Editorial | Give full details of the used cars deal
When otherwise intelligent people engage in seemingly irrational behaviour, it is usually because that action makes sense to someone. That is why the Government is obligated to explain why, after more than three years, it is yet to fully resolve the dispute with O’Brien’s International Car Sales and Rentals over the company’s failure to fulfil its bargain to supply used cars to the Jamaica Constabulary Force (JCF).
Jamaicans learnt this week that despite an announced settlement of the arrangement, O’Brien’s still had not delivered 30 (15 per cent) of the 200 vehicles it was originally to provide, in which event the company ought to have reimbursed the Government some J$100 million.
There must be good and rational reasons why this has not happened, and why the company has not been sued, or otherwise vigorously pursued, to recoup this money, which belongs to taxpayers.
But for the fortuitous re-emergence of the matter at a session of Parliament’s Public Administration and Appropriations Committee (PAAC), called to review supplementary estimates of the Government’s 2021-22 Budget, few Jamaicans were likely to have remembered what, for a good part of 2017, and into 2018, was widely referred to as ‘the used car scandal’.
Early in 2017, then National Security Minister Robert Montague took the unusual, and ultimately controversial, policy decision to acquire used cars for the police force. Before then, vehicles bought for the constabulary were new, and procured through the authorised dealers.
Mr Montague’s argument, essentially, was that with the money he had to spend, he could buy far more used cars than new ones. So, not only would the police be more mobile, they would get good service out of the so-called pre-owned vehicle – for at least three years. O’Brien’s CEO Clement Ebanks expected even longer life from the cars – up to six years, or even more. The vehicles were expected to be 2012 models, which would have made them five years old.
“Minister Montague said three years,” Mr Ebanks said at the delivery of the first 30 vehicles at the end of May 2017. “They are going to get more than three years out of them.”
PLENTY OF CONTROVERSY
What Jamaica’s taxpayers are certain they have got from what was, at the start, a J$426-million deal to deliver 80 Toyota Axios and 120 Toyota Hilux pickups, is plenty of controversy and, at this point, at least 30 vehicles fewer than the suppliers were obligated to deliver – for which they are out of pocket.
Indeed, soon after the delivery of the first batch of vehicles, it began to be obvious that the deal – beyond the political Opposition’s questioning of the logic of the policy decision and suitability of the supplier – was not going well. In November 2017, Dianne McIntosh, then the permanent secretary in the national security ministry, confirmed to the PAAC that the police had not received a second tranche of 50 vehicles. These were promised months earlier, in July. In fact, all 200 vehicles should have been delivered in June that year.
Sixty-sixty, or some number of vehicles between 62 and 66 (the figures fluctuated at PAAC hearings), were on the wharves but were not being cleared. O’Brien’s expected, or was asking for, a waiver on the general and special consumption taxes, which it said it could not absorb. It turned out that the company had been granted a moratorium on the payment of these taxes on the first 30 vehicles.
O’Brien, it seems, had bid too low on the deal when it beat the competition. It now wanted, or expected, to cushion the effect of that decision with tax waivers and moratoriums, which, in the midst of the public controversy, the finance minister declined to countenance. The national security ministry at one point was inclined to some sort of arrangement, which it recommended to the finance ministry.
“The delivery period of 90 days for the vehicles expired on June 5, 2017, and only 30 vehicles have been delivered to date,” the security ministry conceded in a late November memorandum to the PAAC, after its extension was also missed.
Yet, by late December, the finance ministry’s positions may have been softening. Jamaica Customs disclosed that it would grant a tax moratorium on the vehicles for six months. However, soon afterwards, Mr Montague announced that not only had the waiver arrangement been withdrawn, but that O’Brien’s would likely have to forfeit a J$42-million performance bond. The bond was subsequently called.
HELP MAKE SENSE
By December 2018, Dr Horace Chang, the incumbent security minister, was five months in the job when he announced a settlement with O’Brien’s after mediation.
“The agreement will ensure that the Government would recover its full cost of $230 million,” he said on December 23. “There will be no further extension of the contract, and the objective was to conclude the arrangement and protect the Government’s interest.”
Dr Chang promised to report the details of the agreement to Parliament, which most people appeared to have missed, if it happened.
In light of last week’s revelation to the PAAC by Courtney Williams, the permanent secretary at the security ministry, of the unsettled nature of the affair, Dr Chang has no choice but to provide all the details, from start to finish, of this affair – including the deal’s fine print. That might help people make sense of this arrangement.