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

VIDEO: JCC Press Conference – 02 May 2012

The JCC hosted a Press Conference recently to discuss issues in the country in the construction industry. Afra Raymond’s contribution to the press conference is here. 02 May 2012. Video courtesy JCC

  • Programme Air Date: 2 May 2012
  • Programme Length: 0:13:33

2010 Review

This is the time to reflect on the changes we have witnessed in the last year and the several challenges arising from those. This column will attempt to combine the ‘Property Matters’ concerns with the ongoing examination of the CL Financial fiasco.

The Uff Report

Professor John Uff. Photo courtesy Trinidad Guardian
Professor John Uff

For me, the largest single event this year was the completion of the work of the Uff Commission of Enquiry into the Public Sector Construction Industry, with particular reference to UDeCOTT and the HDC.  The controversial Commission of Enquiry was at the centre of widespread public concerns as to the level of corruption in the State construction sector.  To his credit, the Enquiry Chairman, Professor John Uff QC, PhD, insisted that the proceedings be televised and the results of each day’s hearings were also posted to its website.

The Uff Report made history in this country, since it is the first time that a government has published the Report of a Commission of Enquiry.  That is no small accomplishment and despite the fact that these massive wrongdoings took place under the last PNM administration, the act of publication has to be welcomed.

But there are still challenges, because, for whatever reason, the Uff Commission’s website, www.constructionenquiry.gov.tt has now been shut down, which is a real pity, since it contains the important testimony of many witnesses on the issues in this area.  That website needs to be re-opened and I am calling on the Attorney General, under whose Ministry the Enquiry was operated, to ensure that takes place.  It is no large expense to have these important documents made available to the public.  In light of their educative content, I would suggest that the actual documents be housed at UWI, as they have a direct bearing on the deliberations of the Engineering and Social Sciences Faculties.

Of course we had the sight of a fleeing Calder Hart and a defeated Patrick Manning, his PNM cohorts drinking  bitter tea for his fever, all attributable in my view to the groundbreaking Uff Commission.

Looking forward, we have the fact that the 91 recommendations of the Uff Report were adopted by the Peoples Partnership in the run-up to the 24th May General Election.  We have now been promised that those are to be implemented by Minister of Justice, Herbert Volney.  We await Volney’s early report as to the implementation.

In that connection and taking from the PNM example, I am, once again, calling for the publication of the report of the Commission of Enquiry into the Piarco Airport project.  The Bernard Report must be published now.

CL Financial bailout
A Bailout Cheque payed by taxpayers to CLICO was stoppedThe other huge event of the year was the budget speech on 8th September 2010, in which Finance Minister, Winston Dookeran, disclosed publicly that he was revising the terms of the CL Financial bailout.  That bailout was a hugely suspect act, the largest financial commitment ever undertaken in this country, without proper due diligence or even any proper ventilation in the Parliament.  Our Republic had never been so financially violated and in broad daylight.  It was encouraging to see the Finance Minister take the point to its logical conclusion and of course that brought about the large-scale organisation of various aggrieved groups to put their point.

That series of organisations, committed to the doubtful mantra of the guaranteed investment – whatever that is – took on a series of bizarre and increasingly combative stances.  The signature theme being that ‘We are not responsible for our decision’.  We were being treated to a spectacle worthy of any of the ‘Ole Mas’ presentations of yore, in which successful investors – on average at least $700,000 was invested by each of these ‘protestors’ – having benefited from the operation of the capitalist system were seeking 100% redemption from the State.

The entry of the Prime Minister into this debate on 1st October was in my view a turning-point in our development.  For the first time in my memory a politician, who had the majority, to achieve the significant changes which had been tabled, stepped back from that act of sheer power to attempt an act of persuasion.  It was a signal lesson in the reality of possibility in our lifetime.  Even if one is amongst the Clico Policyholders’ Group (CPG) and feeling aggrieved, the calm audacity of the Prime Minister’s decision must be respected.

