VIDEO: First Up Interview – 18 May 2010Afra Raymond sits down with Jessie May Ventour and Derek Ramsamooj for a discussion of matters pertaining to the construction industry prior to the national elections. Topics include UDeCOTT, the controversial Guanapo church and the Uff Commission Report.
On Sunday 6th June the Trinidad Express’ Investigative Desk published yet another series of exclusive reports from Camini Marajh and those are once again, raising more questions than answers.
The reports revolved around some of the recent dealings of Home Construction Limited and their financing via First Citizens’ bank. The Home Construction group of companies is an important part of the CL Financial empire – that CLF empire is being bailed out by the State.
The key issues arising from the reported information would seem to be –
…there was no need since CL Financial was not a statutory State company, and the shareholders’ agreement signed between Lawrence Duprey and the Government required agreement by both sides before any change could be instituted…
If I am reading that right it would seem that the terms of the June 12th 2009 Shareholders’ Agreement were being invoked to secure the positions of the present holders of high office in the CL Financial group. If this position as outlined by Holder is indeed correct, then there seems to be an urgent need for those terms to be re-examined and/or renegotiated.
Apparently Dr. Tewarie is also the Director of the Institute of Critical Thinking at UWI. Listen to his conclusion to the Director’s Statement –
…The present in which we now live has already been created for us or we ourselves might have knowingly or unknowingly conspired to create it. But we live and we learn. The important thing is that we learn. When we learn we grow and evolve and are better able to deal with the inevitable new challenges. And so we press on…
see http://sta.uwi.edu/ct/foundir.asp
We need a proper account from Dr. Tewarie on the last days of the CL Financial group. The people who are responsible for this scale of collapse must render an account. To fail to do so would only compound their failure and we would have to banish them to obscurity.
We are now in an interesting space, between the noise of the election campaign and the appointment of some of the most powerful government officials. The new Cabinet was sworn in on Friday 28th May and the appointment of officials to the SPEs and Statutory Corporations is about to take place.
As noted previously, these SPEs are arguably now more powerful than the traditional civil service, in both the scale of their operations and the loose oversight regimes within which they exist.
As I noted in the first part of this article, published on 16th April, our history is that newly-elected governments will select their own candidates to fill these vacancies. Apart from the issues of ritual dismissals which were identified then, there are further points to be made at this stage.
The People’s Partnership has won a resounding electoral victory and it seems that a significant number of voters were voting for a change from the large-scale corruption and bobol which had become commonplace.
There were some precedents set by the last PNM, which were so shocking, even by our elastic standards, that they must be highlighted, so we can ensure they are never repeated.
Even though the People’s Partnership is still in the ‘honeymoon period’, it is timely to set out these precedents for consideration –
Of course, these are all made more painful, by the fact that they are true and also, by the strange position of Jack Warner MP, our new Minister for Works and Transport. As far as I am aware, once one is appointed to serve in Cabinet, which is effectively the highest office, one is obliged to demit all other offices at once. The notions at work here being the general principle that it is impossible to serve two masters and also this instance being one in which the responsibilities are so serious that ones service must be total and dedicated.
Jack Warner has confirmed that he will be keeping his roles as a Vice-President of FIFA, President of CONCACAF and Special Adviser to the Trinidad & Tobago Football Federation. Simply amazing. Of course, I am subject to correction, but it seems to me that this is an absolutely unacceptable situation. It is impossible for Warner to serve two masters and this is not a precedent which should be tolerated at all, at all.
I want change, not exchange – Question is “Can the People’s Partnership deliver that?”
I had intended to write on the Heritage Buildings in our capital for some time, but the UDeCOTT scandal and other public concerns kept me occupied. The recent shocking collapse of a major part of President’s House eventually acted as a trigger for this article. As I said at the time, that was a shame and a natural result of seriously misplaced priorities.
The present position of the Heritage Buildings is one we can only make sense of by adding some context. In my view, the background to the present situation is –
Some of the Heritage Buildings in our capital have benefited from repair and renovation and those would include –
There have also been these significant failures –
The failure to repair or maintain so many essential buildings is a tragic symbol of our disdain for history and the simple sense of proper maintenance.
