Invader’s Bay part 3: MORE Invaders Bay Ingredients

I closed last week’s article by restating my view that all the ingredients for corruption were present at Invader’s Bay.

What are those ingredients?

Here is my list –

Extensive public assets coming onto the market, in turbid circumstances. Those assets can include property, concessions, contracts and jobs;
Questions of access to the gatekeepers – in these scenarios, some people will have unbelievable access to the decision-makers;
Conflicting and confusing versions of the project or proposal. The confusion is as persistent as it is deliberate, a part of the tangled web.
Blatant double-standards and lying is the norm in these situations;
Apart from ceremonial fluff, such as sod-turnings and ribbon-cuttings, there is no intention whatsoever to give any proper public account or statement of intentions. True transparency is evaded like taxes;
Professional Civil Servants who are unable or unwilling to insist on the maintenance of minimum standards;

Extensive Public Assets

These lands are estimated to be worth in excess of $1.2Bn at today’s priced, that means the unimproved value. Although the lands are reclaimed, a significant amount would have to be spent on infrastructure to make the property ‘shovel-ready’ for development.

As I noted in the first in this series, there were conflicting claims on this aspect, with the selected developers claiming extensive infrastructure expenses as a way to reduce what they would pay for the land. There were no estimates given for the developers’ cost of infrastructure, but I noted that the National Budget for 2014 had specified, at pg 89 of the Public Sector Investment Program, that there would be publicly-funded ‘Infrastructure Development’ at Invader’s Bay.

I have been assisted by some of the professionals in the very Ministry of Planning & Sustainable Development in identifying that item as being a $50M allocation for 2014. The actual works are unspecified, so it is difficult to be certain what is included. It certainly seems a modest sum given the size and peculiar challenges posed by the Invader’s Bay property.

In addition to the obvious public asset of the actual property, readers should note that assets in this context can include concessions. In this context that can mean maritime & docking concessions as well as tax concessions, so we will have to maintain full vigilance to safeguard the public interest.

As a first position, all the details of the overall agreements must be published for public consideration at the earliest opportunity. This is no minor point, since really huge sums of wealth can be transferred from public hands to private interests if proper transparency is not ensured. Just remember that in June this year while the President of the Peoples Republic of China was here there was the signing of a Government to Government Agreement. The JCC has lodged many strong objections to those agreements. How many readers will remember that there was an important agreement signed with respect to the Pitch Lake at that time?

To cite a press report –

…According to a release from Lake Asphalt of Trinidad and Tobago (1978) Ltd, the signing ceremony of a Memorandum of Understanding and a Confidentiality Agreement with Beijing Oriental Yuhong Waterproofing Technology Co Ltd of the People’s Republic of China is scheduled to take place at the Hyatt Regency, Port of Spain…

So, faced with a Freedom of Information Act which ensures disclosure, the new trend is to wrap-up the details in yet another layer of secrecy. We need to be alert to that trend. After all, this is the same Ministry which claims to have legal advice confirming that its actions conform to the Central Tenders Board Act, yet steadfastly refuse to publish that advice.

Access to the gatekeepers

One of the two successful proposers has been the MovieTowne principal, Derek Chin, whose confidence has been striking.
According to Mr. Chin, in an extensive interview –

…Chin has met with the Prime Minister and many government ministers seeking approval for this project.
Before Christmas 2010, he had a meeting with the Transport Minister Jack Warner, Foreign Affairs Minister Suruj Rambachan, and other ministers, at the Prime Minister’s Office. They all supported his plans. “I have been lobbying the Government for a year now, even before the elections. I sent in the preliminary sketches about the concept; I met 19 Cabinet ministers over the last six months. The next minister I am meeting is Bhoe Tewarie, Minister of Planning. He wants to see me. I also met with Jearlean John, Udecott chairman. She also loves it, but that was three to four months ago…

That interview was given in early July 2011, which is over one month before the Request for Proposals was published by the Ministry of Planning & Sustainable Development at the end of August. I tell you.

Conflicting and confusing versions

So, to return to the legal opinions, we have this swirling set of stories.

To date, Minister Tewarie has insisted that the project has been removed from UDeCoTT’s portfolio and placed within the Ministry of Planning. He claims that Cabinet approved this in 2011 and also insists that there is no tender process at Invader’s Bay. Of course it is impossible for the Ministry to proceed to invite tenders for anything without following the Central Tenders Board Act.

The first legal advice I saw was clear that there is indeed a tender process at work here and that the CTB Act ought to have been followed. Obviously, that conclusion did not ‘fit the script’, so an escape hatch had to be fashioned. Shortly thereafter another opinion was submitted by Sir Fenton Ramsahoye SC, on an entirely different set of assumptions which made UDeCoTT the central enabling agency in the entire scheme.

The approach endorsed by the Ramsahoye opinion flatly contradicts the version being advanced by Minister Tewarie.

That is the deep, intentional confusion being encouraged by public officials in this matter.

Blatant double-standards and lying

So, let us start with the role of the Ministry of Planning & Sustainable Development on the Invader’s Bay project. How does that Ministry reconcile its active role in seeking public views on the King’s Wharf project in San Fernando with its silence on Invader’s Bay in POS?

These are blatant double-standards of the worst kind. One can scarcely believe that there are professional civil servants who could condone this reckless and underhanded approach to national development. But there we have it.