Most importantly, we now have a one-man Commission of Enquiry established with the eminent UK jurist, Sir John Colman QC sworn in.  That Commission is to examine the causes of the CL Financial and Hindu Credit Union collapses.  The Colman Commission is expected to start sittings in January 2011 and the Attorney General has directed that its report be delivered in 6 months’ time.

The Manning Factor

Patrick Manning
Patrick Manning

The most comical event of the year is the bold-faced attempt by the former Prime Minister, Patrick Manning, to shift attention away from the PP’s revelations as to the illegal spying activities of various State agencies.  Manning, the original PM, attempted to show-up the Prime Minister, Kamla Persad-Bissessar, with a series of allegations on the status of a house being built with private funds on private lands for a private purpose.  The Prime Minister effectively dismissed Manning’s concocted concerns with the telling observation that all the refutations she quoted were available from the public record, if the accuser had ever been interested in examining that open source.

Having stirred to life and found his voice, it is important to note the several matters on which Manning maintains a stony silence –

  • Calder Hart – Where is Calder Hart?  The nation was told solemnly by Manning that he knewCalder Hart’s whereabouts and further, that Hart was not a fugitive.  We are now told that Calder Hart cannot be located and Manning needs to speak on this.  Is it true that Hart gave Manning his location?  Has Hart changed locations?  Or is it that Manning has not shared that information with the correct authorities?
  • Election rationale – What, if any, was his rationale for calling the general election at mid-term?  I am not sure that anyone knows the answer to this one, but it is surely of continuing interest.
  • Guanapo Church – What is the truth behind the ill-fated Guanapo Church?  It is not my habit to wax scriptural, but that was a ‘house built on sand’ if ever we saw one. The reason for the State Grant of this land and the rapid grant of full planning permission – a record of only one month between the date of application and the grant – remains unexplained.  As for the architect’s plans for this huge church in the grounds of the PM’s residence, the mind boggles.  Where is Pastor Pena? We need to insist that Manning tells us more about this miraculous church.
  • Cleaver Heights – Another area is the wild allegation Manning made, at the close of the 2008 budget debate, as to a ‘missing’ $10M at an HDC project at Cleaver Heights in Arima.  Or was it $20M?  After inserting that case into the ongoing Uff Commission and having the embarrassment of having the allegation evaporate under cross-examination, Manning needs to tell us just how he came to learn of this allegedly missing money.
  • CL Financial bailout – Manning’s conduct in this matter has been the crowning-point of his administration, in my view.  The then Minister of Finance, Karen Nunez-Teshiera, was accused of using ‘inside information’ to make early withdrawals of her own funds from the CL Financial Group and to compound the mischief, being a shareholder of the CL Financial group in the sum of over $10M.  Manning’s steadfast defense of his beleaguered Minister of Finance was a display of loyalty which is seldom seen in higher political circles.  We need to know if the Minister told her colleagues that she was indeed a shareholder of the troubled group.  Did she or did she not recuse herself from the Cabinet’s deliberations?  My reading of the events, as told by the very Minister, is that she did not.

For Manning to fail to come clean on these questions, he would run the risk of damaging his hard-won reputation for upstanding values and leadership.

White Collar Crime
white-collar-cartoonThe obvious connection between these various events is the fact that White Collar Crime – which is sometimes, mistakenly, called victim-less crime – is  afflicting our country in a big way.

The year ahead holds significant challenges as we try to go forward in this morass, to escape the conspiracy which I have titled The Code of Silence.

The only way political rulers can carry on as they do, wasting the country’s money for the benefit of their friends and family, is because they are sure of each other’s silence.  The people in the private sector who were responsible for the financial collapse are no different.  The financial collapse is not, as some have falsely claimed, in any way connected with the Wall Street crisis.  That is only a handy coincidence.  If our regulators and politicians were doing their jobs we would not be in this position.

Please remember that the alarm bells on CL Financial were sounded by Trevor Sudama, since the 1999 budget debate.  More to the point, many of the people who still inhabit the Parliament were there at the time.  Again, I give this administration credit for appointing a Commission of Enquiry into this sordid affair.