These are the Heritage Buildings which really need urgent and high-quality attention –
This is the seat of our Parliament and it is a true failure of repairs and maintenance. There has been an ongoing repair/replacement of the Red House roof for at least 10 years. There is an immense scaffold which is occasionally relocated and the project literally seems to have no end. In addition to the roof repairs, which were originally being undertaken by NIPDEC, there is an ambitious program of Red House works set out on UDeCOTT’s website at http://www.udecott.com/index.php/cc/cc_project_item/restoration_of_the_red_house/. Our Parliament deserves a no less than a solid restoration job and a proper maintenance program.
This historic building, at the corner of Knox and Pembroke Streets, is in a sad state of disrepair. It is in need of a serious program of repairs and renovation.
The western wing of the official residence of the Head of State of our Republic collapsed through lack of maintenance. President’s House is alongside the spanking-new, elaborate Prime Minister’s Residence and Diplomatic Centre, recently opened at a cost in the region of $200M. This building has not been properly maintained for a long time and it was shocking to hear Colm Imbert stating to the media that it had been declared unsafe about 10 years ago. Even the parts of the building which are still standing are now also condemned. There had actually been official functions taking place there up to the day before the collapse.
President’s House has to be a priority project for high-quality repair and renovation.
We do not have a legal and financial framework which will preserve our architectural heritage. The Planning and Development of Land Bill (1997) piloted by the last UNC administration contained provisions which would have addressed many of the issues highlighted in this article.
We need to re-start our discussion on national development, including property and housing. That discussion must include a place for our built heritage.
The CL Financial bailout has been a major public concern since it was announced on 30th January 2009 and I have been critical of the steps taken by the current administration to deal with the collapse of what was the Caribbean’s largest conglomerate. The leader of the Peoples’ Partnership (PP), Kamla Persad-Bissessar, has been noted for her strong criticism of the actions of the then Minister of Finance in making early withdrawals from the CL Financial group before the collapse. Her arguments in the Parliament are an important part of the story of this fiasco.
National elections are tomorrow, with the distinct probability of a victory by the united PP, so it is timely to consider the way in which that group might handle the bailout.
In addition to her major contribution to this debate, the opposition leader has recently promised to revisit the terms of the bailout and that is an intriguing development.
It is impossible at this stage to know what the PP will do on this important public matter, but I have been considering the role of certain major players.
The Insiders
For example, these are prominent people, formerly from the highest level of the CL Financial group –
It is easy to imagine these men playing an important part in any future PP government.
The Outsiders
In contrast, the two UNC MPs who, publicly and in advance, voiced serious concerns over the CL Financial group were economist, Trevor Sudama and former Attorney General, Ramesh Lawrence Maharaj. Both of those courageous individuals suffered the wrath of Mr. Panday and eventually found themselves sidelined. Ramesh was an MP in the last Parliament and ended up backing the very Basdeo Panday in the UNC’s recent leadership contest. A twisted road indeed, but ultimately, with Kamla’s victory, Ramesh has now been excluded from the ranks of PP candidates in tomorrow’s election. Only those two individuals in our public life had the foresight and fortitude to sound the alarm on CL Financial. For whatever reason, we have now come to an arrangement of forces which has no room for those two men.
What is at stake?
Apart from the crucial Special Purpose Entities (SPEs), the CL Financial bailout has placed the entire group under State control. There are therefore substantial Directorships and contracts, within the very CL Financial group, to be dispensed.
Some of the main issues which must be dealt with if the bailout terms are to be normalised would be –
There are about 65 SPEs and the terms of the CL Financial bailout bring another 65 companies in that group within the umbrella of State control. That is a total of 130 companies and this could be an opportunity to re-shape the corporate culture of the place.
The opposition leader has been noted for her sharp questioning of the real role of the SPEs, even going so far as to suggest that they are deliberately used to avoid the norms of proper accountability in the spending of public monies.
The PM, Mr. Manning, also told us in his interview last Sunday that in some cases, the SPEs may have ‘cut corners’.
Both those statements seem to signal an acceptance of the need to change, but we will have to wait to see what actually happens.
In view of the season and the issues raised so far in this series, I am setting out some ideas about the scale of challenge we must overcome to achieve change, not exchange.
The State-owned Special Purpose Entities (SPEs) are an important part of the picture in the provision of goods and services to our country.
