The Sandals Whitehouse controversy deepened yesterday with the release of the contractor-general’s report in which he accused the state-run Urban Development Corporation (UDC) of deliberately concealing information from investigators and concluded that the award of consultancy contracts lacked transparency and competition.

At the same time, the contractor-general, Greg Christie, recommended that Parliament pass laws to punish state officials and agencies that ignore the government’s procurement procedures and breach the public’s trust.

“We would respectfully recommend that the Legislature acts decisively and with urgency to ensure that public bodies and public officials who, with flagrant and glaring impunity, ignore the government’s procurement procedures, are made to be held punitively accountable for their misdeeds and breach of the public’s trust,” Christie said in his report tabled in Parliament.

Sandals Whitehouse, the first major hotel on Jamaica’s south coast, was expected to be the catalyst for tourism development in that section of the island. But it became mired in controversy after Sandals complained that the developers failed to deliver the property completed and fully functioning when the hotel opened in February last year.

Sandals, which manages the hotel, said it was forced to cut rates and refund hundreds of guests. The company also said the issue damaged its reputation.

The hotel was completed more than a year behind schedule and well over the US$70-million budget. In fact, the contractor-general, in his report, said the quantity surveyor’s preliminary final accounts have put the project’s final development cost at over US$110 million.

The Opposition has claimed mismanagement and cronyism during the hotel’s construction, which was overseen by the UDC.

Last November, two firms owned by Sandals chairman Gordon ‘Butch’ Stewart sued the UDC and the two other developers, the National Investment Bank of Jamaica (NIBJ) and Ackendown Newtown Development Company. The UDC and the NIBJ own two-thirds of Ackendown, while Gorstew, ‘Butch’ Stewart’s holding company, owns the other third.

The suit by Gorstew and Sandals Whitehouse Management Limited – the management vehicle being used by Stewart for the Westmoreland hotel – argues that the terms under which Sandals leased the property were breached because of the negligence of the other parties.

Sandals is seeking US$29 million for the losses it incurred and has asked the court to rule that it should not contribute to the US$41-million cost overrun because it made no material design change to the property that would have contributed significantly to the increased cost.

But the UDC has claimed that a substantial reason for the cost escalation was because of extensive changes in design demanded by Gorstew/Sandals.

Gorstew has rejected these arguments, saying in court documents that the overrun was because of the failings of the government agencies.

In his report, Christie was unable to state definitively who should bear the cost of the overrun and appeared to suggest that he would be better able to make such a determination with more information from the UDC.

“We are unclear as to the extent to which the overruns in cost and time should be borne by Gorstew Ltd, the UDC, the NIBJ and/or by any of the other parties to the project’s agreements,” said Christie.

However, he said that he found plausible the suggestion that the increased costs and time overrun were “due substantially to the change from a Beaches to a Sandals concept resort”.

But last night, Christopher Zacca, a director of Gorstew, said that while the company shared Christie’s deep concern for the lack of accountability and transparency with regard to the project management and development of the hotel, the company had its own “concerns with regard to misstatements and inaccuracies in his report as it relates to Gorstew’s involvement in the project, what Gorstew knew and the effect of the change of the name from Beaches to Sandals”.

“We will issue a more fulsome statement tomorrow (today) after we have had a chance to meet with our attorneys and our technical experts,” Zacca added.

According to Christie, his investigators had identified a number of inconsistencies in relation to certain cost numbers in the documents they reviewed. He, therefore, recommended that the UDC, in its capacity as the project manager, and with the assistance of the quantity surveyor, be mandated to produce a comprehensive report detailing, inter alia, the rationale and justifications for the changes and cost overruns, the specific authorisations which accompanied them and the persons to whom those authorisations were attributable.

Christie said he and his team were not satisfied with the documentation made available to them by the UDC and which should have facilitated, but did not facilitate, an understanding of the chronological sequence of operations and events in the implementation and execution of the project, particularly as they related to the significant budget changes.

“This has led us to believe that there was a deliberate attempt to conceal information regarding certain relevant decisions, as well as the basis upon which those decisions were made,” he said.

The contractor-general also said that 24 consultants, inclusive of the UDC, main contractors Ashtrom, Nevalco and Gorstew Ltd, were engaged in the project.

He said that in relation to the awarding of consultancy contracts, he found no evidence to suggest that any of the consultants were selected on an impartial and competitive basis.

“Rather, it appears that all of the consultants were hand-picked and that their basic terms of engagement were negotiated and agreed by and with the UDC, acting on behalf of Newtown, prior to their formal engagement by Newtown,” Christie said.

“At a minimum, such circumstances would constitute a clear and open violation of the government’s procurement policy and procedures and/or the contract award standards which have been established by the Contractor-General Act (1983) which require all government contracts to be awarded impartially, competitively, transparently and/or on merit,” said Christie.