Understanding UDECOTT

“In a small country which possesses enormous wealth, and in which allegations of corruption are rife, the government has proclaimed its commitment to accountability, transparency and integrity in public affairs. The courts have a special role to play in protecting this ethos, particularly in State Companies, incorporated as private companies, with unlimited taxpayers funds at their disposal, and the freedom to by-pass the C.T.B.” - Former Chief Justice Sat Sharma in a judgment against UDECOTT in NH International v UDECOTT delivered in March 2006

In March 2006 an important judgment was delivered by our Court of Appeal in a judicial review case brought by Emile Elias’s NH International Ltd against UDECOTT. Elias challenged the decision of UDECOTT to award a contract worth $150 Million to Hafeez Karamath Ltd for the construction of the Administrative Headquarters of the Ministry of Health at Queens Park East. The important issue which had to be decided was whether the courts should assume a supervisory role in such matters by subjecting this decision to judicial review. Justices of Appeal Warner and Kangaloo decided (contrary to the latter judge’s initial “instinctive reaction”), that the decision to award a contract after a tendering process was a private law matter which was not amenable to judicial review.

Then Chief Justice Sat Sharma delivered an illuminating and powerful dissenting judgment which went the other way. Given the potential for and/or extent of political corruption in such mega projects, I see the need for a greater supervisory role by our courts in such matters and hence wish to remind readers of the now prophetic statements made by the former CJ.

In the instant appeal, there is a strong impulse to simplistically dismiss the matter as a building contract in private law with no public law underpinnings. However, on more mature consideration and after looking at the authorities, I am of the opinion that it has been robustly and persuasively argued that the matter is injected with sufficient public law elements, in order for it to go forward. I say this, since it is well to remember that the distinction is largely procedural and I do not think it would be appropriate for it to be dismissed in limine, as beingan abuse of process. Indeed, in my judgment the Court must only as a last resort, dismiss an application as being an abuse of process in cases, which are plain and obvious. There is really nothing to be gained, by an approach which encourages a proliferation of actions, which are time consuming and costly and which in the end may not yield any practical difference. Nevertheless, I recognise that not all transactions of the respondent would be susceptible to judicial review, for example any litigation involving the purchase of a truck, by the respondent will clearly be a matter in private law.

65. Some of the factors which have influenced my conclusion that the respondent’s contract possessed a sufficient public element are:

i. the evidence that the respondent is performing the government’s infrastructural development;

ii. additionally, while it was said that no State funds or guarantees would be utilised in the Project, it is difficult to conceive that with such a project, that at some stage or the other public funds, or property might not be involved. Indeed, in this case, it seems that the project is to be financed by the respondent’s own funds until such time as debt financing is obtained from a financial institution, the latter to be secured by a mortgage over the property. Isn’t the land in question State Land?

iii. the relationship of the respondent and the government, the State being the sole shareholder in the respondent;

iv. the public interest in any undertaking of the government; and

v. furthermore, the general public interest in every aspect of such a vital Ministry.

In recent times, the government has cleverly bypassed many laws which create proper checks and balances. These laws were designed to ensure transparency. The Auditor General, the Central Tenders Board and the independent service commissions charged with the responsibility for appointment, promotion, transfer and disciplining of public officers are all rendered useless by the creation of private companies fully owned by the state. The government can bypass the Service Commissions and stack these companies with PNM loyalists. This is fertile ground for political favouritism and corruption that will remain secreted in the bosom of the party, never to see the light of day. The public service will soon become one large PNM party group under our very nose if Manning is allowed to have his way.

(next week: more of CJ Sharma’s judgment)

By Anand Ramlogan 2008-05-03

2008-05-04 15:17 GMT - Site Admin Note:
See attached judgments from Justices Warner, Sharma and Kangaloo.

Understanding UDECOTT (Part 2) Absolute Power Corrupts..

The public service is supposed to be the engine for the implementation of government’s policy. Last week, I highlighted the danger of the present strategy by the government of creating private companies fully owned by the state in an effort to bypass the legal regulatory framework that governs the public tendering process, the hiring and firing of staff via the Service Commissions, the transparent scrutiny of the Central Tenders Board and the tentacles of the Auditor general.

Dr Rowley’s dismissal over concerns about the lack of cabinet oversight over and the modus operandi of UDECOTT has thrust this matter onto the national agenda is a forceful way and it is a golden opportunity for the nation to pull the PNM back from the lurch.

The relevant issues were adequately addressed by former Chief Justice Sat Sharma in 2006 in his dissenting judgment against UDECOTT in a judicial review case brought by NH International and today, I wish to continue quoting the relevant passages from his judgment as it highlights the critical role and function of UDECOTT and supports Dr Rowley’s call for greater transparency and accountability.

Calder Hart is in charge of billions of our tax dollars and is more powerful than any cabinet minister. Hidden budgetary allocation exceeds that of most ministers. No one voted for Calder Hart, Ken Julien or Uttao Rao and it is clear that far too much power is concentrated in the hands of a few men who are able to bypass the established regulatory framework and operate outside the loop, as it were. It bears repeating that “Power corrupts and absolute power corrupts absolutely”.

65. “I must assess whether UDECOTT is performing a public duty, to determine whether this matter is one that correctly lies in public law. UDECOTT was described on the internet website of the Ministry of Planning and Development as a wholly owned State Company, which reports through the line Minister to the Cabinet and whose work for the fiscal year 2004 included the Ministry of Health Headquarters and the implementation of new activities as determined by its Board of Directors and Cabinet. Without more, this certainly suggests that there is a measure of government control, which can only imply that the UDECOTT is performing a function, which is of interest to the government, and it necessarily follows, is also of interest to the public.