When is the Ministry of Planning & Sustainable Development going to host a public consultation on Invader’s Bay? That is now an inescapable requirement. Sooner rather than later.

But that is not all. No, not at all.

This administration campaigned on the findings of the Uff Enquiry and made several public promises to implement the 91 recommendations of the Uff Report. Such was the importance of the matter in the political agenda that it formed the first item of the very first post-Cabinet Press Briefing of the Peoples Partnership administration on 1st July 2010. That is a broken promise, since those Uff recommendations have not been adopted and the JCC’s many attempts to offer our assistance to achieve that have all been rejected.

The 17th recommendation of the Uff Report is –

User groups and other interest groups should be properly consulted on decisions regarding public building projects, to ensure that relevant views can be expressed at the appropriate time and taken into account before decisions are made…

There has been no consultation at all on the Invader’s Bay proposals. Quite frankly, apart from rumours and conflicting press reports, I do not really know exactly what is going to be built or where or even when.

According to the iconic American jurist Louis Brandeis, speaking on eradicating corruption –

‘Sunlight is the best Disinfectant’

Invader’s Bay part 2: All the Ingredients for Bobol…

Since my previous article on this controversial proposal, we have seen that certain legal advice reportedly considered by the government has been featured in another newspaper. If that is the advice the State is relying upon in advancing their Invader’s Bay proposals, we are seeing a large-scale act of intentional illegality and a worrying return to the ‘bad-old-days‘.

My main concerns are –

CONSULTATION?

Compare the lack of consultation at Invader’s Bay with what happens elsewhere. In particular, the large waterfront lands near the city centre of San Fernando at King’s Wharf, which has been the subject of ongoing public consultations over the years. The press reports that various design and redevelopment concepts were presented to and discussed with a widely-based audience.

Whatever the criticisms one might make of the King’s Wharf proposals, it is undeniable that views have been sought from the public/stakeholders and various proposals have been made for consideration.

The JCC and its Kindred Associations in Civil Society met with Ministers Tewarie and Cadiz on 26 September 2011 to express our serious concerns. Yet, when Minister Tewarie was challenged by the JCC and others as to the complete failure to consult with the public, the only example of consultation he could cite was the very meeting we had insisted on, which took place after publication of the Ministry’s Request for Proposals (RFP) and just about one week before the closing-date for proposals.

This Minister obviously does not consider public consultation to be a serious element in real development, notwithstanding the lyrics about innovation, planning and, of course, Sustainability and the Cultural Sector. Just consider the way in which East Port-of-Spain is being discussed within that same Ministry. The prospects for sustainable economic development of East POS must be linked with the Invader’s Bay lands, there is no doubt about that. What is more, to carry-on as though the two parts of the capital can enjoy prosperity in isolation from each other is to trade in dangerous nonsense. When criticising the large-scale physical development plans of the last administration, ‘dangerous nonsense’ is exactly what I had accused them of dealing in.

Public Administration must be consistent, reasonable and transparent if the public is to be properly-served. To do otherwise is to encourage disorder and a growing sense that merit is of little value. The decisive thing has become ‘Who know you’.

We need to be informed now what planning permissions or environmental approvals have been granted on Invader’s Bay and on what terms.

The Legal advice

I have seen the two legal documents reported on in another newspaper and have to say that those are remarkable documents.

A critical undisputed point, is that the evaluation rules – the “Invader’s Bay Development Matrix and Criteria Description” – were only published after the closing-date. The JCC made that allegation in its letter of 14 December 2011 and that was confirmed by Minister Tewarie in his Senate contribution on 28 February 2012. That is a fatal concession which makes the entire process voidable and therefore illegal, since the proposers would have been unfairly treated.

Note carefully that in writing to seek legal advice in response to that challenge of December 2011, the fact that the tender rules were published ex post facto does not seem to have been the subject of a query as to its legal effect.

In one of the legal documents I saw, the penultimate para is chilling in its directness –

“…A simple answer to Dr Armstrong’s question on whether the RFP conforms to the (Central) Tenders Board Act is that it does. In reality, the entire tender process was not brought under the CTB Act and the matrix and criteria were forwarded to the tenderers AFTER they submitted their initial proposals to the MoPE…”

The ‘simple answer‘, which is what Senator Armstrong got from Minister Tewarie, is that the Central Tenders’ Board Act had been conformed with. The next sentence is where we enter the other place…let us deconstruct it –

*Phrase*	*Meaning of the phrase*
‘In reality‘	The prior sentence is the official version we are going to tell Senator Armstrong, but here is what really happened.
“…the entire tender process…”	Minister Tewarie has consistently held that there was no tender process, this is the State’s senior legal adviser calling that process by its correct title, two weeks before his statement in the Senate.
…“the entire tender process was not brought under the CTB Act…”	The tender process was required to be brought under the CTB Act, since it was being done via a Ministry…but that did not happen.
“…the matrix and criteria were forwarded to the tenderers AFTER they submitted their initial proposals to the MoPE…”	The State’s senior legal adviser is confirming here that the elementary good practice rules of tendering have been violated, rendering the entire process voidable.

There are two clear findings of illegality in that single paragraph by the State’s senior legal adviser. Yet a ‘simple answer‘, which was ultimately deceptive, was suggested for Senator Armstrong.

