What is the gap in our new public procurement law?

AFRA RAYMOND

“When it comes to law and medicine you need to hire the best experts; for all other professions you can go on price.” Recent FB post from my friend Richard Demming – he could have added accountants and bankers to that list!

The previous article dealt with the sudden unexplained shift from the supposedly-defective Public Procurement and Disposal of Public Property Act to the welcome announcement of its proclamation, so long overdue. I called for an official explanation for this sudden shift, but there has been no response thus far.

The silence of our learned friends on this issue is as echoing and eerie as it is eloquent. These colleagues have opinions on so much else. Yes, power is defined by those things you are not allowed to speak about, so self-censorship is as real as the nose on your face. Well, I tell you, eh!

This article will challenge the basis for the 2020 exemptions to the act (via Act 27 of 2020), which included government-to-government agreements (G2G are usually the hugest projects); matters of national security; legal services; debt-financing services for the national budget; accounting and auditing services; medical emergency or other scheduled medical services.

The Government decided that these transactions in public money did not require the oversight of the Office of Procurement Regulation (OPR), which the Parliament approved. I think that inimical to the public interest.

On May 9, the Prime Minister addressed the concerns over those exemptions, which of course he tried to justify. The lines have been clearly drawn on those massive G2G projects, which the government believes should not be subject to oversight by unelected officials, notwithstanding G2G’s serious and problematic history.

This article makes the case to reconsider the other exemptions, and it is notable that no actual or estimated proportions of those expenditures have been presented. Those details are difficult to unearth, which makes this a challenging issue to tackle. I am therefore proceeding on the basis of the recent reports of those expenditures and fundamental principles we continue to ignore to our collective peril.

These are massive expenditures, so these are the supporting details for my assertions, drawn from official sources.

CL Financial bailout

Many readers would be familiar with the often-reported total cost of this bailout in the $25 million range – but what was the cost of interest?

Tragically, the bailout agreements charged less than one per cent interest on the huge sums of public money advanced to settle the debts of the CLF group. My research on this disclosed that the cost to the State of the interest and financing of this bailout has been in excess of $4.83 billion.
Those costs escalated from $30,640,697.82 per month between January 30, 2009 and April 30, 2016 to $85,895,308.99 per month between April 30, 2016 and June 30, 2018. Over $1 billion a year in interest: why? That was 2.8 times more in monthly interest charges in the second period.

Bankers profited heavily from the State’s funding requirements for the CLF bailout, but my 2019 litigation to disclose the details of those loans failed, with the High Court making no ruling for the disclosure of those details. Those costs could arguably be considered as debt-financing services for the national budget and therefore exempt from OPR oversight – you see?

But that is not all, not at all. On July 1, 2016, the PM made an important statement to Parliament giving details of the legal fees paid during the Colman Enquiry into the CLF collapse: “Madam Speaker, as at May 2016, the total cost to taxpayers of TT of the commission and the attorneys who were retained to assist in the commission was $78,488,943.30 as of May 2016. There may be additional outstanding claims as indicated by some of the individuals involved…” Over $78 million in legal fees for the Colman Enquiry.

But there is more, since then Attorney General Faris Al-Rawi confirmed to Parliament on July 2, 2021, on fees paid on behalf of the Director of Public Prosecutions: “Madam Speaker, I turn to the continuing investigations into Clico, CIB, BATT and CLF in which the taxpayers of this country contributed in excess of $20 million in bailout support. So far for the period 2012-2021, a sum in excess of $181 million has been expended to one firm only in the person of Deloitte & Touche for legal and forensic services. To date, there is an outstanding bill yet to be paid of almost $24 million…”

So, $205 million to Deloitte & Touche, a “Big Four” firm of accountants and advisers.

With the CLF bailout incurring “OPR-exempt” expenditures totalling over $5.1 billion, some serious questions arise. This crisis was huge enough to warrant a commission of enquiry whose results we are yet to see, the DPP is yet to recommend any criminal charges and the new public procurement law is intentionally shrouding some of those key elements in secrecy. So where are we going?

Other legal fees

Even beyond the costs of the exceptional CLF bailout, there are other serious concerns.

The State recently discontinued its case against former AG Anand Ramlogan, SC, and Gerald Ramdeen, in which there were allegations of corruption involving what is said to be $1 billion in legal fees, during the 2010 -2015 PP administration.

Earlier this month, it was confirmed that between September 2015 and March 3, 2023, the State paid a total of $1,116,405,411.34 to 109 attorneys. Those sums did not include fees paid by the ministries of Finance or Energy.

How can we critically understand these exemptions?

We have been sold a self-serving account in which these services cannot be overseen, since these are of such a special type and of such importance because the State needs to be well defended against the many lawsuits which arise. Those facts need to be carefully considered. But what is the proper background, the one beyond the self-serving narrative?

Obviously, we need a proper, modern system to control transactions in public money, as we can see from the torrent of financial scandals which have engulfed us since our independence. The new act is an important step in that direction, so we can certainly expect an improvement in our standing on the annual Corruption Perceptions Index.

The leading learning on public money, from which we drew heavily in writing the new act, is Lord Sharman’s 2001 report Holding to Account on Public Money in the UK. Sharman’s report made the decisive finding that public money must be managed, spent and accounted for to a higher standard that that applicable to private money.

The valid concerns identified by the PM on these legal expenses are not restricted to the State.

So how do multinational companies and conglomerates handle these issues? Are we being asked to believe that there are no controls of costs and engagement procedures for those successful companies? Why are we not offering similar exemptions to architects, engineers and surveyors?

Those companies are managing private money, so how do they handle these issues? Those companies have budgets and well-developed systems to oversee and manage the engagement of those professional services. It is beyond the scope of this article to give details, but it is clear that those companies have not simply declared that those professional fees are too mysterious and important to be properly managed.

On the medical exemptions, we need to note that the official position being taken conflates the private medical decisions of an individual or family with the State’s transactions, which are obviously at a different scale. At this time there are serious debates on the degree of oversight for public health expenditures in both Jamaica and the UK, with strong demands from the public and NGOs for proper oversight of these important transactions in public money.

Of course we need the public procurement law, but we also need to reconsider whether we can properly oversee transactions in public money if we retain those broad, damaging exemptions.

Afra Raymond is a chartered surveyor, managing director of Raymond & Pierre Ltd and a past president of the Joint Consultative Council for the Construction Industry (JCC).