SERIOUS questions are being asked about the failure of Trinidad and Tobago Electricity Commission (T&TEC) to award an insurance brokerage contract, after an aborted first tender left the Commission scrambling for emergency cover nine days before its insurance portfolio was due to expire last June 30.

With the clock ticking down on T&TEC's US$358 million bundle of transmission and distribution assets needing to be insured, the Commission, on June 29, decided to issue a three-month contract to Comprehensive Insurance Brokers Ltd (CIBL), a firm in which Neil Gosine has a controlling interest.

Gosine, managing director of CIBL, who enjoys close ties with the People's Partnership administration, is also board chairman of National Petroleum Company (NP).

In moves that have raised eyebrows and tensions in the brokerage industry, T&TEC scuttled the original Tender No. 9183 based on a controversial claim that the procurement process had been flawed. The utility then took the highly unusual step of placing the lucrative brokerage business, for a three-month term, with a company that had failed to prequalify to bid.

Sunday Express investigations reveal that, for a shocking four or five days in the first week of July, T&TEC had only limited insurance cover for its US$358 million worth of power transmission and distribution equipment.

T&TEC's general manager Kelvin Ramsook, who decided to abort Tender No. 9183 and solicit bids just nine days before the Commission ran out of time, admitted that T&TEC went for several days with only limited insurance cover.

He, however, defended leaving the state power utility with only 30 per cent insurance cover for a critical number of days. In an interview, he insisted that the rushed selection of Comprehensive as the utility's insurance broker had nothing to do with Gosine's beneficial interest in the company nor his connections to the ruling administration. Ramsook said politics played no role in the decision to scrap the tender process and invite fresh bids, scant days before the June 30 expiry date.

Comprehensive was unable to immediately provide more than limited insurance cover, he said, because the work week ended on Friday, June 29, the same day the Gosine brokerage firm received the short-term contract on a price-only basis. The race against the clock and weekend's arrival provided another challenge to the process, he said. T&TEC's new broker, he added, needed a few days to finalise placement of the London-based policies. It was in this in-between period that the Commission was exposed to less than full coverage.

According to Ramsook, the problem originated with the bid evaluation committee. This body, he said, had usurped his oversight authority at the prequalification stage and, without his knowledge or approval, had eliminated candidates.

At this decision-making stage in the T&TEC bid evaluation process, however, things got somewhat electrifying. Ramsook claims that, as general manager, and under the Commission's general procurement policy, he was authorised to veto any determination of the evaluation team.

He identified three "fundamental" breaches in the process of Tender No. 9183:

1.  The four-member evaluation team eliminated and informed the unsuccessful candidates at the prequalification stage, and not at the end of the bid process;

2.  He had no overview of the prequalification process; and

3.  Notification to the failed candidates was made by the assistant general manager, finance Colleen Licorish and not, as stipulated in T&TEC's general procurement rules, by the supplies manager, Curvis Francois.

 

Ramsook described the Licorish-chaired evaluation committee as "judge, jury and executioner." He said the process, which knocked out five of the eight bidders, including Comprehensive, in the prequalification round, could have worked, had he been kept in the loop.

The Licorish evaluation team used exactly the same two-phase bid system provided in T&TEC's general procurement rules. The team also followed the insurance tender evaluation process, which had been employed in the last four insurance tenders. Nevertheless, Ramsook and internal audit manager Ainsley Stewart condemned the Licorish team's process as "flawed".

The bid assessment process and May 1 recommendation favouring incumbent provider, Risk Research Ltd (RRL), sparked a wave of oversight by Ramsook. The general manager took issue with, among other things, the finance manager's appointment as chair of the evaluation committee. This, however, had been the long-standing custom and practice at T&TEC, preceding the term of the current finance manager.

On May 17, Ramsook, general manager since November 2011, solicited an opinion from his audit manager on the reported breaches in Tender No. 9183. The process has three levels of oversight, specifically, the general manager; the tenders and contracts committee of the board; and the T&TEC board itself, chaired by Sushilla Ramkissoon-Mark.

Stewart dismissed several of the concerns flagged by the general manager but supported his contention that the process was flawed.  He found that "the irrevocable decision" taken by the assistant general manager, finance, to officially inform the unsuccessful bidders amounted to "a fundamental flaw in the process", and precluded "independent oversight" of the prequalification exercise.

He concluded: "The absence of an independent assessment of the decision to eliminate the unsuccessful tenders has compromised the process." Stewart also recommended that T&TEC scrap the tender.

He submitted a four-page review of the tender process to Ramsook on May 27. Stewart's finding, however, flies in the face of established tender procedures for the utility's insurance business. His finding also contradicts the tender process schedule for Tender No. 9183, which has clear timelines, and which was approved by the board's tender and contracts committee, and by Ramsook himself.

The bid document, which clearly outlines a prequalification process, required that, on Thursday March 22, 2012, the Commission would issue "notification of outcome of Phase 1 of Tender Process and issue letters of thanks to unsuccessful candidates." The tender document also does not identify who should do the informing.

Despite this, Ramsook on June 1 scrapped the four-member evaluation team comprising Licorish, assistant area manager Alvin Ramsaran, risk and insurance officer Curtis Rahim and risk and insurance administrator Ronald de Silva.

