Sunday Finance today publishes in full Stephen Wedderburn's preliminary statement in response to the LNG report recently published by the Office of the Contractor General.

I refer to the "Special Report of Investigation — Allegations Regarding and Proposal for the Financing, Development, Ownership and Operation of a [sic] FSRU LNG Re-gasification Terminal and Natural Gas Transportation System" (hereinafter called "OCG LNG Report" or "the Report") recently published by the Office of the Contractor General (OCG).

I obtained a copy of the OCG LNG Report only last week and in the time available I have so far only been able to conduct an initial perusal of the Report. However, even this initial reading of the Report reveals several errors of fact, misrepresentations and unfounded conclusions which are extremely damaging to my reputation. Therefore I feel compelled to issue this Preliminary Statement in response to the OCG LNG Report. This Preliminary Statement seeks to address only a few major issues emanating from the Report and does not seek to elaborate all the numerous errors, misrepresentations and unfounded conclusions that appear in the Report.

Background

For background purposes it is important to note the LNG Project in Jamaica has had a long and chequered history. What is commonly referred to as the LNG Project has not been one continuous effort, but in reality has comprised several separate projects interrupted by lots of stops and starts resulting in several different, and often unconnected, initiatives and ideas being pursued at different times.

Relevant history to the OCG LNG Report is that a prequalification exercise for LNG Floating Storage & Regasification Unit (FSRU) services was launched in April 2007, but this exercise was effectively halted with the change of Administration in September 2007 and the appointment of Clive Mullings, who did not support LNG, as energy minister. During the period September 2007 and August 2008, when my employment with PCJ was terminated as a result of my assertion that Minister Mullings' preference for coal was not well thought out, no procurement activities were pursued in respect of LNG and no funding was made available to PCJ to conduct any LNG project studies. However, although no active LNG Project was being pursued in this period, it would be incorrect to say that no LNG activity was taking place. Several initiatives and potential partnerships were explored by the PCJ during this period. However, none of these initiatives gained traction. With the subsequent firing of Ian Moore as PCJ Chairman in November 2008 the LNG initiative in Jamaica appeared to be completely dead. However, LNG was put back formally on the Government of Jamaica (GOJ) agenda when in May 2009 during his Budget Presentation the Prime Minister stated that the Government would be pursuing LNG as the alternative fuel of choice.

Subsequently, an LNG Steering Committee was established under the leadership of then energy minister James Robertson. Working under a directive from the Prime Minister that he wanted the LNG Project to be implemented as fully private operation (unlike all previous initiatives which would have seen PCJ hold a significant stake) this new Steering Committee formulated new transaction principles (not based on any single previous proposal as erroneously asserted by the OCG). During the course of these deliberations I was re-engaged by the PCJ as LNG Project Coordinator. The transaction principles developed by the new Steering Committee provided the basis upon which a Request for Proposals (RFP) document was developed inviting proposals for the provision on a build-own-operate basis of an LNG FSRU solution and associated mooring and pipeline infrastructure.

The issuance of this RFP in November 2009 marked the start of a new LNG project and of the first procurement activity to take place since the halting of the pre-qualification process in September 2007. Ostensibly the OCG investigation was to have been into the circumstances surrounding this new project and procurement activity which began in November 2009.

Some of the major flaws in the OCG LNG report are outlined in the following numbered sections:

1. Improper Dependence on 2007/2008 Data and Communications

As noted above the OCG was supposed to have been investigating a tender process and new LNG project that began in November 2009. However, even a cursory review will indicate that the findings of the OCG LNG Report are extremely dependent on data from an email communications that took place in the period between September 2007 and November 2008. Without this 2007/2008 data the OCG's case for bias and conflict of interest would fall flat.

As stated in the Background, during the period September 2007 to October 2008 there was no procurement activity taking place, but despite the fact that there was no procurement activity taking place the OCG wrongly seeks to view the activities that did take place through the lens of procurement rules, implying for instance that it was improper that more communication took place with Exmar as against the other entities which were eventually invited to participate in the tender process.

