Corruption at Operation Pride (1995-97)

Operation Pride began with the laudable objective of making land available on a wide scale to landless people and for resettling squatters in decent housing.

The auditor general’s report of April 10, 1997 revealed the widespread inefficiency, corruption and mismanagement that characterised Operation Pride. The auditor general (AG) accepted that Pride was intended to be a community-led programme, working through provident societies formed at the community level to serve the mission of divesting Government lands to be used for shelter, small farming, light industry and commercial activity.

The provident societies were to “act as their own developers, depositing funds towards their own solutions and requesting advances from the Ministry of Environment and Housing to be repaid from mortgages or future cash payments” (p1, 17 AG Report). They were supposed to be legal entities, properly registered with formal agreements setting out their relationship with government and their beneficiaries.

On examination of the operation, the auditor general found that only eight of 39 provident societies had been registered under the Industrial and Provident Societies Act, as required by law, and there was there any formal agreement as to how the ministry would be repaid the monies advanced on behalf of the Land Development Committees.

It turned out too that contracts were awarded without compliance with standard procedures, that there was no proper documentation of agreements for services to be provided by individuals and contractors; payments were made for work done without the work being certified; huge sums were paid in excess of the contracted amount; and there were wide disparities in the rates paid for site clearance where the work was done in the same kind of circumstances.

Payment Without Contracts

The auditor general found no evidence of signed contracts for infrastructural work on seven sites, totalling $20,662,180.

Payments in Excess of Contract Amounts

Several instances were noted in which the payments for work done far exceeded the value of the agreements seen. However, no new or amended agreements were presented. The following four examples revealed that the total amount seen on agreements totalled $10,182,167.68 but $26,946,274.77 was paid to contractors. See table below.

In the case of the work at Luana, the total contractors’ claims up to the time of this audit amounted to $55,609,603.

Disparity in Rates: On land with similar types of terrain, different rates were paid for site clearance, varying from $6,000 to $53,000 per acre.

The auditor general made recommendations for the proper procedures to be put in place to avoid a recurrence of the corruption, mismanagement and inefficiency of the kind that led to the scandal of $40.5 million being paid for jobs originally costed at a price of $1.1 million.

The Netserv Jamaica Scandal (2001)

On November 23, 2001 a loan was signed between the National Insurance Bank of Jamaica (NIBJ) and Netserv Jamaica for $180 million, to establish two call centres with 288 seats each, with a job creation potential of approximately 2,000. A memorandum of understanding (MoU) between Netserv and the Ministry of Industry, Commerce, and Technology was signed by the company’s chief executive officer, outlining the terms of the loan and a commitment for the provision of 10,000 jobs in three years. There was no signature from the Government on this MoU.

Following a meeting of the Loans Approval Committee of NIBJ, the loan was approved. Despite such approval, minutes of the meeting tell the concerns that plagued the meeting:

• There was no indication of shareholders or shareholdings of the company;

• There was no information of the company’s credit history;

• No potential clients were identified by Netserv in their business plan, which was critical in assessing the overall project.

Despite these concerns, the loan was approved on the bases of certain preconditions which had to be met before the funds were disbursed. The loan, which had a life of eight years and attracted an interest rate of five per cent, was disbursed by the NIBJ without the necessary analysis or assessment of the claims and projections that were made by Netserv.

A total of $202,705,511 was disbursed to the company. Of the 10,000 jobs promised by Netserv in three years, information from NIBJ proved that only 209 jobs were created by December of 2001. The company ended up in receivership and the principal director was nowhere to be found.

The prime minister, Percival Patterson, in a response to the Netserv fiasco, dubbed it simply a case of the minister acting with “youthful exuberance”.

The NSWMA Scandal (2004)

The chairman of the National Solid Waste Management Authority (NSWMA), which is a government agency responsible for collecting garbage throughout the island, subcontracted work in 2004 to a co-operative. He later fired them. In retaliation the subcontractors set the Riverton dump on fire, interrupting the collection of garbage across the entire island for many days. For nearly a week the country was left to inhale the stench of uncollected, rotting garbage.

