minutes of the honourable jamaica house of … of representative.pdfhon. daryl wesley phillip vaz,...

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MINUTES

OF THE

HONOURABLE JAMAICA HOUSE

OF REPRESENTATIVES

At a meeting of the Members of the House of Representatives held pursuant to adjournment at Gordon House in the City and Parish of Kingston on Tuesday, the

14TH DAY OF JUNE, 2011 The House met at 2:27 p.m. PRAYERS Prayer was offered by the Reverend Ronald Thwaites. CALL OF THE ROLL

PRESENT WERE:

Hon. Delroy Hawmin Chuck, M.P., Speaker

Mrs. Marisa Colleen Dalrymple-Philibert, M.P., Deputy Speaker Hon. Andrew Holness, M.P., Minister of Education and Leader of the House

Hon. Audley Fitz Albert Shaw, M.P., Minister of Finance & the Public Service Hon. Pearnel Patroe Charles, M.P., CD, Minister of Labour & Social Security Hon. Rudyard Conrad Spencer, M.P., OD, Minister of Health Hon. Lester Michael Henry, M.P., CD, Minister of Transport & Works

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Hon. Daryl Wesley Phillip Vaz, M.P., Minister without Portfolio in the Office of the Prime Minister with responsibility for Information and Communication Hon. Shahine Elizabeth Robinson, M.P., Minister of State in the Office of the Prime Minister

Hon. William James Charles Hutchinson, M.P., Minister of State in the Ministry of Agriculture and Fisheries

Mr. Noel George Delano Arscott, M.P., Clarendon, South Western Mr. Luther Bartley Monteith Buchanan, M.P., Westmoreland, Eastern Mr. Peter Murcott Bunting, M.P., Manchester, Central Mr. Roger Harold Clifford Clarke, M.P., Westmoreland, Central Dr. Omar Lloyd Davies, M.P., St. Andrew, Southern Mr. Colin Alfred Alexander Fagan, M.P., St. Catherine, South Eastern Dr. Fenton Rudyard Ferguson, M.P., St. Thomas, Eastern Dr. Morais Valentine Guy, M.P., St. Mary, Central Ms. Lisa Rene Shanti Hanna, M.P., St. Ann, South Eastern Dr. Esmond Vernal Patrick Harris, M.P., Trelawny, Northern Mr. Ian Dave Hayles, M.P., Hanover, Western Mrs. Maxine Antoinette Henry-Wilson, M.P., St. Andrew, South Eastern Mr. Joseph Uriah Hibbert, M.P., St. Andrew, East Rural Mr. George Anthony Hylton, M.P., St. Andrew, Western

Mr. Fitz Arthur Jackson, M.P., St. Catherine, Southern

Mr. Derrick Flavius Kellier, M.P. CD, St. James, Southern Mr. Clive Arthur Mullings, M.P., St. James, West Central Mrs. Natalie Gaye Neita-Headley, M.P., St. Catherine, East Central

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Mr. Phillip Feanny Paulwell, M.P., Kingston Eastern & Port Royal Mr. Dean Alexander Peart, M.P. CD, Manchester, North Western Mr. Michael Anthony Peart, M.P., Manchester, Southern Mr. Tarn Andrew Peralto, M.P., St. Mary, South Eastern Dr. Peter David Phillips, M.P., St. Andrew, East Central Mr. Robert Dixon Pickersgill, M.P., St. Catherine, North Western Dr. Donald Gladstone St. Clair Rhodd, M.P., Portland, Eastern The Most Hon. Portia Lucretia Simpson Miller, ON, M.P., St. Andrew, South Western Mr. Derrick Charles Smith, M.P., St. Andrew, North Western Mr. Kern O’Mar Spencer, M.P., St. Elizabeth, North Eastern Rev. Ronald George Thwaites, M.P., Kingston, Central Mr. Clifford Everald Errol Warmington, M.P., St. Catherine, South Western Mr. Franklin Robert Witter, M.P., St. Elizabeth, South Eastern

ANNOUNCEMENTS

The Clerk laid on the Table of the House, a copy of the following:

Ministry Paper No. 40/11 Ratification of the Optional Protocol on Sale

of Children, Child Prostitution and Child Pornography (Ministry of Health)

Ministry Paper No. 41/11

Sugar Industry Authority (SIA) Annual Report and Audited Financial Statements

for the year ended October 31, 2009 (Ministry of Agriculture & Fisheries)

Ministry Paper No. 42/11

and Report of the Commission of Enquiry into the

Extradition Request for Christopher Coke (Office of the Cabinet)

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Annual Report of the Committee to Examine and Recommend for Approval Proposed Estimates for Constituency Projects

submitted to the Constituency Development Fund (CDF) by respective Members of Parliament

2010 – 2011 (Houses of Parliament)

Auditor General’s Department

Performance Audit Report of the Ministry of Labour and Social Security

Strategy in Preventing, Detecting and Investigating Benefit Fraud (Auditor General’s Department)

The Anti-Dumping and Subsidies Commission

Annual Report and Financial Statements for the Financial Year 2007/2008

(Ministry of Industry, Investment & Commerce (MIIC)

Jamaica Intellectual Property Office (JIPO)

Annual Reports and Audited Financial Statements for the years 2005/2006 and 2006/2007 (Ministry of Industry, Investment & Commerce (MIIC)

Passport, Immigration and Citizenship Agency (PICA)

Annual Report and Audited Financial Statements for the period June 2007 to March 2008

(Ministry of National Security)

Devon House Development Limited Annual Report and Audited Financial Statements for the Financial Year April 2005 to March 2006

(Ministry of Tourism)

Certified Appropriation Accounts

Head Ministry/Department Financial Year 0100 His Excellency Governor-General 2009/2010 0200 Houses of Parliament 2009/2010 0300 Office of the Parliamentary Ombudsman 2009/2010 0400 Office of the Contractor General 2009/2010 0600 Office of the Services Commissions 2009/2010 2015 Inland Revenue Department 2009/2010

(Auditor General’s Department)

(The Prime Minister, the Honourable Orette Bruce Golding, entered and took his seat). (The Minister of Water and Housing, the Honourable Dr. Horace Chang, entered and took his seat).

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(Dr. Donald Duncan, M.P., Hanover, Eastern entered and took his seat).

REPORTS FROM COMMITTEES Mr. Clifford Warmington laid on the Table of the House a copy of the Report of the Committee to examine and recommend for approval proposed estimates for constituency projects by respective members of Parliament: Members of this Honourable House are reminded that on May 21, 2008, the House of Representatives, on a motion moved by the Acting Leader of the House and Minister of State in the Minister of Labour and Social Security passed the following resolution: BE IT RESOLVED that this Honourable House appoint a Joint Select Committee comprising of the following Members:

Hon. Audley Shaw - Chairman Hon. Horace Chang Hon. Olivia Grange Hon. Shahine Robinson Hon. Laurence Broderick Mr. Michael Peart Mrs. Maxine Henry-Wilson Mr. Derrick Kellier Mr. Fitz Jackson

to examine and recommend for approval, proposed estimates for constituency projects submitted to the Constituency Development Fund (CDF) by respective Members of Parliament. On the 3rd day of June, 2008, on a motion moved by the Acting Leader of the House, the House passed a further resolution deleting the names “Michael Peart and Fitz Jackson” and substituting therefor the names “Dean Peart and Noel Arscott”. On the 14th day of October, 2008, on a motion moved by the Acting Leader of the House, the House passed a further resolution deleting the names “Audley Shaw, Laurence Broderick, Olivia Grange, Horace Chang, Dean Peart and Maxine Henry-Wilson” and substituting therefor the names “Clifford Everald Warmington (Chairman), William J. C. Hutchinson, Andrew Gallimore, St. Aubyn Bartlett, Natalie Neita-Headley and Colin Fagan” Members are further reminded that, by virtue of resolutions approved by this Honourable House on March 31, 2009, March 27, 2010 and on April 5, 2011, the composition of the Committee, as set out above, was made to continue in force for the 2010/2011 session of Parliament and the Committee empowered to proceed with matters that were before it from the stage reached at prorogation.

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(i) Overview of the Constituency Development Fund The concept of the Constituency Fund (CDF) was developed in the context of the need for improved governance and greater effectiveness of the people’s representatives in responding to the development needs of the constituents. The main thrust of the CDF is to:

Promote Human and Infrastructure Development at the community and constituency levels

Catalyze economic activities at the constituency level Foster local governance including good environmental stewardship Improve service delivery Bring governance and the people closer together Increase the response capacity of the elected representatives Promote participation at the community level

The CDF programme is in its third year of implementation. Each Member of Parliament in collaboration with the relevant agencies, local/community based organizations and Non-governmental Organizations would have designed a Five Year Development Plan at the inception of the programme. The Five Year Development Plan for each constituency would have outlined a menu of programmes and projects to be undertaken on a yearly basis. (ii) The CDF Committee’s Deliberations and Decisions Your Committee began its meetings for the 2010/2011 Parliamentary Session on June 29, 2010 and held a total of twenty (20) meetings to review and approve the project proposals that were submitted to the Committee, for implementation in the 60 constituencies. (Appendix I) Each Member of Parliament was allocated $20.0 million to execute the projects in his or her constituency for the 2010/2011 Parliamentary Year. Each project proposal was reviewed by the officers at the Constituency Development Fund Project Management Unit (CDF PMU) before being sent to your Committee for further review and approval. Your Committee meticulously reviewed the project documents and where necessary, sought clarity from the technical officers from the CDF Project Management Unit. In some instances, projects were not approved when they were presented to the Committee because they did not meet the criteria set out in the CDF guidelines and had to be returned to the CDF PMU for modifications. Your Committee in its deliberations recommends that all CDF funds should be deposited in a special CDF account by the implementing agencies instead of having the funds co-mingled with other funds held by the particular agency. This, the Committee felt would augur well for accounting of CDF funds within the agencies. Your Committee also recommends that at the onset of the Financial Years’ activities, all Members should be notified in writing of the timeline to submit their projects and closer to the end of the year’s activities it could be highlighted at the Committee’s level and in writing to ensure that Members of Parliament are aware of the timeline. Your Committee also suggests that reports, at intervals, could be done to highlight those Members who are tardy.

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In light of the fact that some project documents were not prepared properly, we recommend that in the new Financial Year there should be a seminar with all the Members of Parliament to take them through the process of preparing project documents for submission to the CDF PMU. Your Committee approved project proposals totaling $1,045,341,349.19, 87.11% of the $1,200,000,000.00 allocated to support all CDF projects for the 2010/11 Financial Year. Each Member of Parliament was allocated $20,000,000.00, however, the amount disbursed for constituencies ranged for a high of 107.4% to a low of 55.03% of the funds designated for use by the constituency (Appendix II). The projects approved represent those submitted by Members of Parliament that satisfied the criteria that were set out for the disbursement of funds by the CDF Unit. Your Committee found that in respect of the fund disbursed, 40.8% was used for human and social development, 6.7% for economic enablement, 3.8% for disaster mitigation, 36.7% for physical development, 0.9% for Labour Day projects, 5.7% for social housing and 5.8% for emergency and welfare. (iii) Acknowledgements Your Committee wishes to express its sincere appreciation to everyone who made the meetings possible. Special thanks to the staff of the CDF Project Management Unit, for preparing the project documents for review by the Committee and to the technical officers, in particular, Ms. Moveta Munroe and Mrs. Pauline Scott-Blair for availing themselves for meetings. To the Clerk to the Houses and her staff, a special thanks for the support and kind courtesies that were extended during the Committee’s deliberations.

