Permanent secretary sets out details of Ocho Rios land acquisitionThursday, July 16, 2020
BY ALPHEA SAUNDERS
PERMANENT secretary in the Ministry of Economic Growth and Job Creation Audrey Sewell has raised questions about findings in the contractor general's report on the Government's sale of prime St Ann beachfront properties in 2016 to Puerto Caribe Properties Limited (PCPL), which claimed that Prime Minister Andrew Holness had given the go-ahead for the deal prior to a non-objection request from the Urban Development Corporation (UDC).
At a meeting of the Public Administration and Appropriations Committee (PAAC) yesterday, where the UDC outlined the details of the failed deal, Sewell said the then acting general manager Donald Hamilton may have misled the UDC board. She argued that the prime minister could not have given approval for a transaction about which he had no details at the time.
PCPL backed out of the multibillion-dollar deal in March this year, approximately a month before it would have had to start development, or return the lands and related properties to the UDC, as per the conditions of the sale. The company cited adverse publicity surrounding the agreement.
Sewell said, given the rigid mechanisms that are in place for land divestment, there would have been no avenue for prime ministerial approval without due process.
North West Manchester MP Mikael Phillips pointed to the contractor general report, which went to Parliament in May last year, which stated that the proposed sale of the Ocho Rios Rooms Hotel, and Beach Property to PCPL was discussed at the UDC's 488th meeting of the board of directors held on October 13, 2016. According to the report, “the minutes of the meeting states that Mr Donald Hamilton, the then acting general manager, in his presentation to the board indicated instructively and importantly that, '...both the Hon Prime Minister and Minister Vaz have agreed to the sale at the amount indicated as well as their payment schedule if an agreement can be reached by the end of the month'.”
“I would find that procedure very strange because there is a formal procedure to get the prime minister's no objection. I don't know how he could have communicated verbally to say go ahead because the procedure is that when the board takes the decision it comes written to the ministry, so to say a decision was taken based on some verbal [communication] I don't know if it [the statement in the report] represents the facts. I think the board was misled; that is not the procedure to communicate a ministerial approval. It's unusual for somebody to go and tell a board that the minister approved something when it has not been placed before the minister. It is highly unusual,” the chief accounting officer stated.
According to the UDC, it was after the October 13 board meeting that the non-objection request was prepared on October 19 and granted, followed by a Cabinet submission on October 31. The deal was inked in November 2016 for 2.88 hectares (7.12 acres) of waterfront land at Ocho Rios bay beach to be transferred to the company, which is headquartered in Mexico. The project was supposed to include a five-star hotel generating US$30.2 million in tax revenue over three years.
Yesterday, General Manager Heather Pinnock explained that only 50 per cent of the $7.2 million paid to the UDC for the lands remained in an investment fund, and that the UDC had already prepared and submitted its budget for the current fiscal year when PCPL indicated that it was reneging on the arrangement. As a result, the close to $1 billion now due to PCPL for the return of the lands was not included in the corporation's financial projections, and the fate of some $500 million worth of planned development projects in Ocho Rios is now affected.
Opposition members of the committee also called attention to the US$200,000 which was tacked on in the final agreement with PCPL for the acquisition of a public beach, a price which was agreed to, in spite of the US$3.5 million the property was valued at. The UDC ended up selling PCPL seven parcels of land along with the beach for $5.6 million less than the total US$12.8 valuation of the package of properties. The beach price went as a second submission to Cabinet, after an omission of those details by the UDC.
“It is not as if you were even [giving up] 50 per cent of the cost; you gave a discount of 95 per cent of the valuation cost. I have no issue if you give a discount because of the investment [but] how could the board at the time agree on a sale price of US$200,000 with a valuation price of US$3.5 million? In many instances you hear Jamaicans speak about access to the beach and to basically give away a beach at that price with no benefit to the Jamaican people is something that is questionable,” Phillips stated.
“All sorts of things are being bandied about, about what the prime minister knew and what he did not know. I cannot state as a fact that he did not know; what I can state is that my responsibility is to put the facts before him, as given by the UDC, coming out of the board deliberations, and whatever we got from UDC went to the Cabinet through the prime minister,” Sewell stated, when asked whether the prime minister was aware that the Cabinet submission included just US$200,000 for the beach itself, or a US$3.3-million discount.
“We worked based on what was present by the UDC through its executive management. We did ask questions and we were given information in terms of the investment, that initially it [the beach] should have been part of what was sent [to the ministry],” the permanent secretary explained.
Meanwhile, Sewell was adamant that the ministry followed land divestment procedure in the PCPL deal. “The ministry's responsibility, when any matter comes to us, is to ensure that the process is followed based on the policy. We are satisfied that the processes were adhered to... outside of the written procedure, these are not things that the ministry could have control over... for example, the role of Minister Vaz. Minister Vaz was responsible for investment; if he had meetings with UDC to discuss this proposed investment I would not have seen it as anything untoward,” she stated.