By Vernon Daley, Staff Reporter 
Paulwell addressing Parliament yesterday. - Rudolph Brown
EMBATTLED TECHNOLOGY Minister Phillip Paulwell last night admitted there was a foul-up in the disbursement of public funds to NetServ Communications Ltd but did not take responsibility for the $180 million pay-out to the collapsed telecom firm.
Buoyed by support from the Government side, the Minister told Parliament yesterday that he had only erred in pushing too hard to get the Government's Information Technology (IT) programme off the ground. This urgency, he said, may have pushed technocrats at the Ministry and the National Investment Bank of Jamaica (NIBJ) to be less cautious than they should have been in granting the loan to the company.
"However, I can say with a clear conscience that whatever mistakes were made were not deliberately intended to flout the tenets of good management," Paulwell said.
However, it emerged last night that the Government continued to pump money into the now failed operations of NetServ Caribbean Ltd even after a due diligence report raised serious questions about the business conduct of the company's principal, Paul Pereira.
At the same time, the Minister admitted that it was an error not to insist that the company put up US$6 million in equity before the NIBJ granted it a $180 million loan to set up a call centre.
Facing mounting calls for his resignation over the week-old scandal, Mr. Paulwell insisted that "whatever mistakes were made were not deliberately intended to flout the tenets of good management".
Minister Paulwell told Parliament that on November 23, 2000, NetServ received a $90 million cheque to enable it to carry out start-up operations, which included making foreign currency payments. But on February 7, 2001 just before the second payment was made, JAMPRO, the Government's investment promotion agency, sent two reports to the Ministry and the NIBJ raising concerns about the operations of NetServ.
One of the reports, conducted by a Trinidad credit and debt collecting agency, A.V. Knowles and Company Ltd, on NetServ Caribbean Ltd and Mr. Pereira raised red flags about the operations of the company.
"Paul Pereira is regarded in the local business and banking community as lacking the essentials of financial integrity," the report said.
The following day, the Ministry's Loan Committee, which approves disbursement of funds to INTECH projects, met and discussed the reports but still decided to go through with the second payment to the company.
"The main reason for proceeding with the loan was the fact that the project was still considered viable and a considerable amount of money had already been advanced to the company," Mr. Paulwell said. He also said about US$1.5 million had already been disbursed directly to third parties to secure equipment for the company but the February 8, 2001 minutes of the Loan Committee indicated that payments were made directly to NetServ.
Even though it had received Government financing, NetServ had failed to inject its required sum of US$6 million into the project. The Minister said that at June 30 this year, the company's balance sheet indicated it had put up US$3 million but noted that was still to be verified.
In his response to questions from Opposition spokesman on Finance Audley Shaw, Minister Paulwell admitted that it was an error to disburse the Government funds without having NetServ inject its own equity.
Last night, Opposition Leader Edward Seaga said the admission indicates the grounds for the charge of Government mismanagement and again called for the Minister's resignation.