Also, please remember that both UDeCOTT and the HDC failed to file accounts for years, in breach of the law and State guidelines.  That failure was not remarked upon by members of the then Opposition.  More to the point, we have now had a change in administration, with no word on the UDeCOTT accounts.  I do acknowledge that certain HDC accounts have now been published and that is to be the subject of upcoming commentary.

The Code of Silence must be broken if we are to progress.

VIDEO: Morning Edition Interviews

VIDEO: Morning Edition Interviews – March 2010

AfraRaymond.com, at this time chooses to re-issues these interviews on Morning edition on TV6 CCN, Trinidad and Tobago, to keep readers up-to-date on issues surrounding Uff Report and UDeCOTT Affair respectively.

  1. Afra Raymond sits with senior journalist Andy Johnson to discuss the “UDeCOTT/Calder Hart Affair” on Morning Edition television show on TV6.
    • Programme Date: 10 March 2010
    • Programme Length: 0:28:16

  2. Afra Raymond sits with guest host, William Lucie-Smith on the Morning Edition television show as part of a panel with senior counsel Israel Khan, to discuss the leaked Uff Report.
    • Programme Date: 31 March 2010
    • Programme Length: 0:26:52

VIDEO: First Up Interview – 18 May 2010

VIDEO: First Up Interview – 18 May 2010

Afra 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.

  • Programme Air Date: Tuesday, 18 May 2010
  • Programme Length: 0:40:33

Seeing the Big Picture – Learning the Lessons of the SPE fiasco: Part 5

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.

nidcoTo 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.

“…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.”

 

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.

SIDEBAR: National Infrastructure Development Company (NIDCO)

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 –

  • Transparency.
  • Professionalism & Quality.
  • Integrity, Trust, & Honesty.
  • Meritocracy.
  • Teamwork.
  • Commitment.
  • Communication & Participation.

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.

Learning the Lessons: Part 4

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.

“That is nothing less than scandalous and deceptive behavior from those we trusted with our national wealth. It is like doing a business plan to open a ‘Chicken and Chips’ outlet and leaving-out the cost of the chicken. Bogus.”

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 –

  1. HDC was established in 2005 as the successor agency to the NHA.  The target set in the 2002 National Housing Policy is for 100,000 new homes to be built in a decade, but that annual target was reduced in the first year to 8,000.housinginside

    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.

  2. UDeCOTT’s mission is to develop the structures that form part of Vision 2020 and which “will be achieved in accordance with…commercially viable principles…” – see http://www.udecott.com/index.php/cc/cc_sub_level/C6.  Those claims are equally baseless, since Calder Hart admitted under my cross-examination that only one of UDeCOTT’s many projects had been the subject of a feasibility test.  Only one.  That was the International Waterfront Complex and my further questioning revealed that the value of the land had been omitted from the equation.  That is nothing less than scandalous and deceptive behavior from those we trusted with our national wealth.  It is like doing a business plan to open a ‘Chicken and Chips’ outlet and leaving-out the cost of the chicken.  Bogus.  Our PM went to great lengths when he addressed the Senate on 13th May 2008 to point out that UDeCOTT’s projects were all approved by Cabinet, after a thorough review process – see http://www.ttembassy.org/051308.htm.  Additional claims were also made as to the ways in which Cabinet monitored UDeCOTT’s operations.  As I wrote in this column, early in my critique of UDeCOTT – There is either a sobering naivete or a lack of rectitude in the highest chambers in our Republic.

    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 –

  • Para 16.16 – referring to advance payments to the contractor –

    …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…

  • Para 16.17 – referring to UDeCOTT’s accounting system –

    …UDeCOTT’s administration and recording of the payment process was “appalling” and required a great deal of detective work to get to the bottom…

  • Para 16.21 – referring to UDeCOTT’s attempts to explain its management of the BLCA –

    …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)…

  • Para 12.45, citing the work of MacCaffrey –
    1. 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.
    2. 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.
    3. 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.

