Paulwell addressing Parliament.
Balford Henry, Senior Staff Reporter
THE suggestion that corrupt actions led to the current scandal over the disbursement of the Intec Fund should be an ideal political and media item in a point-scoring pre-election period.
This is even further encouraged by the idea of a close election, characterised by a campaign in which corruption has become such a dominant issue that the public seems to be surviving on a virtual diet of daily revelations of what sometimes amounts to little more than "suss."
For this reason, the media seem to have been searching through the debris left in the wake of the Fund's obvious failure, for evidence of bribes or conflict of interest when, in fact, the real story we need to deal with has been there staring from the rubble.
I am not for a minute suggesting that there might not be evidence of corruption lost in the piles of paper being investigated. But, while we search for signs of corruption, we shouldn't overlook the evidence of unprofessional conduct which has been so blatant.
There is a fallacy being spread that Caribbean people, in general, and Jamaicans, in particular, are not concerned about corruption. Or, in other words, do not care if their Governments are corrupt, as long as the corruption trickles down to them. The fact, however, is that the majority of us still cling to the hope offered in Shakespeare's words: "Corruption wins not more than honesty" and Arnold's charge that "conduct is three-fourths of our life and its largest concern."
So while there are those who seek repair in the suggestion that there is no evidence that the Intec Fund was corruptly disbursed, there are many of us who seek remedy instead and find the Auditor-General's Report on the Fund providing some very important guides in terms of the proper conduct in the handling of public funds by public servants.
Agreement
In his report, Auditor-General Adrian Strachan points out that there was an agreement between the Ministry of Industry, Commerce and Technology, and the National Investment Bank of Jamaica (NIBJ), which should have guided the work of the Loan Approval Committee (LAC), the body established to authorise loans from the Intec Fund.
Mr. Strachan quotes from the agreement: "The Committee shall act as the authorising body for all loans under the programme. It shall therefore be responsible for making all decisions regarding projects to be financed and terms and conditions of the loans."
This is obviously a very important task assigned to the Loan Approval Committee and one in which the least we should expect was observance of the best standards of professional conduct in carrying out the job. Yet this was not the case.
The AG's examination of the minutes of meetings of the Committee disclosed that some were not even signed!
Small matter to small minds, but people who understand the importance of proper procedure and the need to be able to recall notes for clarification and confirmation, understand that this is a basic requirement of any professional body, much more one handling $1 billion in public funds.
I mean, we probably can forgive the exuberance of cane farmers at their AGM in December when, after hearing from the Minister of Finance that he had forgiven hundreds of millions of dollars in loans they owed and was offering them a further $150 million in replanting loans, deferred discussions on their annual financial accounts. But, we certainly don't expect that of a Committee of this nature.
"There was no indication that most of them were confirmed at subsequent meetings," the AG said in further reference to the minutes of the meetings. "I was advised by some of the key personnel interviewed that several meetings were held in which important decisions were taken and information given which were not recorded in the minutes of the meetings. It was also noted that several important documents, relating to the various projects and on which the committee was expected to deliberate and take decisions, were neither signed nor dated."
This is certainly unbelievable. Even the owner of the "cold supper" shop on the corner, must wonder whether the AG had heard correctly.
The AG said that, in a letter to the Financial Secretary dated November 28, 2000, the representative of the Ministry of Finance and Planning expressed concerns about the manner in which the Committee was conducted.
"She complained that, 'there was a tendency on the part of Minister of Industry, Commerce and Technology Phillip Paulwell, to call (in a somewhat impromptu manner) meetings of the Loan Approval Committee, often before the NIBJ has obtained all the necessary information from loan applicants to facilitate meaningful and complete analysis, thus forming the basis for full recommendations to be made for the committee's review." She also claimed that, "meetings are called on the same day they are to be held, hence all committee members are not necessarily available and there is inadequate time for meaningful review of any available documentation prior to the meeting. Often when concerns are raised or shortcomings are highlighted, these comments are not favourably received by the Ministry of Industry. Commerce and Technology."
Now, one has to bear in mind that these claims are not being reported as suss but by the much-respected Auditor-General based on his own probe of the Intec Fund. And what was the response from the Ministry about these allegations. This is what the AG reports it as saying: "This observation has been duly noted and appropriate procedural improvements will be implemented."
It might as well have simply quoted Timothy when he said, "I did it ignorantly in unbelief."
In response to the letter to the Financial Secretary dated November 28, 2000 in which the Ministry of Finance and Planning's representative on the committee expressed concerns about the manner in which the LAC was conducted, here is the Ministry's explanation:
"...There was some urgency to get projects implemented in the effort to start a new IT industry in Jamaica. In this regard, the need to expedite the processing of applications is indicated at section 5.0 of the Loan Policy Guide for the committee. In essence this shows that within 30 days of project submission, the project should have been presented to the committee for consideration." Well, so what? But, this response has to be looked at in the light of the Prime Minister's dismissal of the failures as the result of exuberance.
Assessment
The AG pointed out that although he had not seen detailed procedures as to how the due diligence work should be undertaken, he would have expected that it would include an assessment of the performance track record of the loan applicant, its principals, as well as its parent and related companies.
"This I would expect to include, among other things, a review of the audited financial statements for a few years," Mr. Strachan added.
The Ministry responded: "Not-withstanding that the procedures were not documented in relation to the Intec Fund in particular, the EXPECTATIONS (my emphasis) of the due diligence were followed. However, in most instances, the loan applicants were all newly registered companies with no historical financial records. The credit and other checks that were conducted on project principals to determine credit worthiness and financial strength revealed nothing untoward. However, given the acknowledged high-risk nature of the fund the inherent viability of the project was to be considered a major criterion of assessment."
Ever heard about the cuttlefish which, when it is threatened or pursued, blackens the water around it so it becomes invisible to its enemies!
In his general conclusions, Mr. Strachan said that based on the many shortcomings he had noted in connection with the various projects funded by the Intec Loan Fund, "it must be concluded that the management of the Fund was inadequate in several aspects."
Track record
He went on: "More careful attention should have been paid in assessing the track record of those seeking public funding of projects. The viability of projects and reasonableness of business projections ought to have been subjected to more meticulous analysis and assessment before loans were approved. There should have been much stricter insistence that loan conditions intended to protect the public interest were complied with. There should also have been better documentation of deliberations done, recommendations made and decisions taken. It is recommended that these concerns be addressed before any future disbursements from the Fund are made."
The Ministry replied: "The recommendations are accepted. Pleased be advised that the ministry and all the agencies involved in the Intec project have reviewed the operations and developed a set of protocols to ensure improved management of the fund. These will be discussed at the March 2002 meeting of the LAC."
You know Edmund Burke has been a much-maligned man in terms of race and politics, but one cannot deny that he has made some profound statements which we must recall when the occasions arise. One such statement reads:
"People not very well grounded in the principles of public morality find a set of maxims in office ready-made for them, which they assume as naturally and inevitably as any of the insignia or instruments of the situation. A certain tone of the solid and practical is immediately acquired. Every former profession of public spirit is to be considered as a debauch of youth, or, at best, as a visionary scheme of unattainable perfection. The very idea of consistency is exploded. The convenience of the business of the day is to furnish the principle for doing it."