As previously stated, a number of possible LNG initiatives were explored in the 2007/2008 period. A common feature of these initiatives was to find a way to advance the project without incurring significant GOJ expense, as it was not realistic at the time to expect any GOJ funding to undertake feasibility studies, etc. Therefore it is not at all surprising that the most intensive discussions during this period took place with parties that were willing to undertake studies on their own initiative and were willing to discuss partnership opportunities with the GOJ. Discussions were held with numerous entities during this period, but the three primary initiatives which were pursued with most effort were:

* the provision to GOJ of up-front financing for the LNG Project through the pre-purchase of carbon credits by the Belgian Government;

* the possibility of a joint-venture partnership with Merrill Lynch; and

* the possibility of implementing the project as part of a regional effort under the Venezuela PetroCaribe umbrella.

The OCG LNG Report does not appear to mention the third effort at all, but focuses on the communications that took place in relation to the first two to seek to make an argument of bias. However, anyone with common sense will understand that the Belgian Government offer to pre-purchase carbon credits would have been conditional on the project being implemented by a Belgian company, namely Exmar. Therefore there was nothing sinister or improper about the extensive communications that took place with Exmar in relation to this effort. In the case of the second initiative, Merrill Lynch was unfamiliar with FSRU technology and was strongly in favour of an on-shore rather than a floating solution, but the Jamaican Government at that time had indicated a preference for a floating terminal. In an effort to resolve this difference with Merrill Lynch and to inform them of the merits of a floating solution we asked Merrill Lynch to talk to both Exmar and Hoegh LNG, who at that time were the only two LNG FSRU companies to have submitted any type of price proposal to the GOJ. It is therefore not at all surprising that in the context of these initiatives there were significant discussions with Exmar.

The OCG uses email communications during this period to seek to make a case that there was bias towards Exmar. However, I believe the OCG's reliance on the 2007/2008 information is improper. My understanding (and I have seen a legal opinion that supports this view) is that under Jamaican procurement rules only current conflicts of interest are relevant, not past conflicts. So even if there was a situation of conflict in 2007/2008 (and I do not agree that this was so) it would for all practical purposes be irrelevant to the OCG investigation of the tender that begun in November 2009. I have not seen in the OCG LNG Report any evidence to establish that there was an existing conflict of interest in November 2009 when the new LNG project began or anytime thereafter.

2. Biased Presentation of Information

For a report that is making accusations of bias the OCG LNG Report is itself curiously biased in the information it chooses to present. The OCG's mandate is to investigate the circumstances surrounding the award of a Government contract and I interpret that to mean the OCG should report on the all the circumstances both positive and adverse. However, the Contractor General is seemingly already pre-empting the status of a prosecutor in the way the report has been presented. In the Report the OCG seems to have made a concerted effort to ignore available evidence that contradict its findings.

For example, the OCG appears to ignore the fact that, even in the absence of any formal procurement activity in the late 2007/2008 period as explained above, I took actions designed to promote competition in the provision of FSRU services. During his first few months as Chairman, Exmar was the only LNG FSRU company that had visited Jamaica and met with Mr Moore. I actively advocated that Mr. Moore attend the GastecOCG the OCG seeks to make out why would I have been warning Exmar's competitors of the advantage that Exmar was establishing and urging these competitors to engage more with Jamaica? The OCG seems not to have considered this evidence at all.

I also note that at around the time I was terminated from PCJ in August 2008 I was having active discussions with Hoegh LNG for them to make a visit to Jamaica in September 2008 with the purpose of introducing themselves to the new Administration (Hoegh had last visited Jamaica in 2006) as a potential FSRU provider and a potential alternative to Exmar. There is an indirect reference to this on page 434 of the Report, but the OCG would have had in its possession a series of several emails between Hoegh LNG and me. It can be seen that I advised Hoegh LNG that the best way to gain entree to the Government was to work through their contacts at Alcoa rather than through PCJ. Again, if I were as biased to Exmar as the OCG seeks to make out why would I be advising a competitor of Exmar of the best way for them to gain entree to the Government?