SIDEBAR: ‘Back-Fitting’ of Financial Documents

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”…

Learning the Lessons of the UDeCOTT fiasco: Part 3

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:
SPE logos

  • National Infrastructure Development Co. (NIDCO)
  • Housing Development Corporation (HDC)
  • Urban Development Corporation of T & T (UDeCOTT)
  • University of Trinidad & Tobago (UTT)
  • Evolving TecKnologies and Enterprise Development Company Limited (e TecK)
  • Education Facilities Co. Ltd (EFCL)

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.

  • The role of Boards of SPEs – As I said when warning against the appointment of Michael Annisette as an Independent Senator – see https://afraraymond.wordpress.com/2010/04/22/2008/01/12/an-unhealthy-choice/ – speaking of “…Directorships in significant State-owned enterprises…it is a widely-held view that such appointments, especially to those who are not experts in the relevant fields, are only offered to those in political favour.  To put it plainly, one would hardly expect to see UNC or COP members, however expert, on State Boards under a PNM administration…”  Despite the fact that there are many excellent and hardworking Directors of SPEs, that is the background to those appointments.  Just to make sure, given the ‘silly season’ we have entered, I am equally convinced that when UNC was last in power they also allocated those SPE Directorships in a similar fashion.
  • The role of the Executive Management – Suffice to say that there is little difference in the considerations when making those appointments.
  • The role of consultants and contractors – It is impossible to say who these stakeholders support, apart from themselves.

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?

SIDEBAR: What is ‘Good Governance?’

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.

  • Extract from the Uff Report – Paras 62 and 63 at pages 33/34.

    “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.

Learning the Lessons of the UDeCOTT fiasco: Part 2

There has been a powerful and positive response to the first column in this series.  The reflections continue, as they must.  No time for distractions, in this election season.

Last week I paused with the promise to spend some time examining the Special Purpose Entity (SPE) model and its role in national development.  This week, I continue the reflection with focus on the Directors of these companies as key players in the sector.

One of the fascinating aspects of the Uff Report is its discussion of the nature and extent of the independence of the Special Purpose Entities.  Obviously, that discussion was mostly focused onto UDeCOTT and the reporting relationship with its line Ministry.

Some main points would be –

  • Multiple Directorships
    Calder Hart. Photo courtesy Trinidad Guardian
    Calder Hart

    One thing which is clear from the Calder Hart episode is that one individual had control of a vast slice of State resources.  Hart was Executive Chairman of UDeCOTT, Chairman of the Home Mortgage Bank, Trinidad & Tobago Mortgage Finance, the National Insurance Board (NIB) and the National Insurance Property Development Company (NIPDEC).  He obviously enjoyed a tremendous level of confidence at the very highest levels of government.  It is equally clear, from the Uff Report, that that confidence was woefully misplaced.  Even in the early days of ‘Corporation Sole’ we have never had an individual invested with so much power.  It seems that this individual never had to answer to a Chairman, since he was head of all the Boards he sat on.  Is that a healthy precedent?  For those who would be quick to say that he has been found guilty of nothing, please note that this is the same individual who described himself to the Uff Commission as  –

    Q.      Yes.  But your lawyers misdescribed you in these proceedings as a financial expert.  You would not agree with that description?
    A.       I would not describe myself as an expert of anything.

    See – ‘End-notes on the Uff Commission‘ at http://www.raymondandpierre.com/articles/article77.htm

    Yes, that is the same individual who stated, under oath, that all outstanding issues with the audited accounts of UDeCOTT had been resolved and that we could expect those in February 2009. Yes, that is the man who was in charge of our national savings and pensions.  And yes, I will write it – He could not do such in Canada.  I am saying that no single individual could properly discharge all those functions.  No way.  The fact that so much trust was reposed in that particular individual is indicative of a distorted sense of values.  Time to think again.

    A similar set of contradictions exist with the outspoken Independent Senator, Michael Annisette.  See – https://afraraymond.wordpress.com/2008/01/12/an-unhealthy-choice/.  Incredible as it might seem, Annisette’s position is even more complicated than Hart’s.

