Fri | May 26, 2017

Editorial | A very messy affair

Published:Sunday | January 8, 2017 | 1:00 AM

The possession of political judgement is nearly as important to leaders of democratic governments as their ability to formulate and execute effective policies. Questions about the former are what now face Prime Minister Andrew Holness in the Caricel issue.

But to be fair to Mr Holness and his administration, while it is they who have embrace of this debacle, and any political consequences that may flow from that, they are not the only ones tainted - if that is what it is - by the affair. Any reasonable reading of the contractor general's report into the matter will conclude that the political bureaucracy, across administrations, seems to have contorted itself to deliver licences to the company to provide telecoms services in Jamaica.

Apparently, the Government has begun moves preliminary to rescinding those licences, against which Caricel has gone to court, in a pre-emptive action, to forestall this. We wish to make it clear that this newspaper declares no position on the legal issues at hand.

What concerns us is that the Jamaican Government, for the second time in seven years, found itself on a potential collision course with a powerful partner, the United States, on a matter with potential implications for national security, which greater vigilance and robust engagement might have avoided. If, in the end, the Government adopted the course it pursued, it would be on the basis of full information and, hopefully, with the consensus of an informed public.

Broadly, Caricel began its quest for the licences which it now possesses in 2013, first by seeking to have the licences previously granted to a dormant outfit transferred to it. That was on the basis that both companies shared many of the same owners and directors.

 

OFFSHORE REGISTERED COMPANY

 

When that strategy failed, it sought the licence in its own right. Then it emerged that the declared owners of the company were not the only or major ones. That turned out to be an offshore registered company, whose sole owner happened to be someone on whom the security analysis showed "adverse traces", which meant that he didn't meet the "fit and proper" criteria for owning a telecoms company.

In the face of this development, this person ostensibly removed himself from any ownership of the enterprise but was replaced by a closely connected party, whereupon the Office of Utilities Regulation (OUR) approved the service licences.

Issues rose, too, including about the bona fides of its beneficial owners, in relation to Caricel's application for the spectrum on which it would provide the services. Last February, the former People's National Party (PNP) administration agreed to that licence for a fee of US$20.83 million and with the proviso that a new security check disclose nothing untoward on the owners, including an offshore registered entity.

Mr Holness' administration not only proceeded with the licences, but substantially softened the payment terms for the purchase of the spectrum, and in the face of the contractor general's recommendation that the agreement be abandoned, doubled down on its decision.

"The adverse traces cited in the Special OCG report relate to information gathered up to 2009," Mr Holness told Parliament last September. "The police have advised that the party in question is not the subject of any investigation."

The Americans made their displeasure public. Now, Mr Holness said that while his Government acted in accordance with Jamaica's laws, it is paying attention to the concerns of a partner to see whether those "potentially align with issues for Jamaica". He suggested that his Government has additional information.

We appreciate a new government's thirst for investment, but a measured approach might have prevented this messy situation, with its potential cost to both investor and government.