Tag: Public Procurement

VIDEO: Address to 6th Annual Caribbean Valuation and Construction Conference – 3 November 2017

This is my address to the 6th Annual Caribbean Valuation and Construction Conference: Best Practices and Experience Sharing hosted by the Royal Institution of Chartered Surveyors, the International Property Tax Institute, and the Institute of Surveyors of T&T held at the Trinidad Hilton on Friday 3 November 2017.

I spoke on the topic “Best Procurement Practice” in which I outlined the new Public Procurement and Disposal of Public Property Act and posed the question, “How effective are laws if we do not conduct ourselves ethically?” Video courtesy PixelPlay Media.

Programme Date: 3 November 2017
Programme Length:  00:28:26

DISCLAIMER: These opinions are mine and not those of the RICS, the IPTI or the ISTT.

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Opening Addresses at Public Corruption and The Oil Curse in Guyana

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I gave both opening addresses at the conference organised by the Caribbean Institute of Forensic Accounting (CIFA), the Guyana Oil & Gas Association and the African Business Roundtable at the Pegasus Hotel in Georgetown. I have also attached the slides for ease of reference.  Continue reading “Opening Addresses at Public Corruption and The Oil Curse in Guyana” →

Property Matters – Invaders’ Bay

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On 28 October 2016, the Appeal Court delivered its majority ruling upholding the decision of Justice Frank Seepersad on 14 July 2014 to order publication, under the Freedom of Information Act (FOIA), of the legal opinions on which the Ministry had been relying. The JCC had won its case at both the High Court and the Appeal Court, so I called for immediate publication of the requested information. The JCC made no such call, neither did any of my erstwhile colleagues.

At an Appeal Court hearing on 21 November 2016, the State obtained leave, with the JCC’s consent, to appeal this matter at the Privy Council. Whilst in Opposition, the PNM made repeated complaints against the secretive conduct of the Invaders’ Bay development by the Peoples Partnership. Now in Government, the PNM has elevated secrecy in public affairs to a new prominence.

Since Dr James Armstrong was appointed JCC President in December 2015, that organisation has been silent on the Invaders’ Bay matter. This had previously been of high importance as a major development in our capital city, which was proceeding illegally and improperly. The JCC now seems to have reversed its earlier position of pressing for publication of those vital, suppressed documents. Continue reading “Property Matters – Invaders’ Bay” →

AUDIO: Interview on Sky 99.5 FM on the JCC’s Invaders’ Bay law suit

sky995fmThis is a short interview I did with SKY 99.5FM on Tuesday 22nd November 2016 with Jessie-May Ventour and Edison Carr to discuss the Invaders’ Bay developments. Audio courtesy Sky 99.5 FM

  • Programme Date: Tuesday, 22 November 2016
  • Programme Length: 10:51

The Proposed changes to the new Public Procurement Act

The Public Procurement and Disposal of Property (Amendment) Billprocurement-bill was tabled in Parliament on Friday 13th November 2015 and a Joint Select Committee appointed – under the Chairmanship of Finance Minister, Colm Imbert – to invite and consider comments on the changes being proposed. Overall, I took the view that the proposed amendments would likely improve this new law, so these are my formal comments as submitted to that JSC. CLICK HERE TO READ.

This is a critical law to tackle the high levels of waste and theft of Public Money and it is therefore critical that it is implemented as swiftly and as solidly as possible, even if we know that certain parts would need to be closely monitored and subject to early adjustments as necessary.

Facing the Facts

Two important laws were partially-proclaimed by the President at the end of July –

  1. The Public Procurement and Disposal of Public Property Act, which is intended to control transactions in Public Money, and the
  2. Planning & Facilitation of Development Act, which is intended to provide for effective control of physical development.

Both those laws would be critical in controlling the worst excesses in terms of waste and theft of Public Money as well as the scourge of unplanned development. There is still substantial work to be done to properly implement those new laws, neither of which will actually come into effect before elections on 7 September, so our stern attention will therefore be essential.

The campaigning and committee-work to achieve those new laws has been demanding, so it Is important to re-state our fundamental concern as to the sheer hostility of high-level public officials to the truth. This is a fundamental point since the new laws create modern, transparent and participative processes. If the key public officials maintain their hostility to the truth, we would be entering a period of serious struggles to implement these new laws.

These examples speak to the official hostility to the truth with which we are beset.
Continue reading “Facing the Facts” →

Public Procurement Priorities

The Public Procurement & Disposal of Public Property Bill was passed by the Senate on Tuesday 16 December 2014, completing its journey through the legislative process. That is an historic achievement for our country, so it is essential that we take our bearings and properly record the moment.