APPENDIX I

ATTENDANCE

(20 meetings)

Present Absent Apology

Mr. Clifford Everald Warmington, M.P. – Chairman 19 1 1

**Hon. Shahine Robinson, M.P. 10 1 - Hon. Neville Gallimore, M.P. 20 - - Hon. William J. C. Hutchinson, M.P. 17 3 2 Dr. St. Aubyn Bartlett , M.P. 16 4 0 Mr. Noel Arscott, M.P. 16 4 3 Mr. Derrick Kellier, M.P. 16 4 1 Mr. Colin Fagan, M.P. 11 9 2 Mrs. Natalie Neita-Headley, M.P. 13 7 3

** Member could only have attended 11 meetings

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APPENDIX II FUNDS APPROVED BY THE CDF COMMITTEE AND DISBURSED TO MEMBERS OF PARLIAMENT – 2009/10

CONSTITUENCIES NAMES OF MEMBER OF

PARLIAMENT PROJECT DESCRIPTION FUNDS APPROVED & DISBURSED

($) 1. Kingston Central Rev. Ronald Thwaites Human and Social Development

Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

10,760,515.00 - - 3,000,000.00 150,000.00 1,000,000.00 1,000,000.00 15,910,515.00 (79.55%)

2. Kingston Eastern & Port Royal

Mr. Phillip Paulwell Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

13,232,633.80 - 1,350,000.00 2,904,618.50 150,000.00 1,000,000.00 960,000.00 19,597,252.30 (97.99%)

3. Kingston Western Hon. Bruce Golding Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

14,500,000.00 - - 3,500,000.00 150,000.00 1,000,000.00 1,000,000.00 20,150,000.00 (100.08%)

4. St. Andrew East Central Dr. Peter Phillips Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

5,750,000.00 - - 5,000,000.00 150,000.00 1,000,000.00 1,000,000.00 12,900,000.00 (64.5%)

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APPENDIX II CONT’D

FUNDS APPROVED BY THE CDF COMMITTEE AND DISBURSED TO MEMBERS OF PARLIAMENT – 2009/10

CONSTITUENCIES NAMES OF MEMBER OF PARLIAMENT

PROJECT DESCRIPTION FUNDS APPROVED & DISBURSED ($)

5. St. Andrew East Rural Mr. Joseph Hibbert Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

8,350,500.00 1,550,000.00 1,000,000.00 2,000,000.00 150,000.00 1,000,000.00 1,000,000.00 15,050,500.00 (75.25%)

6. St. Andrew Eastern Dr. St. Aubyn Bartlett Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

7,058,688.92 - 1,000,000.00 9,689,342.98 150,000.00 1,250,000.00 1,000,000.00 20,148,031.90 (100.74%)

7. St. Andrew North Central Hon. Karl Samuda Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

9,500,000.00 - 3,600,000.00 4,750,000.00 150,000.00 1,000,000.00 1,000,000.00 20,000,000.00 (100.00%)

8. St. Andrew North Eastern Hon. Delroy Chuck Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

3,100,000.00 210,000.00 2,500,000.00 8,995,871.89 150,000.00 1,000,000.00 1,000,000.00 16,955,871.89 (84.78%)

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9. St. Andrew North Western Mr. Derrick Smith Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

5,300,000.00 - 2,586,000.00 9,600,000.00 150,000.00 1,000,000.00 1,000,000.00 19,636,000.00 (98.18%)

10. St. Andrew South Eastern Mrs. Maxine Henry-Wilson Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

8,122,951.75 - - 7,641,388.24 150,000.00 1,000,000.00 1,000,000.00 17,914,339.99 (89.57%)

11. St. Andrew South Western The Most Hon. Portia Simpson-Miller

Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

8,000,000.00 3,000,000.00 1,000,000.00 6,807,096.50 150,000.00 1,000,000.00 1,000,000.00 20,957,096.50 (104.79%)

12. St. Andrew Southern Dr. Omar Davies Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

13,350,000.00 1,000,000.00 - 3,500,000.00 150,000.00 1,000,000.00 1,250,000.00 20,250,000.00 (101.25%)

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FUNDS APPROVED BY THE CDF COMMITTEE AND DISBURSED TO MEMBERS OF PARLIAMENT – 2009/10 CONSTITUENCIES NAMES OF MEMBER OF

PARLIAMENT PROJECT DESCRIPTION FUNDS APPROVED & DISBURSED

($) 13. St. Andrew West Central Hon. Andrew Holness Human and Social Development

Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

11,000,000.00 - 1,000,000.00 1,500,000.00 150,000.00 1,000,000.00 1,000,000.00 15,650,000.00 (78.25%)

14. St. Andrew West Rural Hon. N. Andrew Gallimore Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

4,729,320.00 - 2,100,000.00 5,905,200.00 150,000.00 1,000,000.00 1,000,000.00 14,884,520.00 (74.42%)

15. St. Andrew Western Mr. G. Anthony Hylton Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

10,856,750.00 - - 8,413,460.00 150,000.00 1,000,000.00 1,000,000.00 21,420,210.00 (107.10%)

16. St. Thomas Western Hon. James Robertson Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

11,325,000.00 - 1,000.000.00 4,125,351.50 150,000.00 1,000,000.00 1,000,000.00 18,600,351.50 (93.0%)

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17. St. Thomas Eastern Dr. Fenton Ferguson Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

9,000,000.00 - - 7,500,000.00 150,000.00 750,000.00 750,000.00 18,150,000.00 (90.75%)

18. Portland Western Hon. Daryl Vaz Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

2,000,000.00 1,855,050.00 - 14,245,650.30 150,000.00 500,000.00 1,500,000.00 20,250,700.30 (101.25%)

19. Portland Eastern Dr. Donald Rhodd Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

3,000,000.00 - - 6,714,737.51 150,000.00 1,000,000.00 1,000,000.00 11,864,737.51 (59.32%)

20. St. Mary Western Hon. Robert Montague Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

6,000,000.00 3,115,800.00 - 6,500,000.00 150,000.00 1,000,000.00 1,000,000.00 17,765,800.00 (88.83%)

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21. St. Mary Central Dr. Morais Guy Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

7,793,310.00 2,000,000.00 2,000,000.00 4,636,580.00 150,000.00 1,000,000.00 1,000,000.00 18,579,890.00 (92.90%)

22. St. Mary St. Eastern Mr. Tarn Peralto Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

7,890,000.00 3,000.000.00 2,000,000.00 2,956,130.00 150,000.00 750,000.00 1,000,000.00 17,746,130.00 (88.73%)

23. St. Ann North Eastern Hon. Shahine Robinson Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

2,000,000.00 1,000,000.00 4,000,000.00 10,092,309.13 150,000.00 1,750,000.00 1,250,000.00 20,242,309.13 (101.21%)

24. St. Ann South Western Mr. Ernest Smith Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

6,000,000.00 3,150,000.00 - 6,000,000.00 150,000.00 1,000,000.00 1,000,000.00 17,300,000.00 (86.5%)

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25. St. Ann South Eastern Ms. Lisa Hanna Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

3,500,000.00 - - 5,893,921.00 150,000.00 1,000,000.00 1,000,000.00 11,543,921.00 (57.72%)

26. St. Ann North Western Mr. Othneil Lawrence Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

9,597,540.00 - - 8,361,368.40 150,000.00 1,000,000.00 1,000,000.00 20,108,908.40 (100.54%)

27. Trelawny Northern Dr. Patrick Harris Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

4,000,000.00 2,000,000.00 - 5,000,000.00 150,000.00 1,000,000.00 1,000,000.00 13,150,000.00 (65.75%)

28. Trelawny Southern Mrs. Marisa Dalrymple-Philibert


10,000,000.00 - 3,200,000.00 6,004,071.50 150,000.00 1,000,000.00 1,000,000.00 21,354,071.50 (106.77%)

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FUNDS APPROVED BY THE CDF COMMITTEE AND DISBURSED TO MEMBES OF PARLIAMENT – 2009/10



29. St. James East Central Hon. Edmond Bartlett Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

5,000,000.00 - - 5,769,975.00 150,000.00 1,000,000.00 1,000,000.00 12,919,975.00 (64.60%)

30. St. James North Western Hon. Dr. Horace Chang Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

9,690,000.00 2,500,000.00 - 3,500.000.00 150,000.00 1,000,000.00 1,000,000.00 17,840,000.00 (89.20%)

31. St. James Southern Mr. Derrick Kellier Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

17,778,998.00 - - - 150,000.00 1,000,000.00 1,000,000.00 19,928,998.00 (98.90%)

32. St. James West Central Hon. Clive Mullings Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

11,850,000.00 3,000,000.00 - 2,000,000.00 150,000.00 1,000,000.00 1,000,000.00 19,000,000.00 (95.00%)

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33. Hanover Eastern Dr. Donald Duncan Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

3,500,000.00 1,000,000.00 - 6,848,400.00 150,000.00 1,000,000.00 1,000,000.00 13,498,400.00 (67.49%)

34. Hanover Western Mr. Ian Hayles Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

5,600,000.00 - - 11,291,718.33 150,000.00 1,000,000.00 1,000,000.00 19,041,718.33 (95.21%)

35. Westmoreland Central Mr. Roger Clarke Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

4,000,000.00 - - 11,789,466.19 150,000.00 1,000,000.00 1,000,000.00 17,939,466.19 (89.70%)

36. Westmoreland Eastern Mr. Luther Buchanan Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

4,000,000.00 2,375,966.25 - 2,480,950.00 150,000.00 1,000,000.00 1,000,000.00 11,006,916.25 (55.03%)

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37. Westmoreland Western Dr. K. Wykeham McNeill Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

3,500,000.00 - 1,869,000.00 6,500,000.00 150,000.00 1,000,000.00 1,000,000.00 14,019,000.00 (70.10%)

38. St. Elizabeth North Eastern Mr. Kern Spencer Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

2,000,000.00 - - 12,026,262.00 150,000.00 1,000,000.00 1,000,000.00 16,176,262.00 (80.88%)

39. St. Elizabeth North Western Hon. J. C. Hutchinson Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

8,600,000.00 2,000,000.00 2,500,000.00 4,000,000.00 150,000.00 1,000,000.00 1,000,000.00 19,250,000.00 (96.25%)

40. St. Elizabeth South Eastern Mr. Franklin Witter Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

7,813,800.00 - - 10,036,200.00 150,000.00 1,000,000.00 1,000,000.00 20,000,000.00 (100.00%)

