Saturday, January 20, 2018

12 years of Embd shame


Mark Fraser

After 12 years the Estate Management and Business Development Company (Embd) is a billion-dollar story of the worst form of governance, unanswered questions, and untouchables. Today, the Government seeks a fast-tracked, quick-spend, $5 billion loan from China for industrial estate development. The Keith Rowley-led slate for the current PNM internal elections is revealing a development agenda built upon Dr Rowley’s 2012 address to the party’s convention. Whatever the plan, our national development is beset by a series of problems, including governance worries demonstrated by the Embd’s 12 years of shame. There is no good government without good governance.

From its formation in 2002 the Embd was controversial. In theory, it was expected to monetise Caroni (1975) Ltd’s land assets, and create and manage various agricultural and industrial estates for the State. It was one of a handful of special-purpose State-owned enterprises led by an executive chairman and ad-libbed its way to a big-spending position. The Embd has changed several line ministers, four chairmen, more than 30 board members, and four chief executives. It has made several trips to the Public Accounts (Enterprises) Committee (PAEC) of Parliament, straddling two different governments. In that time, nobody seemed capable of shaking answers out of the Embd.

In December 2013, after three public hearings spanning nine months, the PAEC released its report on the Embd’s Financial Statements for the years ended September 30, 2007, 2008, and 2009. Various debt write-offs were part of a series of governance issues at the Embd for which there is still no accountability. Before that, in 2007, the PAEC considered a range of still-unproven allegations, including breaches of company and Government policy, financial improprieties and irregularities and a high level of employee attrition. That PAEC led then by current Speaker of the House Wade Mark never tendered a report on the Embd. Shocking allegations and audit findings died. 

The PAEC’s 2011/2012 examination did not extend into the Partnership Government’s tenure. It was an exercise in futility. None of the four board members attending the three hearings were on the Embd’s board during the period under examination. The CEO who attended the three hearings was appointed with the change in government and could not be held accountable for the period under examination. And, by the time the PAEC report was released in December 2013, the Embd’s CEO and every board member participating in the PAEC’s examination had been removed from office along with all the other board members. 

The PAEC’s findings on the Embd for the period under examination tells the usual tale of the country’s special purpose State-owned enterprises: an unauthorised investment of $50 million in CLICO; bad debts being written off; lack of documentation for critical transactions and operations; work being performed without contracts or transparency. 

Billions entered the Embd’s front door, went out the back door, and left no record of their journey. And before it could go and find out what happened, at the end of the PAEC examination the Partnership-appointed board and its handpicked CEO were quietly removed. When a future PAEC examines the period from 2009, no man would be in sight. 

With the change in the Embd board and the lack of continued interest in the Embd, many questions remain unanswered. At its first meeting in April 2011 with the PAEC, the Embd’s chairman at the time advised that in light of the issues coming to the board’s attention and the board’s concern, the Embd would likely engage forensic audit resources, “to get through these things”. This comment was made in the context of a $50 million annuity arrangement between the Embd and CLICO. Was this forensic audit commissioned and were the monies placed with CLICO returned to the State? We may never know.

At its second meeting in May 2011 the Embd’s then deputy chairman highlighted the company’s lack of documentation, in the lucrative sandpit operations in particular, Caroni (1975) Ltd’s sandpits having been handed to the Embd by a 2003 Cabinet decision. The PAEC heard that the Embd had no checks and balances at the sandpits and no way of knowing how much sand was extracted from the pits. It may not have mattered: the Embd referred to fixed-term contracts that may have given the sandpit operators the licence to extract sand without reference to quantities.  What is the status of these lucrative sandpits? Are the original handpicked operators still at the sandpits? Have the contractual arrangements changed to provide maximum value to the State? Are there appropriate checks and balances in place? Is anything likely to be done regarding those previous arrangements?

When it comes to State-owned enterprises, the People’s Partnership and PNM should have had a clear idea of what not to do. But this is the bane of partisan politics, our State-owned enterprises and our oversight arrangements. Within the term of a government most allegations of impropriety are likely dealt with quietly through terminations and change of directors. The public is unaware of extensive changes to boards made by the Partnership over almost four years. With a change in government, only allegations of impropriety under a previous government are of interest to a current government. And, whatever is of interest to a current government is a matter of political choice. 

In the fragmented oversight arrangements lots of issues fall through the cracks and for those that land in the hands of the PAEC for example, those who are accountable are rarely before the Committee. Even if they are, they cannot be sanctioned by the Committee. No country can sustain this level of slackness, disinterest, and lack of consequences. No political party can escape complicity. We cannot talk about more billions for national development without considering the Embd’s 12 years of shame and a plan for dealing with that. (For Lincoln Myers) 

• Clarence Rambharat is a lawyer and a university lecturer