This important new law to control transactions in Public Money was the objective of a long-term, collective campaign by the Private Sector Civil Society group (PSCS) of which JCC was a member. The JCC met with the leaders of the Peoples Partnership in April 2010, with one of the key promises emerging from that meeting being that new Public Procurement laws would be passed within one year of an election victory. It has taken four and a half years for the government to achieve that.

This achievement was only possible because of our collective efforts. Ours was a diverse group which resolved to campaign together for this critical reform of our country’s laws to ensure effective control over transactions in Public Money. Continue reading “Public Procurement Priorities” →

None So Blind

Property ownership is a critical ingredient of the society we are trying to build.  No one can deny that.   The wealthiest people and companies in this society have made a great part of their wealth through property dealings – buying, leasing, sub-dividing, selling, renovating and so on.  We all know that property is critical to amassing and holding wealth.

The single largest owner of all classes of property in the Republic is of course, the State.  Those properties are described as ‘Public Property‘ in the Public Procurement & Disposal of Public Property Bill 2014 which is now being debated in Parliament.  The penultimate paragraph of the Private Sector Civil Society group (PSCS) group statement of 13 June 2014, is clear –

“…Whilst very pleased with the progress to date and while not having sight of the amended bill we note two areas that remain of serious concern; the Role of civil society and the acquisition and disposal of public property…“.

At pg 7 of that Bill – “public property” means real or personal property owned by a public body;”

‘Real Property’ usually means real estate (freehold or leasehold), while ‘Personal Property’ usually means all other types of property such as licenses, concessions and tangible items of worth.

‘Owned’ usually means literally owned, as in the case of a freehold or leasehold interest, but there are other important types of property which are not literally in the ownership of a public body.  Public Property is important because it is extremely valuable.  The power of the State or its agencies to allocate those Public Properties must therefore be exercised in an equitable and transparent fashion if we are to foster proper conduct of our country’s public affairs.

Crown Grants

In relation to real estate, it is important to note that the system of Crown Grants was used during the colonial period to encourage immigrants of a particular type.  Immigrants who were of acceptable race, religious belief or station in life were allocated public lands for the purpose of agriculture.  The actual documents are called ‘Crown Grants’ and they can be seen in our country’s records.  The allocation of those lands to those selected people established a pattern of substantial wealth which took generations to displace.  Of course such a system of property allocation, on the basis of ones’ external appearance and belief system, would be incompatible with our Republican status.

That history and the important role which property plays in today’s society are both reasons why the  ‘disposal of public property‘ is an inescapable part of the new law, so that we can ensure good governance in these matters.

The Maha Saba Episode

This is a good example of a type of Public Property not literally owned by a Public Body.  The dispute was over the decision of the previous administration to allocate radio licenses overnight to the Citadel Group, which was owned by a PNM member, at the same time as delaying the grant of broadcast licenses applied for by the Maha Saba.   The Maha Saba had to take legal action all the way to the Privy Council to obtain a favourable judgment as to the breaches of principles of good public administration by that PNM government. 

A new law intended to control dealings in Public Property as defined above would be one which extended beyond those literally owned by Public Bodies to include species of property in the ‘care, custody or control‘ of those bodies.  That would allow future occurrences of a ‘Maha Saba episode’ to be rapidly rectified, also at less expense, by the Procurement Regulator as that type of property transaction would be within oversight of the new law.

In point of fact, it was reported that the Citadel group which comprised three radio stations was sold in 2012 to the CCN group (owners of this newspaper) in 2012 for a sum reported to be over $50M.  So it is clear that these species of property have serious value, quite apart from any other aspects.

Caroni Lands

When Caroni Ltd. was closed in August 2004, about 76,000  acres came out of cultivation and become available for alternative uses.  The Caroni lands stretch from Orange Grove at Trincity (near the large new Blue Water facility) as far south as Princes Town.

Given the fact that Chaguanas has been our fastest-growing town for almost 20 years now and the ongoing growth of investment in San Fernando and its outlying districts, it is clear that the Caroni lands have a critical role to play in our medium to long-term prospects.  But those possible outcomes would be conditional on just how the Caroni lands are allocated in the short-term.  As far as I am aware, a decade after abandoning sugar cultivation, there is still no strategic plan for how these lands are to be utilised.  In the absence of a proper strategy for the management of those important State lands, there is scope for missed opportunity in terms of development and re-distribution.

