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$M jet, a rape on treasury

By ANDRE BAGOO Saturday, March 8 2008

A HIGH-RANKING Govern-ment official yesterday accused Government of going behind Parliament’s back to approve a $400million executive jet, as pressure on the board of Caribbean Airlines (CA) increased.

“This is a rape of the treasury,” stated the official who requested anonymity, noting that there was too much uncertainty looming over the proposed jet transaction. “We are dealing with too much vague information.”

“For the Government to give CA money, it must be approved by Parliament,” he said. “But CA might be borrowing the money under a guarantee from the Government, which would not need Parliamentary approval. But it is not clear. You are only hearing that the aircraft is being leased.”

Government can acquire a jet without need for parliamentary approval, if CA obtains a loan from a private third party leasing company, with the government as guarantor, the official said. Payments out of the consolidated fund in this arrangement could be lower and may be absorbed under pre-existing Budgetary allocations.

Colm Imbert, the Works and Transport Minister, earlier this week said Government has been approached by CA with a proposal to set up a subsidiary company that will supply a $400million executive jet. The Minister said by letter dated February 27, CA approached the Finance Ministry with the jet proposal and the matter was approved the day after by Cabinet. He noted, however, that the deal was not a done deal.

But in Parliament yesterday, Imbert for the first time publically disclosed that the $400million (US$63million) has been placed in a CA account in relation to the transaction, within a week of the Cabinet’s approval.

“Can someone give us the details of the proposed contractual arrangement between the subsidiary and the government?” asked the Government official yesterday as he called on the entire CA board to resign.

He further called Imbert’s claim that Government would only “consummate” the proposed deal with the insertion of an “anti-corruption clause”, “a red herring to divert attention.”

“The question is not of corruption, the question is of waste,” the official said. Danielle Boudreau, a Bombardier public relations officer, would not confirm whether or not such a clause is normal for jet acquisitions with Bombardier. However a CA boardroom source described such a clause as “unusual for leases, but not purchases.”

This as current CA board members privately distanced themselves from the company and said they regretted taking up a position on the board.

The jet became available when a contract between Bombardier and an American corporation fell through, Imbert said. That corporation has since been identified by a CA boardroom source as E- trade, an American brokerage firm.

CA is scheduled under the Ministry of Works and Transport for its day to day running. For its financing, it falls under the Ministry of Finance.

Currently, under the new procurement rules of government procedure, if a minister wants to acquire an asset, three quotations must be obtained or a request for tenders is made and tenders are evaluated by a tenders committee. Ultimately, the asset purchase is approved by the Finance Ministry. But the Prime Minister can simply get a Cabinet note to buy an asset and get the Finance Ministry to disburse the funds.

Any monies paid must come out of the Consolidated Fund. Monies not previously approved in the Annual Budget must later be accounted for via a supplementary appropriation bill in Parliament. Any private company, like CA, can approach government to purchase an asset by simply writing the Ministry of Finance, before triggering the process of consideration.

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