Thu | May 25, 2017

The Gavel: NHT missteps must be addressed - Auditor general's findings require discussion, recommendations

Published:Monday | April 27, 2015 | 4:01 AM
The Michael Manley Building, headquarters of the NHT.

NOW THAT the report on the performance audit of the National Housing Trust (NHT) has been laid before Parliament, the relevant committee of the House of Representatives should move post-haste to discuss its findings and make recommendations for the better use of contributors' funds by those who have been given the awesome responsibility of being stewards.

Based on the report authored by Auditor General Pamela Monroe Ellis, it is clear that the NHT is being used as a slush fund by the State to facilitate bailout of either connected private citizens or public entities in need of cash.

The core business objective of the NHT is to "add to, improve the existing supply of houses, and enhance the usefulness of the funds of the trust by promoting greater efficiency in the housing sector".

Its mission is "to be effective stewards, caring for our contributors as we deliver housing solutions, build communities, refund contributions, and influence the market to make housing more affordable".

Phillip Paulwell, the leader of government business in the House, last year announced the establishment of a committee to treat with reports sent to Parliament by commissions of Parliament. The practice has been that the reports are tabled and that is the end of the matter. That committee should be convened immediately and its first order of business should be this performance audit.

 

blatant breach

 

The blatant breach of fiduciary responsibility by boards of the NHT cannot be treated lightly. It appears boards of the NHT have been failing contributors, especially when one considers that there are instances in which it ignored its technical staff in the purchase of properties or just failed to undertake the necessary due diligence when using taxpayers' funds.

Take, for example, the finding of the auditor general that the NHT acquired two parcels of land from the National Housing Development Corporation (NHDC) for $1.07 billion at Point, Hanover and Ironshore, St James.

The NHT indicated that the acquisition of the properties was to boost NHDC's liquidity and ability to finance the implementation of several Operation Pride projects.

However, the NHT's failure to complete the requisite verification resulted in its purchase of the incorrect parcel of land at Ironshore, St James.

"The imprudent approach by NHT is evident in a letter dated October 6, 2006, informing the NHDC that 'the NHT's decision to agree to the purchase of the subject and to disburse funds before completing verification was done in good faith to assist with relieving the cash flow challenges of the NHDC, relying on the integrity of a sister organisation'," the auditor general reported.

She went on to note that the NHDC responded that "there was no misdescription of the land being sold in the executed agreement for sale dated 21st July 2005 and it was the Trust's responsibility to ensure, prior to contract, that the land that it wished to purchase was properly described in the proposed agreement for sale. The Trust, is after all, an experienced developer and dealer in land with a host of professionals at its disposal".

Interestingly, both parcels of land acquired from the NHDC were characterised by steep slopes, which would result in high infrastructure and development cost. It would be hard to convince anyone that this is not a bailout of a state entity.

And talking about bailout, we won't even bother to touch on the Outameni purchase. That is the definition of brazen.

 

high development costs

 

Consider the fact that 21 parcels of land acquired for $1.66 billion now require exorbitant development costs or change of use from agricultural to residential to enable construction of affordable housing solutions. Where were the boards?

There is also the case where the NHT purchased 166 acres of land in Enfield Meadows, Westmoreland for $105 million in May 2006, for housing

development.

In November 2006, six months after the purchase date, the NHT requested the Mines and Geology Division to conduct inspection of the property in order to assess its geological features. The assessment concluded that the property was in an area that has a history of flooding similar to the Newmarket district. The assessment stated that, historical data indicate that floodwaters could rise to approximately 8.5 metres and take nine months to subside. Again, what advice did the board take? Using contributors' money in this manner is, at the very least, negligent.

The NHT's problem is that it is cash rich. Because of this, it becomes the source which is tapped whenever there is a need for money. That is why more than $2 billion could be taken out for Harmony Cove and Soapberry. That is why it was tapped to help in the Education Transformation Programme, and that is why it has been called upon to provide $46 billion in budgetary support (an action I support given the country's

economic position).

But although the amounts being taken out of the Trust to do bailout of one kind or another does not appear to be huge, it would be naÔve of anyone to think the maladministration should not be addressed. It is for this reason we hope that the performance audit will get the full attention of the Parliament, and that changes are made to the way the Trust operates.

On another note, commendations are in order for Transport and Works Minister Dr Omar Davies who provided an update on the status of the Southern Coastal Improvement Project. The project relates to the construction of a highway from Harbour View in St Andrew, through St Thomas, all the way to Port Antonio, Portland.

But Davies told us nothing about the timeline for its construction or the source of funding. The minister did indicate that he and Finance Minister Dr Peter Phillips are seeking concessionary funding and that phase one of the work would be from Harbour View to Morant Bay. Certainly, those of us from St Thomas and those anxious to invest, want more information.

One hopes Dr Davies will return to the country in a timely manner to provide more information on this project.

daraine.luton@gleanerjm.com