Who is to run these important entities? In what manner? These questions of “w” are central to the sharp public concerns over the level of corruption at and performance of, these agencies. My contention is that there are two contending tendencies in the minds of those who make that sort of decision.
The two ideals exist in fundamental tension, moreso since other aspects of the question are also in flux.
There is no clear agreement as to the boundary between the critical SPEs and the rest. Some of the players believe that every SPE should be subject to their political whims, while others have clear ideas as to which ones must be managed professionally.
Also, it is quite likely that the two ideas co-exist in the minds of some of the main players. That is, they are themselves severely conflicted on the entire subject.
The idea that important SPE/State jobs and contracts are available for those in political favour is one of the things we have to change.
At this moment we are poised before a snap election, with a highly-charged atmosphere on the issue of SPE corruption. Even devotees of the ruling party seem to be shocked by the scale of the problem. Whatever the outcome of this election, there is likely to be considerable action on this aspect of public affairs.
If the present ruling party wins convincingly, we are likely to see a triumphant return to the stated policy of Expediency in Public Affairs. Those winners could declare that the policy approaches which brought us to this sorry place are the right ones, which were endorsed by the electorate, so we return to mismanagement and dishonesty.
The possibility of a victory of the Peoples’ Partnership also holds challenges in this area, since they could return to old habits. By that I intend to remind readers that when UNC took office in 1995, there was a widespread series of dismissals of top-level staff at SPEs. It was so large-scale that the late Grand Master wrote a 1997 calypso on it – ‘De No-Work Band’. It was never a very popular one of Kitch’s numbers, but those people who suffered sudden and unjustified dismissal will remember the tune, as well as the words. Plenty names and bitter-sweet too bad. PNM did much the same thing when they returned to office in 2001. No kaiso for PNM, though.
That pattern of brusque dismissals and crude exchange is highly questionable, given that both parties have fundamentally similar economic and social policies. It seems to me that the dismissals are motivated more by by vengeance and a desire to control the vacated jobs, than by any actual difference in ideology or approach..
This is what I mean, in saying that we need change not exchange.
It might seem unlikely, but we could very soon be confronting these issues of who runs our SPEs and how, in what is likely to be a harsher, sharper fashion than ever before.
The ingredients are all there –
Yes, come 25th May, we could be seeing a situation which eclipses all the wildness which has gone on so far in this country of ours.
It is clear that there are certain SPEs which must be forensically investigated, with people charged under the law with a view to recovering the stolen funds and restoring a healthy atmosphere to public life in this country of ours. I have already given a lot of detail on those SPEs. My point holds ‘irregardless’ of who wins the election. The situation of gross mismanagement and unpunished corruption is too dangerous to our good health as a nation to be allowed to continue just so.
It is equally clear to me that there are serious, capable and committed people in our SPEs. Those people have been exemplary in the execution of their duties and added real value to the public service in this country. They are all now at risk of suffering the fate of other ‘political appointees’ when the other side wins.
It is not good enough for us to shrug and murmur that that is how these things go. We are a small country, with limited human resources and we cannot spare the intellectual capital which is evaporated every time we go through these purges.
I have set out the key findings of the Uff Report, insofar as the elements of governance go. Those were combined with recently published news to offer a picture of the manner in which our leading Special Purpose Entities (SPEs) are being governed.
The picture is an unflattering one, which few could seriously seek to emulate. It brings to mind the question raised here some time ago – ‘What was it really all for?‘ I continue to believe that the State must behave in an exemplary fashion, but that is not all.
The concerns over governance being raised in this series ‘Learning the Lessons’ are part of an attempt to query the true purpose and effect of the SPEs. The point I am making in this final installment is that there are pre-conditions which ought to eclipse even important points like missing years of audited accounts, unsigned contracts, ‘back-fitted’ financial documents, publication of massively-inflated achievements, bogus feasibility studies and the like. Just listing the important principles which have been violated, the whole situation seems incredible.
Important as it is to eradicate those unprofessional and dishonest practices, there has to be more to the development process. Yes, even if the main ingredients of good corporate governance were practiced at our SPEs, it would all be for naught, unless those companies are operating in accordance with a sound strategy for national development. Good corporate governance is necessary, but not sufficient, if we are to achieve the sound development which every right-minded citizen would desire.