I believe the OCG has put forward a very one-sided picture of my activities in the late 2007/2008 period. Apparently to seek to portray that I was only interested in Exmar, the OCG LNG Report totally ignores my activities in relation to the Venezuela PetroCaribe initiative which I pursued with as much gusto as the Exmar and Merrill Lynch discussions. The Report for the most part ignores my efforts to foster competition in the provision of FSRU services by urging other companies to get active in Jamaica. Even where evidence of this is found in the Report this evidence was presented for other purposes, not to establish that I was promoting competition. I therefore find that the OCG LNG Report to be peculiarly biased in the presentation and use of information that was available to the OCG.

3. Blatantly Erroneous Findings that in Promoting LNG, Ian Moore and I were Acting in Contravention of GOJ Policy and in a Conspiratorial Manner Outside of the Knowledge of Other GOJ Officials

There are several suggestions in the OCG LNG Report that in 2007/2008 Ian Moore and I were acting improperly and in contravention of GOJ Policy. For example on page 573 of the Report the following is found:

"Given the fact that during Mr Ian Moore's tenure the official GOJ Energy Policy was geared towards coal, and Mr Ian Moore's sworn assertion that "There was no approved and/or active LNG Project during my tenure at the PCJ", the OCG is unable to determine (a) on whose behalf Mr Stephen Wedderburn and Mr Ian Moore were working in all instances; and (b) under whose Authority both gentlemen were sharing information and/or correspondence with, inter alia, Mr Conrad Kerr and Mr Bart Lavent of Exmar Marine NV. Consequently, the OCG is unable to determine under whose authority and for whose benefit Mr. Stephen Wedderburn and Mr Ian Moore were acting given (a) that several of the referenced correspondence were not shared with any other Accounting and/or Accountable Officers of the PCJ and/or the MEM, (b) the curious and seeming conspiratory circumstances surrounding the Exmar Consortium's exposure to information, ..."

The OCG is utterly and completely off the mark with these assertions. Whilst Mr Moore is correct that there was no approved and/or active LNG Project, as noted above several possible initiatives were in the exploratory stages. The exploration of these initiatives had the blessing of the GOJ and were not in conflict with GOJ policy as asserted by the OCG. In fact the OCG is completely in error in asserting that official GOJ Energy Policy was geared towards coal. As far as I can recall, except for one instance in 2005 when Cabinet gave approval for JPS to construct a coal power plant, the GOJ has never promoted coal as an official policy initiative. In fact, even though then energy minister Clive Mullings was opposed to LNG and strongly pro-coal, it is a matter of public record that after the January 2008 Cabinet Retreat the Prime Minister announced that a decision had been taken to pursue LNG as the preferred fuel for Jamaica. Please note for instance the following quote from former Prime Minister Edward Seaga published in a Jamaica Gleaner article on 27 January 2008:

"I breathed a deep sigh of relief when I heard Prime Minister Bruce Golding announced definitively in his post-Cabinet retreat press conference that the fuel of choice for Jamaica in the future would be liquefied natural gas (LNG), not coal." (http://jamaica-gleaner.com/gleaner/20080127/focus/focus1.html)

It is inexplicable and extremely peculiar that the OCG has ignored the wealth of evidence indicating that the efforts being undertaken by PCJ in regard to LNG during 2007/2008 had the blessing of the GOJ. In this regard it must be recalled that the OCG seized and copied ALL my files and email correspondence in the conduct of their investigation. Therefore the OCG had and presumably still has in its possession evidence that in October 2007 (before Ian Moore was appointed Chairman) I wrote to the Prime Minister informing him of Merrill Lynch's interest and requesting that he meet with Merrill Lynch, which he agreed to do. Arising out of that meeting the Prime Minister gave his assent for there to be further discussions with Merrill Lynch. Also the Belgian Government initiative referred to above was one in which the proposal was addressed directly to the Prime Minister and in relation to this initiative there are several pieces of email correspondence between Office of the Prime Minister and me. The OCG seems to have also found it expedient to ignore the numerous pieces of correspondence that I had with the Cabinet Office Task Force on Energy and with the Ministry of Energy & Mining (MEM) in relation to these initiatives and also the several reports that I submitted to the PCJ Board detailing the activities which were being undertaken.

Without prejudice to any future legal action I may take, I hope that the Contractor General will do the decent thing and apologise for making these utterly erroneous, false and extremely damaging assertions.

