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Partial pension payback - Port Authority executives to retain millions of dollars they were not entitled to

Published:Sunday | July 31, 2016 | 7:00 AMErica Virtue
Auditor General Pamela Monroe Ellis’ report brought the sordid affairs at the Port Authority of Jamaica to public attention.

A settlement proposed by the board of the Port Authority of Jamaica (PAJ) could see a former senior executive of the entity returning almost a half of the $146 million he was paid in pension and gratuity.

In addition, senior staff members would have to be satisfied with $86 million instead of the $291 they were expected to share in pension and gratuity payments which have been deemed in breach of government policy.

The proposed settlement has been sent to the finance ministry for approval after board members agreed that it would be costly and maybe impossible to go to court to recover the millions of dollars paid under the scheme which Auditor General Pamela Monroe Ellis stopped just short of describing as illegal.

Information obtained by The Sunday Gleaner showed that the board appointed in 2012, and which served until the change of government in February, agreed that the scheme where senior members of the PAJ were paid pension and gratuity in a very generous separation packages was in breach of the rules and should be discontinued.

But high-powered lawyers were quickly contracted by persons who had already benefited from the scheme and those set to benefit.

Faced with the prospect of a lengthy legal battle, the board decided that despite the auditor general's conclusion that the benefits were in breach of government regulations, the best option would be to agree to a settlement and seek the approval of the finance ministry for this.

According to Sunday Gleaner sources, the PAJ has gone to the finance ministry seeking resolution "to eliminate the threat of litigation with the uncertainty of the outcome".

The settlement is also designed to "bring the PAJ into full compliance with the governing regulations, and resolve a dispute which is a distraction from the critical work of the authority".

The PAJ board said its decision came on the advice of its lawyers who said that a proposed settlement for the repayment of 50 per cent of the payouts would be reasonable in the absence of a negotiated settlement.

The lawyers noted that the PAJ would have to pursue litigation to recover the sums already paid, while the incompleteness of documentary evidence relating to payments already made meant that reliance would have to be placed on oral evidence from present and former officers.

This would create challenges to litigation, uncertainty as to whether the PAJ would be able to recover all or a substantial portion of the funds that the court could order to be repaid, and would face high litigation costs.

STATUTE BARRED

The board further noted that a senior executive who collected millions in gratuity and pension payments has been told by his attorney that the request for repayment of all the funds he received was statute barred.

According to the information reaching our news team, special funds were established at the PAJ to benefit some senior managers who were paid separation packages despite objections from some of the then board members.

PAJ sources say the matter came to the attention of the 2012 board when an executive requested that the entity pay a retirement benefit based on a contract, but the board and the president were unaware of any such provision.

As a result, the PAJ's internal audit department was asked to prepare a detailed report on the executive retirement benefit schemes in effect at the company.

"The report indicated that there were in fact a number of schemes of which the board was previously unaware," said a document seen by The Sunday Gleaner.

It is further understood that a member of the previous board had raised objections to the various schemes designed to benefit the executives, and had warned that the payments were illegal and in breach of government regulations.

"Within a few months, his resignation was accepted by the board," said a source close to the issue.

But the special audit by Monroe Ellis supported his claim, though it came years after millions of dollars had been collected by senior managers of the PAJ.

According to the findings of the special audit, one senior employee 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.

Monroe Ellis also pointed out that the employment contracts for 14 senior officers provide for the payment of a retirement benefit in addition to gratuity of 25 per cent.

erica.virtue@gleanerjm.com