The advice which featured in the press was from Sir Fenton Ramsahoye SC, seemingly obtained after the initial opinion just discussed.

The Ramsahoye opinion was reported to have ‘given Bhoe a green light‘ and so on, but I have serious doubts on that.

Firstly, if there had been clear-cut, solid advice which would have exonerated its actions, the government would have published that so as to silence its critics.
Secondly, having read it myself, their game is a lot clearer.

Ramsahoye’s mind seems to have been directed to the prospect of UDECOTT being granted a head-lease of the entire Invader’s Bay property and then granting sub-leases to the developers selected by the Ministry of Planning. Those developers would then carry out the proposed development/s.

If that is the way this is proceeding, then there are two serious issues arising on UDeCoTT’s involvement –

The Switch – While it is true that UDeCOTT can lawfully grant the subleases and operate outside the CTB Act, the burning question has to be when was this decision taken to give UDeCoTT that role? Minister Tewarie has been adamant, since November 2011, that Cabinet took a decision that the Invader’s Bay project be removed from UDeCoTT’s portfolio to be placed within his Ministry. When did that purported switch back to UDeCoTT take place? Has Cabinet actually approved such a move? The first advice looked at the development as it had proceeded and made the conclusions which I criticised above. The second advice, contemplated a procedure which had been vigorously resisted by the responsible Minister.
The role of the Board – One of the most vexatious issues to be probed in the Uff Enquiry is the question of to what extent can Cabinet instruct a State Board. That issue of undue Cabinet influence was also a large contention during the Bernard Enquiry into the Piarco Airport scandal. Uff concluded, at para 8, that the scope of Ministers’ power to give instructions ought to be clarified. There are several significant challenges if one accepts the formulation put onto the Invader’s Bay process in Ramsahoye’s opinion. Cabinet would have to instruct that UDeCoTT implement decisions taken by the Ministry of Planning etc. As we have seen and as the legal advice has clarified, those decisions emerged from unlawful processes. Is UDeCoTT obliged to follow unlawful instructions? In the event of litigation, which is increasingly likely, will the members of UDeCoTT’s Board be indemnified by the State for their unlawful acts? If that were the case, it would be repugnant, with deep echoes of the two earlier large-scale episodes of wrongdoing at Piarco Airport and UDeCoTT projects as cited above.

I stated earlier that this Invader’s Bay matter had all the ingredients for corruption. I stand by those views.

Invader’s Bay payday?

invadersbay-sml Invader’s Bay has re-emerged from the shadows via PNM Senator Faris Al-Rawi’s budget contribution on Monday 23 September 2013 (pp. 168-175). The twists and turns in this controversial proposed scheme are detailed at JCC’s webpage.

Invader’s Bay is a 70-acre parcel of reclaimed State land off the Audrey Jeffers Highway – just south of PriceSmart & MovieTowne – in the western part of Port-of-Spain. Its value was estimated by the State in 2011 to be in excess of $1.2Bn, so these are prime development lands, possessing these attributes –

Water, Electricity and all urban services are readily available;
Flat/gently-sloping terrain;
Direct access to Audrey Jeffers Highway;
Waterfront location.

Before proceeding to the latest revelations, it is important to restate the main objections raised by the JCC and others with respect to this proposed development –

The Request for Proposals (RFP) was published by the Ministry of Planning in August 2011 seeking Design-Build proposals for the development of these lands and specifying an entirely inadequate 6 weeks for submissions;
There has been no public consultation at all, so the public has not been involved in this, the largest proposed development in our capital in living memory;
The RFP was silent as to the other three, extant strategic plans for the POS area, all paid for with Public Money. Given that the RFP was published by the Ministry of Planning, that is a tragic irony, to say the least;
EIA – The RFP is silent as to the requirement for an Environmental Impact Assessment in a development of this scale;
The proposals were to be evaluated against the “Invader’s Bay Development Matrix and Criteria Description”, which was only published after the closing-date for submissions. That is a clear breach of proper tender procedure, which renders the entire process voidable and therefore illegal.

Continue reading “Invader’s Bay payday?” →

Property Tax Facts

Property Tax is back and the controversy has naturally returned since the ‘Axe the Tax‘ movement was a signal moment of unity in the anti-PNM campaigns of 2009/2010.

In my opinion, the anti-Property Tax movement was an important measure of the extent to which our national discourse is now irrational and baseless. The disenchantment with the Manning administration and the thirst to have them removed seemed to occupy more time than any substantial discussion as to the merits of the proposed Property Tax.

Now, as then, I hold the view that our nation’s Property Tax regime is long-overdue for reform and updating. I support the proposals to do so and we will have to wait for more detail to analyse these proposals further.

Here are a few of the basic facts on Property Tax.

The size of the Property Tax Take – Proportionally

The Estimates of Revenue disclose that in 1995 property tax was 2% of tax revenue and in 2009 it was expected to be a mere .18%. Property tax, when last collected, contributed a small fraction of the amount it did 15 years ago. The official projections for the Property Taxes proposed by the PNM were for that revenue to increase to $325M in 2010 – even at that level, the contribution would have barely exceeded 1% of the national tax revenue.