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41. St. Elizabeth South Western Dr. the Hon. Christopher Tufton


7,000,000.00 3,500,000.00 - 2,000,000.00 150,000.00 1,000,000.00 1,000,000.00 14,650,000.00 (73.25%)

42. Manchester Central Mr. Peter Bunting Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

6,950,000.00 4,500,000.00 - 3,000,000.00 150,000.00 1,000,000.00 1,000,000.00 16,600,000.00 (83.00%)

43. Manchester North Eastern Hon. Audley Shaw Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

10,000,000.00 - - 4,966,500.00 150,000.00 1,000,000.00 1,000,000.00 17,116,500.00 (85.58%)

44. Manchester North Western Mr. Dean Peart Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

3,350,000.00 1,000,000.00 - 13,501,627.00 150,000.00 1,000,000.00 1,000,000.00 20,001,627.00 (100.01%)

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45. Manchester Southern Mr. Michael Peart Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

6,000,000.00 3,000,000.00 - 10,783,860.00 150,000.00 750,000.00 750,000.00 21,433,860.00 (107.17%)

46. Clarendon Central Hon. Lester “Mike” Henry Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

4,500,000.00 4,992,970.00 2,500,000.00 4,000,000.00 150,000.00 1,000,000.00 1,000,000.00 18,142,970.00 (90.71%)

47. Clarendon North Central Hon. Pearnel Charles, CD. Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

5,800,000.00 - - 4,000,000.00 150,000.00 1,000,000.00 1,000,000.00 11,950,000.00 (59.08%)

48. Clarendon North Western Hon. Michael Stern Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

6,500,000.00 350,000.00 - 6,862,956.50 150,000.00 1,000,000.00 1,000,000.00 15,862,956.50 (79.31%)

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49. Clarendon Northern Hon. Laurence Broderick Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

8,800,000.00 3,500,000.00 - 6,249,698.00 150,000.00 750,000.00 1,000,000.00 20,449,698.00 (102.25%)

50. Clarendon South Eastern Hon. Rudyard Spencer


7,500,000.00 - - 10,350,092.00 150,000.00 1,000,000.00 1,000,000.00 20,000,092.00 (100.00%)

51. Clarendon South Western Mr. Noel Arscott Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

5,250,000.00 2,000,000.00 - 7,000,000.00 150,000.00 1,000,000.00 1,000,000.00 16,400,000.00 (82.00%)

52. St. Catherine Central Hon. Olivia “Babsy” Grange Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

8,500,000.00 - - 3,500,000.00 150,000.00 1,000,000.00 1,000,000.00 14,150,000.00 (70.75%)

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53. St. Catherine East Central Mrs. Natalie Neita-Headley Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

10,200,000.00 1,500,000.00 - 5,406,210.00 150,000.00 1,000,000.00 1,500,000.00 19,756,210.00 (98.78%)

54. St. Catherine North Eastern Mr. D. Gregory Mair Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

3,500,000.00 2,365,127.10 - 6,754,897.10 150,000.00 1,000,000.00 1,000,000.00 14,770,024.20 (73.85%)

55. St. Catherine North Western Mr. Robert Pickersgill Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

3,600,000.00 3,089,132.80 2,000,000.00 6,544,370.00 150,000.00 1,000,000.00 1,000,000.00 17,383,502.80 (86.91%)

56. St. Catherine South Central Mrs. Sharon Hay-Webster Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

9,851,679.72 - 3,000,000.00 3,370,000.00 150,000.00 1,000,000.00 1,000,000.00 18,371,679.72 (91.86%)

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57. St. Catherine South Eastern Mr. Colin Fagan Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

6,714,837.74 2,252,817.00 - 7,433,351.10 150,000.00 1,000,000.00 1,000,000.00 18,551,005.84 (92.76%)

58. St. Catherine South Western Hon. Clifford E. Warmington Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

1,500,000.00 1,000,000.00 - 15,419,200.00 150,000.00 1,000,000.00 1,000,000.00 20,069,200.00 (100.35%)

59. St. Catherine Southern Mr. Fitz Jackson Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

4,500,000.00 - - 6,680,130.44 150,000.00 1,000,000.00 1,000,000.00 13,330,130.44 (66.65%)

60. St. Catherine West Central Hon. Dr. Kenneth Baugh Human and Social Development Economic Enablement Disaster Mitigation Physical Infrastructure Labour Day Project Social Housing Emergency & Welfare

7,000,000.00 4,000,000.00 - 4,500,000.00 150,000.00 1,000,000.00 1,000,000.00 17,650,000.00 (88.25%)

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GRAND TOTAL APPROVED AND DISBURSED = $1,045,341,349.19 (87.11%)

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NOTICES OF MOTIONS GIVEN ORALLY

Mr. Clifford Warmington gave notice that at the next meeting of the House he would move: BE IT RESOLVED that the Report of the Special Select Committee to examine and recommend for approval proposed estimates for Constituency Projects submitted to the Constituency Development Fund (CDF) by respective Members of Parliament which was laid on the Table of the House on Tuesday, the 14th day of June, 2011, be adopted.

(The Minister of State in the Office of the Prime Minister, the Honourable Robert Montague, entered and took his seat). (Dr. Kenneth McNeill, M.P., Westmoreland, Western entered and took his seat). (The Minister of Agriculture and Fisheries, Dr. the Honourable Christopher Tufton, entered and took his seat).

QUESTIONS AND ANSWERS TO QUESTIONS

Mr. Michael Peart, the Leader of Opposition Business raised the subject of Prime Minister’s question time, to which the House agreed, and the following persons, Dr. Omar Davies, Dr. Peter Phillips, Mr. Clifford Warmington, Mr. Michael Peart, Mr. Noel Arscott, Mr. Roger Clarke, the Leader of the Opposition, the Most Honourable Portia Simpson Miller, the Reverend Ronald Thwaites, Mr George Hylton, Mr. Colin Fagan, and Dr. Donald Duncan, asked the Prime Minister questions on matters of national importance, including the Jamaica Development Infrastructure Project (JDIP), the Bauxite/Alumina Industry, the divesting of the Fisheries Complex on Marcus Garvey Drive, the level of the registration of lands, the proposed trip to China by the Minister of Finance and the Public Service, funding for Parish Councils, the gazetting of new constituency boundaries, the team coming from the IMF, and the report of the Manatt Commission of Enquiry. The Prime Minister responded accordingly. (Mr. Ernest Smith, M.P., St. Ann, South Western entered and took his seat). (The Minister of State in the Ministry of Industry, Commerce and Investment, the Honourable Michael Stern, entered and took his seat). (Mr. Othneil Lawrence, M.P., St. Ann, North Western entered and took his seat). (The Minister of Youth, Sports and Culture, the Honourable Olivia Grange, entered and took her seat). (The Deputy Prime Minister and Minister of Foreign Affairs and Foreign Trade, the Honourable Dr. Kenneth Baugh, entered and took his seat).

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Mr. Fitz Jackson gave notice that at the expiration of 21 days he would ask the Prime Minister the following question:

Part 1 Is the Prime Minister aware that the high cost of electricity is heaping great hardship on electricity consumers across all segments of the Jamaican society? Part 2 Does the Prime Minister agree that substantial increases in production in most sectors are critical to Jamaica’s economic development that will provide for higher levels of employment, per capita earnings, and improved quality of life for all Jamaicans? Part 3 Is the Prime Minister aware that manufacturers have repeatedly indicated that the high cost of electricity has made their products less competitive to producers in many other countries? Part 4 In light of the spiraling increases in electricity, and the urgent need to stimulate widespread economic activities, is the Prime Minister giving serious priority consideration to renegotiate the existing licence to the Jamaica Public Service Company (JPSCo) with a view to terminating the provision that provides a monopoly in the distribution of electricity? Part 5 Notwithstanding the response to Part 4, would the Prime Minister consider a limited monopoly, if any, or a provision otherwise that will allow for private investments in power generation and distribution in prescribed production areas that will attract investments requiring less expensive energy and providing high production outputs? Part 6 If the answers to Parts 4 and 5 are in the affirmative, can the Prime Minister provide an indicative time frame for accomplishing the objectives?

PUBLIC BUSINESS Deferred.

The Minister of Education and Leader of the House, the Honourable Andrew Holness moved for the suspension of the Standing Orders to enable the recommital of the items “Announcements”, “Reports from Committees” and “Notices of Motions Given Orally”. Seconded by: Mr. Franklin Witter. Agreed to.

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ANNOUNCEMENTS The Clerk laid on the Table of the House, a copy of the following:

Report of the Public Accounts Committee (PAC) of the House of Representatives

on its Examination of Ministries/Departments/Agencies during the Period April 2010 to March 2011

(Houses of Parliament)

Report of the Public Accounts Committee (PAC) of the House of Representatives

on its Examination of the Special Audit Report Conducted into the Petroleum Corporation of Jamaica Limited

(Houses of Parliament)

REPORTS FROM COMMITTEES

Dr. Omar Davies laid on the Table of the House a copy of the Report of the Public Accounts Committee on its examination of Ministries/Departments/Agencies during the period April 2010 to March 2011: Members of this Honourable House are reminded that on March 17, 2010, the Minister of Education and Leader of the House moved a motion in the House of Representatives enabling the Public Accounts Committee to complete, in the current Session of Parliament, its deliberations on the issues referred to it prior to prorogation. The committee is comprised of the following members:

Dr. Omar Davies, M.P. - Chairman

Mrs. Marisa Dalrymple Philibert, M.P.

Hon. Clifford Warmington, M.P.

Hon. Neville Gallimore, M.P.

Hon. Laurence Broderick, M.P.

Hon. Robert Montague, M.P.

Hon. Michael Stern, M.P.

Mr. Desmond Mair, M.P.

Mr. Tarn Peralto, M.P.

Mrs. Sharon Hay Webster, M.P.

Dr. Morais Guy, M.P.

Rev. Ronald Thwaites, M.P.

Mr. Fitz Jackson, M.P.

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Mr. Michael Peart, M.P.

Mr. Ian Hayles, M.P.

Members are reminded that on June 1, 2010, a resolution was passed in the House of Representatives, replacing Mrs. Sharon Hay-Webster with Ms. Lisa Hanna as member of the committee.

Members were further reminded that in Monday, March 7, 2011, the Hon. Clifford Warmington tendered his resignation as Member of Parliament.

On May 11, 2011, Mr. Clifford Warmington was re-appointed as member of the committee. 1.0 INTRODUCTION

1.1 Standing Orders No. 69 of the House of Representatives gives the PAC the mandate to examine (a) the accounts showing the appropriation of the sums granted by the Legislature to meet public expenditure; (b) such other accounts as may be referred to the Committee by the House or under any law and (c) the report of the Auditor General on any such accounts. In addition, all accounts and Financial Statements laid upon the Table of the House in respect of Statutory Boards, Public Corporations and Public Companies in which the Government holds majority shares are deemed to be automatically referred to the Public Accounts Committee for examination and report.

