Thu | Jan 18, 2018

Editorial | Phillips takes the high road

Published:Tuesday | May 31, 2016 | 12:00 AM

We support Peter Phillips' request for the auditor general to investigate the circumstances surrounding the sale of the Oceana hotel in downtown Kingston, as well as the circumstances under which the Government failed to make a call on a bauxite company's US$5-million letter of credit, which the finance minister, Audley Shaw, suggests were the subject of mismanagement and, perhaps, corruption. The consequence of these events, according to Mr Shaw, is the loss to the country of hundreds of millions of dollars.

Dr Phillips has a personal, reputational stake in these matters. He was the finance minister at the time of the transactions and has won plaudits, domestically and internationally, for the facility and integrity with which he managed Jamaica's fiscal affairs during the four years, up to last February, that he was finance minister.

But there are deeper implications for Jamaica if Mr Shaw's direct allegations or innuendos are true. For as Dr Phillips observed in his reported statement to the auditor general, what Mr Shaw said, without more, could "damage public confidence, the Government, and the conduct of public officials".

The Oceana hotel used to be owned by the Government's Urban Development Corporation (UDC) until it was sold, two years ago, for J$385 million to a consortium that includes one of Jamaica's biggest corporations, Pan-Jamaican Investment, and Canadian firm Downing Street Investments. Last week, Mr Shaw revealed in Parliament that a ground floor of the building is being leased by the Accountant General's Department, the government's treasurer, for around J$91 million a year. Significantly, the Government is spending J$400 million to renovate the premises, without, it seems, any clawback to the State for the improvements.

Not only did this not appear to Mr Shaw to be good value for money, but he questioned whether it was a "sweetheart deal", which would mean some form of collusion between public officials and the Pan-Jam-Downing Street consortium.




At the very least, the optics of this lease arrangement aren't pretty. And, as posited by Mr Shaw, it would seem to be, as we remarked previously, "a loose, wanton, and wasteful use of public resources". We called then for a full explanation of the circumstances of the deal.

Dr Phillips, however, has done better, asking for a full probe by the auditor general, the constitutionally established and independent commission that has responsibility for the periodic auditing of the ministries, agencies, and departments to ensure prudence and to account for taxpayers' resources.

Indeed, this oversight is also relevant to the letter-of-credit matter, which Noranda Bauxite Company established with a foreign bank as financial cover during its dispute with the Government over the rate of production levy, which an international tribunal ultimately settled in Jamaica's favour. Mr Shaw did not say this, but it appears that the original documents relating to the letter of credit might have been misplaced in the Ministry of Finance, without which it was difficult to make a call on the financial cover with the agreement of all parties. If that was, indeed, the case, it would seem that there was a failure in systems that should not have occurred. The question is, who, in such a circumstance, should be held accountable?

There may be other variables to be considered. We look forward to urgent action by the auditor general.