To illustrate this point as to the importance attached to strategy, I am going to shift focus from UDeCOTT and the HDC. I am going to consider the operations of NIDCO in terms of examining this issue.
In her maiden budget speech on 22nd September 2008, the Minister of Finance set out the main elements of this government’s ambitious transportation plans. These were in four parts – the rapid rail project, the coastal water taxi, the building of more highways and a significant expansion of PTSC’s fleet. The Rapid Rail, Coastal Water Taxi and Highway building program are all being handled by NIDCO.
In ‘P3 and the Proposals’- published in this space on 23rd October 2008, see http://www.raymondandpierre.com/articles/article58.htm – I wrote –
“The National Infrastructure Development Company’s (Nidco’s) high-profile advertisements for rapid rail are now giving one pause. Hear this: “As part of a holistic plan to ease traffic congestion and create a more modern, efficient, transportation network, the Ministry of Works & Transport…signed a design-build-operate-maintain contract on April 11, 2008, for the implementation of the Trinidad Rapid Rail Transit System.
Where is this holistic plan?
Were public comments ever invited on that plan?
Where can the public see that plan?”
It was plainly the intention of NIDCO, in this series of advertisements, to promote the belief that these four huge, expensive initiatives are all part of a comprehensive strategy.
I was very sceptical and continued to call for the ‘Holistic Plan’ to be published. All to no avail.
On 27th November 2008, I submitted my application, under the provisions of the Freedom of Information Act (FoIA), for a copy of the said ‘Holistic Plan’. My application was sent to both the Ministry of Works and Transport (MoWT) and NIDCO, its implementing agency.
That FoIA application and NIDCO’s reply also dealt with the Rapid Rail contract, but that is for another time.
On 2nd January 2009, I was ‘phoned by a civil servant from MoWT, who advised that they were ‘working on my application’; she confirmed by email later that day that “…we are still gathering the information and working on your request…”.
Just imagine that. 9 months after signing a major contract, reportedly ‘…as part of a holistic plan…’ and three months after publishing advertisements to that effect, I get an email from MoWT to say they are putting the plan together.
On March 6th 2009, the Permanent Secretary of MoWT wrote me to apologise for the delay (these FoIA applications are supposed to be dealt with in a month) and direct me to pursue NIDCO for a reply.
On 4th August 2009, NIDCO’s Vice-President Legal, Nirad Samnadda-Ramrekersingh, wrote in reply to my application for the ‘holistic plan’ –
“…please note that same does not exist either as a formal document or series of documents and that the term as used in the newspaper advertisement to which you have referred is simply a descriptive reference to the Rapid Rail Transit System, the Water Taxi Service, the Interchange Project and the existing PTSC and Maxi Taxi networks also described in the said advertisement. We are satisfied that this is the case…”
“…simply a descriptive reference…” Take that.
So there we have it, another slew of ambitious, extremely expensive and long-range plans being carried out supposedly for our benefit, but once again, we are witness to fundamental dishonesty on a huge scale. Just like UDeCOTT, with its bogus feasibility studies, we can see that NIDCO’s claims are also highly questionable. In the absence of real development strategy, we can only hope for a lucky accident. That is no proper road to national development. Particularly in the arena of physical development, where decisions have long-term physical, environmental and financial consequences.
As our servant with special responsibilities, the State is responsible for carrying out those developments in accordance with some sound strategy. We must raise questions which are fundamental if we are to do better. If we are to do better, we have to think and act differently. Big changes are essential if the State is to deliver the future we need.
NIDCO is a State-owned company, established in 2005 and under the control of the Ministry of Works and Transport.
According to its website – www.nidco.co.tt – its vision is –
Vision
To be a key enabling vehicle for the development of infrastructure that enhances and sustains Trinidad and Tobago’s economic development and quality of life.
Its core values are –
No reasonable person could object to those principles.
The Chairman of NIDCO is Professor Chandrabhan Sharma, of UWI’s Engineering Department; Professor Sharma is also a Director of Republic Bank Limited, TTEC and several other companies.
NIDCO’s President is Kaisha Ince, Attorney-at-Law.
