Kamina Johnson Smith GUEST COLUMNIST
The Government has argued that it only passed new legislation to amend the NHT Act out of an abundance of caution.
Without entering into debate on the NHT (Special Provisions) Act itself, what is indisputable is that it cannot correct any wrongful exercise of duty by the board at the time it took its decision to permit the withdrawal of billions of dollars from the Trust by the Ministry of Finance. This decision was taken before the announcement by the minister of finance on February 12, 2013.
Apart from the question of whether the decision itself was ultra vires, one must ask whether the decision was a proper exercise of the board's statutory and fiduciary duties. Did they take proper advice before taking a decision? Did they ensure they asked the right questions AND received the requisite answers before taking the decision? To whom does the board owe a duty of care? Did they exercise that duty properly? Did they exercise the care, diligence and skill that a reasonably prudent man would have in comparable circumstances?
Some thoughts extracted from my contribution to the recent NHT debate in the Senate follow:
(i) Acting on professional advice: In the exercise of its duties, a board is entitled, in good faith, to rely on professional advice and the advice of management. We have, therefore, been told that the actions of the board were sound because it acted on the advice of the Attorney General's Department. That discussion could fill a separate article, so let us note that in any event that a board always has a right and duty to seek independent legal advice.
Even if this board did so, we are unlikely to have the opinion(s) shared with us to assist in assessing the board's decision. Maybe we should, therefore, just accept that they relied on legal advice in good faith?
(ii) The shackle defence: Or should we? Didn't a board member actually go on radio stating that the board would not be shackled by the law? Did the board, in fact, base its decision on legal advice if at least one member felt bold enough to make this public statement? How many others shared that view? We may never know, but shouldn't contributors be concerned about his/their role in the management of their funds? I am a contributor and I certainly am concerned.
(iii) What of reasonable prudence?: Beyond the matter of legal advice, reports in the media reflect that although the decision was announced on February 12, the chairman and other members of the board SUBSEQUENTLY stated at different times that the board was still in the process of determining the financial impact of the requested withdrawal, that they were redoing business plans, and even that they were comfortable that the monies could be afforded for the first two years (but could not make any assertions regarding the remaining years).
If these calculations and assessments were all done AFTER the board's decision was made, on what legitimate basis could the board be said to have exercised its duties at the time it took the decision? Even if board members took legal advice, they were still responsible to ensure the decision was fiscally responsible. It does not appear that this work was done prior to the decision, and accordingly the decision was not soundly made.
(iv) National interest as a defence: An argument we have also heard is that the board recognised the predicament of the country and made its decision in that context. If this is true, the board, with all due respect, does not understand its responsibilities.
In the exercise of its fiduciary duties, the board
In law, therefore, members of the board have a fiduciary responsibility to the Trust itself from one perspective, or to the contributors from another. It can only act to "add and improve the existing housing supply ... and to enhance the usefulness of the Trust by promoting greater efficiency in the housing sector".
Yes, it is certainly the Government's role to consider broad national contexts, but it is NOT the NHT board's. This is the very reason the funds were segregated and managed separately from the Consolidated Fund in the first place.
ACCOUNTABILITY OR BUSINESS AS USUAL?
Will this board continue to preside over the contributions of hard-working Jamaicans (whether employee, employer or self-employed)? Will this board examine its actions and hold itself accountable? If not, will we as Jamaicans hold the members accountable?
I would be interested in the views of the Jamaica Civil Society Coalition, National Integrity Action, and any other body that has lobbied publicly for good governance. I would also be interested to know the views of the arm of the Government in charge of implementing the Corporate Governance Framework.
Are we happy with business as usual? Do we accept the 'shackle defence'? Who will take Jamaica off the slippery slope of bad governance?
Kamina Johnson Smith is an opposition senator. Email feedback to firstname.lastname@example.org.