Sun | Jul 15, 2018

Jamaica Railway Corp does not know what land it owns

Published:Wednesday | October 8, 2014 | 12:00 AM
Disabled assets of the Jamaica Railway Corporation. Norman Grindley/Chief Photographer

A.C. Count, Guest Columnist

Jamaica Railway Corporation (JRC) accounts supervisor, Patrick Rose, writes that the provision of current accounts, after March 2012, requires board approval and that this was to be considered at the September meeting.

Every board member, appointed more than two years ago, should be deeply ashamed of JRC's failure to be accountable, even though the mess was inherited from a previous regime. An early statement from the board of directors should be made, indicating when the incredible financial mess at JRC will be resolved.

It is astonishing that JRC's own ministry, Transport Works & Housing, indicates that the last tabled accounts for the railway corporation was for the period 2007-08!

The JRC states that its 2013 accounts are being held up by Cabinet and its accounts for March 2014, interestingly, are "audited but not finalised".

This seems most unusual. I wonder what the auditors, KPMG, would have to say about apparently auditing accounts that are not finalised?

The March 2012 accounts show revenue to the corporation of $85 million that transforms into a loss of $75 million after operating and other expenses. The KPMG-audited report is heavily qualified in relation to:

i) Not being able to identify and value its lands, most of which were transferred to the corporation in 1960. After 50 years, the JRC does not know what land it owns;

ii) The JRC did not take a physical account of inventory at year end, estimated to be valued at $44 million. The JRC does not provide for interest on certain GOJ loans, even though government has not yet agreed to waive interest; and

iii) There is inadequate paperwork to allow for the verification of loans amounting to $513 million.


No provision was made in the accounts for outstanding liabilities relating to pending claims. Last, and most important, KPMG was not able to obtain sufficient audit evidence to provide a basis for an audit opinion.

During the year, JRC received $20 million due to "the sale of used-material scraps". The salary bill of the JRC is $130 million, an increase of over 50 per cent from 2011 to 2012.

More than $18 million is paid out as "travelling and subsistence".

The JRC sought and obtained a waiver in respect of HEART/NHT contributions amounting to $3.1 million. The number of permanent employees at yearend were 100, up from 76 the year before.

The trade and other receivables of the JRC are in an unsatisfactory condition - $41 million is supposedly recoverable for "railway rehabilitation"; $50 million is "deferred expenses - train service"; and $26 million is supposedly normal trade receivables.

The JRC, it appears, failed to issue shares to the Government of Jamaica for $652,294. This default appears to be brought forward year after year.

JRC has massive debts, more than $500 million to the GOJ - all past due - and operates on overdraft. The Government has failed to respond to requests to renegotiate the amounts due to them.

The payables owed by the JRC increased in leaps and bounds in 2012, by almost 50 per cent, to $200 million.

The JRC owes considerably for statutory deductions. Notes to the accounts indicate that the GOJ will fund settlement of outstanding salaries through utilisation of the Railway Rehabilitation Fund held by the Development Bank of Jamaica. What is this fund? How did it arise? How big is it?

Since its inception, the JRC has not filed one annual income tax return.

More than $4.7 million of receivables have had to be impaired. There were more than 751 (2011: 688) real estate tenant accounts. Some $13.7 million has been treated as impaired, in relation to the total amount due of $14.23 million, that is, 95 per cent of the total debt.

The corporation's most significant customer has made a claim under its "track users agreement". The corporation may have to pay to the customer $42 million for work carried out by it on permanent restructures and track damaged by 2002 heavy rains. The JRC disputes this amount and, in turn, has requested payments of $25 million from its most significant customer, which represents 80 per cent of the cost incurred "for ballast and tamping services".

In 2012, some $11 million had been brought to account in respect of transactions relating to closure and privatisation of JRC. The redundancy cost in relation to employees working for the provision of a limited passenger service amounted to $36 million.


Thanks to the permanent secretaries in the Ministry of Transport Works and Housing (Audrey Sewell) and the Ministry of Youth and Culture (Sherill O'Reggio Angus) for responding quickly, under two months, to a request for details of entities reporting to their ministries.

The MTWH has 14 agencies reporting to it. Not one of the agencies has had its March 2014 accounts tabled in Parliament. Eleven of the 14 have no accounts tabled after March 2011. The Transport Authority's last tabled accounts are for 2007.

The attorney general is able to apply sanctions if accounts are late. This column looks forward to hearing from the attorney general about what sanctions he has ever applied.

The Ministry of Youth also has 14 agencies in its portfolio. The ministry informs that from October 2011 to May 2014, it tabled four accounts in parliament. These were for the Institute of Jamaica 2004-05 (Chairman Ainsley Henriques); Jamaica Cultural Development Commission 2008-09 (Chairman Christopher Samuda); National Library of Jamaica 2009-10 (Carlton Davis), and Creative Production and Training Centre 2010-11 (Chairman Christopher Samuda).

It is difficult for this columnist to understand the lack of interest by ministers Omar Davies and Lisa Hanna), permanent secretaries, board chairmen and board members, to say nothing of CEOs, in ensuring public funds are spent prudently and accounted for to the public.

Each needs to demonstrably show interest in cleaning up the financial mess for which, in one way or another, they are responsible. At a minimum, each of these entities in arrears should make a statement as to when they will produce current financial data.

PS: The National Health Fund does not seem to know that its 2012-2013 report is not yet on its website. Maybe Chairman Sterling Soares, Deputy Chairman Lucien Jones and CEO Everton Anderson could take action to make the NHF more accountable and get its July 2014 accounts made public.

This column reviews the audited and in-house accounts and reports of companies and entities owned or influenced by Government.

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