The Draft Estimates of Revenue (2014) published in the recently-approved budget are unclear and I have requested an official clarification before making any detailed comments on those. As an example the Total Tax Revenue 2014 is estimated (at p. vii) to be $46.8Bn, with ‘Taxes on Property’ comprising $3.914M, which is a tiny proportion of the total, about 100,000th of 1%. The accompanying chart, on that very page, shows Property Tax at 1% of the total. There is more to say, but I am awaiting the requested information, hopefully before next week’s deadline.

The key point here is that property is a vibrant engine of wealth in our country and has been so for many decades, every successful person knows that. Given that fundamental, it is obvious that property has to be properly taxed if any kind of economic justice is to emerge. The historically paltry percentage of revenues raised via Property Taxes is solid justification for a comprehensive mapping of who owns what and the where. This is a flourishing sector of the economy, so proper taxes are long-overdue.

The size of the Property Tax Take – Absolutely

property-tax_93-09 — Total Property Tax 1993-2009. ***Click image to see expanded version.***

category_expand — Total Property Tax 1993-2009. ***Click image to see expanded version.***

*The PNM’s 2009 proposal was to abolish both the L&B Taxes and the House Rates, with the replacement Property Tax anticipated to earn $325M in the year 2010 – from Ministry of Finance, Estimates of Revenue 2010 (at pg v )

The figures tell a story, since they depict an unexplained decline in Property Tax revenue from $132.16M in 1994 to $83.44M in 1995 and modest increases to $95.08M in 2001, before restoration to $129.65M in 2002. L&B Taxes were payable outside of Municipalities, while House Rates were payable within the 5 Municipalities – POS, San Fernando, Arima, Point Fortin and Chaguanas.

According to the official records, the real decline in Property Tax income in that period occurred in non-Municipal areas, with L&B Taxes falling from $109.38M in 1994 to $60.38M in 1995, never rising above $64M, before restoration in 2002 to $94.08M. In clear contrast, House Rates in the corresponding period rose steadily from $22.78M to $35.97M.

I am an outsider examining these aspects of the Property Tax challenge from the published record and one wonders just who is responsible for this level of sheer recklessness. After all, 45% of the revenue from L&B Taxes vanished in a mere 12 months and in any properly-managed organisation that would send alarm bells ringing. Over the seven fiscal years 1995-2001, an annual average of $50M in Land & Building Taxes went unpaid – which makes a total of about $350M in missing revenue, at a minimum. What was the reaction within the Board of Inland Revenue? What steps did they take to identify and eliminate this leakage? Was there any tax evasion? Was anyone charged for that criminal offence?

These are essential questions to be resolved if we are to master the challenge of the proposed Property Tax system.

The Local Government element

mc-funding-chart_2009 — 2009 Municipal Corporations funding. ***Click image to see expanded version.***

Both PNM and Peoples Partnership proposed to send the Property Taxes direct to the Consolidated Fund. The effect of that would be to reduce Municipalities to having just over 2% of their funding free from Central Government controls. That critical element must form part of any discussion on Local Government reform.

Next week, I delve into the question of income tax on rental income and the likely levels of tax on your property.

VIDEO: Time to Face the Facts about Caribbean Corruption – 26 May 2013

This is the interview on Caribbean Corruption for ‘Time to Face the Facts‘ which was broadcast out of Barbados-based Caribbean Media Corporation on Sunday 26th May 2013.

The audience was regional via cable and global via their Facebook page. The interviewer is Jerry George and the format was a live call-in. Video courtesy Jerry George

Part 1:

Part 2:

Part 3:

Charting our losses: ‘A picture is worth a thousand words’

The last four articles in this series have focused on what I call ‘two sides of the same coin’ – the coin being the large-scale and improper use of Public Money.

I examined the THA/BOLT office project called MILSHIRV being undertaken with the Rahael group and the Calcutta Settlement land scheme in which the HDC acquired developed lands at several times the proper price the State could have paid.

Throughout this type of critique one has to strive for effective balance and fundamental integrity. The extent of the waste and/or theft is never easy to pinpoint when one is working from outside and relying solely on published documents, but my best efforts to establish those facts is what is presented. Of course it is impossible to say for sure that any amount of money was stolen in a particular project, hence the phrase ‘wasted or stolen’.

Objectively, it does not matter whether the money is wasted or stolen, if it is ultimately unavailable for the benefit of the Public. Once spent, that Public Money is gone forever, which is why Value for Money is of such importance in any proper Public Procurement system.

Subjectively, however, the errors of inexperience or poor process must be differentiated from an active conspiracy to defraud. Although the objective measure of loss might be identical in terms of the dollar-amount, there are different long-term consequences. Innocent errors and miscalculations can be rectified over time by ongoing review processes. Deliberate conspiracies to defraud require concerted and well-grounded attacks in order to be eliminated. What is worse about the deliberate conspiracies is that they affect the very atmosphere in which public business is conducted.

We end up with a situation where it pays to pay a bribe and the decision not to pay is to suffer delay.

That is why we are where we are today. Simple so.

One of the important lessons emerging from the Wall St disaster is that the variety of financial regulators with their varying rules and experiences allowed financial players to engage in ‘Regulatory Arbitrage’. That was the scenario in which financial players shopped for pliable or suitable regulators within which to channel their products, resulting in the unprecedented financial disaster we are all living through.

