The Public Accounts Committee (PAC) of Parliament has reported that former Ministers of Housing and Lands Michael Lashley and Dennis Kellman over-reached their authority by micro managing the operations of the state-owned National Housing Corporation (NHC) including the award and oversight of contracts.
The 74-page report for 2013-2018 which was laid and debated in the House of Assembly yesterday found that Lashley instructed the then NHC chairman Anthony Wiltshire to award a contract to a company called BJ Investments Limited for $33 million to build 96 high-rise condominium housing units at Exmouth, St Michael without the approval of Cabinet or the corporation’s board.
In fact, the PAC found that the contract with Rotherley Construction – the original contractor – was terminated on the purported basis that Cabinet was made aware of the company’s alleged financial inability to do the job.
However, the committee uncovered evidence that it was Lashley who had taken the decision on his own to offer the contract to BJ Investments Limited without the knowledge or approval of Cabinet.
When he testified before the committee, then permanent secretary in the Ministry of Housing Ronald Bascombe said when he demitted office in November 2013, there was no Cabinet note giving permission to the NHC to enter into the contract with BJ Investments Limited.
What Bascombe said he found in his files was a letter dated February 18, 2013 signed by Lashley stating that Cabinet at a meeting on February 14, 2013 was informed of Rotherley Construction’s financial inability to execute the project and had therefore given the go-ahead for a new contractor to be hired.
“I am instructing you as chairman of the board of directors to enter a contract on behalf of the National Housing Corporation and BJ Investments Limited which has the financial capability to construct the said condominium buildings in keeping with the directive from Cabinet,” the former housing minister wrote.
Restating that he saw no such authority on the file for Lashley to give the instruction he did, the PS explained to the PAC that if indeed Rotherley’s deal had fallen through, the appropriate course of action would have been to go back to tender.
The 14-member PAC, which was chaired by then Opposition Leader Mia Mottley and comprised eight Government ministers revealed that on a number of occasions, Cabinet papers which addressed the contract between the NHC and BJ Investments were prepared at the direction of the minister, submitted and then withdrawn from consideration with no explanation.
The committee found that the custom for amending Cabinet papers was not observed in some instances and in some cases while the subject matter was approved, paragraphs were subsequently deleted.
This issue was raised in the report with reference to an example where Preconco entered into an agreement to build 76 high-rise housing units at The Grotto, Beckles Road, St Michael at a cost of $18 million but on October 9, 2012, submitted a revised proposal for the construction of 80 units for a total of $27.8 million.
The committee disclosed that, not only did the contract not go out to competitive tender, but there was nothing on file to justify the variation in the proposal or the basis on which the initial $18 million was put forward and whether it was a fair price.
“The specific concerns of Mr Bascombe over the contractual obligations and liabilities of the NHC, the justification for the initial contract sum of $18 million and then the revised sum of $27 million and the ability to fund the projects, were deleted from the relevant Cabinet papers,” the report revealed.
The PAC also found that despite repeated queries by ministry officials to the contractor for the Grotto project to explain the significant change of $9.8 million, they all went without receiving any responses. “The contractor chose to respond only to the minister,” the report added.
Former Minister of Housing Dennis Kellman also came up for scrutiny in the findings.
“Minister of Housing Dennis Kellman also intruded into the day-to-day affairs of the NHC to the financial detriment of the corporation. This is reflected in the minutes of the 451st board meeting of the NHC of 14th August 2013 in the matter of the land-swap at Lancaster No. 2 with C.O. Williams Construction Limited,” the report said.
It revealed that the directors of the NHC had recommended a price for the land in question owned by the corporation to be $65 per square foot based on valuations received.
The committee said however, that the general manager informed the board that Minister Kellman indicated that a price of $35 per square foot was “feasible” to erase the outstanding debt to C.O Williams of $1.1 million plus $500,000 interest, leading to a value of $2 million.
“This meant that the NHC entered a land swap receiving $30 per square foot less, a financial disadvantage. To be more precise, the NHC received $968,730 less, given the lower valuation imposed in this transaction as a result of the directive of Minister Kellman,” declared the report.