Bahamas
ECONOMIC Affairs Minister Michael Halkitis said government is hoping to amend the Public Procurement Act in the upcoming budget period with a view of making it “user friendly” to ensure better compliance and greater transparency of the country’s procurement process.
The law, which was passed under the Minnis administration last year, requires the government to publish details of approved contracts and procurement activities within 60 days of the award of the contract.
However, since assuming office, the Davis administration has yet to comply with the reporting requirements of the law, often facing criticism from the opposition over the issue.
“We’re addressing that,” Mr Halkitis said before going to a Cabinet meeting yesterday.
He reiterated that a lack of standard operating procedures relating to the legislation has affected the government’s ability to comply with the law.
“What has happened is, and I’ll repeat it, it was a major piece of legislation that was put in place without all the foundational pieces in terms of the manual or training, the staffing of the office,” he added.
“If you would recall the law was passed and then it was a long period and then it was brought into effect in September of 2021. We are totally interested in total transparency and being able to provide the public with that sort of information but the government needs to be able to operate.”
The minister continued: “You have to build capacity when you’re making those sort of changes. You just don’t pass a law today and it starts work. It has to be training throughout the ministries and you would know that even the state-owned enterprises of the public corporations – they are covered. The ministries there need to be training straight down the line.
“There need to be manuals and standard operating procedures. You know those things we’re not done and so what we’re doing, as has been said, we’re revisiting the legislation to make sure we can tweak it to make it user friendly for the government, but at the same time, maintaining that transparency and availability of information and so that will come.”
“And you know, we’re striving to have it done during this budget period. Going forward, there will be no question of compliance or non compliance but it’s just a matter of you have this major piece of legislation, transformative piece of legislation put in and none of the foundational pieces … so we just want to assure the public that we’re committed to transparency and we’re making the changes to keep that intact but also government has to be able to operate.”
The passage of the Public Procurement Act was partly a response to long-term criticisms of the country’s procurement processes.
In its 2020 investment climate statement on The Bahamas, the US State Department said this country lacks modern procurement legislation and that companies have complained its tender process for public contracts is inconsistent.
“US firms have identified corruption as an obstacle to FDI (foreign direct investment) and have reported perceived corruption in government procurement and in the FDI approvals process,” the report said.
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Guyana
-says GPL raised no complaints about spares or problems between 2017 and 2020
Former Minister of Public Infrastructure David Patterson is rebutting the recent claims made by the Guyana Power and Light (GPL) that the company contracted to maintain its generators utilised cheap spares.
He insists that purchases by Power Producers and Distribution Inc (PPDI) were original spare parts procured from companies with a reputable quality system.
“All of the entities were listed on the Lloyd’s of London’s approved list of manufacturers,” Patterson stated while arguing that there was never any objections to the proposals submitted by PPDI for works by GPL.
During the years of its management of the electricity generating sets, PPDI under its contractual obligations, was required to submit its annual operations and maintenance plan to be approved by GPL and its directors.
“This plan included among other information, the list of suppliers that PPDI was proposing to obtain spares from and there was never any objection to the parts suppliers by GPL,” Patterson said on Friday as he responded to the utility company’s statement issued on Thursday.
He assured that all of its procurement procedures were in compliance with the National Procurement and Tender Administration Board regulations and every procurement of a spare part was in compliance with the tendering process.
It was also pointed out that the GPL release failed to mention that the company had a representative on the board of PPDI, who at all times was a senior director of the power company.
“As an additional safeguard, GPL always had a representative on PPDI’s tender board…plus it had the extra assurance of being scrutinized by (the) GPL procurement department – to now claim the company departed from these established principles – is nothing more than new GPL’s tangled web.”
And in an additional layer to the oversight of PPDI, in keeping with the policy of inclusivity of the previous administration, a position on the board was reserved for a nominee of the then parliamentary opposition. This offer, Patterson said, they declined to accept from 2017 to 2020
According to the former minister, PPDI, which is a state-owned company, had its procurement manual developed by now Minister within the Ministry of Housing and Water, Susan Rodrigues, under the supervision of chartered accountant Christopher Ram and later approved by the Public Procurement Commission.
GPL on Thursday rejected Patterson’s claim in a Kaieteur News report that PPDI had been up to standard and that the PPP/C government had targeted its managers in August 2020 because their salaries were perceived to be too high.
According to GPL, “earlier this year, PPDI had to cut invoices submitted for replacement parts used since 2018. It turned out that these are some of the off-market spares that failed prematurely that GPL was being asked to pay to replace.”
When it was announced in October, 2018 that PPDI would be taking over the management of Wärtsilä generators from the Finnish manufacturers, concerns were raised as to whether the level of service would be maintained.
According to GPL’s statement, “During the 20 + years that Wärtsilä had the Operation and Maintenance Contract with GEC/GPL, the various power plants maintained an availability above 98%. Their maintenance programme was rigid and utilized only Original Equipment Manufacturer spares. Contrary to what former Minister Patterson asserts, the use of alternate spares came after PPDI was given the contract in 2016 and continued until 2021 when GPL discovered this breach of the Contract. The use of cheaper off the market spares allowed PPDI to realize healthy profits while GPL had to pay for the early replacement of the major components.”