  • Over-burdened Directors – Quite apart from the particular issues which beset these two individuals, there is broader issue to consider.  Do  we draw our Directors and leaders from a sufficiently broad cadre of people? In terms of both the State sector and the private sector, it seems to me that we have similarly narrow channels from which we make these appointments.  I am not at all sure that the private sector can claim a superior method or results in terms of over-burdened Directors.  The result, as was clearly the case at UDeCOTT, can be a poor quality of strategic decision-making and lax oversight of the company’s affairs.  That is a sorry result, given that those are core Board functions.One key lesson we should be able to draw from this is that there is no way people can function with this level of multiple responsibilities.  We now need to develop a new set of guidelines for these important roles.  The UDeCOTT episode must not only be used to critique the public sector, for there are surely examples of over-burdened within the private sector as well.
  • Under-development of our society – A paradoxical aspect of the situation is that the thrust to rapid development is given as the rationale for the Special Purpose Entity, yet the method of deployment is somewhat counter-productive.  I am saying that the cadre of people from which we draw our Directors and leaders needs to be wider if we are really to develop our potential as a nation.  That also applies to the private sector, since the prevailing instinct seems to be that we pick people with whom we are comfortable for these leadership positions.  Very understandable, whether we are speaking about the public or private sectors, but the act of restricting the ranks of leaders is itself inimical to our development.
  • The proper role of the State – I am also saying that the State must behave in an exemplary fashion.  That is very important, given the corrosion of proper standards we are living through.  The State has an indispensable role to play in national development and that is not just limited to  construction.

What we saw at UDeCOTT was rampant expediency, with good management and internal controls being violated at every turn.  All in the interest of achieving targets and developing the country.  Huge contracts granted via sole selective tendering, without competition. That means they gave the contracts to their chosen contractor and consultants.  Yes, just so.  Huge payments made before works were done or materials purchased.

Yes, expediency was allowed to eclipse good governance and accountability.  The interest of the taxpayer was jeopardised, supposedly all for the benefit of said taxpayer.

We can now soberly put the question – ‘What was it really all for?

SIDEBAR

The Ordinary citizen

I am also asking that our Prime Minister give details of his conversation with Calder Hart.  Of course, one does not seriously expect an answer.  That, too, is a big part of the problem we are trying to probe with only our wits and words.

UDeCOTT’s Audited Accounts

This column is to be published on 22nd April, four weeks after Jearlean John held her first meeting with the UDeCOTT Board.  Readers might remember that Ms. John, citing her adherence to good standards of governance and professional conduct, promised to publish UDeCOTT’s audited accounts.  Those were last published at the end of 2006.  No accounts for 2007, 2008 or 2009.  Worse yet, no explanation at all.  I have had to dismiss some absurd attempts to explain that the delay has been due to the Uff Commission itself.  Those attempts emanated from a member of the Cabinet who definitely ought to have known better.  Ms. John is now making me wonder ‘What is the mystery?’ Is this one of those cases which gave rise to our folk saying ‘More in the Mortar than the Pestle’?

Learning the Lessons of the UdeCOTT fiasco

Former UDeCOTT Board
Former UDeCOTT Board, (l-r) Dr. Krishna Bahadoorsingh, Sen. Michael Annisette, Mr. Anthony Cherrie, Mr. Wendell Dottin

The leaking of the Uff Report, the delayed dismissal of the remaining, ‘squeaky-clean’ UdeCOTT Board members and the dissolution of Parliament are all part of a major distraction operation. The fallout from suppressing the Uff Report would have been huge and unpredictable, so the name of the game was spin. That spin is what we have been getting from government ever since we entered the end-game. The ultimate attempt to distract us was of course the dissolution of the Parliament by FAX on Thursday 8th April.

The strategy seems to be an attempt to provide the media and the population with even more interesting talking points, so that the Uff Report slips into obscurity. I expect that if the incumbent party is returned to office, there will be attempts to claim that the ‘mandate’ granted by that vote is a justification for the matters revealed in the Uff Report. Already a large slice of attention has been shifted to the impending elections, as expected.

