HALT THA DEALS
By SEAN DOUGLAS Thursday, October 11 2012
PRIME Minister Kamla Persad-Bissessar yesterday vowed to probe two dubious multi-million dollar land deals done by the PNM-led Tobago House of Assembly (THA) which she urged now be halted — the $250 million Tobago Aquatic Centre and the $320 million Shirvan THA Administrative Complex.
The Ministry of Finance, Attorney General and Integrity Commission would be asked to probe the deals, she said, speaking in the Lower House in the 2013 Budget debate.
She expounded on the controversy of the THA Administrative Complex in a deal between the PNM-led Assembly and companies owned by the family of former PNM government minister John Rahael.
Although the issue has been a hot topic in Tobago for several weeks, it was first exposed in the Lower House in Trinidad by Sport Minister, Anil Roberts, last Friday, in his contribution to the Budget debate.
Roberts had outlined a transaction in which the THA bought three acres of land from the Rahael family for $12 million, agreed to lease the land back to the family business for 199 years, and then to rent an office building, to be built by the Rahaels, at $1.2 million a month for 20 years, at the end of which the land and building would be transferred to the THA.
Persad-Bissessar told the Lower House that renowned Tobagonian, former head of the Public Service Reginald Dumas, has even vowed court action against the THA on the Administrative Complex transaction done under the Build Own Lease Transfer (BOLT) model, quoting an exclusive report in yesterday’s Newsday, headlined “I’ll sue THA, says Dumas”.
In response, Dumas and the Rahaels yesterday said they welcomed the probe.
Of the THA/Rahael land deal, and the Aquatic Centre, both of which were not put out for tender, Persad-Bissessar told the Lower House the arrangements raised questions about the transparency of the THA’s actions.
“These transactions raise a number of critical issues in procurement, transparency, accountability and legality,” she said. “It appears that the THA negotiated an arrangement which was designed to by-pass and circumvent the provisions of the THA Act.” She said the Act allows the THA to borrow by way of overdraft but only with the approval of the line Minister in the case of borrowing for capital investment.
She vowed to say a lot more about the Shirvan THA Administrative Complex, whose cost she said would be about $320 million, which is more than her initial estimate of $143 million. She said this was a sweetheart deal involving the THA and two firms - Milshirv Properties Limited and Dankett Limited, whose directors include “a Mr Rahael”.
(The directors are Joseph Rahael, son of former PNM minister John Rahael, and Anthony Rahael, brother of John.) “On October 3, 2011 Milshirv was incorporated. On November 15, 2011, the THA purchased three acres of land situated at the corner of Shirvan and Milford Roads for $12 million from Dankett Limited. Six days later on November 21, 2011, the THA leased the same three acre property for 199 years at an annual rent of $10 to Milshirv Properties Limited, this a mere two months after Milshirv was incorporated.”
Persad-Bissessar alerted that there is no existence of any “annex B” to the deed given to Milshirv, regarding all actions agreed to that must happen at a later date.
She said it is an incomplete document. Further, she said the deal was done without any tenders or requests for proposals (RFPs).
Earlier in her contribution, she related the curious chronology of events whereby a letter dated January 16 from Adam’s Project Management and Construction Limited had proposed to construct the Aquatic Centre and Indoor Sports Complex for $149 million, while on January 23, Zoit Developers Limited had sent an unsolicited bid to THA Chief Secretary Orville London to build it for $233 million, including leasing lands which after 18 years would be transferred to the THA under the BOLT scheme.
“Was it tendered? How did either of these companies become aware that this Aquatic Centre was to be constructed so as to make their offer?” asked Persad-Bissessar. “Was there a request for proposal or any other form of tender? Were these companies hand selected to make proposals, and if so, on what criteria?
“Was this project put out to tender, advertised or in any way made known to the public? If not, why not?” She said BOLT projects must be tendered.
Persad-Bissessar said a companies search showed that Zoit was incorporated only on November 15, 2011, listing directors Mervyn Campbell, Keith King, Lennox Lewis and Joanne Chaitan Forsyth.