1.2 The Committee held nineteen (19) meetings (Appendix I) during the Session and examined Ministries, Departments, Agencies, and Statutory Bodies in respect of the Auditor General’s Report for the Financial Year 2007/2008.

1.3 The following major public sector entities were reviewed:

Office of the Prime Minister Office of the Cabinet

Ministry of Finance & the Public Service Ministry of Transport & Works

Ministry of Justice Ministry of Labour & Social Security Ministry of Foreign Affairs & Foreign Trade Ministry of Health Ministry of Education Ministry of Agriculture & Fisheries

Ministry of Water & Housing Ministry of Industry, Investment & Commerce Ministry of Youth, Sports & Culture

2.0 OVERVIEW

2.1 Each year, the Auditor General presents to the Speaker of the House of Representatives, a summary report of the findings of her audit of the accounts of all Government ministries,

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departments and agencies which fall within her purview. All ministries/departments/agencies that are found to be operating in contravention of the prescribed policies, financial guidelines and regulatory framework which have been promulgated are summoned to appear before the Public Accounts Committee to answer to the queries of the Auditor General’s Department. This report describes the major unsatisfactory features found during the examinations, some of the deliberations of the committee, the concluding observations of the committee, and the recommendations made by the committee to increase the efficiency and effectiveness of public sector entities.

2.2 In examining the responses given by the ministries/department/agencies to the Auditor General’s queries, the committee recognized some major deficiencies in the financial transactions and accounting systems. These included outstanding financial and bank reconciliation statements; losses, irregularities and unverified transactions; improper payments/nugatory expenditure; amounts owed to the Government; amounts owed by the Government; tax assessment and collection; internal control weaknesses; breaches of procurement guidelines, among others.

3.0 SUMMARY OF MAJOR FINDINGS AND RECOMMENDATIONS

Resulting from the deliberations on the various deficiencies outlined above, the committee wishes to highlight the following issues that need to be addressed in order to effect improvement in or the elimination of these deficiencies.

3.1 Outstanding Financial and Bank Reconciliation Statements and Appropriation Accounts 3.1.1 In keeping with the provisions of the Financial Administration and Audit (FAA) Act, financial statements for the preceding Financial Year should be submitted to the Auditor General’s Department by July 31. The committee was alarmed at the number of instances in which Ministries/Department/Agencies failed to present their financial statements on time, or in some instances, not at all. Bank reconciliation statements and appropriation accounts were also in arrears for many ministries/departments/agencies. This practice was of particular concern because it had the potential for errors, irregularities and unauthorized transactions to go undetected, resulting in loss of public funds.

3.1.2 The committee was presented with various reasons for the failure to meet the statutory deadline for completing and submitting these statements. The introduction of the new FINMAN accounting software to make the process more efficient was reported to have created a plethora of problems that have affected several ministries’ ability to complete their statements on time. The lack of competent/adequate staff, failure on the part of the external auditors to complete the statements on time and challenges in locating the required documentation were also identified as having contributed to the problem. It was pointed out however that in many instances, errors were not corrected in a timely manner by the entities. In other instances the entities involved made no attempt to have the matters dealt with.

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3.1.3 Committee members were of the view that ministries/departments/agencies did not give priority treatment to ensuring that these statements were completed and submitted in a timely manner, and therefore did not have a dedicated cadre of staff that was specifically assigned to doing these statements. They questioned why delinquent ministries/departments/agencies continued to have their budgets approved annually in Parliament and continued to receive their monthly warrants, when there was no means of being able to determine how the previous allocations had been spent or to obtain a true picture of the financial health of these entities. 3.1.4 Members also felt that the lack of sanctions for non-compliance contributed to the institutions’ failure to attend to this task with alacrity. The committee was informed by the Ministry of Finance and the Public Service that whereas the Public Bodies Management and Accountability Act stipulated that the financial statements of these entities should be submitted to Parliament within four months of the end of the financial year, there were no penalties for failing to do so. The committee made the following recommendation: That regulations to the Public Bodies Management & Accountability Act should be enacted to provide sanctions for failure to present audited statements on time. 3.2 The Effectiveness of Internal Auditors within Ministries/Departments/Agencies - Some members of the committee observed that many of the breaches identified by the Auditor General’s department went undetected by the Internal Auditors within the respective ministries/departments/agencies and therefore questioned the effectiveness of these Internal Auditors. The committee was told that there were instances in which some Internal Auditors were not at the required standard, but that this was partly due to the low level of remuneration for this category of persons which made it difficult to attract and retain qualified persons in the field. The committee recommends that a review of the entire internal audit system in Government should be undertaken. 4.0 Losses and Irregularities 4.1 During its deliberations, the committee discovered that losses and irregularities occurred frequently in many ministries/departments/agencies, and Members felt that steps must be taken to minimize if not totally eliminate the loss of scarce Government resources. Losses were manifested in various forms such as overpayments in allowances and emoluments, and the theft of items such as computers and other equipment from secure storage areas. The committee noted that in many instances where items went missing, this was facilitated by lack of a proper inventory system, failure on the part of the responsible officers to record the items in the existing inventory and inadequate controls over access to these facilities. Members also observed that failure on the part of entities to have the persons involved either removed from those positions or imprisoned sent a clear signal to these persons that their actions would go unpunished. 4.2 Members were disturbed by the laissez faire attitude of public officers to the recovery of lost Government items and outstanding monies. This was particularly in view of the fact that on the other hand, many of these entities were unable to carry out their basic, necessary functions due to inadequate funding and were constantly lobbying the Government for additional financial resources. In most situations, no attempts were made to locate the individuals who had resigned

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from the particular entities or to ascertain whether they were gainfully employed elsewhere. Members felt that the available avenues such as filing suit in the courts, garnishing their pension or tracking individuals via their Taxpayer Registration Numbers (TRNs) were not usually utilized.

The committee recommends: That regular checks be done of the items stored so that unauthorized removal of these items could be detected immediately, and that should such a situation occur, the ministries should not delay in contacting the Police. That proper systems be put in place to enable entities to track individuals who owed monies to the Government and all available options be pursued to recover the sums owed.

4.2.1 Members of the committee expressed shock and concern at the situation at the Inland Revenue Department (IRD) where two (2) teslins, 1,500 motor vehicle registration certificates and thirteen (13) motor vehicle titles went missing from the stores in which they were being housed. The committee learnt that although the store manager had discovered the items missing, she did not report the matter to the head of the department or other appropriate authority, and that the matter was brought to their attention by the Police who had taken into their possession two of the missing motor vehicle registration certificates. The manager, who was one of the two individuals in possession of the only two keys to the storage facility, was merely charged with failing to report the matter by the internal Disciplinary Committee of the Inland Revenue Department, which stated that there was insufficient evidence to charge either of the two persons for the removal of the items. The matter was also investigated by the Police and the Public Accountability Inspectorate (PAI) of the Ministry of Finance & the Public Service, the latter making a recommendation for the two individuals to be re-assigned. The Police is yet to conclude their investigations. The committee was further informed that the IRD was unable to act upon the PAI’s recommendation because there would have to have been vacant posts in which to transfer the individuals, which could not be found at the time either within the Department or in the Taxpayer Audit and Assessment Department. Subsequently, one officer made a request and was transferred to another Parish where an opening became available. The Department further informed the committee that they were advised by their Lawyers and the Services Commission that no further disciplinary action could be taken against the individuals via the administrative process and that the individuals could neither be made to pay nor be surcharged as this would represent double punishment. Members were at a loss as to why the staff manning the stores were not charged for the missing items instead of a charge being laid for not reporting, given that there was no evidence of a break-in, that only two individuals had the keys to the stores, that there was a record of the items being received by the Department in question and that they went missing from source. Committee members felt that the least action that should have been taken was to charge these persons with negligence, and that failure on the part of the Department to act sent the wrong message and was evidence of a lack of accountability. They were also of the view that those who removed the items from the stores did so for financial gain.

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Members, being cognizant that not all the facts of the case had been presented, and not being convinced that the proper remedies had been applied in this situation, made the following recommendations:

That as a special assignment, the Auditor General conduct a thorough investigation of this matter to determine all the circumstances surrounding the loss of the items mentioned, what occurred at each stage, what reports were prepared internally on the matter, what information was presented to the disciplinary committee, why a charge of lateness in reporting the matter was made and whether other charges had been put forward, and how the circumstances of this case could be extrapolated to deal with any such occurrences in the wider public service. That simultaneously, there should be a review of the Act/Regulations governing these matters in the public service. That the Financial Secretary re-assess the actions that had been taken internally in this situation and determine whether further action could still be taken to deal with the breach that occurred.

4.2.2 The Auditor General was of the uninformed view that there might be other entities in the wider public sector that faced the same constraints experienced by the Inland Revenue Department, which might similarly prevent them from taking further action once they had acted upon a previous recommendation for disciplinary action. She therefore suggested that when the resources become available, her Department could undertake a generic review of the issue. The committee supports this recommendation made by the Auditor General. 4.3 Surcharge 4.3.1 Where there is a loss to the Government and the Auditor General determines that that loss was due to negligence on the part of the public officer, the Auditor General would make a recommendation for surcharge to the Financial Secretary, who would then institute surcharge proceedings after conducting his own investigations. There were some concerns expressed that the surcharge was not being applied in some instances, that the level of surcharge imposed in some instances was miniscule in relation to the loss and that in general, it did not appear to be an effective deterrent.

5.0 Unremitted Statutory Deductions 5.1 Some members of the committee observed that one of the recurring problems from year to year was the failure of Government departments/agencies to pay over statutory deductions to the respective institutions. They found this situation embarrassing and also feared that it would result in affected workers being unable to access the potential benefits due to them from the National Insurance Scheme (NIS) and the National Housing Trust for example. The Ministry of Labour & Social Security clarified that in respect of public sector employees, the standard operating procedure was that in such circumstances, the employees would not lose their (NIS) entitlement, and that once this was paid, a claim would then be made on the relevant agency to recover the amounts in question.

