Published Thursday February 24th, 2011
Last week’s cover story in this paper was
of the same title. Readers were treated to a two-page article
introducing UDeCOTT’s new Board of Directors and offering several views
from the re-appointed Chairwoman, Jearlean John.
As a long-time UDeCOTT-watcher, I was
really pleased to see their new Board appointed, but John’s opening
quote in that article was provocative in the extreme. Speaking about
the scandalous International Waterfront Centre (IWC), UDeCOTT’s flagship
project, John is reported to have mused “…Whatever else he did, he
did that…” Ms. John was referring to the now-departed Calder Hart.
Truer words were never spoken, but yet it
was a provocative opening. How so?
Despite the regime change, it seems that
the IWC remains UDeCOTT’s flagship project. On the one hand, its
admirers point to the architectural merits of the complex and the
repeated claims that it was completed on time and within budget. On the
other hand, it is a monument to a chronically-flawed process of project
conception and approval, being one of those classic ‘white elephant’
projects, with a ‘break-even’ point at some point in the distant future,
The IWC represents a serious paradox in
the entire UDeCOTT fiasco, but more interestingly, it offers an insight
into the extent of the issues facing that State-owned company. Yes,
there is an unbroken thread of unreason through this flagship project to
the bigger picture.
I will move from the general to the
To begin at the very basic level, UDeCOTT
has published no audited accounts since the end of 2006. Yes, that
company, one of the hugest in the country, was operated throughout its
period of greatest activity without audited accounts. Quite seriously,
that indicates a far larger failure in terms of the rules and guidelines
for State Enterprises, the oversight of the Parliament and of course the
sheer dereliction of the Cabinet. At one point in the Uff Enquiry,
UDeCOTT's attorneys stated that it was a $12Bn company. Of course, the
last Prime Minister repeatedly told the public that UDeCOTT was a
leading State Enterprise.
At the Uff Enquiry, Calder Hart was
questioned under oath by Alvin Fitzpatrick SC, the JCC's attorney – the
relevant extract is at
– and said on 28th January 2009 that all the issues with
UDeCOTT's accounts had been resolved. He went on to say that the
accounts would be published within shortly. Of course that has never
happened, so we have to ask why.
In March 2010 I made yet another public
call for the publication of those accounts. But even worse, according
to a Newsday article on 18th March 2010, Jearlean John, the
newly-appointed Chairwoman said
“...Explaining that she adheres to
“good corporate governance” in her professional life, John said Udecott
will adhere to the law and the standing accounting practices as outlined
by the law...”
That published promise
was never delivered.
The simple fact is
that we cannot continue talking about performance and good governance,
far less change, without knowing the condition of our largest State
That is a serious and
inescapable point. We were sorely disappointed by the wanton
mismanagement of the last regime and its consequences on the State
Enterprise sector. The State Enterprises cannot and will not function
if the actual strategy is unsound. The State Enterprises are meant to
be servants to the Central Government.
I expect better from
you both, Minister Mary King and Chairwoman Jearlean John. Much
better. No continuation of the past follies and shameless excuses. I
am saying plainly to you, Ms. John, that you promised us these accounts
nearly a year ago and we have nothing. Sad to say, but a little further
and your statements on this important matter could echo Hart's, as he
told his tale.
That article in last
week's BG stated that the new UDeCOTT Board would consider financials
for 2008, 2009 and 2010 at its first meeting. No mention of 2007 and I
hope that was a mis-print.
Where are the UDeCOTT
accounts? What is the mystery? Are the issues resolved or not? Is
there yet another 'Code of Silence' surrounding this nexus between
Calder Hart, the PM's office and PriceWaterhouse Coopers?
But what does the IWC have to do with all
You see, the various UDeCOTT supporters
have continued to applaud this project as the flagship and a leading
example etc. etc.. Even Jearlean John seems to be going in that
So here are a few facts on that project -
The break-even rent – This is the rent a project needs to earn to
repay its cost (those costs include land, professional fees,
construction and finance – they do not include for profits or
maintenance). In the case of the IWC, that break-even rent was
calculated by me, in this column and prior to the Uff Enquiry, as being
of the order of $30 per sq. ft. Please note that rents of good quality
space in POS at the time this project was approved would have been in
the $12 psf range.
The Feasibility test – I questioned Calder Hart under oath at the
Uff Enquiry and he stated that only one UDeCOTT project had been the
subject of a feasibility test- the very IWC. He stated that its
'break-even rent' was '...under $20psf...', but when I questioned
what was the value he had attributed to the land, he replied 'NIL'.
Bogus and unprofessional approaches to massive investments. Hart was
prepared to omit the property in order to carry out a feasibility test
on a property development. That is the sheer scale of the failure we
are looking at. All these projects were approved by the Cabinet,
according to Manning's 13th May 2008 statement to the Senate.
The financing model – UDeCOTT's 2006 Annual Report was strong on
the point that that project in particular did not require a State letter
of comfort or guarantee. It was meant to demonstrate the scale of
achievement and independence.
When will the IWC break even? - The best offices in POS are
rented in the $15 psf range and the IWC comprises some 900,000 sf of
offices – that is about nine times the size of the Nicholas Towers on
Brian Lara Promenade. Due to its size, it would be reasonable to expect
the IWC to fetch a rent of about $12-13psf now, if one were fortunate.
Given that background, it seems that this project will never break even.
If UDeCOTT's best project will never
break even, the entire company must be insolvent or so close as to not
make a difference.
If their best project is a big-time
loser, it is no wonder that the last administration was a reluctant to
publish UDeCOTT accounts. The very year (2006) that project started was
the very year the accounts stopped being published.
The profitability of the Hyatt, which was
reportedly cited by John in last week's article, needs to be backed up
by those accounts. In any case the unprofitable offices far eclipse the
It is clear that UDeCOTT's new Board have
a heavy task before them in terms of fixing its many ills, but hey need
to start with an honest and straightforward approach. If the country
has to count our losses, you need to do so now, Chairwoman John. Do
There is no right way to do the wrong
Afra Raymond is Managing Director of
Raymond & Pierre Limited and President of the Joint Consultative Council
for the Construction Industry (JCC).