Integrity Commission to probe divestment of White Marl complex

Integrity Commission to probe divestment of White Marl complex

Durrant Pate
Observer Business Writer

Monday, December 02, 2019

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The Integrity Commission has initiated an investigation into the process being used to divest the Factories Corporation of Jamaica (FCJ) White Marl Small Business Complex in St Catherine.

This follows complaints about the process being used to offload the property to the Lasco Group.

Prime Minister Andrew Holness made the disclosure of the Integrity Commission's probe last week during his response to questions tabled in Parliament by Opposition spokesman on Industry, Competitiveness and Global Logistics, Anthony Hylton.

Holness told Members of Parliament last Tuesday that he is aware that in a letter dated November 19, 2019, the FCJ responded to the Integrity Commission's letter dated November 11, 2019 on the process utilised by FCJ to divest the White Marl property.

Regarding the current status of the divestment process, Holness explained, “the FCJ has made a recommendation to the Ministry of Economic Growth and Job Creation, which is being reviewed by the technical and policy officers. It has not yet come to my desk for review; therefore I am answering these questions prematurely.”

The prime minister was asked by Hylton that in light of the concerns/objection by the “long-term” tenants to the manner in which the divestment is being pursued by the FCJ board, if the Government was prepared to halt the process to allow for a review of the recommendation from the FCJ and consideration of the options, including right of first refusal put forward by some tenants, before a final determination is made.

In his response Holness remarked, “as I would have stated previously, it would be premature for me to comment further, as it is being reviewed within the Ministry of Economic Growth and Job Creation and ultimately will have to go to Cabinet.“

But Holness argued that “the notion that there were corruption and deceptive processes is misguided and unsubstantiated as the process used by FCJ to date has been consistent with policies and procedures. Also, the FCJ would have already divested 14 properties, which have come under scrutiny and it has been shown that guidelines were followed.”

Holness admitted that the White Marl, St Catherine complex is not considered to be among the non-performing asset of the FCJ. However, he sought to explain the reason for putting up the property for divestment

These include the factors of low rental rates, low return on asset, potential for private sector development, location and management considerations and proximity to other commercial and industrial developments.

Holness was also asked if the divestment process should result in the facility being divested to a person or entity other than a “long-term” tenant, what plans, if any, are in place to assist the affected occupants in the medium term.

In his response the prime minister disclosed that the Government has committed to providing affordable space for small businesses, noting that the Cabinet has just approved the expansion of Garmex complex in Kingston.

He posited that the successful bidder in making the offer-will protect lessees, the sales agreement will refer to existing lease agreements as a condition of the sale and finally FCJ has commenced a 90,000 square foot with expansion to 360,000 square foot at Garmex complex.

In total, FCJ is projected to do approximately 1.6-million square foot comprising Garmex with 360,000; Bound Brook with 100,000; Naggo Head with 850,000 and Morant Bay with 500,000 square foot of space.

Holness said these developments will be integrated with emphasis on shared services, which will greatly benefit of small businesses.

The FCJ has explained, in response to the media reports — which cited high levels of disquiet among current tenants — that White Marl was among 58 properties being divested on instruction of the Government.

“In 2018 the Government of Jamaica mandated that the Factories Corporation of Jamaica Limited divest 15 per cent of its non-performing assets to supplement the Government's debt reduction strategy. FCJ identified 58 properties for divestment, among them undeveloped lands, small industrial complexes and stand-alone units, both occupied and unoccupied,” the State entity stated.

It said bidders for the property must display the financial capabilities to acquire and develop it to allow for economic growth and job creation, by facilitating players in the manufacturing, warehousing, agro-processing and business process outsourcing industries.

Lasco has already indicated that if it is successful in its bid it does not intend to displace any of the current teanants.

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