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The committee recommends that where such situations arise, it should be automatic for the employee to receive his/her entitlement from the National Insurance Scheme. The committee further recommends that the same approach should be adopted by the National Housing Trust in respect of public sector employees. 6.0 Recovery of Improper Payments from Workers/Employees 6.1 The committee noted the many instances in which officers, who had been given salary and benefit payments to which they were not entitled, were being asked to repay these sums. In some cases the decision to pay these amounts had been taken by the head of the respective entities involved in an effort to entice these officers to either accept the posts being offered or to remain in these posts whilst in other cases the decisions were taken by the Board. In many of the cases highlighted, the persons had valid contracts in place, despite the fact that the institutions involved had failed to carry out the necessary due diligence by having these contracts vetted and approved by the Ministry of Finance & the Public Service. Members felt that in all cases, the persons who received the payments were not at fault, that they had in fact accepted the payments in good faith and had performed their tasks satisfactorily. Consequently, it was unfair to ask them to repay. The committee recommends that in order to prevent a recurrence of these situations, all ministries/departments/agencies should adhere to the guidelines and obtain the prior approval of the Ministry of Finance & the Public Service before making such payments. Sanctions should also be applied for failure to comply. 7.0 Streamlining of the Relationship between parent ministries and their portfolio agencies and between ministries of Government 7.1 It was brought to the committee’s attention that there were situations in which monies were owed to portfolio agencies by their parent ministries. One such case was where the National Works Agency had been carrying on its books significant sums for fees owed by its parent ministry, the Ministry of Transport & Works. There were also instances in which the parent company operated as an endless source of funds for their subsidiary, with no repayment terms being put in place and no interest being charged. The committee recommends that where such anomalies existed, that a review of the relationship between the institutions should be undertaken and the appropriate measures put in place. 7.2 The discussions also revealed that in some instances, monies were owed to one ministry by another, despite the fact that they were all Government ministries receiving funds from the same source. In the example cited above, a percentage of the fees owed to the National Works Agency should also have been paid over to the Ministry of Finance & the Public Service. The committee recommends that a policy decision be taken on how to proceed when these circumstances arise.

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8.0 The Operations of Public Bodies, Government Companies and Local Government Authorities 8.1 Committee members were concerned about the manner in which a number of public bodies, Government companies and local government entities have been and continued to conduct their business, with little or no regard for the existing rules and guidelines under which they should operate. This has resulted in the commission of several breaches in respect of the procurement guidelines, the payment of salaries and allowances at scales above those approved by the Ministry of Finance & the Public Service, the over-expenditure of funds outside of the prescribed rules and the failure to obtain the prior approval of the Ministry of Finance & the Public Service for all employment contracts. The committee recognised that in some instances, these entities merely flouted the existing rules, but was also made aware that in other cases, the entities genuinely believed that they had the autonomy to act based on their own statutes and based on the decisions of their Boards. Members pointed to the need to address this latter concern because whilst certain responsibilities have been given to the Boards of these entities, at the same time, they were expected to adhere to the requirements for the overall public sector.

The committee recommends: That a clear policy should be established to clarify under what circumstances, if any, the statutes or rules of these entities would supersede the rules and guidelines established by the Government of Jamaica. That in cases where the rules and guidelines were blatantly ignored by the entities, sanctions should be applied for non-compliance. That a comprehensive public education programme should be launched specifically to educate the heads of these entities, their Board chairmen and Directors on the rules/guidelines which govern their operations. 9.0 Lack of Accountability among Public Officers 9.1 Committee members were disturbed by the lack of accountability among public officers who continued to receive promotions and their salaries even in cases where dereliction of duties on their part was apparent. The committee was presented with countless examples in which officers failed to do their jobs or follow basic procedures, and in which their superiors failed to take action when persons either failed to perform their duties or committed serious breaches. In some instances, the heads of the entities appeared to be either powerless or unwilling to take the required action. Of note were the failure on the part of the Inland Revenue Department to act on a recommendation by the Public Accountability Inspectorate to remove the two persons who held the keys to the vault at one of the Collectorate from which certain valuables went missing, and the failure on the part of the Accountant General’s Department to pay a supplier for the installation of a PBX system at the department, resulting in the accumulation of interest charges of over J$2M. Regarding the matter of the PBX system, the committee was later advised that the outstanding principal and interest were paid to the supplier in question.

9.2 This lack of accountability was also manifested in the manner in which accounting officers and their accountable officers prepared themselves to appear before the committee, often

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failing to take action in respect of the issues raised in the Auditor General’s reports and frustrating and retarding the work of the committee in terms of being able to obtain specific answers to the specific concerns raised. The committee recommends that in the event of a Permanent Secretary or Head of a Public Sector Agency being unprepared, evasive or otherwise unresponsive to the Auditor General or the Public Accounts Committee, it shall be the option of the Public Accounts Committee to issue a formal reprimand to the Public Officer in question and forward this to the appropriate authority to whom that officer is accountable. 9.3 Committee members observed that even after the committee’s deliberations, the recommendations made to the various entities by the committee and the Auditor General were often not put in place despite the fact that the entities had promised to take action. Consequently, some breaches remained uncorrected for several years and were often repeatedly highlighted in the Auditor General’s annual reports. Members noted also that presently, there was no entity or individual that had specific responsibility for policing the various entities to ensure that the recommendations made by the committee and the Auditor General are implemented and the proper systems put in place. The committee therefore recommends that a special unit should be established in the Ministry of Finance & the Public Service, which would have specific responsibility to monitor the agencies and update the Financial Secretary on whether the recommendations were being implemented. The Financial Secretary would then take the appropriate action, which would include providing progress reports to the Public Accounts Committee and the Auditor General within one month after the recommendations are made. 10.0 The Treatment of Public Resources and Assets 10.1 Committee members were dismayed at the way in which public resources and assets such as properties and buildings which had income earning potential were treated by public officers. It was brought to their attention that scarce resources were consistently being wasted and that efforts were not being made to maintain assets owned by the Government or to maximize their income earning potential. Large sums were spent, for example, for overdraft charges despite the fact that Government entities were prohibited from incurring such charges as well as other excesses such as overtime payments. Huge expenditure on projects that did not appear to represent value for money were discovered, one example being the expenditure on the Transportation Centre in Down Town Kingston, the design of which was neither considered to be practical nor adequate and which to date needed further modifications to make it user friendly. 10.2 Committee members were very concerned about the practice of Government entities utilizing funds collected to mitigate their cash flow problems. These funds should however be lodged by the end of the day on which they were collected. Many entities, including police stations which collected monies on behalf of the Courts and some Parish Councils were reported to have committed this breach. Some of the monies collected (from the 8% cess levied on fuel) by the Ministry of Transport & Works on behalf of the Road Maintenance Fund were also reported to have been utilized to offset various expenditure by that ministry, although the funds should have been used for the improvement and maintenance of roads across the island.

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10.3 The committee also learnt that assets, particularly land and buildings were not treated as valuables by various Government entities, which in most cases failed to put a property management plan in place. The result was a loss to the Government of millions of dollars owed in rental and maintenance fees. In many cases, the basic requirement of a rental or lease agreement had not been put in place, and Members also noted the less than proactive approach that was taken to collect the outstanding sums, particularly where the tenants were other Government entities. That in emergency situations where it becomes necessary to divert funds from one area of expenditure to another, or to exceed the funds allocated for a particular area of expenditure, the respective entity should place a telephone call to the respective Division in the Ministry of Finance & the Public Service to obtain prior approval. The entity should then submit a written request to that ministry within twenty four hours. That all Government entities should maintain a log of their real estate assets and put a proper property management system in place to properly maintain these assets. 11.0 The Motor Vehicle and Driver’s Licensing System 11.1 The committee had serious concerns about the motor vehicle and driver’s licensing system which had so many deficiencies that it facilitated the development of parallel systems both within the formal system as well as within the underground system. Members pointed out that persons were making their own certificates of insurance, driver’s licences, certificates of fitness and other documents to certify they and their vehicles were road worthy. Members pointed out further that these documents were also being bought illegitimately at the Island Traffic Authority and the various Collectorates from bona fide employees who were involved in extra legal activities, with specific fee structures in place for the various categories of documents. This has led to the worrying situation where neither the authorities nor the public were aware of the number of vehicles and persons that had been legitimately certified through the formal system. Some of the loopholes in the automated motor vehicle registration system and the driver’s licence system at the Inland Revenue Department (IRD) were the issuing of licence plates that were not recorded on the IRD system, the acceptance by Inland Revenue Department of fraudulent certificates of insurance because they had no system of verifying the authenticity of the certificates presented, the acceptance of certificates of fitness that were allegedly issued by the Island Traffic Authority, the failure of the driver’s licence system to identify and flag anomalies such as under aged or over aged drivers, the total reliance of the Inland Revenue Department on the Taxpayer Registration (TRN) database to validate persons’ information particularly since the integrity of the TRN system was questionable, and the creation of multiple records for individual drivers each time they renewed their drivers’ licences. There were also concerns about the ability of Inland Revenue Department personnel to manipulate and make changes to the database. Despite assurances that the issues were being addressed, and despite the upgrade of the driver’s licence system in 2008 in an attempt to resolve the problems, the committee felt that the integrity of the entire system was in question. This view was further strengthened by information presented that certain items such as teslins used to prepare the driver’s licences, blank motor vehicle titles and motor vehicles certificates of registration had been discovered missing at the department in July, 2010.

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11.2 Members were also opposed to the arbitrary imposition of certain rules such as the refusal of the Island Traffic Authority to issue licences to new drivers in the latter part of the month of December and the granting of certificates of fitness for new vehicles for eighteen months when the law permitted them to certify these vehicles for up to a maximum of two years. The committee wishes to make the following recommendations: That the matter concerning fitness certification and the issuing of driver’s licences outside of the realm of the Colllectorates needs to be examined and a policy decision taken. That the Inland Revenue Department should require that all applicants for driver’s licences provide their birth certificates as proof of age. That a central database should be established by the Inland Revenue Department, to which the Police, the Island Traffic Authority and other relevant agencies are linked, to provide them with instant 24-hour access when there is need to verify the authenticity of any information regarding a driver or a motor vehicle that is being checked. That instead of having multiple records for individual drivers, the Inland Revenue Department should institute a system of one record for each driver. That an inter-ministerial committee be established to coordinate the aforementioned recommendations. That the required financial and technological resources should be made available to the Police to enable them to effectively carry out their traffic enforcement and anti-crime operations. 12.0 Increasing the Efficiency and Effectiveness of Government ministries/departments/agencies 12.1 Committee members felt that the efficiency and effectiveness of Government ministries/departments/agencies could be greatly improved by (i) centralizing certain activities such as auditing services that could address the issue of the preparation of audited financial statements for example; (ii) the outsourcing of other services such as the emergency traffic ticketing system at the Ministry of National Security and the collection of monies owed to Government agencies, (iii) diversifying payment options to include online payments or payments at specific banks or various bill payment facilities; and (iv) the establishing of links between the different entities of Government to facilitate the sharing of information. The committee recommends that these options be pursued where appropriate.