Here in T&T we have seen a similar pattern in our financial markets, but the point being made here is that it has also emerged in the Public Procurement arena, with TIDCO paving roads; the rising profile of State-owned entities which were deliberately excluded from the formal procurement controls; those same companies breaking their own rules and so on. That is the emergence of a toxic kind of ‘Procurement Arbitrage’, which is the reason why we must have over-arching regulations to control all transactions in Public Money.

So, there are two types of losses being charted here –

Firstly, inexperienced officials or poor processes can approve wasteful uses of Public Money through sheer ignorance.
Secondly, there is deliberate conspiracy to defraud the Treasury of our precious Public Money.

Only a Court can establish whether the lost Public Money was wasted or stolen, so I have ventured no opinion as to which is which. Readers can reach their own conclusions.

These charts illustrate the extent of the waste or theft of Public Money in the THA/BOLT and Calcutta Settlement projects.

‘A good example is worth a thousand words‘

THA/BOLT – MILSHIRV Project

Rental increase chart with table THA-BOLT

Click on the charts above to see full size version

Calcutta Settlement Land sale – Eden Gardens

stamp duty Eden gardens Chart 1 20130405-1

Acquisition options HDC chart 2 20130405

Click on the charts above to see full size version

Calcutta Settlement review

The simple, inescapable fact is that the State could have lawfully acquired the ‘Eden Gardens’ property for less than $40M. The HDC paid $175M in November 2012 to Point Lisas Park Ltd (PLP) for that property, which is the reason I am calling this an improper use of Public Money.

Despite having available the advice of the Commissioner of State Lands, the Commissioner of Valuations and various attorneys at HDC and so on, the Cabinet approved this transaction. This Cabinet, with two Senior Counsel at its head and several other seasoned legal advisers, appears to have been unaware of, or intentionally ignoring, the legal safeguards.

Some readers may be surprised at those assertions, so here are my reasons for making such.

The last two articles examined the steps leading to the HDC’s purchase of land at ‘Eden Gardens’ in Calcutta Settlement. In my opinion that transaction, as well as the one which preceded it, are both highly improper and very probably unlawful. The HDC purchase must be reversed and the responsible parties investigated/prosecuted as required by our laws.

This ‘Eden Gardens’ episode is an object lesson in what can go wrong when elementary policy is set aside for stated reasons of expediency. Apart from the lack of any Needs Assessment, the unclear role of the Commissioner of State Lands is a source of serious concern. That Commissioner’s role is to advise the State on the strategic implications of its land policies and transactions, so this is a straight example of a case which required a solid input from that critical State Officer.

So, what should have happened? How would a proposal like the ‘Eden Gardens’ one have been handled if the various parts of the system were functioning properly?

When parties are in commercial negotiations, there is always a Plan ‘B’, to be adopted in case the main plan goes awry. Each side has a different Plan ‘B’, since they have different interests.

What was Point Lisas Park’s Plan ‘B’ in case their negotiations with the State were unsuccessful? While we can never know for sure, PLP being a private company, the fact that those lots were widely offered at $400,000 can allow us to form a view as to the benchmark they were likely using.

The State’s Plan ‘B’ is far simpler to establish, since there exists the legal power to compulsorily acquire private property for a public purpose. That was the third unique facility enjoyed by the State as set out in the previous article.

In the case of a landowner making unreasonable demands, the State has the lawful option of compulsorily acquiring the property.

The Land Acquisition Act 1994 (LAA) establishes the right of the State to compulsorily acquire private property for a public purpose. At S.12, the LAA specifies the rules of assessment used to arrive at the sum offered to the owners of private property interests being acquired.

S.12 (4) states –

“…(4) In making an assessment under this section, the Judge is entitled to be furnished with and to consider all returns and assessments of capital value for taxation made or acquiesced in by the claimant and such other returns and assessments as he may require…”

The point in this case being that, having registered a purchase at $5M in February 2010, PLP would have been unable to legally resist a compulsory purchase which adopted that price as its basis. Even if the State, in recognition of the roughly $29M spent by PLP on building the infrastructure for ‘Eden Gardens’, were to add that sum, the final offer would only be about $34M.

Those provisions at S.12 (4) of the LAA are a critical safeguard against persons who might seek to under-declare their properties to evade taxes, then seek to make exorbitant claims if the State seeks to acquire compulsorily. S.12 (4) prevents the State from falling victim to any such games, it is a critical safety-valve to protect our Treasury from those who seek to pay as little as possible when taxes are due, but boldly make huge claims from the Treasury when seeking to sell.

That is why I am calling for this matter to be swiftly investigated and the responsible parties prosecuted to the full extent of the law.

This was in reality a potent dilemma for PLP, in that if they were served with a proper compulsory purchase notice, they would have either had to stick with the $5M figure as a 2010 baseline, or reject that deed and incur the strong penalties at S.84 of the Conveyancing and Law of Property Act.

One of the three deeds executed on Wednesday 3 February 2010 recorded the purchase of ‘Eden Gardens’ for $5M, which is a massive understatement of consideration. The true market value of that undeveloped property at that date would have been of the order of $50M, so the loss of Stamp Duty to the Board of Inland Revenue would have been in excess of $3.0M. The underpayment of Stamp Duty is tantamount to a defect in title of a property. Are we witness to the State making a massive over-payment for marginal lands with defective title?

