Full text of Dr Ruth Potopsingh’s statement in light of revelations of a forensic audit report on the operations of the PCJ and PETCOM.

RECENT reports released in the local media about information contained in a forensic audit report by the board of directors of the Petroleum Corporation of Jamaica have left me with little choice but to issue this statement to protect my professional reputation.

On Wednesday evening, April 14, 2010, I was verbally advised by the chairperson of the PCJ board, Ms Kathryn Phipps, that based on the forensic audit report the board had lost confidence in my ability to operate the corporation.

Ms. Phipps also verbally informed me that she along with the corporate secretary and the HR specialist would meet with me on the matter on Thursday, April 15, 2010.

To date, no meeting has taken place, nor have I received any written notification indicating any change in my status as group managing director. Surprisingly, since then, there have been detailed reports in the media concerning my ‘termination’ as well as considerable details of the forensic audit, which has not yet been tabled in Parliament.

According to accepted audit procedures, I prepared my detailed response to the forensic audit report on January 25, 2010, copies of which were sent to the chairman of the board of the PCJ, the prime minister, the solicitor general and later the auditor general. Since the submission of my report, there has been no attempt to test the veracity of my response, neither have I received responses from the offices of the prime minister, the solicitor general or the auditor general; and as of April 14, 2010, when the PCJ chairman spoke to me about the decision of the board, neither the forensic audit, nor my response had yet been tabled in Parliament.

My response outlines several deficiencies of the audit, including errors of fact and, in many instances, the presentation of partial information. In other instances, events have been misrepresented or presented in a one-sided manner. More importantly, my response appears to have been totally ignored. In fact, it is of great concern to me that no attempt has been made to get to the true facts.

I expressed to the PCJ board my concerns that the PCJ Audit Committee, in its deliberations, did not provide me with an opportunity to be heard on the various issues prior to reaching its conclusions and making its submission to the full PCJ board. Furthermore, I was never requested or given an opportunity to provide any information or documentation to the committee. It is a well-known fact that if the process is not properly followed, it could only lead to erroneous and misleading conclusions, as is now evident.

Media Reports

The statement in the Sunday Observer of April 18, 2010 claims that I was cited by the board for ‘weak and ineffective management”. This statement is objectionable and in no way reflects my commitment to my responsibilities and my performance since my appointment as group managing director (GMD) in January, 2006

Governance and Core Activities

Given my extensive training in business and technical issues, on my appointment, I began to address in a systematic manner the mandate, mission and role of the PCJ in the future development of Jamaica. There were many areas of weakness which existed in the corporation, many of which could not be remedied overnight.

My approach therefore, was two-fold, targeting separately and simultaneously Governance and Core Energy Activities.

Governance Procedures

Some of the governance measures which I introduced included:

* Establishment of a Procurement Committee, where none existed before, and staff training of relevant officers in procurement matters (2006);

* Implementation of a Human Resources Manual (board approved, August 2006);

* Cheques Signing Limits of Authority (Drafted 2007, board approved 2008);

* Limits of Authority (Drafted 2007, board approved 2009);

* Two approving officers, one being GMD and Use of Purchase Orders (September 2007-2008);

* Accounting Manual (board approved 2009), and roll-out of training, beginning with Management Appointment of an Ethics Officer (2006);

* Monthly Management Meetings (2006-2008) increased to weekly meetings in 2009 ( hitherto not done);

* Quarterly Staff Meetings (2006);

* Sought and received board approval for the employment of an in-house legal counsel (2007) to provide the corporation with legal input in contracts, MOUs, and other corporate initiatives;

* Introduced a Performance Appraisal Systems for staff and the management team;

* Acquired and implemented the Symsure Monitoring Software (2008) to facilitate early identification of issues of an accounting nature;

* Implemented an Investment Register (2009);

* Designed a Staff Benefits Programme and submitted this to the Ministry of Finance and the Public Service (2009) for review to ensure compliance with PBMA (applicable to statutory bodies 2003);

* Drafted a Project Procedures Manual in 2008 (Implemented 2009);

* Instituted a Performance Incentive Programme (2009) which is in the process of being implemented.

Core Energy Activities

Some Core Activities implemented included:

* Conclusion of the joint venture negotiations between Petroleos de Venezuela (PDVSA) and PCJ re the sale of 49 per cent of shares in the Petrojam Refinery (2006);

* Offered through a formal bid licensing, production sharing agreements for offshore oil exploration 2006/2007 to three companies;

* Established a Centre of Excellence for Renewable Energy (CERE) to develop alternative energy resources in Jamaica (2006) and to provide technical expertise;

* Implemented over 40 energy efficient projects in government hospitals islandwide to introduce hot water and steam steriliser systems, more efficient air-conditioning systems and to reduce energy costs while effectively providing the enabling environment for patients to be treated, especially women and children (2006-2009);

* Conducted feasibility studies for hydropower facilities on three rivers (2006-2010) for expansion of the country’s renewable energy mix thereby strengthening our energy security;

* Engaged in planning and financing for the expansion of the Wigton Wind Farm to 38.7 MW in Manchester. Project currently being implemented;

* Engaged in negotiations on the establishment of a Joint Regime Area for Oil and Gas Exploration with Colombia;

* Facilitated the expanded seismic survey of Jamaica’s deep offshore blocks to enable the country to have a better chance of attracting oil exploration companies;

* Implemented Inner-City Schools Training Programme in Energy Conservation and Environment;

* Through a bid process selected a company to convert waste to energy at the two major municipal solid waste sites in Jamaica. Negotiations are at an advanced stage;

* Embarked on the development of a bio fuels programme for Jamaica, including a pilot project for the cultivation of castor beans as a bio fuel source;

* Negotiated several grants from the international community to conduct studies for expanding wind and photovoltaic/solar energy;

* Began the process for the introduction of Natural Gas (LNG) into Jamaica as a fuel diversification strategy. A bid evaluation for Build Own and Operate (BOO) infrastructure is expected to be soon concluded.

Forensic Audit Issues

My response to the forensic audit contains a thorough treatment of all the issues raised in the report. It is expected that this response will be made public, once both the forensic audit and my response are tabled in Parliament.

While there were issues that emerged, which could not have been known by me, without a forensic audit, it should also be noted that neither the PCJ group internal auditor, the PCJ’s external auditors nor the Auditor General, which conducted various audits during the period, discovered these alleged irregularities.

I wish to stress that many of the issues raised in the audit predate my appointment as GMD to the PCJ in January 2006. There were also matters about which the previous PCJ board of directors had already made decisions and commitments. These decisions were made on sound judgement contrary to the audit’s conclusions.

Importantly, I cannot accept responsibility for those decisions or approvals of the PCJ board or those of its subsidiaries when I was not group managing director or a member of those boards.

Conclusion

I have served the PCJ for 22 years in various capacities and I have served the Government of Jamaica for 33 years. I take pride in the fact that neither the forensic audit nor any other audit has found me culpable for any act of alleged dishonesty or irregularity.

The records show that under my management the PCJ has achieved success in several areas, contributing significantly to Jamaica’s development.