Wed | Dec 7, 2016

NHT's reckless slide

Published:Monday | November 10, 2014 | 12:00 AM
Kamina Johnson Smith GUEST COLUMNIST

When the public was still discussing the Government's passage of the NHT (Special Provisions) Act in 2013, I wrote an article titled 'The NHT's slippery slope' (Gleaner, March 17, 2013). It examined the issue from the particular perspective of the duties of directors.

In that article, I posited that regardless of any legal debate on the act itself, the act did not correct any wrongful exercise of duty by the board at the time it took its decision to permit the withdrawal of $44.6 billion from the Trust by the Ministry of Finance for budgetary support.

I also stated: "Apart from the question of whether the decision itself was ultra vires, one must ask whether the decision was a proper exercise of the board's statutory and fiduciary duties. Did they take proper advice before taking a decision? Did they ensure they asked the right questions AND received the requisite answers before taking the decision? To whom does the board owe a duty of care? Did they exercise that duty properly? Did they exercise the care, diligence and skill that a reasonably prudent man would have in comparable circumstances?"

In the context of current concern regarding the Outameni debacle, much of this returned to me, and I thought I would reprise some extracts in this new context. Where quotations are used - as above - these are extracts from last year's article (really, you can go back and check! - I know you'll want to).

"... (ii) The shackle defence: ... Didn't a board member actually go on radio stating that the board would not be shackled by the law? Did the board, in fact, base its decision on legal advice if at least one member felt bold enough to make this public statement? How many others shared that view? We may never know, but shouldn't contributors be concerned about their role in the management of their funds? I am a contributor and I certainly am concerned ... .

(iv) National interest as a defence: An argument we have also heard is that the board recognised the predicament of the country and made its decision in that context. If this is true, the board, with all due respect, does not understand its responsibilities.

In the exercise of its fiduciary duties, the board doesn't have the right to made decisions on that premise. ... . In law, therefore, members of the board have a fiduciary responsibility to the Trust itself from one perspective, or to the contributors from another. It can only act to "add and improve the existing housing supply ... and to enhance the usefulness of the Trust by promoting greater efficiency in the housing sector.

Yes, it is certainly the Government's role to consider broad national contexts, but it is NOT the NHT board's. This is the very reason the funds were segregated and managed separately from the Consolidated Fund in the first place.

The issue of accountability

Will this board continue to preside over the contributions of hard-working Jamaicans (whether employee, employer or self-employed)? Will this board examine its actions and hold itself accountable? If not, will we as Jamaicans hold the members accountable?

I would be interested in the views of the Jamaica Civil Society Coalition, National Integrity Action, and any other body that has lobbied publicly for good governance. I would also be interested to know the views of the arm of the Government in charge of implementing the Corporate Governance Framework.

Are we happy with business as usual? Do we accept the 'shackle defence'? Who will take Jamaica off the slippery slope of bad governance?"

Of course, for whatever reasons, we heard no such views. So here we are, one year and eight months later, reaping the seeds of impunity sown in the NHT boardroom back then. The truth is that this matter is even more egregious than the billion-dollar withdrawal, because while national interest and patriotism aren't even on the table to potentially cloud one's judgement, all the matters of principle and law still apply - and perhaps more clearly so.

I'm happy to see that the JMA, JCC, PSOJ and the JCSC have joined the Opposition and other members of the public who have taken up the Outameni issue, and are calling for answers. I trust they will also call for accountability. The NHT has slid off the slope of good governance. Enough is enough.

Kamina Johnson Smith is a commercial and corporate attorney and an opposition senator. Email feedback to columns@gleanerjm.com and