4 Extremely Damaging and Utterly Irresponsible Suggestion of the Existence of a Criminal, "Conspiratory, Fraudulent, Corrupt, Clandestine and/or Surreptitious" Relationship between Ian Moore and Me

During the period November 2007 and August 2008 Mr Ian Moore was Chairman of PCJ and I was the LNG Project Manager at PCJ. Both of us were strong supporters of LNG and it is a fact that in the context of a PCJ Chairman/employee relationship we collaborated closely in promoting LNG as the best fuel choice for Jamaica. As noted in 3 above the OCG has quite incorrectly sought to paint a picture that we were acting in a conspiratorial nature outside of established GOJ policy. I would like Mr Christie to explain what is corrupt and/or criminal about an employee collaborating closely with his Chairman to promote the interests of the organisation. In this regard it must be noted that in all the LNG initiatives that were being explored at the time the objective being pursued by Mr Moore and me was for PCJ to benefit from a majority stake in the LNG Project. LNG as in integral component of PCJ's future business activities was a primary takeaway in the presentations given to the PCJ Board Retreat in June 2008 by Mr. Moore and me - again exposing the falsehood in the OCG assertion that we were acting without the knowledge of our colleagues.

I have found in the OCG LNG Report absolutely no evidence, not even the tiniest shred, that suggests the existence of any relationship between Mr Moore and myself outside of the PCJ context, much less an improper one. Despite this gross lack of evidence the OCG seemingly had absolutely no compunction about implying the existence of a criminal relationship between Mr Moore and me by the referral of the Report to the DPP and the Commissioner of Police, urging, inter alia, the investigation of "whether there was a conspiracy or agreement between Mr Ian Moore and/or Mr Stephen Wedderburn and/or any or all of the named persons to facilitate, inter alia, what could be the possible commission, on the part of any and/or all of them, of an act or acts of corruption, contrary to Section 14 of the Corruption Prevention Act ..." I find this to be an utterly irresponsible action by the OCG. I believe a more responsible holder of the office of Contractor General would simply have reported that he found no evidence of an improper relationship.

5 Accusation without any Supporting Evidence of a Disclosable Relationship Between Joseph Fossella and Me

In a number of places the OCG LNG Report states:

"However, the OCG has found no evidence to suggest that Mr. Stephen Wedderburn disclosed his relationship with Mr. Joseph Fossella, a sub-contractor of CH-IV International ..."

As a result of this finding the OCG accuses me of being in breach of Sub-Section S-1040 of the Revised GOJ Public Sector Procurement Procedures (2008 November).

I have examined the Report to try to establish the nature of the relationship being alleged, but I am still completely in the dark with regard to this. There are numerous instances in the OCG LNG Report where the findings are disconnected from the evidence presented, and this accusation is one of the most egregious occurrences of this.

Without prejudice to any future legal action I may take, I challenge the Contractor General to provide real and tangible evidence that there existed a relationship between Mr Fossella and me of a nature that warranted disclosure. If the Contractor General is unable to respond to this challenge with real evidence (rather than his usual verbose bluster), and I am confident he will not be able to, I hope he will do the decent thing in retracting the accusation and issuing an apology.

6 Errors/False Statements in Sworn Statements and Anonymous Submissions

There are numerous errors and untrue statements incorporated in the OCG LNG Report through the presentation of sworn statements and anonymous complaints that were submitted to the OCG. For the purposes of this Preliminary Statement I bring attention only to three instances of these.

* The first is one which received significant publicity. Mrs Marcia Forbes is reported as stating that I asked for an "astronomical fee" of about J$15 million per month to head the LNG Project. This is completely untrue. I am not crazy and only someone crazy would have expected to be able to receive JA$180 million (or over US$2 million) per year as remuneration for a Government of Jamaica job. I note that the OCG is in possession of my initial proposal submitted in response to a request from Mrs Forbes since they refer to it elsewhere in the Report. It would have been most useful for the OCG to have included a notation that this claim by Mrs Forbes was not supported by the documentation, rather than simply including the statement without comment. Also in relation to Mrs Forbes statement, I note that at no time did I have any discussions about becoming head of PCJ with either Mrs Forbes or then Minister Robertson.