66. UDECOTT “is required to obtain the prior approval of the Minister of Finance for any borrowings in respect of this Project. This is a standard requirement for all state enterprises in order that the Minister of Finance may monitor the borrowings of state enterprises”. In my opinion, this would inevitably involve some reporting to the Cabinet and the line Minister as Cabinet must be satisfied that the work undertaken by the UDECOTT on its behalf is well planned and in instances where there has been a State guarantee for financing secured, that the UDECOTT acts responsibly and adopts the principles of transparency and accountability.

68. My attention was drawn to a public document entitled “Public Sector Investment Programme 2005” (“PSIP”) which…details the public investment thrust of the Government of Trinidad and Tobago (“GORTT”) across all sectors for the year 2004 and outlines the high priority investment projects which the Government intended to pursue in 2005. Paragraph 335 of the SPSIP 2004 document details the role of the State Enterprise Sector, in it, the UDECOTT is included as one of the State Enterprises expected to play an important role in the pursuit of the Government’s developmental strategies, specifically in the implementation of the government’s housing initiative. Additionally, the document stated that the activities of the UDECOTT were in 2005 to be extended to include the construction and refurbishment of Government buildings and urban redevelopment….UDECOTT was described as a “significant agent in the Government’s Housing thrust”.

71. I am left with no doubt that the UDECOTT performs a public function, though it is a private limited liability company. There is a preponderance of evidence that assists in my conclusion, as illustrated above. The UDECOTT has an integral role in the development of the urban landscape of Trinidad and Tobago and impacts on the lives of all citizens in this regard. It would be absurd to find otherwise, and I am persuaded even more that the UDECOTT is performing a public function, which properly brings this appeal into the realm of public law.”

Next week: Final in three-part series

By Anand Ramlogan 2008-05-09

Understanding UDECOTT (final part) - A law unto itself

There is probably more corruption under the PNM than any other government. The machinery is well-oiled and runs smoothly, and unlike the UNC, it isn’t concentrated in the hands of a few but spread a little more evenly, across the board. From contractors building small HDC houses, to billion-dollar mega projects, bribery is a rampant, but accepted fact of political life.

On the ground, the people involved speak freely about it, but it is a win-win situation so there’s no cause for complaint. Add to this the failure of our courts to rise to the occasion in this regard, with preliminary inquiries in corruption cases dragging on endlessly, for six years and any hope of exposure recedes faster than the prominence of Valley, Hinds, Achong and Rowley (?).

In this final part, I wish to conclude my reference to the 2006 judgment of former CJ Sharma and record the fact that in an earlier judgment delivered by his successor, CJ Archie in the same matter in 2005, the court of appeal decided that the matter should be ventilated before the court and not shut out at the preliminary stage.

Justice Archie expressed the preliminary view the precise nature of UDECOTT with the government needed clarification. He stated it was a live issue whether UDECOTT had a contract with the government or was simply an agent of it. Crucial to his decision was the fact that UDECOTT could award contracts without reference to the Central Tenders Board. This was later taken up by Sharma in his dissenting judgment as follows:

71. Additionally and most crucially the Central Tenders Board (“C.T.B”) is vested with the sole and exclusive authority to act for the government and the statutory bodies in inviting, considering and accepting or rejecting offers for the supply of articles or for the undertaking of works or any services in connection therewith, necessary for carrying out the functions of the Government or any of the statutory bodies. The UDECOTT’s invitation to the prequalified contractors to submit tenders was pursuant to an amendment to the C.T.B Ordinance by Act No. 36 of 1979, which permits the government to act on its own behalf, without reference to the C.T.B where it contracts with wholly owned state enterprises with respect to “ the undertaking of works… necessary for carrying out the functions of the Government”. It would appear that the Government has attempted to circumvent the requirements under the Ordinance, by creating and contracting with several wholly owned several State enterprises to bypass the C.T.B. No doubt, it was commendably intended to use this route in the interest of speed, but in my view accountability and transparency are not to be sacrificed.

74 …the extent of UDECOTT’s borrowings from the private sector amount to $291 million secured by State guarantee. It is recognised that a government guarantee is not evidence that the public funds are expended, but it is a contractual liability and the possibility exists that public funds may be expended. Therefore, the contention that the UDECOTT does not depend on taxpayers’ funds is untenable.

75. That, coupled with the introduction of several pieces of legislation designed to promote the principles of transparency and accountability in public affairs, necessitate that any state enterprise or any company with such a wide scope of involvement in the public sector must be accountable for its transactions, to ensure that the State’s purse is safeguarded in the interests of the citizens and that the State’s policies are adhered to and protected. In the instant and similar cases, the Auditor General’s regulation of the public purse may be too little too late to address any injustice and in any case would be primarily geared towards financial accountability. The court must therefore exercise a supervisory jurisdiction in the interests of the citizens and taxpayers over the UDECOTT and similar autonomous bodies which seek to perform public functions thereby ensuring immediate intervention to address concerns of irregularity raised about the disbursement of public funds and the lack of transparency in any transaction of a public nature, before it is too late. Admittedly, it has been said that the tendering procedure under the C.T.B is sometimes sluggish, that may be true, but this is neither reason nor justification for releasing the UDECOTT from the strictures of transparency and accountability.

76. In a small country which possesses enormous wealth, and in which allegations of corruption are rife, the government has proclaimed its commitment to accountability, transparency and integrity in public affairs. The courts have a special role to play in protecting this ethos, particularly in State Companies, incorporated as private companies, with unlimited taxpayers funds at their disposal, and the freedom to by-pass the C.T.B.

By Anand Ramlogan (Conclusion of three-part series) 2008-05-18