The failure of a leading shareholder of telecoms firm Solutrea Jamaica Limited to fully pay-up on a timely basis for the fourth cellular licence together with issues of due diligence has placed Minister of Industry, Technology Energy and Commerce Phillip Paulwell under the spotlight.

Speaking with Sunday Finance, Paulwell said that it was all a storm in a tea cup and that the funds owed would be paid by the end of this weekend.

"Solutrea had won the fourth cellular licence but has failed to pay on schedule but I gather that arrangements are being made to pay the US$7.5 million by the end of this weekend," said Paulwell.
The minister went on to explain that a bidding process was put in place but that the government was unable to attract other interested parties thus leaving the way clear for Solutrea to win the licence subject to a due diligence exercise.

"The negotiations with Solutrea were weighted in the government's favour because when we issued a licence to AT&T some years ago, they paid for it but failed to activate it. At the time US$6 million was the best we could get for it. For us to get US$7.5 million for a negotiated licence from Solutrea in an environment where we have achieved a 100 per cent teledensity with the likes of Digicel, Cable & Wireless and MiPhone in a mature market is phenomenal. Now that doesn't speak to the investment Solutrea will have to make to roll out a network. What people should focus on is what we have been able to achieve which is raking in US$100 million - that is J$6 billion from cellular licences over the last seven years.

Speaking on Solutrea principal, attorney-at-law Minnette Palmer unsuitable connection to Paulwell's ministry as a legal advisor, the minister dismissed it as a non-issue.
"Yes, some might say a conflict of interest arises here, but that does not disqualify that person once she declares her interest and Minnette did so. She ceased to be my advisor once she declared her interest with Solutrea. In fact, my records show that on September 11th 2006 I sent correspondence to Cabinet clarifying the situation and explaining that Minnette Palmer will now cease being my advisor and will only provide advise to the ministry where there was no one else capable of doing so.

"In a small society like Jamaica you will find people with these conflicts of interest but once you become aware of it, you dissociate yourself from it. Nothing untoward happened here. This thing has been blown way out of proportion and people are making a mountain out of a mole hill."

Last week Minister Paulwell suspended granting the cellular licence to Solutrea because it had not made the agreed upon payments for the licence. The Opposition Jamaica Labour Party in a press conference held at its Belmont Road headquarters last Friday, called for the licence to be revoked due to Solutrea's inability to pay for the licence on an agreed upon basis and the obvious lack of a rigorous due diligence process. Paulwell maintains that this deal is good for the country and that a further US$50 million will roll into Minister of Finance Dr Omar Davies' coffers as a result of the accompanying infrastructure work that goes with establishing a cellular network.

"There are people - and I know who they are, who are trying to create scandal where none exists. Rather than go down that road they should be grateful for the number of jobs this cellular licence will create. Companies have tremendous confidence in Jamaica's telecom sector that has grown exponentially over the last five to seven years and where there are still investment possibilities, declared Paulwell.

Gotel will be awarded the next cellular licence

The minister of technology took the opportunity to announce that local telecoms company Gotel will be awarded the next cellular licence for US$2 million. Gotel will roll out a CDMA network similar to the one operated by MiPhone. Solutra will operate a GSM network.
Paulwell believes there is room for other players coming onto the cellular market as a result of the popularity of data and the lack of viability in voice. He points out that despite the saturation of the Jamaican cellular market companies still see value there.

Did the Ministry of Finance know what was going on?

It appears unclear whether the Ministry of Finance was fully cognisant of a due-diligence process and whether it was familiar with all the circumstances of the Solutrea Jamaica Limited case.

Paulwell explained: "The Ministry of Finance has been integral in terms of the due diligence that was done on the company. What happened was that the documentation at the Companies Office was not updated to coincide with the information that the Ministry of Finance has. "The Ministry of Finance assured me that a due-diligence process was carried out and that the only concern was whether the funds were legitimate, ie, did not come from money laundering activities. Having satisfied myself based on the Ministry of Finance's due diligence report, that at least one of the shareholders in Solutrea had the requisite resources and that they were legitimate, I therefore signed off on it.

The major question here was the source of the funds. The confusion comes as a result of updated information, which the Ministry of Finance did not have - nothing else. By the end of this weekend Solutrea would have made the necessary payments and I will then grant the company the licence."

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