$96m fraud? - CG says 3 KSAC councillors, staff member involved

KSAC probing fraud allegations

BY INGRID BROWN Senior staff reporter browni@jamaicaobserver.com

Tuesday, May 31, 2011

THE Office of the Contractor General (OCG) said it has uncovered major fraud involving three councillors and a staff member of the Kingston and St Andrew Corporation (KSAC), and will be turning the matter over to the police.

According to the OCG, the alleged fraud involved some 114 Government contracts valued at more than $96 million, which were awarded between November 2006 and November 2010 by the KSAC.

Yesterday, head of the KSAC, Kingston Mayor Senator Desmond McKenzie said he has not been informed by the OCG who the implicated councillors and member of staff are, but an internal investigation has been launched into the matter.

McKenzie said the town clerk, the city treasurer and the deputy mayor will make up the team which has been mandated to investigate the matter.

He said the town clerk will be writing to Contractor General Greg Christie today to seek further details.

"The KSAC will be co-operating one hundred per cent with the OCG," McKenzie told the Observer.

In a release issued yesterday, the OCG alleged that the contracts, the majority of which were for gully and drain cleaning, were awarded to a fake female contractor who admitted to merely acting as a 'front' for the parish councillors and a staff member of the KSAC's Roads and Works Division.

The OCG said internal investigations revealed that the fake contractor fraudulently secured registration with the National Contracts Commission (NCC) as a Government works contractor and had listed three staff members on her NCC Contractor Re-registration Application Form. But the OCG said when the listed staff members were interviewed they disclosed that they neither knew of the woman nor had they ever worked for her.

"The fake contractor, who was summoned to the OCG to account for the discrepancy in the sworn representations which she had made in her Application Form, co-operated fully with the OCG and disclosed the extent of the alleged scam," the release stated.

Among the disclosures, which were made under the pain of criminal prosecution, according to the OCG, were the identities of the three councillors and the staff member.

Also disclosed was the fact that she did not know the so-called staff members who are listed on her NCC Contractor Re-registration Application Form, nor has any of the named persons ever worked for her.

The fake contractor is said to have further disclosed that she receives the contract awards or projects from the implicated councillors and staff member and that the projects are actually undertaken by agents of the named persons, but the said works are done in the name of her business, which is a 'front'.

The OCG said that after being paid the contract sums by the KSAC, she takes the money from the bank and pays over same to the implicated KSAC personnel who, in return, gives her a fee of 10 per cent of the contract sums.

The woman further disclosed that she did not have any construction or works experience, and that her role on the works sites is to "just stand and look from morning till evening".

The fake contractor is reported to have told the OCG that she has no staff employed to her "business" and that the workers who are engaged on the works sites are provided by the three councillors and the staff member. She is said to have worked with other councillors but could not recall their names.

"To facilitate her written application to the NCC to be re-registered as a Government contractor, she paid a fee of $15,000 to a named third party who, in turn, completed the NCC application form, inclusive of providing the particulars of the fake staffing information," the OCG stated.

Yesterday, McKenzie said while he was aware that the OCG was conducting an audit at the KSAC, his first knowledge of the allegations was when he was contacted by the media following the release of a statement by the OCG.

However, McKenzie said he is not just awaiting the OCG and the police findings, but have ensured that the KSAC embarks on its own investigation.

"We will not allow the public to wonder what our responses will be," McKenzie said.

Meanwhile, the OCG said since last year it has made several requests to the Government and the NCC for additional staff to assist in its scrutiny of works contractors' application forms so as to minimise delays in the NCC contractor registration process whilst ensuring that all fraudulent contractor applicants are removed.

"However to date, the OCG's requests for additional resources have fallen on deaf ears," it said.

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$96m fraud? - CG says 3 KSAC councillors, staff member involved