OCG scolds Gov't over sale of Ocho Rios beachfront property

OCG scolds Gov't over sale of Ocho Rios beachfront property


Wednesday, May 01, 2019

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The former Office of the Contractor General (OCG) has found that the Urban Development Corporation (UDC) sold prime beachfront properties in St Ann for at least US$4.6 million below their value following what it described as a “farcical negotiation process”.

In a report tabled in Parliament yesterday by the Integrity Commission, which has since assumed the role of the OCG and two other anti-corruption agencies, Daryl Vaz, minister without portfolio in the Ministry of Economic Growth and Job Creation, and the ministry, were criticised for their alleged interference in the divestment process which the OCG said failed to optimise the income for the country.

In addition, the OCG said beach land valued at US$3.5 million was handed over to the purchaser without being factored into the sale price, with the consent of Vaz and the non-objection of Prime Minister Andrew Holness.

But Vaz has fired back, labelling the OCG's allegations against him as false, disingenuous, and without basis.

Prime Minister Holness, who heads the Ministry of Economic Growth and Job Creation, has also denied any involvement in the negotiations and said he approved the non-objection and, subsequent to the Cabinet's final approval, the sale of the properties based on several factors which took steps to protect the interests of Jamaicans.

The OCG's report of its investigation into the sale of Rooms on the Beach and beach lands by the UDC to Puerto Caribe Properties Limited, which operates Moon Palace Jamaica Grande Hotel, followed a probe which was launched in November 2016 after it received a claim from an anonymous source that the lands were being divested at below market value.

In its report, the OCG noted that the sale price negotiated by the UDC was US$7.2 million, which was approximately US$4.6 million below the lowest cumulative valuation figures and approximately US$6.3 million below the highest cumulative valuation figure.

“A sale price of US$9.3 million was put forward by the UDC; however, the board of the entity approved and divested the properties at a sale price of US$7.2 million,” noted the OCG.

The OCG said there are varying reports from the main actors, including Holness, Vaz, and the UDC, as to the part they played in the negotiations which led to the final sale price.

“Given the assets being divested, and the strategic importance which has been placed on the same, this portrayed uncertainty regarding the 'decision-maker' [and] … can be described, at best, as an untidy state of affairs given the conflicting reports presented to the OCG.

“The OCG considers that the numerous negotiations/discussions surrounding the same to be untidy and not the most effective approach to preserve the integrity of the revenue,” said the report.

According to the OCG, based on the disclosures it received from the UDC it is left to question if the final sale price had been agreed even before the negotiations began.

“The OCG is of the opinion that the UDC was unable to negotiate freely and from a position of 'strength' with Puerto Caribe Properties Limited because of the direct involvement of the Honourable Minister Daryl Vaz and other State agencies,” said the report as it noted that this has been denied by Vaz.

The OCG noted that during a meeting of the UDC's board Vaz advised that, should there be any matter needed to be dealt with urgently that it should be brought to his attention and he would have dealt with it, “which points to how pivotal the minister's role was to the divestment process,” argued the OCG.

The Ministry of Economic Growth and Job Creation also came in for strong criticism from the OCG in the report.

According to the OCG, through the negotiation process the ministry surrendered its position of strength to negotiate a price close to the market value and, instead, did the complete opposite in the name of attracting an investment.

“This had the effect of depriving the country of revenue and the integrity of the revenue was not protected. Further, surrendering the position of strength in the negotiation process has made a farce of the negotiating process, whereby the market price was unjustifiably discounted,” said the OCG.

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