This claim was roundly denied by Patterson who pointed out that during the period 2017 – 2020, there were no records of GPL raising any issues with the performance of PPDI. On the contrary, he said, GPL, was always in high praise of the service provided, “so much so, that by the end of 2020, GPL and PPDI were in discussions on the expansion of maintenance services for other locations (Leguan, Wakenaam, Bartica, Anna Regina, etc.).”
Major challenges
In a report submitted on Friday to the press by Patterson, PPDI said that they faced major challenges when it came to the maintenance of GPL generators. In their annual reports from 2018 to 2019, PPDI listed several of challenges they faced.
In 2018, the company said it was difficult to get the Guyana Power and Light to make capital investments to plants with defects. It stated too that there were alternator failures at the newer Kingston 2 and Vreed-en-Hoop Power Plants.
For 2019, they said it was difficult to access the engines and release them in a timely manner to perform major overhauls at the recommended running time interval. This resulted in an increased wear and tear and thus increased the cost of the maintenance.
Also, during that year the company noted that they started experiencing payment delays from GPL Inc which hampered the timely procurement of spares thus driving up costs.
The former APNU+AFC government Minister stressed that PPDI was only formed after they recognised Wärtsilä’s maintenance performance was not what the utility company was paying for.
“During this review, unmistakable evidence was uncovered which highlighted that based on the company’s structure, GPL was paying above market rates for some spares and all of the maintenance was being conducted by local engineers, while GPL was being billed for overseas personnel and had a deferred maintenance schedule due to the lack of availability of staff,” Patterson highlighted.
In 2019, PPDI rejected claims that it was using Chinese-made spare parts. At the time, it was responding to assertions that were being made via a voice-note that had been circulating on social media.
PPDI said that they wanted to inform all stakeholders that the claim of Chinese-made spare parts being used in the execution of their maintenance activities is “completely false.”
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Jamaica
Work is set to commence on major expansion works at the Spanish Town Hospital early next year.
“I am pleased to advise that the tender for the Spanish Town Hospital will be in the public domain in May 2022. Based on Inter-American Development Bank (IDB) procurement procedures, it is anticipated that we should have engaged a contractor by the end of the calendar year and work should commence early in 2023,” said Minister of Health and Wellness, Dr. the Hon. Christopher Tufton.
He was speaking during his contribution to the 2022/23 Sectoral Debate in the House of Representatives on May 3.
The expansion of the hospital is being facilitated under a US$50-million IDB project.
In November 2021, Dr. Tufton presented the designs for three hospitals and 10 health centres that will be financed under this loan facility.
The investment at Spanish Town Hospital will see the creation of an accident and emergency wing with ambulatory and ambulance bay, triage and consulting rooms; patient wards and, among other things, lounge, and lunch areas; a radiology department pharmacy and outpatient department; a surgical floor and patient wards; a basement area that includes staff parking, and a sky bridge that links the existing administration and dietary blocks.
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Bahamas
A special investigation from the Internal Control and Compliance Division at the Water and Sewerage Corporation has revealed “high-level corrupt transactions” regarding multiple projects and accuses a former executive member of conflict of interest and fraud.
The special investigation is a part of an ongoing probe into the issuance of contracts and management of the corporation under the previous Minnis administration.
It is also a part of a larger audit of services contracts at WSC, from vender engagements in excess of $250,000.
The report, which was completed on March 18, 2022, and viewed by Eyewitness News, identifies two “red-flagged projects” that were of material value and required minister approval, but no such approval existed in the records of the board meetings.
Those projects included the Water Tanks Painting Phase 1 at the Corporation’s Blue Hills Low Level and Windsor Storage Tanks Facilities and the Painting of the E. George Moss Building and Somerset Housing Building on University Drive.
“This special investigation unveiled apparent conflict of interest, lack of due diligence, and poor professional judgment on the part of the former Board and former General Manager Elwood Donaldson in their respective capacities,” the report read.
“In addition, the evidence persuaded the auditors that there were high-level corrupt transactions that caused significant financial losses to the corporation under the direction of the former board and the former general manager, possibly motivated by self-interest, financial gain, or fraud.”
The report documented “significant irregularities” in the project initiation, project management, and payment process.
It further exposed “gross mismanagement in the valuation, supervision and inspection” of projects by the Board of Directors; along with “incompetence” in the procurement of the project costs estimates by the board and general manager.
Additional revelations from the special investigation showed a “violation of trust” by the board and the general manager in allegedly disclosing the competitive tender cost of the lowest bidder to favored vendors believed to be related to the parties.
GOVERNANCE OF BOARD
The report noted that there was a “high risk” that there were offenses contrary to the Prevention of Bribery Act that warrants an investigation into the beneficial owners of the companies of interest and whether the board of directors or general manager gained possession of pecuniary resources inconsistent with the income resources at or around the time of the project approval and throughout the project life.