The actions of the board members of the NSWMA exposed the corrupt nature of agencies under the PNP-led Government. It was revealed that there were many “genetically connected” individuals on the board and in top-level positions in the ruling party. Further investigations into the operations of the NSWMA confirmed that millions of dollars in contractual services were issued to companies that were not fit to conduct government work, as many were not even registered with the National Contracts Commission (NCC) and services were subcontracted to companies without going through the necessary protocol of inviting other companies to bid. One PNP activist, who had received a subcontract from the NSWMA for which he did not have to bid, happily admitted that he was “genetically connected” to the PNP and confessed that he saw nothing wrong with being subcontracted without tendering a bid.

The findings of the contractor general’s report confirmed that the NSWMA board members and management evaded the procurement policies and procedures set by the Government, and breached sections of the FAA Act (1959), the Revised Comprehensive Motor Vehicle Policy for the Public Sector (2003), and the National Solid Waste Management Act (2001).

Sandals Whitehouse Scandal (2005

The Sandals Whitehouse scandal recorded a cost overrun of US$45 million to construct a 400-room hotel. This scandal led to a multi-billion-dollar lawsuit between the Government and two companies owned by Gordon “Butch” Stewart. The companies filed a suit in respect to damages to the Sandals International brand from Government’s failure to deliver a fully functional and completed property when the hotel was opened in February 2005.

Montego Bay Street People Scandal (1999)

A group of more than 30 homeless persons were arbitrarily detained, tied with ropes, and forcibly taken in a government truck from the Montego Bay square to a deserted area 37 kilometeres away. Some of the unwilling detainees were pepper sprayed in order to subdue the lot. The incident was later brought to the attention of the prime minster who, after public pressure, convened an inquiry. As is the trend with the PNP Government and assaults brought against them, the appointed commissioners found no one responsible for such a heinous, calculated act by the State.

Trafigura Scandal (2006)

In September 2006 Prime Minister Simpson Miller announced that the party was broke and needed help to finance the party’s annual conference.

Having made this plea, it was later revealed that the PNP had in fact received over 460,000 euros, equivalent to over $37 million, from Trafigura, a Dutch oil company that the Government does business with, to help in financing the party conference.

On October 3, 2006, Opposition Leader Bruce Golding accused the People’s National Party of using State money to fund its 68th annual conference. According to Mr Golding, the PNP had diverted funds amounting to $37 million from the Nigerian oil deal to fund its party conference, which was held in September 2006. Showing evidence of such a transaction, Golding explained that a donation was made to an account called the CCOC Association, of which the minister of information, Colin Campbell, was one of the signatories. He added that two cheques totalling $30 million were made to SW Services. A third cheque, totalling $465,000, was drawn from the account of CCOC. These cheques were deposited by Trafigura Beheer, which was engaged to carry out the lifting and trading of oil from Nigeria on Jamaica’s behalf. Denying these allegations, the PNP responded that the money from the Dutch benefactor was a donation to the party. However, this claim was denied by Trafigura’s management when they were contacted and questioned about the donation. Responding through its office based in the United Kingdom, the company stated that as a part of the development of its business in Jamaica, it has a “commercial agreement with CCOC Associates and payments were made under that agreement”.

Two weeks after this announcement Campbell resigned and the money was returned to the company.

Cuban Light Bulb Scandal (2007)

In October of 2007, the newly appointed Minister of Energy, Mining and Telecommunications Clive Mullings made accusations of corruption and fraud on a project involving the Cuban Government’s supply four million bulbs to replace incandescent bulbs in households with the more efficient, compact fluorescent bulbs.

The project had accrued a bill of more than $276.5 million in the distribution of free Cuban light bulbs.

A 124-page report of an investigation by the contractor general found evidence of breaches of the Government Procurement Procedures Handbook, the Contractor General Act, the Financial Administration and Audit Act, and the Public Bodies Management and Accountability Act.

The investigation found that the contractors appointed to distribute the free light bulbs were companies that were formed less than one month prior to their contract. In addition, the Office of the Contractor General was not informed of the appointment of these companies, nor was there a formal bid for the project. The report concluded that there was corruption or a criminal conspiracy in the Cuban light bulb affair.

— Edward Seaga is a former prime minister of Jamaica and currently distinguished fellow, The University of the West Indies, as well as chancellor, University of Technology, Jamaica.