|Learning the Lessons of the UDeCOTT
fiasco - Part 3
Published Thursday April 29th, 2010
continue this week, by drawing heavily on the text of the Uff Report and
the transcripts of the Uff Commission, to set some of the scandalous
facts into context. This is for those who are still wondering ‘What
was it all really for?’
Last week I wrote that
the State must behave in an exemplary fashion. It is also important to
know that the State has a responsibility beyond the moral plane. On an
entirely practical level, it is clear that the State controls the
majority of economic activity in our nation. As such, it is responsible
for the majority of construction projects in the country. If we exclude
the exceptional projects built for the energy sector, over 75% of the
construction in the country is carried out by the State.
Apart from statutory
undertakers – like TTEC, WASA, TSTT etc. - the State carries out most of
its capital investment via various SPEs. Those would include
National Infrastructure Development Co. (NIDCO)
Evolving TecKnologies and Enterprise Development Company Limited
University of Trinidad & Tobago (UTT)
Housing Development Corporation (HDC)
Urban Development Corporation of T & T (UDeCOTT)
Education Facilities Co. Ltd (EFCL)
The conduct of the
State is therefore fundamental to the conduct of a huge slice of the
business activity in our country. If the behaviour in the majority of
our commercial relationships is improper, that is good reason for the
cynical attitudes and poor standards which flourish.
Yes, there is
considerable ambiguity in the term ‘improper’ and I am therefore going
The role of Boards of SPEs – As I said when warning against the
appointment of Michael Annisette as an Independent Senator – see
- speaking of “…Directorships in significant State-owned enterprises…it
is a widely-held view that such appointments, especially to those who
are not experts in the relevant fields, are only offered to those in
political favour. To put it plainly, one would hardly expect to see UNC
or COP members, however expert, on State Boards under a PNM
administration…” Despite the fact that there are many excellent and
hardworking Directors of SPEs, that is the background to those
appointments. Just to make sure, given the ‘silly season’ we have
entered, I am equally convinced that when UNC was last in power they
also allocated those SPE Directorships in a similar fashion.
The role of the Executive Management – Suffice to say that there
is little difference in the considerations when making those
The role of consultants and contractors – It is impossible to say
who these stakeholders support, apart from themselves.
One of the perennial
questions is ‘How come State projects are almost always overbudget
and late?’ That is a truly universal question and the problem, if
only the main element is isolated for discussion, is that the parties
are too close.
The typical contractual
and managerial controls of budgets, accounting systems, independent
professional advice and penalty clauses were all violated wantonly. Our
Treasury has been plundered. See the sidebar for an extract from the
UDeCOTT and the HDC are
the State’s two main agencies in the move to physical development, they
are both under the Ministry of Planning, Housing and the Environment.
We are now clear that
both have been failures when measured against the goals set for them.
The sheer scale of the failure will be set out next week in this space,
again with extracts from the published record.
We need to ask what has
to happen differently? Can we make the change?
At the national level,
we can have a broad description of good governance which includes
elements such as – equity, participation, accountability, transparency
and conforming to the rule of law. Of course, when we focus on the SPEs,
there is a narrower definition of good corporate governance being the
rules which are followed by a Board of Directors to achieve fairness,
accountability and transparency in the relations with the company’s
When one considers that
the SPEs were introduced to overcome the delays of the old civil service
rules, their corporate governance rules are key in achieving those
elusive levels of performance.
Extract from the Uff Report - Paras 62 and 63 at pages 33/34.
“Holding to account
62. We have observed, in the context of contractual issues as well
as regulatory matters that there exists a culture of non-enforcement
which appears to operate on a mutual basis. Contractors seem
reluctant to issue proceedings for payments overdue or to enforce claims
and employers in turn refrain from enforcing time obligations which are
routinely not complied with. In regard to delay issues, the point
was demonstrated by the fact that no witness or representative appearing
at the enquiry was able to quote any case in which a contractor had
actually been required to pay or had been debited with liquidated
damages. In the wider field there was a tacit acceptance that
regulatory approvals, particularly as to planning, were rarely given in
a final form before the work was performed, this coupled with an
expectation that such approval would be forthcoming retrospectively.
63. At the same time we had the impression that one contractor who made
a habit of enforcing contractual rights, if necessary by formal
proceedings, was regarded as being "confrontational". Such an attitude
does not sit well with the careful drawing up of commercial agreements;
nor with competitive tending, which is carried out on the basis that
contracts will be enforced. It is also inconsistent with the
clear duty of directors of companies and public bodies to enforce the
contracts they negotiate and enter into. If there is a desire to
promote the timely and proper performance of public sector contracts,
this will only be achieved by holding parties to account for any
breaches of contracts freely entered into; as well as enforcement of
legal duties in regard to regulatory matters. Enforcement must
also be assured through efficient and timely processes of courts and
The emphases are mine.
Afra Raymond is
Managing Director of Raymond & Pierre Limited and President of the
Institute of Surveyors of Trinidad & Tobago. Comments can be sent to