As for the overall governance of the corporation, the special investigation revealed that board resolutions were inadequate and missing in many instances.
“Board meetings, the quorum for voting, and board meeting attendance records were missing or not kept”.
The report pointed out that Donaldson had previously held the position of Senior Assistant General Manager of Internal Controls and Compliance and would have been fully aware of proper policies and procedures.
“Notwithstanding this knowledge and experience, the General Manager directly instructed acts to be performed that were contrary to the established internal controls safeguards,” it read.
“The audit evidence was sufficiently persuasive to enable the auditors to draw conclusions of fiduciary breached, undue influence adverse to finances to the corporation and gross indifference to conflict of interest and the appearance of profit sharing or even fraud”.
Additionally, the report noted that while references were made to board resolution in secretary certificates, those certificates failed to name the board member that was present when the resolution was passed and failed to attach certificates for the named projects.
“High risk of fraud and high suspicion of fraud in the preparation of the subject secretary certificates arise,” it read.
RECOMMENDATIONS
The report concluded with recommendations for corrective action with the corporation including internal and an external investigation into certain companies.
Its internal recommendations suggested that “Executives and Management make a declaration of any related party transaction based on their role at any given time for works and parent processing approvals”.
The auditors recommended improvements to the internal controls, including ensuring that tax compliance requirements be completely satisfied before any payments are made to vendors.
The report revealed that Adams Landscaping, General Maintenance, and Elite Maintenance received contracts in excess of $100,000 in June 2020 while being a non-VAT Registrant.
The external recommendations included a need for an investigation to be conducted into the vendors Baha Maintenance & Restoration, Adams Landscaping, General Maintenance, Baha Maintenance & Restoration, and Elite Maintenance Incorporated Ltd.
The report also recommended that there be better documentation and filing of Board Minutes as per stipulated guidelines, which could include Water Storage Tank Management Files being created to keep track of maintenance of the equipment, which should become more periodic to prevent corrosion and reduce excessive costs.
Upon coming to office, the Davis administration advised that all government agencies and corporations were undergoing investigations.
Allegations against former WSC Executive Chairman Adrian Gibson suggested that Elite Maintenance Incorporated Ltd — a company purportedly co-owned by his former fiancée — received a series of payments from WSC totaling over $500,000 between November 2018 and January 2021.
In October, Prime Minister Philip Brave Davis indicated there is enough information in the public domain to “warrant an investigation” into contracts issued at corporations.
Water and Sewerage Corporation (WSC) General Manager Elwood Donaldson was been placed on leave amidst ongoing investigations at the corporation in December.
Eyewitness News reported that police officers were on-site to oversee Donaldson’s exit from the property.
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Jamaica
The European Investment Bank (EIB) and the Inter-American Development Bank (IDB) have signed a new agreement enabling them to better support climate resilient projects throughout Latin America and the Caribbean.
They said the Mutual Reliance Agreement will improve project implementation and monitoring, empowering the EIB and the IDB to finance climate-focused investment more efficiently.
The initiative enhances efforts by both banks to harmonise their work on projects and make development resources more effective.
Specifically, the new agreement allows the EIB and the IDB to delegate to each other procurement tasks related to project preparation, implementation, and monitoring. That will improve joint financing arrangements, increase efficiency, and reduce transactional costs for partners in the region.
In practical terms, for each new project that is co-financed, partners will now be able to designate a lead co-financier whose procurement policies will govern the project, with the other co-financier relying on the lead’s work.
The agreement also bolsters the banks’ commitment to streamlining procurement activities for promoters and recipients and enables multilateral development banks (MDBs) to monitor procurement activities more efficiently.
The agreement was signed during a bilateral meeting between EIB President, Werner Hoyer, and IDB President Mauricio Claver-Carone, on the margins of the Spring Meetings of the World Bank Group and the International Monetary Fund here.
It will increase the coherence of co-financed operations and improve the ability of both institutions to identify development priorities and determine in which countries these operations can have the greatest development impact.
“Latin America and the Caribbean have all the right conditions to become a global renewable energy hub. Today, we are marking an important step to unlock investment opportunities in partnership with IDB, focusing on increasing the impact of our joint support for growth, innovation, climate action and resilience,” said Hoyer.
“At the Inter-American Development Bank, over the past two years we have strived to expand our support to the region and improve the way we respond to the needs of our member countries. As a result, we’ve reached unprecedented financing levels.
“ It is critical that we continue to improve how we work with partners to maximise synergies, facilitate co-financing, and streamline processes to ensure our work is as efficient, effective and approachable as possible. This new agreement with the European Investment Bank achieves this very goal, optimising the process for joint financing and enabling our organisations to double down on our work together,” said Claver-Carone.
The EIB-IDB partnership supports projects that promote climate action and attract private investment in Latin America and the Caribbean. The banks co-finance projects across the region, and are also building on their ongoing work to co-finance projects by funding additional sovereign guaranteed operations.
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