AG sues London
By Jada Loutoo Saturday, January 12 2013
EVEN as the battle for control of the Tobago House of Assembly (THA) heats up, the assembly has now found itself at the middle of a legal battle over its decision in 2011 to enter into a Build Own Lease Transfer (BOLT) arrangement with Rahael Holding Ltd for the construction and financing of the Milshirv administrative complex on the sister-isle.
In the review claim filed by Attorney General (AG) Anand Ramlogan in the Port-of-Spain High Court, the State is seeking declarations that the decision to enter into the BOLT arrangement for the administrative complex was illegal and in breach of the THA Act and the Central Tenders Board Act. The AG is also asking that the decision made by the Orville London-led THA be quashed and that the deed of lease between the THA and Milshirv Properties Limited be set aside as well as the deed of licence and deed of mortgage between special purpose company, Milshirv Properties and First Citizens.
The deal was reportedly worth more than $320 million.
According to the claim for judicial review, evidence of the BOLT arrangement was contained in a bundle of documents delivered by the THA to the Finance Ministry in November, last year.
The controversial deal generated much discussion after it was revealed by then Minister of Tobago Development, Vernella Alleyne-Toppin, in the House of Representatives in October, last year. The issue was also raised during the budget debate by Prime Minister Kamla Persad- Bissessar.
According to Ramlogan, a newspaper advertisement placed by Rahael Holdings set out details of the project and he said it appeared it confirmed that a BOLT style arrangement had been used for developing and financing the project at Shirvan, Tobago.
According to Ramlogan, who is represented in the matter by Alvin Fitzpatrick, SC, Lesley-Ann Lucky-Samaroo and Martin George, a request was made to the Finance Minister to determine if he had knowledge of the arrangement, to which the reply was in the negative.
A subsequent request was made by the minister to London, seeking funding details for payment of the purchase price of the land, which amounted to $12 million, as well as other details on the arrangement.
According to Ramlogan, after the BOLT documents were received, legal opinion was sought on the validity of the decision and Senior Counsel opined that the THA Act clearly established the statutory framework for allocation of funds and control of expenditure and borrowing of the THA and that the decision taken by the authority appeared to have been intended to circumvent the constraints imposed by the Act.
Ramlogan noted that advice received stated that the Milshirv/BOLT decision amounted to the use of the THA’s powers for an improper purpose and was in bad faith so as to circumvent the statutory financial controls and borrowing machinery incorporated in the THA Act for the protection of public funds.
In documents filed in support of the claim, the AG says if the THA is allowed to continue to enter into BOLT style financing arrangements for the development of capital projects in Tobago it would compel the Government to retrospectively approve for fiscal purposes a project and may also see the THA creating claims on the Consolidated Fund which were not approved within the statutory framework for same.
He also expressed concern that the THA may, by means of the BOLT arrangement, attempt to avoid scrutiny into its capital project financing, contrary to good governance, and may hold the Government accountable in the event that it is unable to meet its financial commitments.
The lawsuit further notes that acquisition of the land in question had been authorised by the Government using public funds, but the assembly failed to indicate that it had intended to dispose of the lands to Rahael Holdings’ Amera Caribbean Development.
Ramlogan noted that if the THA was permitted to enter into BOLT type arrangements for the financing of capital projects without complying with the legislative framework provided, Government will be hampered in its Budget planning resulting in a disruption in its planned fiscal policies.
“The THA has indicated that it intends to continue to use BOLT arrangements for the development of other capital projects in Tobago,” he notes in an affidavit filed in support of the claim.
According to the public law claim, the decision by the THA was irrational and unreasonable and the AG has advanced in support of the application, the grounds that the project did not receive the approval of Central Government; that Cabinet was within its rights to decline to approve estimates presented to it by the THA for the recurrent expenditure to meet the payment of the annual rent of $14,379,499.32 for the period of 20 years contemplated by the proposed sublease.
“In the circumstances, the decision to enter into the BOLT agreement without any proper or any arrangements being put in place for the payment of the recurrent annual rental and where the approval for the payment of these sums is out of the control of the THA has the self-evident risk of forfeiture of valuable State lands and the deposit contemplated by the arrangement,” the lawsuit against London’s THA contends.
The claim further argues that the irrationality of the decision to purchase the lands upon which the project is proposed to be built is further compounded by the fact that in 2003 Cabinet approved the acquisition by the THA of four parcels of land comprising approximately 140.2847 hectares forming parts of the Courland Estate by means of a Government guaranteed fixed dated loan of $90,377,500.
According to the lawsuit, it also appeared that the THA was suggesting that central Government had in the past not accepted the THA’s proposals for capital projects prompting its decision to enter into BOLT type arrangements as an alternative.
Included in the supporting documents is reference to a deed, dated November 15, 2011, for the purchase of three acres of land for $12 million by the THA from a company called Dankett Limited, whose directors were listed as Anthony Rahael, Joseph Rahael, John Aboud and Michael Aboud.
The lawsuit also points to a lease by the THA for the land to Milshirv Properties for 199 years, beginning December 1, 2011 at an annual rental of $10, referred in the lawsuit as “peppercorn rent.”
Milshirv’s directors have been listed as Joseph Rahael and John Aboud. According to the lease document, Milshirv is “to construct an office building and facilities ...on completion of (which), (Milshirv) will lease (them) to the (THA) for a term of 20 years...All rates, taxes and assessments” on the premises are to be paid by the THA.
Drawings and designs for the proposed facility were done by Amera, whose directors are Joseph Rahael and Anthony Rahael.
A sublease imposed on the THA to pay an annual rent of $14,379,499.32 for the administrative complex by equal monthly installments of $1.2 million.
It also provides for the THA to pay to Milshirv, as an advance security deposit, $22 million, representing 18 months rent, to be held by FCB.
The judicial review application was filed without notice being given to the THA and a date is yet to be set for hearing.
The Prime Minister had demanded answers from the Chief Secretary as to why, after millions of dollars were spent, the THA has chosen to give the Milshirv property back to its directors. She also questioned why the office lease agreement which was incorporated into the lease agreement of Milshirv was not immediately registered. She said she found it highly suspicious and irregular with the recent BOLT agreement between the THA and Milshirv Ltd.