The following are some excerpts from the questioning of former Urban Development Corporation (UDC) chairman, Dr Vin Lawrence, by former Public Accounts Committee (PAC) chairman and Opposition spokesman on finance and the public service Audley Shaw at the PAC meeting looking into the Sandals Whitehouse Hotel project overrun on Tuesday, November 14.

Shaw: Doctor, you mentioned the project manager’s report and you have given an indication that sometime in March 2004 you began to get an indication of the kind of cost increases that were evident, is that so?

Lawrence: Yes, Sir, and I even go further. There was a letter written by Mr (Patrick) Lynch (Gorstew) among the correspondence that you have, to the company secretary, in which he did some form of analysis of information from some of those reports. The letter is dated July 31, 2003 and it points out – it says, for example, the amount expended to date, and it named some items which constitute 86 per cent of the budgeted amount while expenditure and room blocks and facilities are 38 per cent and 39 per cent. This is a warning signal.

Shaw: Now, Doctor, on May 28th, 2003, Mr Lynch, since you mentioned him, asked for a report on the total expenditure to date of the project. You promised to provide that information to him within one week. Can you recall whether that report on the total expenditure, as promised by you in the board minutes, whether that information was in fact provided to your partner Gorstew?

Lawrence: As far as I am aware, the corporate secretary, I will ask her to answer but, as far as I am aware, all the information requested in time was provided.

Shaw: Okay, we can get that information. But now, Dr Lawrence, you indicate that in these project manager’s reports there are these indications of increased cost. However, it is not until the board meeting of March 2, 2005, that it is reported that the overrun – it was initially reported in January that the overrun was US$15 million, that’s in January 2005. Then two months later, the report is that the overrun will be US$25 million, not US$15 million, and then later the figure moves by another US$18 million to the total of US$43 million.

My question is, all of these overruns were reported from between January and April or so of 2005. Didn’t you know of the size of this overrun long before this period, especially during that 14-month period when the board was not meeting? Were you not aware of the gravity of the situation and that this overrun was likely to be rather much more substantial than originally anticipated?

Lawrence: I certainly was conscious of the fact that there would be increased cost, and I think all the partners were conscious of the fact that there would be increased cost and I indicated earlier, I think last week, the expectation that the increased cost would be somewhere between 10 per cent and 20 per cent. In the September 2004 project management report there was even a clearer indication than the March, 2004 that there were increased costs.

The quantity surveyors, who are responsible for developing the cost, were asked to indicate where we were and they produced numbers in October 2004 which, again, were made available to all the parties which showed an increased cost in the region of some 80 million something dollars.

Then there were further numbers produced again in December which showed figures above US$90 million and, at that stage, I attempted to convene a meeting of the board of directors. It was difficult to convene it in December, and that’s why we met on January fourth. That was the first time that was available, but information was generally available that we were in a significant cost increase based upon what it was on the project taking place.

As a matter of fact, the board met in March (2005) on two occasions and when the quantity surveyor was able to bring forward all the numbers, as he had said, completing those measurements.

I think the minutes of those meetings will show clearly where the parties, and even the Gorstew representatives said, ‘well now we do understand and see where the cost numbers are’. That statement was made, although they – and I won’t go any further on this issue because that’s a part of the court matter – although they said we now need to decide who pays. And that is certainly an issue.