By Vernon Daley,
Staff Reporter
THE GOVERNMENT has been forced to fork out about $13 million to compensate a construction company because of a mix-up at the Ministry of Environment and Housing over the development of a housing project which never got off the ground.
Auditor-General Adrian Strachan also raised concerns about the Ministry's decision to go ahead with the compensation without first getting approval from Cabinet.
At yesterday's sitting of the Public Accounts Committee (PAC) of Parliament which focused on the Ministry's 1998/99 accounts, the Auditor-General revealed that in 1995 the National Housing Corporation (NHC) and the Jamaica Civil Service Housing Company (JCSHCo) entered into a joint venture to build 48 houses on land which forms part of the Kings House lands, near Washington Drive in St. Andrew.
The joint venture partners signed a contract valued at $74 million with Meridian Construction Company for the development of the houses, but subsequently had to abandon the project after the Ministry disclosed the lands had already been identified for the development of a Heritage Park by a broad-based committee including the National Heritage Trust and Urban Development Corporation.
"So it was when the development was well down the road that the claims of this other group were brought to the attention of the Ministry," Permanent Secretary in the Ministry, Thorant Hardware, said to the committee.
Resulting from the abortion of the project, Meridian submitted a claim for $20 million for loss of profit and other costs it had incurred. However, the company eventually agreed to a settlement of just more than $13 million in the form of equity in two housing projects controlled by NHC.
Chairman of the PAC, Audley Shaw, demanded to know how the decision could have been given by the Ministry to build the houses when there was a prior claim to the lands and charged the blunder signalled a breakdown in basic checks.
"Where is the due diligence in this matter, so that you don't end up with a costly error of $13 million?" Mr. Shaw asked. "That is what public servants are hired to do."
Meanwhile, Mr. Strachan pointed out that after the project was aborted, the NHC, through the Ministry should have returned to the Cabinet for approval to compensate Meridian.
Committee member Ronnie Thwaites, however, questioned the need for going back to the Cabinet to approve the compensation, given it was Cabinet that had approved the contract in the first place.
Mr. Strachan, nevertheless insisted the Cabinet should have been consulted, especially because of amount of money involved.
"We believe it is of sufficient gravity and quantum that Cabinet should be made aware of it," he said.
