateful Uff Enquiry. Those objections were also taken by others and were fully vindicated by the findings of the Uff Report;
  • The International Waterfront Centre, of which the Hyatt Regency is an important part, opened in January 2008 and has been repeatedly claimed as UDeCOTT’s ‘Flagship Project‘;
  • Since the IWC opened UDeCOTT has not published proper audited accounts, as detailed in this space on 21st February 2018.

UDeCOTT logoIn the case of UDeCOTT, the Parliament website shows its Consolidated Financial Statements for the years ending 31st December 2007 and 2008. In both cases, the Independent Auditors Report, was issued with a stern Disclaimer of Opinion.

For the financial year ending 31st December 2008 – KPMG’s 2008 Audit Report made an identical statement, but went on to conclude its ‘Emphasis of Matter’ section as follows –

“…A letter of financial support from the GORTT (the government) would confirm its continued financial support of the Group as no reliable subsequent financial statements and cash flow budgets are available…”. (emphasis is mine)

In the case of e Teck, the Parliament website shows its Consolidated Financial Statements for the years ending 30 September 2010 to 2016. In 2010, PWC issued qualified accounts and in 2011 also issued a Disclaimer of Opinion, which is considered to be significantly more severe than qualification. In the period 2012 to 2016, KPMG issued qualified accounts for e Teck. In the entire period, key issues were noted with both the Trinidad Hilton and Magdalena Grand (Vanguard Holdings) properties as earlier cited from the JSC Report into e Teck of June 2016.

On 25th October 2016, I caused a request to be sent, from my colleagues at Disclosure Today, to the Ministry of Finance for information under the FoIA. We requested copies of any Audits or Management Reviews conducted at any of the three State-owned hotels – Trinidad Hilton, Magdalena Grand and Hyatt Regency. On 10th November 2016, the PS of the Finance Ministry responded, with-in the 30-day limit set by the FoIA, to confirm that no such Audit or Management Review had ever been done.

3hotels

It is very serious that leading Public Officials could be claiming that these Management Agreements for our State-owned hotels are satisfactory.

ADDENDUM: UDeCOTT’s compliance post-2008

Property of TVS, Inc.
Port of Spain International Waterfront Centre (IWC)

The IWC was funded via UDeCOTT issuing a 15-year bond, which was declared at that time to be confirmation of its commercial viability and so on. The fact is that as a Securities Issuer registered with the T&T Securities & Exchange Commission (TTSEC), UDeCOTT is obliged to file its accounts regularly. That legal requirement is to provide the necessary degree of market information to the investing public on the performance of the issuer of securities. This table sets out four cases in which UDeCOTT formally agreed that it was in breach of the relevant law and paid the penalties.

So what we have is a best-performing State Enterprise operating in breach of the applicable Securities law over a period of years and those penalties being a further expense on the taxpayer. I have not heard of any of UDeCOTT’s Directors or Officers being taken to task or penalised for this and it is unclear whether there are continuing penalties on the company in the cases of continuing breaches.

Penalties paid by UDeCOTT to TTSEC
in settlement of its agreed breaches of Securities Industry laws

Date Breach Penalty Paid (TT$)
15 June 2011 Failure to file Financial Statements – 2008(Audited) and 2009 (Interim) $120,000
6 June 2012 Failure to Register additional securities of $250 Million, issued in excess of approved limit of $1.2 Billion for International Waterfront Centre (2009-2024) $100,000
3 April 2017 Late filing of Interim Financial Statements for period ending 30th June 2016. $4,000
1 December 2017 Late filing of Interim Financial Statements for period ending 31st March 2017. $50,000
TOTAL $274,000
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2 thoughts on “Property Matters – Cycle of Consequences

  1. The use of taxpayers money as recompense for the incompetence of very highly paid, qualified, public administrators is yet another severe drain on our economy. We assume that very high salaries are given to those who will minimise expense and maximise efficiency. If political interference or cronyism or corruption is the cause then we are obligated to demand the full reimbursement of those funds by those guilty. Malpractice by anyone CANNOT be funded by the victims and reversals MUST be freely and completely consequential by law. Our education masks these principles with too much BS (business studies).
    Flooding and water wastage recur alternately each year. Guilty persons are freed on superficial technicalities and complex interpretations concocted by QCs. yet those on the lowest rungs are fined, imprisoned and evicted at the whim and fancy of hypocritical others.

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