Did the Cabinet and the HDC receive the proper advice from the Commissioner of State Lands and the Commissioner of Valuations, as well as the other legal advisers? If yes, that advice was plainly not followed, so in that case the question would have to be ‘What caused the Cabinet and the HDC to abandon that sound advice?‘

If the true situation is that the proper advice was not provided, we need to know why. If the advice was not sought, then we need to know why. If the advice was sought, but not provided, those advisers need to be rusticated so that our processes are protected from more of this nonsense.

The State has an overriding duty to comply with the law and be exemplary in its conduct. That is not negotiable, if we are to build a society which is orderly, progressive and just.

Episodes such as the ‘Eden Gardens’ sale and the THA/BOLT deal continue the erosion of Public Trust and the loss of that intangible, almost-forgotten, source of ‘soft power’, the Benefit of the Doubt.

This Prime Minister has made repeated statements that any evidence of wrongdoing will be investigated, so that the offenders can be prosecuted according to law. These three articles have detailed the evidence and breaches of sound public policy, so it is now over to the authorities.

The ‘Eden Gardens’ transaction is a prime example of a large-scale economic crime against the State and the interests of its citizens.

Again, I ask – ‘Who were the beneficiaries?‘

The final point here is that the parties to the PLP purchase and improvement of ‘Eden Gardens’ are now in litigation, with the contractors – SIS Ltd. – suing Point Lisas Park Limited for various monies and demanding an account of the $175M. Case CV 2012 – 5068, so we have interesting times ahead.

Calcutta Settlement again

In light of the many questions raised by readers after the last article on the HDC’s purchase of land at ‘Eden Gardens‘ in Calcutta Settlement, I am continuing there.

The previous article discussed the Calcutta Settlement scheme and its relation to implementation of national housing policy. There is little, if any, connection between the provision of affordable housing and the acquisition of those ‘Eden Gardens‘ lands, at what is surely the highest price in Central Trinidad. How we create and implement a progressive housing policy is a critical part of this discourse, but there is more.

Another important aspect of this episode is the fact that sound land administration policy appears to have been abandoned for expediency. Expediency should never eclipse proper policy, especially when neither the process nor end-result advance the ultimate objective of serving our citizens.

The sidelining of sound land administration policy was essential in order to get the Calcutta Settlement scheme approved. National Land Administration policy is important so that we can be strategic in using the country’s property assets for proper national development, as opposed to the enrichment of a select few.

The State is a unique player in our country’s land arena, so we need to place this Calcutta Settlement episode into proper context from a land administration viewpoint.

This is the framework –

Size – The State is by far the largest land-owner in the country, which means that there are only limited situations in which it will require private lands;
Wealth – The State is the wealthiest entity in the country, which means that it alone can bid at certain levels for the best properties. Applied to this case, a reasonable question would be ‘Who would have purchased ‘Eden Gardens’ and at what price, if the State had not proceeded?‘;
Compulsion – The State is the sole entity in the country able to lawfully acquire land for a public purpose against its owner’s wishes, which means that if an owner of private property takes an unreasonable position during negotiations, the State can compulsorily acquire it;
Planning Authority – The State is the national planning authority, which means it has the power to approve its own designs and proposals;
Statutory undertaker – The State has ownership and control of the principal utilities, electricity and water/sewerage;

So, if the State intended to construct affordable housing in Central Trinidad, it could have chosen from the abundant State-owned property in the area, granted planning permission for its own proposed development and provided services. The State could only have bought the ‘Eden Gardens‘ land by ignoring sound land administration principles. Elementary policy was ignored in favour of sheer expediency, or worse, the enrichment of carpetbaggers at the expense of the Public Interest.

What was the advice of the Commissioner of State Lands on this transaction? Was his advice sought? Bizarre and expensive precedents are being set in situations of zero benefit to the Public Good. This deal is detrimental to the Public Interest.

At a level of State policy, there was a collapse into expedience and a continuing silence as to the role of ‘Eden Gardens’ in the national housing policy. But when I delved into the documents in my possession, there were even more causes for concern.

The Registrar General’s records show that there were three transactions executed on the same day for this property – It was Wednesday 3 February 2010 –

Deed # DE2010 004276 02D001 rescinded the 2004 Sale Agreement (the one for $17M, registered in 2007), with the deposit returned and no claims made;
Deed # DE2010 007816 95D001, Point Lisas Park Ltd (PLP) purchased the property from the owner, Sookdeo Deousaran, for $5M, paying Stamp Duty of $350,000;
Deed # DE2010 003449 63D001, PLP mortgaged the property to said Sookdeo Deousaran for $18.5M at 8%, to be repaid on the last day of January 2012.

These purchasers were prepared to pay $17M for this undeveloped property in mid-2004, but ended up paying only $5M for it in early 2010. On the same day, they mortgage it for $18.5M. By happy coincidence, or otherwise, the property with infrastructure added was offered to the HDC at $200M in late January 2012, two years later. Literally unbelievable.

What is more, the fact that the second and third of those deeds were executed on the same day is deeply perturbing as to the operation of the Stamp Duty section of the Board of Inland Revenue. The second deed transfers the property for $5M and Stamp Duty is paid on that, yet the third deed shows a mortgage granted the same day on the same property for $18.5M. Normal practice in the finance world is for a mortgage to be taken on a property at some fraction of its current market value. Both those deeds were registered at the San Fernando office of the Registrar General’s Dept.