* Mr Zia Mian is reported as saying in his sworn statement that "At a meeting at Jamaica House, the Minister, and Messrs. Wedderburn and Moore strongly recommended that a negotiated deal with Exmar could deliver the LNG to Jamaica on a fast track basis..." I do not recall ever participating in any such meeting. As far as I can recall the only time James Robertson, Ian Moore and I were all in any meeting at Jamaica House was during the January 2008 Cabinet Retreat (at which time Mr Robertson was not energy minister). I am certain that during the tenure of Mr Robertson as energy minister I did not participate in any meeting at Jamaica House which included Mr Moore or at which a negotiated deal with Exmar was recommended.

* The Report presents an email dated 25 June 2010 from a "concerned citizen". Although the email is anonymous, the content strongly suggests that it came from a member of the PCJ Board. There are numerous untrue statements in this email, but for the purposes of this Preliminary Statement I focus only on the assertion that Mr. Moore paid for my travel to Bangkok. As the OCG LNG Report notes elsewhere the travel to Bangkok constituted official Government business and it is a matter of record that my travel expenses were paid by PCJ, not by Mr Moore. I am sure that the OCG would have investigated this claim and it would have been useful if they had included some sort of notation in the Report to the effect that the statement was not corroborated rather than simply having the untrue statement in the Report without any comment.

* The Report also references another email dated 8 September 2009 from a "Concerned Citizen of Jamaica" which alleges that I was a good friend of the Minister [Mr. Robertson]. Even though for a period we attended the same high school, I had no relationship of any form with Mr Robertson, much less to be called a good friend, prior to his appointment as energy minister.

Source of Exmar Consortium Advantage

One issue on which I do not disagree with the OCG is that Exmar Consortium had an advantage going into 2009 tender. In fact I fully agree with the following statement which is made several times in the OCG LNG Report:

"The OCG has concluded that Exmar Marine NV had a distinct advantage over the other potential bidders for the 'FSRU LNG Project' as a result of the extensive work which it undertook with respect to introducing LNG to Jamaica since 2006." (my emphasis)

The OCG is absolutely correct in identifying that Exmar's advantage stemmed from the extensive work it did. As far as I am aware from my involvement in the process this advantage was obtained not by any corrupt means, but through the time, effort and resources Exmar put into identifying LNG solutions for Jamaica. I note that there seems to be flawed logic circulating that this advantage will cease to exist if there is a re-tender. I also note that even though the OCG has this as one of the conclusions arising from its investigations, the Report castigates me and accuses me of bias for arriving at and stating the same conclusion in 2008

Concerns about OCG Approach to Investigation

I believe it was Minister Christopher Tufton who not too long ago expressed concern with the OCG's propensity to put its findings in the public domain without giving accused persons an opportunity to respond to the allegations being made. I wholeheartedly share this concern.

As demonstrated in this Preliminary Statement the OCG LNG Report contains numerous errors of fact and numerous unfounded conclusions. Whilst it is possible to go through the Report and list all the inaccuracies, my reputation has already been damaged through the publication of a fundamentally flawed report by the OCG. No matter how many errors I document in the OCG LNG Report and how much I point out that there is absolutely no evidence to support the implication that I was involved in criminal and/or corrupt activities the damage to my reputation will never be fully repaired, as the initial public reaction to the Report is what will stick.

If the OCG adopted the practice of consulting with the persons named in its report, prior to publication, many errors of fact could easily be cleared up and in the instant case the OCG likely could have avoided issuing such a shoddy report.

I note that the OCG made no attempt whatsoever whether in writing or by interview to test its findings in relation to me. In the preliminary round of data gathering I responded in writing to two requisitions from the OCG on 15 November 2010 and on 21 December 2010. Subsequently there was absolutely no effort by the OCG to contact me for any form of clarification whatsoever, even though I am a central figure in the report. I note that the OCG found time to meet with and interview persons who from all indications were amongst those making accusations of impropriety, but did not conduct any personal interview with any of the persons accused of wrongdoing. It seems therefore that the OCG was willing to make time for the accusers, but not for the accused. This does not appear to have been a just and fair approach to the investigation.

Stephen Wedderburn

StephenWedderburn@alum.mit.edu

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