On June 6, the existing provider, RRL was asked to provide quotations for a three-month extension on all of T&TEC's policies due to expire at the end of that month. RRL's managing director, Gregory de Montrichard, reported meeting with Ramsook at T&TEC's Mt Hope office on June 11 to talk about the financial drawbacks to either a three-month or a six-month insurance placement at the start of the hurricane season.

Ramsook told the Sunday Express that he found RRL's price of $5.7 million for a three-month cover uneconomical. On June 22, the Commission asked the eight brokerage houses that had submitted bids on the aborted Tender No. 9183 for quotations on the placement of the utility's insurance business for both a three-month and one-year period.

He also appointed a new three-member team with no experience in insurance evaluations. This team comprised the assistant general manager, human resources Jacqueline Cheesman; acting assistant general manger, distribution, Rene Austin; and supplies manager, Curvis Francois.

Bid packages were collected by all the companies at noon on Monday, June 25. All except RRL returned for a 2 pm question-and-answer briefing at T&TEC. They were issued with a 3 pm Wednesday, June 27 deadline for the submission of bids. Five made the issued deadline. Two companies, the holding broker RRL and Comprehensive, were shortlisted.

The Cheesman Committee, which had no clear scoring criteria, found some technical competence and financial issues with the Comprehensive bid but, on the basis of price, still selected it as the preferred candidate. The committee noted there was no indication that "machinery breakdown", a critical component in the Property All Risks policy, was covered. Comprehensive was subsequently allowed to extend its cover and premium to include machinery breakdown.

On the Public Liability policy, the committee noted that the reinsured address was the same as Trinre's on Edward Street in Port of Spain, but that the insurer was identified as Lloyds Underwriters via Northern Atlantic Insurance and Finance Co (NATIC), agents for Maritime General Insurance.

Until recently, Neil Gosine's wife, Sharon, was the sole shareholder of NATIC, which is a connected company to CIBL, sharing the same 103 St Vincent Street, Port of Spain, trading address, and run by Vaughn Gosine, brother of Neil.

NATIC's role as an agent for Maritime General Insurance has added another layer of confusion to the controversial brokerage contract, which was extended for another three months on September 19. This was 11 days before the end of the current contract, and after a preferred candidate had been selected by the Cheesman Committee in T&TEC's second attempt to award a contract.

NATIC lent its stamp and signature as an agent of Maritime on eight of the 15 broker slips contained in CIBL's quotation document. Signed and stamped broker slips by the lead insurer were a requirement of T&TEC's Request for Quotations. In the contract under scrutiny, Maritime signed on for eight placements.

After Comprehensive landed the T&TEC account, however, Maritime failed to take up the placements it undertook— via NATIC—to write, save for one policy and small portions on two others. On Friday, Maritime's chairman and CEO, John Smith said that the company's legal counsel had advised they say nothing on the matter until all the facts are available.

Smith refused comment on whether Maritime had knowledge of the insurance risks it undertook to write via its binding agreement with agent NATIC. Nor did he comment on why Maritime told RRL it was "unable to write" on the "workmen's compensation/employer's liability" policy, yet signed on to take the business (via NATIC) on the CIBL placement, in contravention of the laid-down practice for insurers not to favour any one broker.

Maritime was replaced on all three of those policies after Comprehensive snagged the T&TEC account by other insurers. Vaughn Gosine said NATIC had the requisite approvals from Maritime to go ahead with the eight placements quoted in the CIBL document. He was unable to say why Maritime failed to follow through.

His brother, Neil Gosine, denied that he won the T&TEC insurance account with political help. In a short telephone interview, Gosine said Maritime did come on the policy but gave way to other insurers after Comprehensive won the contract.

T&TEC chairman Ramkissoon-Mark, the wife of House Speaker Wade Mark, said only that were a "number of irregularities" with the tender process. Chairman of the board's tenders and contracts committee, Jairama Chadeesingh, said he was not prepared to discuss the matter with the press.

Public Utilities Minister Nizam Baksh said he had been briefed on the issue by Ramsook early last week. The minister said he would not tolerate any wrongdoing on his watch, and confirmed information received by this newspaper that a decision has been taken to scuttle the second tender process after Agostini Insurance Brokers Ltd had been selected as the preferred bidder.

The Sunday Express understands that the utility is now considering engagement of a consulting firm to manage what looks to be a third insurance tender attempt. Ramsook said the utility saved $3 million plus by going with the TT$2.8 million Comprehensive bid.

He was, however, silent on the one-year placement quotation, which put RRL ahead of Comprehensive. RRL's one-year bid was $601,191 cheaper than Comprehensive's.

"The GM has to be involved in the process," he told the Sunday Express. "I didn't get a say in the first stage. They came to me at the end of the process with a recommendation."

The brokerage firms that submitted bids on T&TEC's aborted Tender No.9183   Agostini Insurance Brokers Ltd Sterling Insurance Services Ltd Insurance Brokers West Indies Ltd (IBWIL) Risk Management Services Ltd Risk Research Ltd 21st Century Insurance and Reinsurance Brokers Ltd Comprehensive Insurance Brokers Ltd Farah Insurance Brokers Ltd/Trinidad Import Export Ltd   The three companies that made the prequalification cut   Risk Research Ltd Risk Management Services Ltd IBWIL   Only four companies bid on the second Tender No. 9289 They are: IBWIL Comprehensive Insurance Brokers Ltd 21st Century Insurance and Reinsurance Brokers Ltd Agostini Insurance Brokers Ltd (selected as the preferred candidate)