If there were a reasonable gap between the first sale to PLP and the new owners mortgaging the property, it might be possible to claim some increase in value due to its physical development or obtaining permission to develop. But since both transactions took place on the same day, there is no way anyone can claim a genuine difference in value.

The 8% interest rate on the two-year mortgage is instructive, in that the actual rate at which finance was offered at that time for similar projects was in the 10.5-12.0% range. The reasonable conclusion being that both sides had a high degree of comfort with each other, indicative of close collaborators.

S.84 of The Conveyancing and Law of Property Act (1939), states that the penalty for falsely stating the consideration in a deed is a modest fixed fine and a further penalty payment of 5 times the amount of the understatement. Those penalties apply to both the buyer and seller, perhaps to discourage these dishonest practices. The Act goes further to offer the penalty payment as a reward to the person making the report of the understatement.

S.86 of that Act also specifies a small fixed penalty for an attorney found guilty of “…knowingly and willfully…” recording a false consideration and mandates that the said attorney “…shall…” be disbarred. Of course an attorney who had prepared only one of those deeds could reasonably claim to be genuinely unaware of the entire transaction, so we will see.

Sad to say this ‘Eden Gardens’ scheme is reminding me of the CL Financial antics. I am thinking about the the affidavit of the Inspector of Financial Institutions stating that Clico Investment Bank did not file its Corporate Tax returns for 2007, 2008 and 2009 and the fact that, despite those lapses, they were able to obtain a bailout on ‘sweetheart terms‘. The Eden Gardens chiefs were able to understate the property value to avoid the true level of Stamp Duty, but were also able to get Cabinet to agree to effectively bail them out, also on ‘sweetheart terms‘.

Always remember that the land at ‘Eden Gardens‘ cost $663,000 per lot as agreed by the Cabinet, seemingly unaware that the developers were offering lots there for sale at $400,000 only months before.

The HDC purchase was completed on 9 November 2012 and recorded in DE 2012 026026 11D001. The para before the $175M sale price is the one which specifies the 2010 deed for $5M, just so.

I approved of the diligence of our AG in challenging the legality of the THA’s BOLT project. This ‘Eden Gardens‘ scheme is also in need of urgent investigation, so we will see.

My final point is that all the information cited in this article is available on the internet, so where is the basic due diligence? These sorts of schemes should not even get past the first gatekeeper, far less into the Cabinet for consideration.

From THA/BOLT to Calcutta – tangled webs: Part 1

tha-bolt1 — Artist Impression of THA Admin building courtesy Amera Caribbean Development Ltd.

With the THA elections having become a kind of national contest, the issues of governance and integrity loom large. The two relevant controversial issues, both of which emerged late last year, were the THA/BOLT office project and the HDC’s proposed purchase of land at Calcutta No. 2 Settlement.

Both those projects have given me serious cause for concern in terms of proper public procurement practice, so much so that I see them as being two sides of the same coin. Both these cases are models of inadvisable dealings in Public Money of a type which no prudent or reputable company would undertake. I am choosing my words carefully since recent reports are that litigation has already started on both projects.

I do not at all agree with the widespread myth that corruption is a minor thing which adds maybe 10% or 15% to the cost of projects. That misinformation is nothing but public mischief which has blinded us to the scale of the theft of Public Money, so it must be completely demolished. In the case of the 1970s to 1980s ‘Government to Government Arrangements’ the then PM, George Chambers, told the nation that two out of every three ‘Petro-dollars’ was wasted or stolen. In the ongoing imbroglio over the $1.6Bn Piarco Airport project, we learned from the DPP’s S.34 statement that $1.0Bn of Public Money had been located in offshore bank accounts.

The DPP’s S.34 Statement on Wednesday September 12, 2012

“…These cases involve allegations of a conspiracy to defraud the Republic of Trinidad and Tobago of over TT$1 billion by the fraudulent use of bonds and the rigging of the contracts for the various Construction packages for the Piarco Airport Project…”

The DPP’s full statement is here.

Also, from “Cops target MP in $1Bn airport scam” in Trinidad Guardian of Friday 5 March, 2004 –

“…TV6 News reported last night that Lindquist and Interpol officers had discovered more than $1billion stashed away in off-shore accounts, arising out of corruption in the airport project…”

This article deals with the THA/BOLT project, which is a Public Private Partnership. The PPP is a procurement model now being pursued by this government, according to the strategy outlined in the 2013 budget.

Build Own Lease Transfer (BOLT) is a subset of the PPP procurement method. Under a BOLT arrangement a client has a facility built by the private sector at their expense – the client makes agreed rental payments so that the developer can cover the cost of building the project and a reasonable profit. At the end of the agreed lease period, the facility is transferred to the client.

There has been effective use of PPP to produce Public Goods like the Brian Lara Promenade. BOLT has also been used to procure prominent POS buildings such as NALIS, UTC HQ and Ministry of Works HQ (via Republic Bank) and the AG’s office at Cabildo Chambers (via NIPDEC).

The PPP can be a feasible method of procuring public goods, offices or other facilities in situations where the State is unable to commit to the capital expenditure and there is a pressing need. The strong selling-point of the PPP is that the private sector takes the risks and is allowed to make a reasonable profit while the public sector can add to its stock of capital goods without the risks of project execution.