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13.2 Technological Advances 13.2.1 Committee members recommended that Government entities adopt the use of the various technological innovations at their disposal. This, they felt, could greatly assist in simplifying many of the processes in Government and make the work of these entities more efficient. Such innovations could be particularly beneficial to those entities that carried out enforcement activities such as the Police, the Island Traffic Authority and the Fisheries Division of the Ministry of Agriculture. Other entities such as the Ministry of Foreign Affairs & Foreign Trade could utilize these innovations to coordinate, from its headquarters, information from the overseas missions. 13.2.2 The committee also observed that there were persons who dedicated themselves to finding new ways of manipulating the various systems to their advantage. The committee therefore recommends a central Government team of specially trained Information Technology (IT) experts should be put in place, whose work would be dedicated to staying ahead or at least abreast of the new methodologies being invented by persons to manipulate or circumvent the systems in the respective ministries/departments/agencies, such as the motor vehicle and driver’s licensing system at the Inland Revenue Department. 14.0 Illiteracy in the School System 14.1 Committee members were extremely concerned that approximately ten thousand students were being promoted to high schools each year from the primary schools although they were not ready to access the secondary school curriculum. Additionally, there were students in the secondary schools who were promoted to a higher grade/level each year although they had not mastered the curriculum at the grade/level from which they were being promoted. The ministry admitted to being seized with the gravity of the situation, but informed the committee that students were being promoted to high schools partly because of a lack of space. Although the ministry highlighted the various interventions being made to address the problems, which included the placement of literacy and numeracy specialists in primary and secondary schools which needed such intervention and the placement of underperforming students in small instructional groups where they could receive individual attention, Committee members felt that enough was not being done to correct the problem. They pointed to the psychological damage being done to these children, particularly those who had completed their secondary education and could not pursue further studies or other professional opportunities because they did not meet the entry requirements. They were also of the view that accountability was lacking in the system, as the ministry had failed to hold the Education Officers, the Principals of Schools and the School Boards accountable for the underperformance of the students in the relevant schools. The committee recommends that: As a matter of policy, no student should be promoted to a higher level or grade unless he/she had fully mastered the previous level/grade. The Ministry of Education should adopt the proposal made that the first two years of primary school education should be devoted solely to teaching literacy and numeracy.

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The Ministry should implement a policy where, in May or June of each year, an assessment of all students is done and an intervention programme put in place each summer to ensure that those students who are performing below standard are prepared for the next grade level by September of that year. The Ministry should begin to send officers in the field to assess the performance of those persons in the education system, and remove those who are not performing. The Ministry should conduct a study of all public schools, identify those that are performing well, and use them as models for improving the performance of the schools that are consistently underperforming. 15.0 Ineffective Boards 15.1 Information presented to the committee revealed that there were cases in which Boards were not performing, but remained in place and at times were re-appointed. This applied to Boards of statutory and public bodies, as well as school Boards, among others. Members recommended that ineffective Boards should be terminated before the end of their tenure. This would ensure that Boards were more accountable for their actions and promote better and more effective governance. 16.0 Lack of Response from certain Government Entities 16.1 Committee members noted the number of cases in which ministries/departments/agencies were awaiting responses/action from the Fraud Squad, the Attorney General’s Chambers, the Ministry of Finance & the Public Service and Fiscal Services Limited. As a consequence of the non-responsiveness of these entities, a number of issues continue to be unresolved and will remain outstanding until the responses are forthcoming. The Ministry of Finance & the Public Service, in response, assured the committee that a specific unit within the ministry would have responsibility for responding to issues referred to the ministry. The committee, mindful of the foregoing, is concerned that there seemed not to be enough effort being placed on the criminal investigation of these cases and is therefore recommending that the Office of the Commissioner of Police be required to give oversight to the cases brought to the attention of the Public Accounts Committee and also be required to provide regular updates to the Public Accounts Committee. 17.0 Auditor General’s Reports The Auditor General made a proposal to produce quarterly reports instead of the annual reports in order to make her reports less dated and more relevant. The committee however recommended that semi-annual reports would be more practical. 18.0 COMMENDATION The committee observed that efforts were made by some ministries/departments /agencies to improve their system of accountability and to have the number of queries from the Auditor General reduced.

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The Ministry of Labour & Social Security was commended for its level of preparedness and the Permanent Secretary’s in-depth knowledge and grasp of all the subject areas under his portfolio. Of note is the fact that for the first time in several years, the Ministry of National Security successfully resolved all the concerns that had been raised by the Auditor General and therefore did not appear before the committee. 19.0 OTHER RECOMMENDATIONS The committee wishes to make the following recommendation which it hopes will positively influence those responsible for carrying out the affairs of Government:

That the recommendations contained in this report be submitted to Cabinet for consideration and implementation.

20.0 ACKNOWLEDGEMENTS The committee wishes to express profound gratitude to those persons who made the meetings possible. It thanks the Accounting Officers and their principals who appeared before it for their invaluable contribution to the discussions. Special thanks are extended to the Auditor General and her staff and the Deputy Financial Secretary (Public Expenditure & Policy Coordination Division) and his staff for their technical guidance during the deliberations. The committee also expresses thanks to the Clerk and the staff of the Houses of Parliament for their administrative and secretarial support, kind cooperation and courtesies extended during the long and exhaustive deliberations. The committee would also like to extend special thanks to the members of the Press who so ably recorded and reported on the deliberations of the committee.

ATTENDANCE

NINETEEN (19) MEETINGS

MEMBER PRESENT ABSENT APOLOGY

Dr. Omar Davies 19 0 0

Mrs. Marisa Dalrymple Philibert 11 8 0

Hon. Clifford Warmington 16 3 2

Hon. Neville Gallimore 19 0 0

Hon. Laurence Broderick 12 7 1

Hon. Robert Montague 0 19 0

Hon. Michael Stern 9 10 0

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PRESENT ABSENT APOLOGY

Mr. Desmond Mair 2 17 2

Mr. Tarn Peralto 14 5 0

*Mrs. Sharon Hay Webster 1 3 1

*Ms. Lisa Hanna 14 1 0

Dr. Morais Guy 19 0 0

Rev. Ronald Thwaites 15 4 2

Mr. Fitz Jackson 18 1 0

Mr. Michael Peart 11 8 0

Mr. Ian Hayles 6 13 0 *Member Sharon Hay-Webster could only have attended a maximum of four (4) meetings. *Member Lisa Hanna could only have attended a maximum of fifteen (15) meetings. Dr. Omar Davies laid on the Table of the House, a copy of the Special Audit Report conducted into the Petroleum Corporation of Jamaica Limited. Members of this Honourable House are reminded that on March 17, 2010, the Minister of Education and Leader of the House moved a motion in the House of Representatives enabling the Public Accounts Committee to complete, in the current Session of Parliament, its deliberations on the issues referred to it prior to prorogation. The committee is comprised of the following members:

Dr. Omar Davies, M.P. - Chairman

Mrs. Marisa Dalrymple Philibert, M.P.

Hon. Clifford Warmington, M.P.

Hon. Neville Gallimore, M.P.

Hon. Laurence Broderick, M.P.

Hon. Robert Montague, M.P.

Hon. Michael Stern, M.P.

Mr. Desmond Mair, M.P.

Mr. Tarn Peralto, M.P.

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Mrs. Sharon Hay Webster, M.P.

Dr. Morais Guy, M.P.

Rev. Ronald Thwaites, M.P.

Mr. Fitz Jackson, M.P.

Mr. Michael Peart, M.P.

Mr. Ian Hayles, M.P.

On April 21, 2010, the Minister of Energy and Mining moved a motion referring the Special Audit Report on the Petroleum Corporation of Jamaica to the Public Accounts Committee for consideration and report. On June 1, 2010, the House of Representatives passed a resolution replacing Mrs. Sharon Hay Webster with Ms. Lisa Hanna.

TERMS OF REFERENCE OF THE PAC Standing Order No. 69 of the House of Representatives gives the PAC the mandate to examine (a) the accounts showing the appropriation of sums granted by the Legislature to meet public expenditure; (b) such other accounts as may be referred to the Committee by the House or under any law; and (c) the report of the Auditor General on any such accounts. In addition, all accounts and financial statements laid upon the Table of the House in respect of Statutory Boards, Public Corporations in which the Government holds majority shares are deemed to be automatically referred to the Public Accounts Committee for examination and report.

NUMBER OF MEETINGS HELD AND THE ENTITIES AND INDIVIDUALS WHICH APPEARED BEFORE THE PAC

The Committee held five (5) meetings (Appendix 1) during its examination of the matter and heard testimonies from the following: The Ministry of Energy and Mining The Petroleum Corporation of Jamaica

ENTITIES WHICH PROVIDED TECHNICAL AND LEGAL ADVICE The Committee also relied on the Auditor General’s Department and the Ministry of Finance & the Public Service for technical advice.

BACKGROUND INFORMATION The committee derived its mandate for examining the issues raised in the Special Audit Report from the resolution passed in the House of Representatives on April 21, 2010. The committee also requested that the Auditor General conduct a review of the Special Audit Report and present her findings, which were also used to assist the committee in its deliberations on the matter.

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THE OBJECTIVES OF THE COMMMITTEE’S INVESTIGATION INTO THE SPECIAL AUDIT REPORT

The objectives of the committee in examining the issues highlighted in the special audit report are as follows: To ascertain what breakdown of the systems, if any, took place that resulted in the

findings presented in the report To ascertain what corrective action was taken or systems put in place to correct the

deficiencies identified To make recommendations concerning the steps that could be taken to prevent any future

recurrence. AUDITOR GENERAL’S REVIEW OF THE SPECIAL AUDIT REPORT The Auditor General, in her review of the Special Audit Report, focussed specifically on the corporate governance issues as well as the issue related to the sums which were alleged to have not been properly deposited to the PetroCaribe Fund. The Auditor General made the point that the findings relating to the PCJ were not specific to that entity, as the deficiencies identified could be found in many other ministries and agencies in the public sector. She stated that many of the weaknesses identified were enumerated in her annual report each year, and that although some of the issues might appear to be trivial, it was the failure to adhere to these basic corporate governance principles that often led to situations such as the one identified at the PCJ. The Auditor General disclosed that the auditor had concerns about the daily running of the PCJ and the enormous powers that seemed to have been invested in both the chairman and the then director of administration. She said a review of the Board meeting minutes by her department also revealed that similar concerns were expressed by some members of the Board, one of whom commented on the strong stamp of the chairman and director of administration on the operations of the PCJ. A second member was cited as having concerns that decisions were being made by the chairman without the rest of the Board and the Managing Director. Among other things, the Auditor General recommended that there should be a clear demarcation between the responsibilities of the chief executive officer and those of the chairman of the Board, which should be set out in writing and agreed by the Board. She recommended further that non-executive members should vigorously challenge the conduct and decisions of members of the Board and Executive and hold them accountable. Additionally, she made a recommendation for internal audit to conduct a review of the corporate governance practices of the Board, and a report of their findings should be submitted to the Permanent Secretary or the Chief Executive Officer. It was also expected that this report would be forwarded to the audit review committee of the Board for assessment, evaluation and monitoring of the recommendations made therein. The Auditor General also highlighted the need to strengthen the role of the ministry’s representative on the Board to ensure that concerns raised at Board meetings were escalated to the appropriate level.