The decisive land allocation issues would include –

  • How does the allocation policy work together with the State’s broader economic policies?
  • To whom are the lands allocated?
  • On what terms are the lands allocated – i.e. for how long are the lands to be leased and with what restrictions? Some of the ex-Caroni workers are demanding grants of freehold interests from the State, but no decision seems to have been made on that.
  • Does the State have the right to repossess the lands upon expiry of the lease?
  • Does the allocation strategy have dynamic measures to control speculation?  This is to prevent the growth of ‘flippers’ who just acquire property to hold and re-sell.  There is a serious view that ‘flippers’ are a part of the market, but there is also a way that their presence can retard development as they do not typically improve or maintain their properties.

All of those issues must be located within equitable and transparent arrangements as required by the new  law.

State Leases of offices

When the State leases offices or other property it is in fact procuring property via a transaction in Public Money.  Those transactions must take place within a modern system which ensures good governance by attaining accountability, transparency and value for money.

There is a huge oversupply of offices in greater POS as a result of the State’s overbuilding during the last regime and the current administration is now shifting significant public offices out of POS.  The combined impact of those ought to be a steady decline in both the gross amounts paid to landlords via State leases and the amounts paid per sq. ft..  That kind of change can only be obtained and monitored if the State’s leases of offices and other property are also part of the new Procurement system, so that the details are published as part of the database of State contracts.

Invader’s Bay

The State-owned reclaimed lands at Invader’s Bay in west POS are another pregnant example of how the use of improper land allocation processes can injure the public interest.  The JCC has mounted a legal challenge to seek publication of the legal advice obtained by the Ministry of Planning & Sustainable Development as to the legality of their activity ‘thus far’ in respect of that 70-acre parcel of prime land.

It is interesting to recall that one of the legal opinions on which the State seems to be relying, notes that this proposal was to grant long leases (about 99 years) to the successful bidders at Invader’s Bay.  That was not considered a disposal since the State would have retained the freehold interest.  Now that is probably the best example of why these types of transactions must be controlled by these modern and effective laws.  The attempt to conflate a residual freehold interest with ownership, while at the same time denying the tremendous commercial value of a 99-year lease over prime lands was scandalous.

The most valuable properties in the capital are the leaseholds in St. Clair and Woodbrook, that much is indisputable, which is why we have guard against this kind of evasive advice to facilitate arrangements to escape proper oversight.

The Landed Interests

The ill-fated 2009 proposals for a new Property Tax would have required an updated and open database of the entire country’s property holdings.  The campaign to ‘Axe the Tax’ was successful and that database never saw the light of day, which entirely suited the Landed Interests who are wary of any system which would expose their operations to easy scrutiny.

We need to be vigilant to ensure that the Public Procurement & Disposal of Public Property Bill 2014 does not leave a gaping, purposeful loophole thorough which our Public Money will continue to pour.

Given that our political parties receive financing from business-people, how will those party financiers be rewarded?  In a situation which properly controls the award of State contracts for goods, works and services, how can they be rewarded?

The answer is Public Property.

Paying the Price

On Wednesday 11 June 2014, the Senate unanimously approved the Public Procurement & Disposal of Public Property Bill 2014 and that Bill is soon to go to the House of Representatives for their deliberation. I was present to witness the collective efforts made by Senators on Tuesday 10 June and it was a really thought-provoking experience for me.  I started to wonder just how much we could achieve if the banal point-scoring and ritual picong was to become a thing of the past.  The basis of decision-making on public issues would have to shift to a fact-based one, which would be a huge, healthy step away from the sad formula of ‘might is right’.

What a day that would be for us all, just imagine.

But we have to exist in this place, as it is, with all its imperfections.  Which leads me to discuss the constant questions put by people who want to know if ‘this law we are fighting for‘ could prevent this-or-that corrupt practice.  So the two projects which I would use to give worked examples are –

  1. the THA/BOLT office project on which the High Court recently ruled;
  2. Calcutta Settlement/Eden Gardens land purchase by HDC.

THA/BOLT

tha-bolt1This project was analysed in a previous article, which set out certain questionable aspects of those arrangements.  In my opinion, the greatest areas of concern were  –

  • Size – THA stated that the Divisions for which this building was being leased now occupy 28,500sf, yet the completed project is to comprise 83,000sf – almost three times more space.
  • Quality – The new building is projected to cost $143M, which equates to $1,723 per sq ft and that is at the upper end of office costs, even when we consider that the contract was reported to be for a fully fitted building.
  • Rent – The current rent paid by the THA for the Divisions to be located in the new facility is an average of $8.17 per sq ft.  The rent for the new facility was agreed at $15.61 per sq ft, which is almost twice the rate now paid.  It was telling that the THA relied on the statements of a Civil Engineer, Peter Forde, who sought to justify that rent by reference to the fact that $10 per sq ft was being paid for some offices in Scarborough.  Mr. Forde is an esteemed engineer with whom I have worked well in the past, but that is like relying on my advice, as a Chartered Valuation Surveyor, as to the correct steel to use in some complex structure.
  • Total Costs – The total monthly rent now paid by THA for those Divisions is $231,788, while the new project is set to cost a monthly rent of $1.295M – more than five times more.

