|The Uff Commission – A Final Fix?
Published Thursday October 1st 2009
It might seem
impossible, but we have been pushed into greater confusion by the events
of the fortnight since the last
a fresh round of confusing denials, UDeCOTT are reported to have
maintained their legal action to challenge the Uff Commission. That
challenge includes claims as to the alleged bias of the Commissioners.
UDeCOTT continues to deny that the purpose of these legal challenges is
to de-rail the Uff Commission. If those actions were to be sustained
and to eventually succeed, the Uff Commission would be de-railed. Some
attorneys have pointed out to me that there have been no studied
statements as to whether an Enquiry with a reduced number of
Commissioners is still effective under the law. Even so, justice must
not only be done, it must appear to be done. Point being, even if the
Enquiry with a reduced number of Commissioners is lawful, it will hardly
be able to command any moral authority. It is my view that a successful
legal challenge from UDeCOTT would have the effect of killing the Uff
I am reliably
informed that the hearings for this UDeCOTT challenge could take at
least one year.
Some of the major
highlights in the swarm of contradictory comments were –
Conrad Enill’s opaque statement on the State paying
UDeCOTT’s legal fees. The PNM Chairman referred the question to the
Minister of Planning, Housing and the Environment, Dr. Emily
Attorney General John Jeremie made strong, stirring
statements on his no-nonsense approach to white-collar crime. Mr.
Jeremie was adamant that all the necessary steps would be taken to
ensure the proper completion of the Enquiry.
Minister Gaynor-Dick-Forde is reported to have given a
telephone interview to affirm that ‘UDECOTT is right’ in making its
[link] That incredible assertion can only dilute the limited
authority of this Minister, who took prompt action to dismiss the entire
HDC board of Directors earlier this year. The Minister’s explanation
was that there was a ‘governance crisis’ at the HDC. If this behaviour
by UDeCOTT does not count as a ‘governance crisis’ of the first order,
we have to wonder about the quality of this Minister’s judgment. Dr.
Gaynor-Dick-Forde went so far as to say that the AG and UDeCOTT were
saying ‘one and the same thing’. This Minister is a highly-lettered
scholarship winner and has affirmed herself to be a Christian with a
Independent Senator and UDeCOTT Board member Michael
Annisette, gave a strong defence to UDeCOTT in his contribution to the
budget debate. More on this later.
UDeCOTT also made a
public statement to compare their legal challenge to Dr. Keith Rowley’s
action vs. The Integrity Commission, when he was a member of the
Cabinet. That comparison is baseless and misleading, as are so many
other statements in this sorry affair. Just to list three important
Firstly, Rowley paid his own legal fees while UDeCOTT is using
taxpayers’ money to defy the government.
Secondly, Rowley sued in his private capacity – i.e. to preserve
his reputation – while it is clear that UDeCOTT is suing as a body
Thirdly, the Rowley lawsuit was against an independent
Constitutional Commission, appointed by the President. In contrast,
UDeCOTT is challenging the acts of an Enquiry whose members have been
selected and terms specified by the Cabinet. The President issued the
documents for the appointment of the Commission, but the entire Enquiry
is a creature of the government’s creation. For a State Agency to
challenge such an Enquiry is utterly unprecedented and scandalous
The original Cleaver
Heights allegations have been discredited and the attempt to introduce
fresh material on that project was compromised with the surprise
appearance of Mr. Carl Khan as a witness on the CH allegations. The
last hearings of the Enquiry had the potential to reveal the extent of
the waste and corruption which all citizens know to be a reality.
It is clear for all
to see that this important Enquiry is being willfully undermined. The
damage to the credibility of the members of the Cabinet is immense.
Even docile and obedient party members are now asking ‘Who
really in charge here?’.
Further legal and
reasoned justifications will only deepen the loss of faith. UDeCOTT
Board members are acting in defiance of stated government policy. Or
are they in fact following a policy of concealment? A Board which was
acting in defiance of the PM would have been dismissed already.
Only swift, direct
and unambiguous action by the PM can retrieve this fiasco. The
confusing antics by the others are fooling less and less people.
Amidst all the
scandal and name-calling, I am reminding readers that Udecott has filed
no accounts for 2007 or 2008. We are entitled to wonder why. To continue
from last week, I have been involved in a series of e-mail enquiries on
this question with Minister in the Ministry of Finance Mariano Browne.
His replies have advised that all the remaining issues on this audit
have been resolved, but that there are non-technical reasons why
PriceWaterhouseCoopers cannot issue the accounts. He has not advised
what those “non-technical issues” were. This Property Matters series on
Udecott has been running for more than 2 years and it is useful to step
back from the details and return to first principles.
Udecott is a state
enterprise which lists value for money, professionalism and
accountability among its core values. Udecott has been carrying out a
large-scale construction programme and has borrowed most of the funds
for that. While the projects were under construction Udecott’s
accountants calculated their value by adding the estimated value of the
sites (as if they were vacant) to the cost of the completed works (that
is called value in the quantity surveying/engineering parts of the
construction profession). That method is an acceptable one. The problem
is that upon completion, those projects have to be put onto the balance
sheet at market value. That means that the properties have to be valued
at the estimated price they would fetch in the open market. Those are
the requirements of international accounting standards. We have
repeatedly said that not one of these projects represents value for
money. Not one. The largely vacant International Waterfront Complex was
financed via a 15-year bond which, by my calculations, would now be
requiring a monthly payment of the order of $14 million. That project is
Udecott’s flagship and, as such, it formed a key part of the executive
chairman’s report in 2006.
The phrase was:
“project financing on competitive terms without the requirement of a
government guarantee or government letter of comfort.” In the absence of
either of those, how is Udecott paying the financiers for this project?
More to the point, how is the carrying cost of the largely vacant
complex being shown in the accounts. The terms of finance secured by
Udecott were very competitive. The rental value of the complex, if it
were occupied, would barely cover the debt service. How is the high cost
of maintenance to be factored into the property valuation and,
consequently, the accounts? One of the recurring themes in this series
on Udecott has been the fact that the true break-even rent of these
projects are, in fact, unachievable in a market flooded by the very same
space. The plain meaning of that is they are all now liabilities in
terms of market value, since their rent is insufficient to cover the
real cost of land plus the building. All these issues are present across
the entire portfolio of projects many of which are now completing,
post-2006. If I am right, the accounting effect of all this will be a
sudden decline in asset values and a simultaneous leap in
and Udecott board member Michael Annisette made recent comments on the
indebtedness and accounts of state enterprises:
[link]. “If regulation is not followed through on a timely basis
government must clamp down on those entities. “I agree that monitoring
must be exercised in a timely fashion. There must be oversight and
superintending of the accounts in a sustainable and fundamental way,
that’s the only way you can have checks and balances on these
institutions. “There are cases where action starts after the fact and
not before. The action must be preventative and not reactive. People who
are given responsibility are not always accountable. Accountability
demands a responsibility if you don’t account you pay the price. There
must be a deterrent mechanism in place. The state enterprises are simply
ignoring these regulations and no one is following up to ensure
compliance,” said Michael Annisette.
Afra Raymond is Managing Director of Raymond & Pierre Limited.
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