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The Auditor General noted that the auditor identified several internal control weaknesses at the PCJ. One such weakness was the absence of adequate supporting documents for goods and services procured and the lack of authorisation of transactions. The auditor indicated that the majority of the PCJ’s expenditure was approved by the former director of administration and the former financial controller. Another weakness identified was the poor segregation of duties, where one individual, the former director of administration, carried out a range of functions which included the review of the checks and balances over the payment process, responsibility for directing and coordinating administrative matters, corporate secretary-custodian of all documents, member of the Procurement Committee, member of the Management Committee, and overall responsibility for Accounts, Personnel and Office Services departments. The Auditor General told the committee that it was a conflict of interest for the same individual to authorise the transaction and also approve and sign off on the cheque payments. The Auditor General also cited the example of the tender officer, whom the auditor identified as the person who drafted the bid proposals and prepared the tender documents, was the sole evaluator of bids and made recommendations for the award of contracts, and also certified the work done and recommended payment. She stated that according to the audit report, the tender officer advised the auditor that her assignments had been issued by the director of administration. The Auditor General felt that perhaps there should now be a sensitisation session for all Boards on corporate governance issues and that the management of the various entities was also in need of such sensitisation. The Auditor General made several recommendations, one being the need to carry out a job analysis to ensure adequate segregation of duties and to prevent one person from having control over too many functions. Other compensating controls should also be put in place to detect deviations, deficiencies, errors or irregularities in a timely manner. Another recommendation was for payments to be authorised by at least two persons acting within the limits of their authority and for the required disciplinary action to be taken for breaches of the guidelines and procedures. With respect to the limits of authority, the Auditor General was of the view that among other things, management should ensure that the limits were properly communication to all concerned, that the limits should be subjected to periodic reviews, that a proper monitoring mechanism should be in place, and appropriate sanctions applied where flagrant breaches occurred. Reports on weaknesses identified should be made by the internal auditor to the audit committee, which should then report to the Board of Directors. The annual report of the Corporation should also include a report that the Board has conducted a review of the effectiveness of the group’s system of internal controls. The Auditor General also pointed to the apparent incestuous relationship that was said to have existed between the canteen operation and the PCJ, where the canteen benefited from the resources of the PCJ without the latter being compensated. There was also an alleged cash skimming scheme and excesses in relation to salary and benefits identified by the auditor. The

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Auditor General made several recommendations aimed at correcting the ethical lapses which were felt to have existed, including the development of a code of conduct to guide the activities and behaviour of managers and employees, and the sending of a clear message to all employees that unethical behaviour would not be tolerated. In respect of the PetroCaribe Fund, the Auditor General stated that the audit determined that an amount of $14.7M which should have been properly paid into the Fund was not, and a recommendation was made for these amounts to be paid over to the Fund by the PCJ.

SPECIAL AUDIT REPORT

The Special Audit Report focussed on three broad areas, namely concerns about suspected irregularities or exposure to such irregularities, corporate governance issues and questionable procurement practices. In addition to those highlighted by the Auditor General in her review, some of the findings and recommendations contained in the Special Audit Report were: The auditor reported irregularities in the carrying out several transactions at the PCJ. One such transaction involved the award of contracts for the Font Hill Renovation Project, where the auditor alleged that contracts were awarded to one particular bidder due to interference from the tender officer who was said to have changed the figures on the tender opening documents for that bidder prior to submitting them to the procurement committee for approval. As a result, the contract was not awarded to the bidder with the lowest bid. The auditor reported that when the tender officer was asked to explain why the contract for the gate improvement was not awarded to the lowest bidder, she stated that the lowest bidder had made a mathematical error on his bid which was in fact higher, however, the tender officer was unable to show the mathematical error. The auditor made specific recommendations for the procurement practices to be reviewed by the Contractor General. The auditor identified lapses in the management of properties and service stations owned by both PETCOM and the PCJ. He revealed that PCJ and PETCOM had difficulty locating documents related to the services stations which they owned, that PCJ owned five stations whereas PETCOM owned two and that PETCOM did not know that it owned one of the two properties under its ownership. The auditor further disclosed that PETCOM had never collected rental charges and throughput fees from the property that it has owned since 2004. Special mention was made of the circumstances surrounding the purchase and repurchase of the PETCOM-Lluidas Vale service station. The audit report indicated that initially, PCJ provided $3M to PETCOM to facilitate the purchase of a property for this service station and a further $3M to purchase equipment for the property. It was disclosed that two individuals then made an offer to purchase the property. Subsequent to this, PCJ provided $1M to the two individuals to purchase the property, after which PCJ took back over $1M mortgage on the property. According to the auditor, a total of $15M was spent by PCJ and PETCOM for the construction and build out of the service station, which was subsequently repurchased from the owner/operator by PCJ for $14M. The auditor found this transaction questionable, particularly against the background that the said owner/operator had originally purchased the property for

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$1M, that he had been given a mortgage for this $1M and therefore had not provided any of his own funds for the purchase of the property, that he had failed to make any payments on the $1M mortgage with PCJ and that the service station had performed marginally. The auditor disclosed further that the owner/operator received a $1.8M profit from the resale of the property to PCJ, and continued to operate the service station even after the resale had been completed. It was also revealed that the land in question was owned by the Commissioner of Lands. The audit report made reference to several irregularities in the management of the PCJ canteen, which included a cash skimming scheme, the exclusion of the operations of the canteen from the financial transactions of PCJ, the transfer of funds regularly from PCJ into the PCJ canteen bank account and the fact that employees of the canteen were not considered by PCJ as employees although they were paid by PCJ and statutory deductions were made by PCJ on their behalf. Health insurance coverage and a pension plan were put in place on their behalf by PCJ.

COMMENTS OF THE MINISTRY OF ENERGY AND MINING

In its appearance before the committee, the Ministry of Energy and Mining disclosed that after it became apparent to the ministry that there were concerns about some of the practices within the PCJ, the audit of the PCJ was conducted with the urging of the ministry, through the Office of the Permanent Secretary and the Minister. This was subsequently supported by CIDA through its agency the Deployment for Democratic Programme. The remit of the audit was to undertake fraud audits and preliminary investigations as well as to raise the capacity for such audits within the public sector. Consequently, it focussed on active participation and application of forensic audit investigation mechanisms and methodologies and the transfer of knowledge from the consulting firm to the participants from the Ministry of Energy and Mining and the Auditor General’s department. The ministry told the committee there were certain caveats to the investigation, one of which was the restriction of use which prevented the dissemination of any draft or preliminary report in its entirety without discussion or the consent of the auditor, Papineau Consulting Inc. Consequently, neither the entity under review (PCJ) nor the Group Managing Director at the time was privy to the draft audit report. Instead, discussions on various elements of the report were held with the then Group Managing Director and persons who were highlighted in the audit. The ministry also indicated that it was in the process of improving its internal audit capacity to enable it to better carry out its monitoring function over the PCJ and other entities under its portfolio as well as to widen its remit to deal with matters relating to governance.

COMMENTS OF THE PETROLEUM CORPORATION OF JAMAICA (PCJ) PCJ made it clear that although it only became aware of some of the irregularities and deficiencies during and after the audit conducted by Papineau Inc., there were some areas of its operations that it had identified as being lacking prior to the audit. The PCJ disclosed that it had

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also begun the process of addressing the deficiencies in those areas as soon as they were identified. The Corporation admitted that as identified in the audit, there were significant weaknesses in the management of some of the assets owned by the PCJ and PETCOM, including property and petrol stations. They informed the committee that they were currently conducting a comprehensive review of this aspect of the entity’s operations, with a view to streamlining the petrol stations and putting in place leases for the properties in question and appropriate rental and throughput fees. The committee was also told that divestment of this area was one of the options being contemplated. PCJ informed the committee that the manner in which the sale and resale of the PETCOM- Lluidas Vale service station was handled was not consistent with the normal practices/procedures for such transactions. The committee was told that at the time of the construction of the PETCOM-Lluidas Vale service station, the Sitting Committee which usually received and reviewed applications for the establishment of PETCOM stations had not been meeting. Consequently, there was no evidence that the required procedures, such as carrying out the feasibility studies or the granting of approval for the building of this station, were carried out. PCJ also informed the committee that according to the records, the owner/operator of the station had been experiencing difficulty making payments on the loan as well as for PETCOM products, and as a result, an agreement was brokered between himself and PETCOM/PCJ for PCJ to purchase the property from him despite the fact that he did not own the property. The committee was further informed that the transaction was arranged by the former director of administration and that the sale contract was executed by the former group managing director of the PCJ. PCJ further informed the committee that the company’s legal officer has been asked to determine whether some of the funds involved in this transaction could be recovered and from whom. In this regard, legal opinion has been sought from the Solicitor General on the question of whom an action could be brought against to recover the sums involved in this transaction. The Corporation is currently awaiting this opinion. PCJ went on to clarify that although no sitting committee currently exists, there were sub-committees of the Board that currently carry out these responsibilities. There were also limits of authority, segregation of duties, various sub-committees of the Board and a functioning procurement committee that were in place. The PCJ was effectively being supervised by the operations of the Board and its sub-committees. Regarding the recommendations made in the audit report, the PCJ told the committee that some recommendations had already been implemented, some were in the process of being implemented whilst the others were being reviewed to determine how best they could be put in place. The PCJ also referred to the Fraud Squad all matters for which such recommendation had been made, as well as to the Financial Investigations Division (FID). The committee was told that in transactions between PCJ and PETCOM, the normal modus operandi was for these transactions to be approved by the Finance Committee and the Board, with a loan agreement in place that was executed by both parties. Therefore, the cases cited in

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the audit report where no agreements were in place were aberrations, and should therefore not occur in the future. Regarding the issue of whether PETCOM owned one or two service stations, PCJ clarified that PETCOM owned one service station. PCJ went on to explain that the other service station mentioned in the report was counted by PCJ as an asset because although the land on which the service was located was owned PETCOM, the service station was built by PCJ. In respect of the monies owed to the PetroCaribe Fund, PCJ disclosed that a formal agreement had been put in place for them to repay these funds to PetroCaribe over a twelve month period. The terms of this agreement were being honoured by PCJ. PCJ acknowledged that the transactions surrounding the PCJ canteen operations that were highlighted in the audit report were inappropriate, and that the persons involved in the management of this accounts had been separated from PCJ. Systems for improvement have been put in place, such as the establishment of limits of authority, approval of transactions by the Board of Directors, the implementation of an accounting manual and the provision of appropriate training for the management team and the accounting staff. PCJ further disclosed that the employees of the canteen staff, who were of the view that they were PCJ employees, were in fact undocumented employees of PCJ and were released upon the closure of the canteen. The canteen account has also been frozen and would eventually be closed. The committee was told that these six employees were not engaged through the Human Resources department of the Corporation, instead, a directive had been given for them to be paid and for health insurance benefits to be put in place for them. Some of these persons were engaged for up to seven years. PCJ further informed the committee that upon the closure of the canteen, it was ordered by the Ministry of Labour & Social Security to make redundancy payments to the employees of the canteen, and that after seeking legal advice, the Corporation complied with this order. PCJ stated that the matter involving the canteen operations had been referred to the Financial Investigations Division, which was expected to carry out a forensic audit to determine what took place in respect of the funds that were to have been transferred to the account of the PetroCaribe Fund, and who received and utilised those funds, among other things. Regarding the funds that were to have been properly lodged to the PetroCaribe Fund, the committee was also informed that based on the records, the funds were received from PETROJAM in one instance and invested with the bank in the name of the PCJ and that the interest was credited to PCJ’s main account at the end of the investment period. PCJ further disclosed that on another occasion, a memo was written from one party to the other party stating that an error had been made and requesting that the error be reversed and a cheque drawn to the PCJ canteen account. In two other instances, the interest was credited directly to the canteen account. In respect of the alleged cash skimming scheme, PCJ disclosed that PETCOM no longer encashed cheques from PCJ cheques and have been directed to cease the practice of encashing cheques from cash receipts.