All of these arrangements being made by a public authority which makes a compelling case that the Central Government has starved them of financial resources over a considerable period.  The THA, starved of money, is justifying a deal which will hugely increase their monthly rent bill, for an office building three times larger than required at a higher quality than any other in Tobago.  That is the sense of this deal.

The recent litigation over this project was altered after it started, to two questions of ‘construction’, being ruled by the Court to be issues of public interest –

  • Finance Ministry approval – Is THA required to obtain approval from the Ministry of Finance before entering a BOLT arrangement?
  • Tendering procedure – Is THA required to follow the procedures of the Central Tenders Board Act (CTB Act) in entering a BOLT arrangement?

The High Court ruling on 30 April 2014 was claimed by THA to be an endorsement of their course of action, but this is what it actually meant.

ISSUES High Court Ruling Proposed Public Procurement Law
Preliminary considerations No ruling by the Court. A Needs Assessment would be required to take account of a life-cycle costing, which includes both initial and cost-in-use aspects.
Ministry of Finance approval At para 33, the Court ruled that THA is not required to obtain approval of the Minister of Finance.  In that respect, one can understand THA’s claim to have been vindicated.At para 29, the Court makes the inescapable point that since this is a 20-year recurrent commitment which would have to be paid for by financing from the Central Government, it would be prudent for the THA to consult with the Finance Ministry before entering such arrangements. This is a transaction in ‘Public Money’ via a ‘Public Private Partnership’ which is included in the remit of the proposed law.
Tendering Procedure At paras 48 through 51, the Court was emphatic that the THA was required to follow the provisions of the CTB Act. The proposed law abolishes and replaces the CTB Act and would include this kind of project under the oversight of the Office of Procurement Regulation.

In this case, the THA’s claims of victory appear unrealistic, but the good news is that the proposed arrangements will act to prevent a recurrence of this wasteful type of project.

EDEN GARDENS

163940This 2012 purchase of 50.5 acres (comprising 264 residential lots with ancillary uses) by the Housing Development Corporation (HDC) was also the subject of a series of articles in this space, which highlighted these questionable aspects –

  • Private sales as individual lots – Eden Gardens lots were being offered for sale in 2011 at $400,000.
  • HDC Valuations or Offers? – HDC obtained a private valuation of the property at $52M in November 2011.  In January 2012 Eden Gardens is offered to the HDC at $200M.  So why did HDC order a valuation in November 2011?  Was there an attempt to offer the site to HDC before November 2011 and at what price?
  • The State valuer exceeds the opinion of a private valuer? – Of course that is virtually unknown, but the fact is that the Commissioner of Valuations issued an opinion of value in April 2012 placing the property at $180M.
  • HDC Purchase – The HDC buys the property in November 2012 at $175M, which equates to $663,000 per lot.   Given that those lots were available in 2011 at $400,000, that is a 66% increase in the value of those lands within one year, which can make no sense.  It makes even less sense when one considers that HDC was buying the all that land at once, so a discount would be the rational and expected commercial practice.  So what was the basis on which this price was settled?
  • Plan ‘B’ – The State had the power to compulsorily acquire the land if it was required for a public purpose, which housing is.  The point being that the State could have lawfully acquired Eden Gardens for no more than $35M, if they had chosen to use their powers of compulsory acquisition.  So, why did they choose to go the Private Treaty route?
  • The ‘Ultimate Beneficial Owner’ – The basic business practice required of bankers and other finance professionals is to ‘Know Your Customer’ as a fundamental part of ‘Anti Money Laundering’ (AML) laws now in force in this country.  Those laws and professional practices have now extended to cover the activities of real estate agents, so anyone selling land would be required to conform.  The vendor of Eden Gardens was Point Lisas Park Limited, but from my research at the Registrar General’s Dept, it seems that PLP Ltd. has never issued shares.  Which means that we can only speculate as to who was the ‘Ultimate Beneficial Owner’ of Eden Gardens and indeed, who received $175M for that property.

The proposed new laws do not contain any provisions to govern the State in ‘acquiring public property’, which was the case in Eden Gardens, since the State was buying land.

This is one of the outstanding serious concerns as to the proposed new law, which would not act to prevent this type of corrupt practice.  Our Parliamentarians need to consider these aspects in finalising this law.