| Learning the Lessons of the UDeCOTT
fiasco - Part 2
Published Thursday April 22nd, 2010
There has been a
powerful and positive response to the first column in this series. The
reflections continue, as they must. No time for distractions, in this
election season.
Last week I paused with
the promise to spend some time examining the Special Purpose Entity (SPE)
model and its role in national development. This week, I continue the
reflection with focus on the Directors of these companies as key players
in the sector.
One of the fascinating
aspects of the Uff Report is its discussion of the nature and extent of
the independence of the Special Purpose Entities. Obviously, that
discussion was mostly focused onto UDeCOTT and the reporting
relationship with its line Ministry.
Some main points would
be –
·
Multiple Directorships – One thing which is clear from the Calder
Hart episode is that one individual had control of a vast slice of State
resources. Hart was Executive Chairman of UDeCOTT, Chairman of the Home
Mortgage Bank, Trinidad & Tobago Mortgage Finance, the National
Insurance Board (NIB) and the National Insurance Property Development
Company (NIPDEC). He obviously enjoyed a tremendous level of confidence
at the very highest levels of government. It is equally clear, from the
Uff Report, that that confidence was woefully misplaced. Even in the
early days of 'Corporation Sole' we have never had an individual
invested with so much power. It seems that this individual never had to
answer to a Chairman, since he was head of all the Boards he sat on. Is
that a healthy precedent? For those who would be quick to say that he
has been found guilty of nothing, please note that this is the same
individual who described himself to the Uff Commission as -
Q. Yes. But your lawyers misdescribed you in these proceedings
as a financial expert. You would not agree with that description?
A. I would not describe myself as an expert of anything.
See – 'End-notes on the Uff Commission' at
link
Yes, that is the same individual who stated, under oath, that all
outstanding issues with the audited accounts of UDeCOTT had been
resolved and that we could expect those in February 2009. Yes,
that is the man who was in charge of our national savings and pensions.
And yes, I will write it – He could not do such in Canada. I am saying
that no single individual could properly discharge all those functions.
No way. The fact that so much trust was reposed in that particular
individual is indicative of a distorted sense of values. Time to think
again.
A similar set of contradictions exist with the outspoken Independent
Senator, Michael Annisette. See
link.
Incredible as it might seem, Annisette's position is even more
complicated than Hart's.
·
Over-burdened Directors – Quite apart from the particular issues
which beset these two individuals, there is broader issue to consider.
Do we draw our Directors and leaders from a sufficiently broad cadre of
people? In terms of both the State sector and the private sector, it
seems to me that we have similarly narrow channels from which we make
these appointments. I am not at all sure that the private sector can
claim a superior method or results in terms of over-burdened Directors.
The result, as was clearly the case at UDeCOTT, can be a poor quality of
strategic decision-making and lax oversight of the company's affairs.
That is a sorry result, given that those are core Board functions.
One key lesson we should be able to draw from this is that there is
no way people can function with this level of multiple
responsibilities. We now need to develop a new set of guidelines for
these important roles. The UDeCOTT episode must not only be used to
critique the public sector, for there are surely examples of
over-burdened within the private sector as well.
·
Under-development of our society – A paradoxical aspect of the
situation is that the thrust to rapid development is given as the
rationale for the Special Purpose Entity, yet the method of deployment
is somewhat counter-productive. I am saying that the cadre of people
from which we draw our Directors and leaders needs to be wider if we are
really to develop our potential as a nation. That also applies to the
private sector, since the prevailing instinct seems to be that we pick
people with whom we are comfortable for these leadership positions.
Very understandable, whether we are speaking about the public or private
sectors, but the act of restricting the ranks of leaders is itself
inimical to our development.
·
The proper role of the State – I am also saying that the State
must behave in an exemplary fashion. That is very important, given the
corrosion of proper standards we are living through. The State has an
indispensable role to play in national development and that is not just
limited to construction.
What we saw at UDeCOTT was rampant expediency, with good management and
internal controls being violated at every turn. All in the interest of
achieving targets and developing the country. Huge contracts granted
via sole selective tendering, without competition. That means they gave
the contracts to their chosen contractor and consultants. Yes, just
so. Huge payments made before works were done or materials purchased.
Yes, expediency was allowed to eclipse good governance and
accountability. The interest of the taxpayer was jeopardised,
supposedly all for the benefit of said taxpayer.
We can now soberly put
the question – 'What was it really all for?'
UDeCOTT’s Audited
Accounts
This column is to be
published on 22nd April, four weeks after Jearlean John held
her first meeting with the UDeCOTT Board. Readers might remember that
Ms. John, citing her adherence to good standards of governance and
professional conduct, promised to publish UDeCOTT’s audited accounts.
Those were last published at the end of 2006. No accounts for 2007,
2008 or 2009. Worse yet, no explanation at all. I have had to dismiss
some absurd attempts to explain that the delay has been due to the Uff
Commission itself. Those attempts emanated from a member of the Cabinet
who definitely ought to have known better. Ms. John is now making me
wonder ‘What is the mystery?’ Is this one of those cases which
gave rise to our folk saying ‘More in the Mortar than the Pestle’?
Afra Raymond is
Managing Director of Raymond & Pierre Limited and President of the
Institute of Surveyors of Trinidad & Tobago. Comments can be sent to
afra@raymondandpierre.com. |