I have no intention of allowing those distractions to take hold. I will continue to write on the lessons of the UdeCOTT fiasco.

This entire series of revelations is historic in that finally we have a Report by a Commission of Enquiry published. The second note for us is that it raises once again sobering governance issues, including matters of professional integrity and Directors’ responsibility. Those are aspects into which Property Matters will delve in the coming series.

Some main points for us to consider –

  • Cleaver Heights – The Uff Report makes it clear that there is no missing money. None. There are other serious concerns addressed in the Report as to the change in the form of contract and the fact that some $140M was paid to the contractor without title having passed to the State. I do agree that those are matters worthy of further investigation. To be clear, the questions would have to be whether any undue benefit was enjoyed by the contractor and, if so, how did the HDC’s checks and balances fail to detect and arrest this? Please note that the entire contract sum was never estimated to exceed $150M for this project. That said, we still have two mysterious parts of the puzzle to figure out – firstly, now that, under cross-examination, everyone has denied doing so, ‘Who told the Prime Minister that blatant untruth about ‘missing money’? Secondly, the renowned Forensic Accountant, Bob Lindquist, has been investigating the Cleaver Heights project for some considerable time now, so what are his findings? Note well that I am not asking for his report, since some ‘bright’ person would be quick to say that he never submitted his report or that it is incomplete. I am asking for his findings, even the interim ones, before we spend more money on more investigations.
  • The non-gazetting of the Uff Commission – We were all shocked to learn, at the end of August 2009, that the Enquiry had not been properly set-up, due the failure to ‘Gazette’. A special, one-man Enquiry into that episode was launched by the AG, with a final report handed into the AG on 9th December 2009 by retired Judge, Anthony Lucky – see http://guardian.co.tt/news/politics/2009/12/10/lucky-report-goes-cabinet-today-lead-pg3. What are the findings of the Lucky Report, Mr. AG? I think that we need to know and now, please.
  • Was there any evidence of criminal wrongdoing by UdeCOTT? – According to Para 14.41 of the Uff Report – “…there should be an investigation by an appropriate criminal law Authority into the award of the MLA contract to CH Development to include the role of Mr. Calder Hart and the conduct of the Board in not ensuring that an enforceable guarantee was given by the parent company of CH Development….”
  • Calder Hart – Was Calder Hart a good executive manager, who may have just ‘over-reached’ his authority in an effort to meet his demanding targets? According to Para 12.55 of the Uff Report – “…We have noted the apparent absence of any note of criticism or dissent within the UdeCOTT staff and the dominant influence of the Executive Chairman, Mr. Calder Hart. To the extent the failure of senior staff and directors to raise any voice in opposition to the level of financial irregularity found on the Brian Lara Project amounts to loyalty, such loyalty is clearly misplaced…”
  • That UdeCOTT Board – It was a relief to see the dismissal of these Directors. In fact, the more one considers their bizarre and reckless statements, the more obvious it was that this was indeed a large corporation in crisis. Problem was, that it was our money they were wasting and worse yet, failing to publish audited account for three years. A sad example of wrong and strong. The AG said, on 1st April as he announced that the Uff Report would be published in full, that Calder Hart was just ‘an ordinary citizen’. It seems to me that Calder Hart enjoyed benefits far beyond those extended to the ‘ordinary citizen’. I have never heard of the PM tipping off anyone else under serious investigation. The other UdeCOTT Board members were not given the ‘tip’ to resign and have had to be fired. There must be a lesson in there, somewhere.
  • The Model – This colossal failure is such as to prompt a serious re-examination of the idea that the Special Purpose Entity (SPE)is the preferred vehicle for our national development. The continued down-sizing and sidelining of Ministries and the promotion of SPEs have continued apace, most recently in the TTRA proposals. I am saying that it is time to soberly re-examine these ideas against the actual results, so that we can chart a better way forward.

Next, I will be examining the implications of the SPE model and its effects on the nation.