These PPP arrangements are now being intensely criticized in developed jurisdictions as having served the public interest very poorly. The focal point of much of the criticism has been the fact that, despite the rubric, the private sector has seldom taken any genuine risk.

Turning to the actual THA/BOLT deal, I have to say that the decision to publish a large number of the important documents in relation to this arrangement is to the credit of the THA.

• The bundle of documents are here.

In response to the request from the Minister of Finance, THA leader Orville London said:

…that under the laws and the T&T Constitution the Finance Minister has no authority to instruct him to provide information to him within any timeframe.

However, London said, in the interest of public disclosure and considering that this particular transaction has generated so much discussion he believed that he had a responsibility to make the information available to the public and the Minister…

This is a bold and in my view admirable initiative by a leading Public Official and I have to say that it has tempered my scepticism over this project. I only wish that Cabinet Ministers took a similar view of their responsibilities.

The THA ‘bundle’ details the ongoing financial shortfall in allocations from Central govt, the main point of which is the fact that the THA is definitely resource-starved in relation to the arrangements with Central govt. When one considers the financial state of the THA alongside the national economic outlook – we are in our fourth year of deficit financing in relation to the national budget – it is a sobering background to this discourse.

I have spoken with all the main parties to this arrangement and this is a summary of the THA/BOLT deal. The THA purchased a 3-acre parcel of land at the corner of the Claude Noel Highway and the Shirvan Road from private landowners for $12M and immediately leased it back to them for a 199-year lease at a nominal rent. The private developers have agreed to erect an 83,000sf office building at a cost of $143M and the THA has agreed to lease it for 20 years at a fixed rent of $15.61psf – an annual rent of about $15.55M, totalling some $311M over the term of the 20-year lease – with the property reverting to the THA at the end of the lease. Those offices are to be built for the THA’s Division of Agriculture, Marine Affairs, Marketing and the Environment.

There have been recent reports of the AG’s lawsuit to test the legality of the THA/BOLT arrangement, so this is not an attempt to pre-empt the Court in ruling on those submissions.

My concerns arise at the level of the Needs Assessment, which must be the first stage of any proper procurement process, public or private. The purpose of the Needs Assessment is to determine the rationale for and scope of the project so that preliminary consideration can be given to the key elements before any high costs are incurred. In this case, we are told that the developer approached the THA, which is unusual to the extent that best practice requires that extra care be taken with unsolicited proposals.

The main points concerning me are that once again we are seeing large-scale expenditure of Public Money without a proper business case having been made. The opinion of Hamel-Smith & Co as to the legality of the transaction is of no comfort to me, this is a matter of making a sound investment decision. A legal opinion is necessary but not sufficient.

That 6-page legal opinion,dated 3 January 2011,by Timothy Hamel-Smith (who was appointed Senate President on 18 June 2010) is at page 168 of the ‘bundle’.

Quantity of space – at pages 68 and 69 of the THA ‘bundle’ there is a ‘Note for Executive Council’ which summarises that the offices occupied by that Division – a total of 22,500sf is detailed, while a further 6,000sf can be reasonably surmised for the last Department. The average rent being paid by the THA for this Division is $8.17psf, also please note that a total of 28,500sf is now occupied by the Division for which the THA is procuring an 83,000sf office building.
Quality of space – The cost of $143M for that space equates to $1,723 per square foot and I am reliably informed that the contract calls for a fully fitted and finished office building. That figure is at the absolute upper end of the range of costs for office buildings.
Rent levels – According to the THA’s adviser on this project, Peter Forde, at the THA Press Conference on 10 September 2012 – see

…the monthly payment of $15.61 per square foot per month was not an unreasonable rate because there were properties in Scarborough where tenants were paying as much as $10.00 per square foot. He stressed that even if there was inflation the rate will remain the same…

The first issue I have with that is the attempt to use the $10psf comparable to justify the $15.61psf rent. That is an unreasonable ‘stretch’ by my standards as a professional valuer. Did the THA seek the opinion of the Commissioner of Valuations? Secondly, the fact that the rent cannot be increased in the event of inflation is a distraction, since the likely effect of this new, huge THA office building is that the rental market in Tobago will become saturated with the offices they vacate. The result of that is the decline in office rental values, so in the absence of any provisions for rent adjustments, the burning question has to be ‘What real risk is this developer taking?’. Risk Allocation remains a real issue.

So, in summary, we have a semi-autonomous Public Authority contracting, at a time of tremendous financial strain, to build first-class facilities three times larger than the second-class ones it currently occupies. Finally, please note that according to the ‘Note’ I cited earlier, the current monthly rent bill of the THA Division is $231,788, while the new monthly rent under this arrangement will be $1.295M – over five times more.

At the start of this article, I gave examples of the ratio at which Public Money was wasted or stolen, so just compare this project to those figures.

My next article will delve into the Calcutta Settlement land deal and its own peculiarities.

VIDEO: Early Morning Interview – 4 May 2012

JCC President Afra Raymond appeared on Early Morning with Hema Ramkissoon to discuss ‘Government fails to deliver?’; a question on the minds of the construction industry. 04 May 2012. Video courtesy CNC3

Programme Air Date: 4 May 2012
Programme Length: 0:16:18

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Category: Property Matters