US$150,000 Petrojam spent on consultancy could be sourced internally, PAC told

US$150,000 Petrojam spent on consultancy could be sourced internally, PAC told

Senior staff reporter

Thursday, May 09, 2019

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PETROJAM General Manager Winston Watson told Parliament's Public Accounts Committee (PAC) on Tuesday that the expertise for which Petrojam paid more than US$150,000 tax-free could have been sourced internally.

The PAC is pushing to have Petrojam's former General Manager Floyd Grindley and its former Procurement Manager Ronique Budram-Ford appear to explain why they approved multimillion-dollar consultancies, which the auditor general said have not been proven to benefit the company.

Grindley resigned last July as the firestorm surrounding Petrojam heated up, and Budram-Ford stepped down as head of the procurement unit in January this year.

PAC members insisted that it was imperative that both Grindley and Ford respond to questions about the methods of contracting used to engage Canada-based Asha Corporation, whose principal, Rodney Davis, was directly paid half of the 14 payments remitted to the company under three contracts totalling US$152,000 between June 2017 and March 2018.

Auditor General Pamela Monroe Ellis told the committee that her team had raised concerns about the $17.4 million expended on consultancy services for the refinery upgrade project in the agency's 2018 report on the refinery's operations.

“We didn't see the benefit that accrued to Petrojam as a result of those consultancies,” she said.

According to an extensive report which Petrojam has submitted to the PAC, the three contracts Asha Corporation held with the company were all initiated by Grindley.

PAC Chairman Mark Golding noted that the submission states that the compliance officer refused to sign the related documents as she disagreed with the justification for the method of contracting.

But according to the document, Grindley and Budram-Ford ignored her disagreement. It said most of the communication was between the consultant and Grindley, and that only one report is on file as proof of work done by Asha.

The company was engaged to conduct feasibility research and analysis, but the deliverables were not achieved. Furthermore, Petrojam's access to the former general manager's documents is now limited to those saved to the network as the Major Organised Anti-Corruption Agency (MOCA) is still in possession of his mobile phone and computer as part of ongoing investigations.

Petrojam's Chief Financial Officer Carlene Evans offered the PAC an explanation for the seven payments to Asha's principal, Rodney Davis, instead of to the company.

She said when United States issued executive orders against certain transactions with Venezuela in August 2017, it created an array of problems for Petrojam payments routed through overseas intermediary banks. This included payments to Asha Corporation, Evans said.

The Executive Order issued by US President Donald Trump on August 25, 2017 prohibited certain transactions involving the Venezuelan Government and State-owned or State-controlled entities, including State-owned Petroleos de Venezuela, SA (PdVSA) —which had a 49 per cent stake in Petrojam.

“A lot of them (payments) were questioned for enhanced due diligence [and] there were extensive holds on payments, including some related to Asha. Mr Grindley was intimately involved with Mr Davis — he was the project manager for this assignment — so a request was made for Mr Davis to provide alternative banking instructions and approval was given for him to be paid accordingly,” she outlined.

The initial contract with Asha (inclusive of a confidentiality agreement) for US$47,200 was signed in May 2017 for three months, to liaise and work with a firm conducting an evaluation of the refinery, review their evaluation, and then determine opportunities to increase revenues.

In September 2017 another contract was signed for US$55, 200 to review all existing financial management and regulatory reports and do project economic analysis on the Vacuum Distillation Unit project — the first phase of the refinery upgrade. Then, in March 2018, another contract for US$51,000 was signed to evaluate the viability and capital investment for Jamaica Petroleum Terminals Limited — a tank farm in Montego Bay.

When Watson told the committee that the expertise could be sourced internally one Opposition member was most sarcastic.

“It's comical,” Manchester Central Member of Parliament Peter Bunting asserted.

“It's basically giving back to Petrojam the information that it provided to them; this is really an extreme case of a consultant borrowing your watch to tell you the time and to charge you for it. It's just a ruse to extract money from the company, and I really hope that these fraud investigations will bear some sort of fruit,” he continued.

The PAC chairman said the entire arrangement “looks like a series of contracts not designed to provide any real value whatsoever, couched in fluffy language producing virtually nothing and costing the company over US$150,000”.

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