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COMMENTS OF THE FORMER GROUP MANAGING DIRECTOR OF THE PETROLEUM CORPORATION OF JAMAICA

A formal response to the allegations presented in the special audit report was made by the former Group Managing Director of the Petroleum Corporation of Jamaica. The committee had contemplated examining this document and extended an invitation to the former Group Managing Director to provide her with the opportunity to present her version of the events that occurred. The former Group Managing Director declined this invitation, indicating that it would not be appropriate to speak on the issues at this time given that she had intended to file Suit against the PCJ in respect of the said issues. The committee was of the view that it would be inappropriate to discuss her response to the special audit report in her absence, and therefore, took a decision not to examine the document.

CONCERNS RAISED BY THE COMMITTEE

Overall, members of the committee were alarmed at the findings presented in the Special Audit report, as many of the issues highlighted were of a serious nature. Some members of the committee voiced their concern that natural justice, a basic principle of the rule of law, was not observed in the conduct of the audit because neither the PCJ nor the then Group Managing Director was privy to the draft report. Consequently, they were unable to respond to the allegations made therein before the report was finalised and made public. Committee members felt that the restriction of use clause imposed by the auditor, Papineau Consulting Inc. should not have been accepted, and that such a deviation should not be tolerated in the future. Members were concerned about the effectiveness of the internal audit system within the parent ministry and the PCJ, which they felt should have detected most of the concerns highlighted by the auditor prior to the conduct of the audit and should have brought these matters to the attention of the relevant authority. Members of the committee felt that at the time when the transactions identified in the audit report occurred, the Board apparently was not functioning effectively. Based on the information presented, there appeared to have been too much power concentrated in the hands of the chairman of the Board, without the input of the other Board members. The committee further observed that although a few of the other Board members expressed concern about this modus operandi, they did not take sufficient steps to ensure that the situation was corrected or to ensure that they had more input in the decision making process. Committee members felt that the management of the PCJ failed to take action in a timely manner to correct the deficiencies that had been identified by the auditor. The committee was also concerned about the apparent lack of documentation and absence of a proper mechanism for record keeping in general, which resulted in the PCJ’s inability to provide both the auditor and the committee with the details surrounding several transactions that took place at the entity. PCJ for example was unable to coherently explain the chronology of events

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surrounding the transactions involving the PETCOM-Lluidas Vale service station, and to provide an accurate breakdown of the amounts spent and for what purpose. There was no explanation was to why PCJ had not initially purchased the property directly, rather than providing PETCOM with a loan for that entity to purchase the property. There was also no documentation to support loans made from PCJ to PETCOM, to stipulate the terms of the loan agreements such as the repayment period and the interest rate or to indicate who approved the loans. Several members placed on record their dissatisfaction with this state of affairs, where loans could be made without a formal loan agreement being in place and where cheques could be drawn with only a notation on them. Generally, the committee was concerned about the looseness of the relationship between PCJ and its subsidiary, PETCOM, which allowed funds to be passed freely from one entity to the other without prescribed rules and procedures being in place to govern the transactions. Members of the committee were of the view that a Permanent Secretary should be prohibited from sitting on the Board of an entity which fell within the portfolio of his/her ministry, as this could prevent him/her from effectively being able to arbitrate on issues of conflict that might arise within the Board or between the Board and other agencies under the ministry’s portfolio. They were of the view however, that an appropriate representative from the ministry should be represented on the Board. They were not opposed to a Permanent Secretary sitting on the Boards of other ministries or entities. Clarification was sought on whether two service stations were owned by PETCOM, given that there was conflicting information provided by the auditor and the PCJ.

CONCLUSIONS OF THE COMMITTEE The committee felt that the following were some of the main factors which led to the situation that was discovered to have existed at the PCJ: The Board, which featured prominently in many of the decisions at PCJ, failed to adhere to the procedures and guidelines that existed in the Public Bodies Management & Accountability Act to govern the operations of entities within the public sector. It was recognised that a contributing factor to the problem was that Board members might not have had a proper understanding of how the Board should operate within the constraints of the public sector. Failure to apply the required sanctions for breaches of the Public Bodies Management & Accountability Act allowed Boards and their members to continue to disregard the rules without consequences. Of equal importance was the absence of regulations to accompany the Public Bodies Management & Accountability Act, which would break out the day to day responsibility of Board members. The practice of vesting a wide range of responsibilities into one individual, for example the tender officer and the director of administration, created loopholes that allowed deviations and irregularities to go undetected.

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The lack of a proper internal control mechanism allowed internal control weaknesses to be exploited by those who were aware of their existence. The committee also discovered that because the internal audit of the PCJ usually focused on the financials and did not usually take into consideration the systems, they did not readily detect instances where breakdowns occurred.

The internal audit of the PCJ as well as that of the ministry seemed to have failed, which led to the irregularities/deficiencies being allowed to continue undetected. The management of the PCJ should have been more attentive to monitoring the assets of the entity, particularly its property assets and service stations. The project involving the construction and build out of the PETCOM-Lluidas Vale service station had been ill conceived from the inception, and that $15M should not have been spent on that service station given its location, poor performance and the fact that there had been little chance of recouping the investment that had been made.

LIST OF RECOMMENDATIONS

The following are the recommendations of the committee:

1. That no Government entity should accept the imposition of a ‘restriction of use’ clause by any domestic or international agency that has been commissioned/engaged to conduct an audit of that entity or of other entities under its aegis.

2. That as a matter of principle, a copy of the draft of all reports should be presented to all

entities/individuals about whom questions are raised, to afford them the opportunity to respond to the allegations prior to the publication of the final report.

3. That the breaches that occurred at the PCJ should not be allowed to recur. Consequently,

it was recommended that in areas where this was lacking, proper systems of accountability must be established and sanctions applied for failure to comply with these systems.

4. That PCJ take steps to immediately implement those recommendations made by the

auditor that have not yet been implemented.

5. That the internal control mechanisms at PCJ must be strengthened to prevent persons from using internal control weaknesses to circumvent the established procedures and manipulate the system to their advantage.

6. That the Corporation ensures that the corrective measures that have put in place as well

as those that would be implemented were adequate to prevent the concentration of too much power in the hands of too few persons.

7. That the Corporation place specific emphasis on the management of its financial and

other assets. It was further recommended that clear rules should be established to govern

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the transfer of funds and other financial transactions between PCJ and its subsidiary PETCOM, in keeping with the normal procedures and practices that govern these arrangements.

8. That the matter surrounding the sale and re-sale of the PETCOM-Lluidas Vale service

station be referred to the Fraud Squad for further investigation and action.

9. That in the carrying out their audit activities, internal auditors should broaden their focus to examine the systems that exist, given that this was the area in which breakdown usually occurred.

10. That greater care and scrutiny should be applied when appointing public Boards, and that

the available sanctions under the relevant laws such as the Public Bodies Management & Accountability Act must be applied when Boards disregard the existing legislation and guidelines.

COMMENDATION

The committee commended the acting Group Managing Director and his team from PCJ for the tremendous amount of work that was done in their effort to provide Members with the required responses to the issues that were raised during the course of the deliberations.

THANKS

The committee wishes to express gratitude to those persons who made the meetings possible. Special thanks are extended to the Auditor General and her staff and the Deputy Financial Secretary (Public Expenditure & Policy Coordination Division) and his staff for their technical guidance during the deliberations. . The committee also expresses thanks to the Clerk and the staff of the Houses of Parliament for their administrative and secretarial support, kind cooperation and courtesies extended during the long and exhaustive deliberations. . The committee would also like to extend special thanks to the members of the Press who so ably recorded and reported on the deliberations of the committee.

APPENDIX 1 ATTENDANCE

FIVE (5) MEETINGS

MEMBER PRESENT ABSENT APOLOGIES

Dr. Omar Davies, M.P. 5 0 0

Mrs. Marisa Dalrymple Philibert, M.P. 3 2 0

Hon. Clifford Warmington, M.P. 4 1 1

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Hon. Neville Gallimore, M.P. 5 0 0

Hon. Laurence Broderick, M.P. 2 3 0

Hon. Robert Montague, M.P. 0 5 0

Hon. Michael Stern, M.P. 3 2 0

PRESENT ABSENT APOLOGIES

Mr. Desmond Mair, M.P. 2 3 0

Mr. Tarn Peralto, M.P. 3 2 0

Ms. Lisa Hanna, M.P. 4 1 0

Dr. Morais Guy, M.P. 3 2 2

Rev. Ronald Thwaites, M.P. 4 1 1

Mr. Fitz Jackson, M.P. 4 1 0

Mr. Michael Peart, M.P. 3 2 1

Mr. Ian Hayles 3 2 1

NOTICES OF MOTIONS GIVEN ORALLY

The Prime Minister, the Honourable Orette Bruce Golding gave notice that at the next meeting of the House he would move to introduce and have read a first time a Bill shortly entitled “AN ACT to Amend the Interception of Communications Act”.

Dr. Omar Davies gave notice that at the next meeting of the House he would move:

1. BE IT RESOLVED that the Report of the Public Accounts Committee on its examination of Ministries/Departments/Agencies during the period April 2010 to March 2011 which was laid on the Table of the House on Tuesday, the 14th day of June, 2011, be adopted. 2. BE IT RESOLVED that the Report of the Public Accounts Committee on its examination of the Special Audit Report conducted into the Petroleum Corporation of Jamaica Limited which was laid on the Table of the House on Tuesday, the 14th day of June, 2011, be adopted.

ADJOURNMENT At 4:04 p.m., The Minister of Education and Leader of the House moved that the House do now adjourn to Tuesday, June 21, 2011 at 2:00 p.m. Seconded by: Mr. Franklin Witter. Agreed to.

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The Minister of Education and Leader of the House invited the Members to attend the World Bank workshop scheduled to be held on Tuesday, June 21, 2011. He also mentioned that the amendments made by the Prime Minister, and the ad hoc committee consisting of three (3) government members and three (3) opposition members, which met on Wednesday, June 15, 2011, to deliberate on the Bill shortly entitled “The Corruption Prevention (Special Prosecutor) Act, 2011” will be merged and a mock Bill provided so that the committee of the whole House can look at what it will be like with the amendments inserted. At 4:14 p.m. on the motion for the adjournment being put, same was agreed to. The House adjourned accordingly. ----------------------------------------- Delroy Chuck, M.P. Speaker

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