“So here is a company incorporated on November 15, 2011, referring to a letter of introduction of December 13, 2011 to Mr London and then making a proposal of about $233 million for the Tobago Aquatic Centre project. Shades of Calder Hart - a company incorporated for a few months making unsolicited proposals for a multi-million dollar contract,” she said wryly. In contrast, she said Adams was registered in 2001.
She said the THA’s Chief Administrator for Finance and Enterprise Development had last March asked a firm, Project Specialist Limited (PSL), to evaluate Zoit’s bid for the Aquatic Centre.
“By report dated May 3, PSL raised serious concerns and advised the THA against going forward,” she said. PSL has warned of annual recurrent costs of between $18.95 million and $22.38 million - excluding maintenance costs - for the next 18 years.
The Zoit bid was found to be overpriced and poorly structured, such that the use of market rates and proper financing would otherwise have let the THA save $100 million in costs.
“Why is the THA borrowing at a lease of eight percent?” she asked of the exorbitant interest rate.
Yet she noted that the THA Finance Secretary Anselm London in a letter dated July 13 told Zoit that the THA’s executive council would issue Zoit a letter of interest for the deal.
She said it was not transparent for that letter to allow Zoit to amend its proposal.
“Were other bidders afforded the same luxury?” he asked.
Persad-Bissessar said that when the Tobago Organisation of the People, a member of the People’s Partnership Government, broke the story, both Londons (Orville and Anselm) had denied the project was approved, claiming it was just a letter of intent. Yet this was contradicted by an email from Joel Jack, programme coordinator of the THA’s Division of Finance and Enterprise Development, dated September 12. “The project has been approved by the Assembly,” she disclosed. Moreso, the project cost was put at $250 million. “The THA needs the project to start now ‘for obvious reasons’,” she quoted the email.
Persad-Bissessar lamented that on top on the initial costs, the recurrent costs wold be about $400 million over the next 20 or so years.
As a result of questions on the two transactions, she has ordered probes be done.
“I am suggesting first of all that the project Milshirv and the project with respect to the Aquatic Centre be halted, and the matters be referred to the Attorney General, the DPP (Director of Public Prosecutions) and the Integrity Commission to be investigated for any breach of the law. I have already asked the Minister of Finance for the Ministry to carry out a central audit on this project.”
The action comes a few months after Tobago West MP Dr Delmon Baker (now Minister of Tobago Development) had told a post-Cabinet news briefing in Tobago on May 31 and announced the Government was probing THA operations unearthed by the Auditor General.
Following her concerns over the THA’s deals, Persad-Bissessar vowed to soon send a draft bill on procurement reform to Cabinet’s Legislative Review Committee (LRC). Also on a Tobago theme, Persad-Bissessar vowed to let Parliament mull a bill on Tobago self-government, (even as she accused Opposition Leader, Dr Keith Rowley, of ignoring the sister isle in his Budget response by his “conspicuous omission” last Friday which showed the Opposition has no plans for Tobago).
This Constitution (Amendment) Tobago Bill 2011 would strengthen Tobago’s internal self-governance and its economy, coming on the heels of much public consultation of the Government’s Green Paper on Tobago. She said Attorney General Anand Ramlogan has hired Russell Martineau SC to draft a Tobago Land Bill to help Tobagonians get proper legal title to their lands.
Persad-Bissessar accused the Opposition of scare tactics over the Government’s stance on the Government Assistance with Tuition Expenses (GATE) subsidy which she vowed to retain so as to boost tertiary education from a current 46 percent to a targeted 60 percent of the population.
Asking why anyone would ever want to close the University of Trinidad and Tobago (UTT), she said her own son, Kris, is a student at UTT, (where he is reportedly studying for a Bachelor’s degree in Education)
She then said the Budget’s Public Sector Investment Programme (PSIP) includes 36 percent in poverty alleviation and 35 percent to stimulating economic growth.