On 12th March 2009, the Business Guardian published ‘Sagacity and Veracity’ as my attempt to compare the aspects being revealed by the unfolding collapse of CL Financial and the Uff Enquiry into the public sector construction industry. At the time, quite frankly, it felt like a bit of a stretch to compare the two….what do we know now?
No need to burden readers, the last few months have been crammed full of shocking details of these situations. Time for me to try putting them into some perspective.
Some threads to start pulling together –
What is obvious to me is that the absence of consequences is proving inimical to our national development.
In addition to the absence of consequence, there exists a potent Code of Silence which prevents us from getting a reliable account of what really went on inside any of these many situations. I am speaking here of attributed interviews which can form part of our understanding the problems. Nobody on the CL Financial or UDeCOTT or HDC Boards has spoken openly. No one in any of the previous Cabinets. Is like we walking in de dark (Thanks, Brigo).
There is no point in citing Cabinet secrecy or commercial confidentiality as reasons for the silence. That would involve an attachment to principle which is not part of our situation. In other countries with far more at stake – USA in its ‘War on Terror’, for example – it is normal to see detailed, open accounts of what has taken place at Cabinet and other top-level commercial meetings. Our Code of Silence is a different thing.
One thing, we all know for sure, even with the national absence of consequence, is that one type of person will definitely be punished. Yes, that is the ‘whistleblower’, the seeker after truth. Only whistleblowers are punished in our Republic.
Is almost like gangster business, where witnesses need special protection. Gangster politics.
Can we escape our culture? Can we escape our culture? Can we eclipse ourselves?
Do we need a big Witness Protection program? Who is to Guard those guards?
‘A good example is worth a thousand words’, so my teachers used to say. What kind of example are we setting for our young people?
The people responsible for this mess are our Leadership Class. These are the people – yes, I know that I am one of them – who had the best schooling and opportunities. We are witnessing a lack of responsible behavior by our leadership class – the best and the brightest.
We are living with the consequences of an absence of consequence.
Careless Chiefs
Imagine a parent, becoming aware that something improper is happening between one of their children and a responsible adult, someone like a teacher or coach. Someone whose job it is to nurture your child in a responsible fashion.
A responsible parent will take immediate steps to deal with the problem. Try to imagine what kind of parent will deal with a coach behaving improperly with one child, but leave their other children in that class, with the said ‘interfering’ coach.
Yes, we have a ‘Father of the Nation’ who has done just such a thing. The fact is that the dismissed UDeCOTT Directors have not been removed from their other positions at State-controlled organizations.
That is the scale of the problem.
For the Party People
Some readers might see these columns as being critical of the PNM government and to some extent they would be right, since that is the party in power during these various episodes. It being election season, nobody should be surprised that this stream of damaging revelations – on UDeCOTT, HDC, CL Financial etc – is very useful to the Peoples’ Partnership in the campaign.
As bad as the revelations of corruption, I am not at all sure, given their recent and indisputable record on these questions, whether the UNC would have done differently had they been in power in the last 8 years or so. I can clearly recall the rejection suffered by Maharaj, Sudama and Maraj when they spoke out against corruption in the last UNC government. The dissolution of Parliament and the calling of fresh elections soon followed, just like in this rounds.
No, this is not a political column, just an attempt to set out some points of view on our situation. To stay on point, I agree with Transparency’s Chairman, Victor Hart, that the non-publication of the Bernard Report into the Piarco Airport project was a pity. Hart, who was a Commissioner on that Enquiry, has also said that, had it been published, we would have been unlikely to have had the UDeCOTT situation. Interestingly enough, PM Manning promised to publish it, but over 6 years later it remains concealed, for whatever reason.
The Peoples’ Partnership seems to be forging ahead on the winds of public disgust with large-scale corruption, so I am now calling on the leader to make us a public pledge to publish the Bernard Report into the Piarco Airport project immediately upon taking office.
The outline from ‘Sagacity and Veracity’
https://afraraymond.wordpress.com/2009/03/12/sagacity-and-veracity/
An easy guide to the CL Financial and UDeCOTT Fiascos
Six quick pointers for our readers –
Last week I promised readers some details of the scale of the failure at the HDC and UDeCOTT.
The failure is systemic and exists at every level.
