PetroCaribe searches for risk manager... Hughes defends management of Fund
Dr Wesley Hughes, the CEO of the PetroCaribe Development Fund (PDF), said yesterday that the management of the Fund has taken steps to restart the process of hiring a new risk consultant and to recruit a risk manager.
Auditor General Pamela Monroe Ellis, in her 2014 annual report tabled in the House of Representatives on Tuesday, noted that the PDF does not have a formal risk-management framework.
She pointed out that recognising the need to institute a formal risk management policy to guide the development and implementation of risk management strategies, the Fund had engaged the services of a consultant for a fee of US$84,000.
The consultant has since been paid the Jamaican equivalent of US$48,930. However, arising from the board's concerns in relation to intellectual property rights and other issues, PDF has not accepted the draft document submitted by the consultant.
Hughes said the Fund has got a preliminary opinion from the attorney general's chambers on the matter of the consultant, and that the process of hiring a risk-
management consultant and recruit a risk manager are under way.
Meanwhile, Hughes has expressed the view that the PDF is being properly managed, notwithstanding concerns raised in the auditor general's report.
"The Fund makes loans and grants with the approval of the board and, where warranted, the Cabinet or the Ministry of Finance. At times, the issue of national interest is invoked either implicitly or explicitly in making decisions to fund
public sector entities," Hughes told The Gleaner.
Among the key findings of the audit was that unsecured loans amounting to approximately US$100 million were made to four entities and PDF reported that Cabinet approvals were not obtained.
Additionally, the audit report says that there were instances whereby commitment fees for some borrowers were being charged at less than the required 0.5 per cent.
The report also said that Clarendon Alunima Production (CAP) has not made any payment in relation to the commitment fees totalling US$225,000. PDF reported that all of CAP's loan obligations to PDF have been taken over by the GOJ with effect from March 2013 and the first payment on the loan is due September 30, 2016.
Explaining the decisions taken by the PDF which have been flagged by the auditor general, Hughes said that in the case of Clarendon Alunima Production Ltd, for example, a decision was made "to assist the company although its finances were extremely weak, because it was deemed in the national interest and, further, the Ministry of Finance gave an undertaking to service the loan if CAP could not pay".