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Auditor General raises concern about legal costs racked up by FCJ

Published:Wednesday | June 8, 2016 | 12:00 AM

Auditor General Pamela Monroe Ellis has raised a red flag over several issues involving the Factories Corporation of Jamaica, which, over the period March 2011 to December 2015, spent tens of millions of dollars on legal services when an in-house attorney could have done the job.

In a Regulatory Audit and Financial Statements Assessments of the Factories Corporation of Jamaica (FCJ), the Auditor General's Department indicated that the FCJ engaged attorneys to provide conveyance services instead of using an attorney employed to the corporation.

Monroe Ellis reported that based on the FCJ's salary scale, her department estimated that its legal costs for emoluments would have been about $26.9 million for the period March 2011 to December 2015 had the corporation used an in-house legal officer at the current salary level.

However, the auditor general pointed out that in one instance, the FCJ incurred legal fees of $48.9 million because the entity paid two separate firms of attorneys in relation to the same transaction.

It was revealed that the FCJ engaged two board members to provide conveyance services for the purchase of 200 acres of land valued at $900 million from the Urban Development Corporation.

"The lawyers charged and were paid legal fees totalling $26.4 million. FCJ terminated the services of both board members in September 2012 after the sale agreement was stamped and the letter of possession received," Monroe Ellis reported.

It was further highlighted that the FCJ engaged another attorney in December 2014 to complete the same transaction for $22.5 million. Monroe Ellis added that in both instances, the lawyers charged two and a half per cent of the sale price of $900 million.

The auditor general noted that the vendor, which was the UDC, utilised its own internal legal team for the transaction.

She pointed out that the post of legal officer in the FCJ's organisation structure has been vacant since January 2013.

In its response on April 29, 2016, the FCJ told the auditor general that the corporation received legal advice and opted not to use a staff attorney as he or she "cannot give an undertaking in a conveyance matter unless they are in possession of the funds".

The FCJ added: "This would also be contravening the ethics of the governing profession. Government guidelines do not allow staff to be in possession of public funds."

However, the FCJ did not furnish evidence of the legal advice it received to the auditor general.

The auditor general's report was tabled in Gordon House yesterday.