The Special Purpose Entities (SPEs) were established to achieve a more rapid rate of national development. The idea was that we, the public, would benefit from the ‘best of both worlds’, so to speak, in that the ‘best practice’ of the private sector would be used in the SPEs to satisfy the requirements of the public for better roads, housing or other goods or services.
Starting at the level of underlying purpose of these SPEs –
In the seven years between 2003 and 2009, there should have been an output of 56,000 new homes, but the total output claimed was repeatedly given by the PM and the Minister of Planning, Housing and the Environment as being about 26,000. In March, I publicly challenged the accuracy of those claims and the new MD of the HDC, Jearlean John, released revised figures – see http://guardian.co.tt/news/politics/2010/03/28/unc-claims-hdc-voter-padding-opposition-strongholds-marginals – which showed a total of 15,394 new homes built in the period. An annual average of about 2,200 new homes, about a quarter of the reduced target.
That is at least 10,000 less new homes than the HDC’s chiefs had been claiming. What trouble is this?! Now, at the same time as we thanked Ms. John for setting the record straight, just try to imagine the record-keeping and integrity of an organization which could repeatedly overstate its achievements in this fashion.
That is the scale of the problem.
That is the scale of the problem.
In both cases, we are witness to fundamental dishonesty on a huge scale.
Moving on to the findings of the Uff Report –
Looking at the controversial Cleaver Heights project, at para 25.30, the Report states
“…The absence of a written contract was put in context in the cross-examination of Minister Dick-Forde when she confirmed advice from HDC to the effect that none of their large projects and none of the small projects either had a signed contract . It was subsequently confirmed that as at January 2009 HDC had 64 large projects ongoing and 591 small projects, none of which had a signed contract. Large projects were those over $50m in value. Thus, while there appeared to be no good reason why a formal contract was not signed between NHA and NHIC, it seems clear that to have done so would have been a highly unusual step and one which was presumably regarded, both by NHA and HDC, as unnecessary.…”
Not one HDC contract has been formally drawn up or executed. Not one.
My colleague, Ken Ali, put out a hard-hitting exclusive on the ‘HDC’s Silent Projects’, published in last Monday’s Guardian at http://guardian.co.tt/news/general/2010/04/26/capacity-firms-weak-non-existent.
UDeCOTT was also involved in its own widespread and unconventional practices, namely ‘back-fitting’ of data, as described in the sidebar.
On the blighted Brian Lara Cricket Academy (BLCA), being built by Hafeez Karamath Ltd. (HKL), we are told –
“…As a result money was advanced in circumstances which do not appear to have been governed by any ascertainable rules and amounted effectively to very substantial loans to HKL. Such a procedure is quite unique in the experience of the Commissioners. It calls for explanation but none has been offered…”
“…UDeCOTT’s administration and recording of the payment process was “appalling” and required a great deal of detective work to get to the bottom…”
“…does not by any means explain why UDeCOTT staff had gone to such extraordinary lengths to ensure that HKL was paid as soon as the money became available; why UDeCOTT was seemingly so anxious to make payments substantially beyond the value of work carried out (and in circumstances where the contractor was already in default such that TAL had long since recommended termination); and why UDeCOTT chose to disregard the opinions of the appointed engineer (TAL)…”
- Of 79 Certificates issued for advance payments, 39 were wrong in relation to the sum for payment of advance payment, 60 were wrong in relation to the amount of advance payment made to date and only 4 out of 79 correctly recorded the advance payment and the amount of repayment.
- UDeCOTT’s contemporaneous reporting of advance payment is materially wrong (i.e. under-reported) by tens of millions of TT$ for the vast majority of the duration of the project.
- UDeCOTT decided to back-fit Payment Certificates in February 2008. Those back-fitted Certificates also materially under-reported the amount of advance payments made. All the back-fitted Certificates have been endorsed by at least two signatories and in some cases three.
Little wonder that UDeCOTT’s audited accounts have not been published since the end of 2006.
The Cancerous Cozy Consensus
Given the scale of the bobol revealed in this single Enquiry, one can only wonder what else is taking place at other SPEs. The relationships are so cozy that one seldom, if ever, hears of anyone being made to repay the monies stolen or even face the Courts. I am repeating my call that it is time for us to review the performance and proper role of the SPEs.
