The Udecott strategy
‘A considerable concentration of power’
Published Thursday 29th May, 2008
Cross-subsidy is a common feature of
complex, comprehensive, urban developments in that unprofitable, but
necessary public facilities are balanced out by profitable commercial
parts of the development.
A recent, well-known example of this
type of development is the offices above the National Library complex.
We are not sure if these uses are effectively balanced-out in that case,
but this is just an example of the possibilities. It is the essence of
this type of development and Udecott’s mission statement speaks to this
concern “the urban centre of the 21st century is one …in which interests
in culture, history education, entertainment and government are
well-balanced with commerce.”
The justification
behind the existence of the Urban Development Corporation of T&T (Udecott)
as an implementer of the State’s physical development programme is as
solid as it is commonplace. The traditional bureaucratic structures of
the public service do not serve the demands of rapid development.
There can be
little doubt that Udecott has made great strides in our physical
development in a remarkably compressed period. Whatever the current
uproar, there are valuable lessons to be learned from the methods used
by this company to advance State projects.
We need to outline
our areas of concern with Udecott’s operations and equally, to
distinguish those from the areas now being ventilated. There have been
increasing allegations against Udecott; these have included unfair
tendering, undue use of foreign contractors and professionals and the
power of its leader, the Canadian-born Calder Hart.
Those allegations
have come from a variety of civic organisations—including the Joint
Consultative Council (JCC), the T&T Institute of Architects (TTIA), the
local chapter of Transparency International and the T&T Manufacturers’
Association (TTMA)—culminating in a joint press conference to call for a
Commission of Enquiry into Udecott. The Opposition leader, Basdeo Panday,
also joined those calls.
Udecott has its
defenders who point out that it is consistently profitable and audited
annually by a leading firm of accountants. Some go even further to say
that in the real sense, Udecott is an exemplary State-owned company due
to its visible effectiveness.
Udecott also held
a combative press conference to reply to its critics. After dramatic
allegations by the UNC-A’s Chief Whip, Ramesh Lawrence Maharaj, of
irregularities in the award of contracts, Prime Minister Patrick Manning
announced a Commission of Enquiry into what amounts to the entire
construction industry with a focus on public procurement. The ball seems
to have been kicked into the long grass.
Udecott’s Web site
speaks of the company as being a project facilitator for the State and
lists its many projects. I am reliably informed that Udecott has moved
beyond project facilitation with a new role as a project promoter. That
is an important difference since it would seem to place additional
responsibilities upon that organisation. If that is the case, the
Commission of Enquiry needs to have more specific terms of reference
than proposed by the PM.
The issue with the
wave of projects now engulfing us is, for me, far more than the
important ones of who is the architect, contractor, engineer etc. It is
necessary, but not at all sufficient, that we enquire into those areas.
We need to consider carefully the genesis of these projects. Did they
originate within Udecott or the respective ministries and government
agencies?
We spent a
considerable amount of space in the 2007 series of Property Matters
setting out the case that none of the office buildings being built by
Udecott in our capital are feasible. Not one.
In every case the
“break-even” rent—which is the figure the building has to be rented for
to repay the cost of the project—is way in excess of the market rent.
That remains uncontested to date. The silence on this point, from an
organisation with an extensive PR budget, is as eloquent as it is
damning. Silence from UNC-A and CoP too, for those who might feel that
this writer is being party-political. All this from an organisation
whose mission statement, in respect of its role as “developer of
choice,” informs us, in respect of its aims, that “this will be achieved
in accordance with aesthetically pleasing, environmentally sound and
commercially viable principles.”
Udecott’s
aspirations are clearly not being achieved, if we use “commercially
viable principles” as a yardstick.
If Udecott were
merely implementing State instructions—“to work as directed by the
Government”—that would be one thing. It is my view that even so, it
would have been incumbent on the professional staff and directors of
such a special-purpose company to draw to the client’s attention all the
implications of its unsound proposals. Did Udecott advise the State that
its many office projects are all unviable and do not, by any measure,
represent value for money?
No organisation
claiming, as Udecott does in its core values, “We are professional at
all times and expect the highest work ethics from ourselves” could
possibly do otherwise. It is the true professional’s cause to advise the
client on how best to achieve its objectives, but always pointing out
the implications of those objectives.
But what if
Udecott were actually more than a project facilitator? What if these
projects were, in fact, conceived and promoted to the State by Udecott?
If that were the case, we would be considering a higher level of
responsibility. We would be contemplating a trusted adviser making
detrimental proposals. That would be a professional nadir.
Those seem to me
to be far more serious, precedent concerns in respect of the Udecott. We
do need to examine other things, but we must keep our collective eyes on
the ball. Where did all these projects come from?
There has never
been prior public consultation on the rebuilding of our capital’s
commercial centre. That lack of democratic process dilutes the claims to
transparency now being so soberly advanced by those who should know
better. It takes more than an audit to assure that a company is sound
and progressing well. Audits are necessary, but not sufficient. In the
case of property development companies, one has to examine many aspects
other than just the accounts before a view can be formed as to the
company’s operations or prospects. We understand that Udecott’s 2007
annual report is due shortly and once that is published we will be
examining those.
Some questions to
consider for next week:
l
What
did the PM and the Cabinet know of these projects’ viability and when?
Did Udecott ever advise its clients of the implications of their
proposals?
l
Given its responsibilities, is Udecott appropriately governed? To go
even beyond the doubts already published about the advisability of the
executive chairman arrangement, I read in another newspaper that “On
June 22, 2007, Ricardo O’Brien revealed to the PAEC that Udecott did not
have an internal auditor and that its audit committee consisted solely
of Udecott chairman, Calder Hart.” It seems, to refer to the subtitle of
this column, to be a case of “A considerable concentration of power,” to
quote the Cadbury Report.
l
If
there is no profitable commercial element to our many, expensive
State-sponsored developments, what cross-subsidy is there? If there is
no cross-subsidy, what are we doing with our windfall? Is this the 1970s
all over again?
Afra Raymond is a
director of Raymond & Pierre Limited. Feedback can be directed to afra@raymondandpierre.com.
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