IT WILL go down as one of the strangest Republic Day gifts to the nation.
Mere days shy of the long holiday weekend, Trinidad Petroleum Holdings Ltd (TPHL), the state-owned holding company for Petrotrin assets, announced a multi-million-dollar settlement with a private lease operator that had been accused of inflating claims.
A&V Oil and Gas Ltd is to receive approximately $120 million: $18 million in damages, $16 million in outstanding invoices and $84 million pending in escrow. Additionally, the lease operator will benefit from a ten-year contract with the new state entities that have succeeded Petrotrin.
TPHL described this as a “win-win” for the country.
But there were no winners. On the contrary, every single party to this affair has come out a loser.
That a principal official connected to A&V Oil has been identified as a personal friend of the Prime Minister is, on its own, no reason why this company should not enjoy all of the protections offered by law, including equal treatment in any commercial arrangements which the State enters.
From day one, it was in the interest of taxpayers that A&V be treated fairly; that it not be penalised for something it did not do.
But while it has received this settlement, A&V Oil has also suffered a considerable disservice: it has been denied an opportunity, once and for all, to help clear the aura of suspicion which attended this whole affair.
There have been no court proceedings. However binding they are contractually, secret arbitration proceedings do not have the moral authority of a court of law.
It remains unclear what took place in 2017. The findings of Petrotrin’s own internal audit, as well as the audits of two separate external auditors, remain unexplained.
What is clear is that it was always for Petrotrin’s management to implement, monitor and evaluate that company’s system of internal control. That system was designed to assure the security of the company’s assets, to detect fraud and to achieve operational efficiency.
No matter which way you look at it, it is clear the system failed in this instance.
Either someone overinflated claims and got away with it because the company was unable to prove it or a contractor was wrongly accused of misconduct and the company was embroiled in years of controversy which wasted time, diverted resources and incurred a hefty legal bill.
Both possibilities constitute a startling blemish on the newfangled entity that is TPHL and its subsidiaries.
We have been told there are plans for the State to implement proper measurement tools going forward in relation to claims.
The question is, were such controls not in place to begin with? Why are they being modified only now?