It might also be useful at this stage, for those of us who exist in the ‘comfort zone’ of private sector superiority to reflect on how seldom, if ever, we act against ‘White-collar’ crime.
One of the hidden practices of UDeCOTT which was revealed in the Uff Report was that of ‘back-fitting’ of payment certificates so that various erratic and unsupported payments could continue, all under the veil of accountability. For readers who are unfamiliar with this sort of practice or surprised that such could be the practice at the ‘best-performing SPE’, they might find it easier to understand if the colloquial phrase is used…Yes, ‘Ratchefee”…
The reflections continue this week, by drawing heavily on the text of the Uff Report and the transcripts of the Uff Commission, to set some of the scandalous facts into context. This is for those who are still wondering ‘What was it all really for?’
Last week I wrote that the State must behave in an exemplary fashion. It is also important to know that the State has a responsibility beyond the moral plane. On an entirely practical level, it is clear that the State controls the majority of economic activity in our nation. As such, it is responsible for the majority of construction projects in the country. If we exclude the exceptional projects built for the energy sector, over 75% of the construction in the country is carried out by the State.
Apart from statutory undertakers – like TTEC, WASA, TSTT etc. – the State carries out most of its capital investment via various SPEs. Those would include:
The conduct of the State is therefore fundamental to the conduct of a huge slice of the business activity in our country. If the behaviour in the majority of our commercial relationships is improper, that is good reason for the cynical attitudes and poor standards which flourish.
Yes, there is considerable ambiguity in the term ‘improper’ and I am therefore going to illustrate.
One of the perennial questions is ‘How come State projects are almost always overbudget and late?’ That is a truly universal question and the problem, if only the main element is isolated for discussion, is that the parties are too close.
The typical contractual and managerial controls of budgets, accounting systems, independent professional advice and penalty clauses were all violated wantonly. Our Treasury has been plundered. See the sidebar for an extract from the Uff Report.
UDeCOTT and the HDC are the State’s two main agencies in the move to physical development, they are both under the Ministry of Planning, Housing and the Environment.
We are now clear that both have been failures when measured against the goals set for them. The sheer scale of the failure will be set out next week in this space, again with extracts from the published record.
We need to ask what has to happen differently? Can we make the change?
Governance is one of the vexed aspects of this discussion on the purpose and performance of Special Purpose Entities (SPEs). Whether we are looking at the HDC or UDeCOTT, the concerns are similar.
At the national level, we can have a broad description of good governance which includes elements such as – equity, participation, accountability, transparency and conforming to the rule of law. Of course, when we focus on the SPEs, there is a narrower definition of good corporate governance being the rules which are followed by a Board of Directors to achieve fairness, accountability and transparency in the relations with the company’s stakeholders.
When one considers that the SPEs were introduced to overcome the delays of the old civil service rules, their corporate governance rules are key in achieving those elusive levels of performance.
“Holding to account
62. We have observed, in the context of contractual issues as well as regulatory matters that there exists a culture of non-enforcement which appears to operate on a mutual basis. Contractors seem reluctant to issue proceedings for payments overdue or to enforce claims and employers in turn refrain from enforcing time obligations which are routinely not complied with. In regard to delay issues, the point was demonstrated by the fact that no witness or representative appearing at the enquiry was able to quote any case in which a contractor had actually been required to pay or had been debited with liquidated damages. In the wider field there was a tacit acceptance that regulatory approvals, particularly as to planning, were rarely given in a final form before the work was performed, this coupled with an expectation that such approval would be forthcoming retrospectively.
63. At the same time we had the impression that one contractor who made a habit of enforcing contractual rights, if necessary by formal proceedings, was regarded as being “confrontational”. Such an attitude does not sit well with the careful drawing up of commercial agreements; nor with competitive tending, which is carried out on the basis that contracts will be enforced. It is also inconsistent with the clear duty of directors of companies and public bodies to enforce the contracts they negotiate and enter into. If there is a desire to promote the timely and proper performance of public sector contracts, this will only be achieved by holding parties to account for any breaches of contracts freely entered into; as well as enforcement of legal duties in regard to regulatory matters. Enforcement must also be assured through efficient and timely processes of courts and other tribunals.”
The emphases are mine.
AfraRaymond.net 