Thu | Aug 17, 2017

Pension bombshell

Published:Wednesday | July 27, 2016 | 7:00 AMEdmond Campbell

Auditor General Pamela Monroe Ellis is reporting that a senior officer who worked with the Port Authority of Jamaica has received three pension benefits, including a "golden handshake" valued at more than $100 million, in addition to gratuity amounting to $31.33 million covering the contract period November 2004 to October 2013.

In total, this senior officer walked away with pensions and gratuity amounting to approximately $146 million.

In a special audit of the Port Authority of Jamaica, which was tabled in Parliament yesterday, Monroe Ellis pointed out that the employment contracts for 14 senior officers at the public body provided for the payment of a retirement benefit in addition to gratuity of 25 per cent.

However, the policy of the Ministry of Finance dictates that gratuity payments are made in lieu of pension or retirement benefits and are calculated on basic pay only.

Over the five year period, 2010-2011 to financial year 2014-2015, the Port Authority made gratuity payments totalling $106.9 million to the senior officers.

"In particular, one of the 14 senior officers benefited from three pensions valued at $120,000; $56.2 million and US$554,164, respectively, while in receipt of gratuity totalling $31.33 million ... ," the auditor general noted. The payment was made in 2013.

Monroe Ellis said that the contract of still another senior officer who was already in receipt of pension from the Consolidated Fund also provided for the payment of a second retirement benefit, plus gratuity amounting to $6.6 million for the period April 1, 2012 to March 31, 2015.

SUPERSEDING LAW

Section 19 of the Port Authority Act (1972) and Section 41 of the Port Authority Superannuation Regulations (2004) grant the minister and the authority, respectively, the right to make pension, gratuities and other benefits to employees. However, the Public Bodies Management and Accountability (PBMA) Act supersedes the Port Authority laws in relation to public bodies.

Further, the auditor general reported that prior to approval of the retirement benefit in March 2006, a board member of the authority had raised concerns with the proposed retirement plan. She said the board member also stated that persons on contract were already in receipt of gratuity payments, "which is supposed to be in lieu of pension".

Giving details about the US$554,164 (J$58.7 million) "golden handshake", Monroe Ellis explained that the board of the Port Authority approved on February 1, 2001, the provision of a retirement package in consideration for the long and valuable service to the public body for three senior officers.

The board also approved that funds be set up to allow for payments when due.

However, the auditor general said the fund which was not approved by the Ministry of Finance, was terminated and the entire proceeds of US$544,164, including net interest was paid over to one senior officer on October 4, 2013.

LEGAL ADVICE

In its response to the Auditor General's Department, the Port Authority indicated that, acting on legal advice, a letter dated January 4, 2016 was sent to the former senior officer requesting repayment of the retirement benefit.

At the same time, the auditor general also discovered that the 14 senior officers were overpaid gratuity totalling $15.05 million between April 2011 and March 2015. The senior officers' contracts provided for gratuity of 25 per cent of gross taxable emoluments. However, the ministry's guideline stipulates that gratuity should be paid on basic pay only.

A request for a waiver for existing senior officers whose contracts were in breach of the ministry's policy was made by the authority. However, the ministry said it could not support the continuation of a practice that was in breach of its guidelines.

In her recommendations, Monroe Ellis said that in the absence of explicit approval from the finance ministry, the Port Authority should take steps to recover amounts overpaid in respect of retirement benefit and gratuity payments.

She also urged the authority to ensure that employment contracts conform with provisions of the PBMA Act and Ministry of Finance circulars and guidelines.

Further, Monroe Ellis said the "responsible officer(s)" who approved the unauthorised benefits should be advised that they could be subjected to administrative action in accordance with the PBMA Act.

Attempts to call Port Authority Chairman Gordon Shirley and his predecessor, Noel Hylton, for the identities of beneficiaries were unsuccessful, as calls to both men's phones went unanswered.

edmond.campbell@gleanerjm.com