Minutes of the Honourable Jamaica House Of

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

8th DAY OF JUNE, 2010

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. Dr. Kenneth Leigh O’Neill Baugh, M.P., Deputy Prime Minister and Minister of Foreign Affairs and Foreign Trade

Hon. Pearnel Patroe Charles, M.P., CD, Minister of Labour & Social Security

Hon. Dr. Horace Anthony Chang, M.P., Minister of Water & Housing

Hon. Neville Andrew Gallimore, M.P., Minister of State in the Ministry of Labour and Social Security & Deputy Leader of the House

Hon. Clifford Everald Errol Warmington, M.P., Minister of State in the Ministry of Water and Housing

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

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

Hon. Robert St. Aubyn Montague, M.P., Minister of State in the Office of the Prime Minister

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. Donald Keith Duncan, M.P., Hanover, Eastern

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

Mr. Ian Dave Hayles, M.P., Hanover, Western

Mrs. Sharon Merle Hay-Webster, M.P., St. Catherine, South Central

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. Derrick Flavius Kellier, M.P. CD, St. James, Southern

Mr. Othneil Damion St. Elmo Lawrence, M.P., St. Ann, North Western

Mr. Desmond Gregory Mair, M.P., St. Catherine, North Eastern

2 Mr. Clive Arthur Mullings, M.P., S. James, West, Central

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

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. Ernest Augustus Smith, M.P., St. Ann, South Western

Rev. Ronald George Thwaites, M.P., Kingston, Central

STATEMENTS BY MINISTERS

The Minister of Energy and Mining, the Honourable James Robertson made the following statement:

The Contractor-General has announced his intention to carry out an investigation into the proposed sale of the government’s 45% equity in Jamalco. The government will cooperate fully with the Contractor-General in the conduct of his investigations.

In fact, the Contractor-General first became aware of the matter in April 2009, when, on the instructions of the Prime Minister, as acknowledged by him in a letter dated April 29, 2009, the then Permanent Secretary in the Ministry of Energy and Mining and the Chairman of BATCO met with the Contractor-General to discuss issues related to the HongFan proposal. HongFan initially sought to purchase alumina but from the very outset indicated its interest in acquiring the government’s shares in JAMALCO.

There are two important considerations that have guided the proposed transaction.

Firstly, the government’s 45% ownership in Jamalco, through Clarendon Alumina Production (CAP), had become a costly burden which the Jamaican taxpayers could no longer bear. The problems began in 2000 when CAP was unable to meets its share of operational costs and proceeded to borrow US$125 million initially from Glencore as an advance which was repaid by a US$125 million loan secured from the international capital market. US$55 million of this amount was diverted to help the government to finance its budget.

In 2002, a further US$65 million was borrowed from GLencore to meet CAP’s share of plant expansion costs.

3 In 2006, a further US$200 million was secured from the international capital market, US$69 million of which was used to repay the balance on the US$125 million loan, US$126 million to settle further debts that CAP had accrued and US$5 million toward working capital. The loans from Glencore were repayable through 10 year alumina supply contracts with more than a half of the supply at a fixed price and the remainder pegged to the equivalent of 12¼ % of the price of aluminum on the London Metal Exchange.

Sharp increases in the price of oil and caustic soda led to a situation where the cost of production far exceeded the price we were receiving under these arrangements. The huge drop in alumina prices caused by the recession without a commensurate fall in oil prices further aggravated the dilemma. At the end of 2008, we were losing over US$130 on every ton of alumina produced, incurring losses on CAP’s operations at an average rate of US$10 million per month.

As the debts piled up and CAP was unable to meet its payments, the government was required to make good on the payments. In fact, in October 2008, Alcoa issued to CAP a formal notice of default. The seriousness of this cannot be overlooked as it would have impacted the US$200 million globally traded bonds with grave implications for all GOJ sovereign bonds. The government had to step in. Between 2007 and 2010, the government, through the Ministry of Finance and the Public Service and the Petrocaribe Fund, has had to pump approximately US$250 million to meet CAP’s obligations to Jamalco. CAP’s current indebtedness stands at just under US$400 million.

Under the IMF agreement, the government could not continue to finance these losses. They had to be cauterized. The government had to divest itself of its shares in Jamalco.

The second issue relates to the selection of HongFan as the preferred bidder.

Divesting our shares in Jamalco involves much more than simply selling an asset. There are strategic considerations that have to be weighed carefully to determine what is in the best long- term interests of Jamaica’s alumina industry. China, with its fast growing economy, is the largest market for alumina. In addition, the selection of a buyer for our shares had to take into account the need to maintain and strengthen the partnership with Alcoa which owns 55% of the shares in Jamalco.

HongFan had expressed an interest in acquiring our Jamalco shares in 2008. The government spent considerable time conducting due diligence on the company. Founded in 1992, it controls or has significant investment in a number of aluminum plants in China. It has supply contracts with Chalco, China’s largest aluminum company and is the exclusive agent for all of Chalco’s aluminum products in the US market.

HongFan’s interest was maintained through 2009 when the industry fell to its lowest point, several plants around the world were being shut down and hardly any investor was prepared to take on new ventures. Its offer includes not only a substantial price commensurate with independent evaluation but the assumption by HongFan of the costly supply contracts which are

4 responsible for a substantial part of the accumulated losses and some of which run until 2013. Its offer is also better than that submitted by one of the major global players in the alumina industry.

HongFan has the support of the China Development Bank, the world largest development bank. During the Prime Minister’s visit to China in February, he met with Chalco and the China Development Bank to confirm their support for the deal. In April, representatives from Chalco and the China Development Bank visited Jamaica for further discussions and toured the plant jointly with senior officials from HongFan and Alcoa.

The agreement which was approved by Cabinet has not yet been consummated as, under the joint venture agreement between CAP and Alcoa, Alcoa has the right of first refusal and has until the end of June to exercise that option.

Yesterday, I attended a meeting in New York for joint follow-up discussions with HongFan and Alcoa.

As I have already stated, all the relevant government entities will cooperate fully with the Contractor-General in his investigations.

(The Prime Minister, the Honourable Bruce Golding entered and took his seat).

(Dr. Patrick Harris, M.P., Trelawny, Northern, entered and took his seat).

(The Minister of Transport and Works, the Honourable Lester Henry, entered and took his seat).

(The Minister of Health and Environment, the Honourable Rudyard Spencer, entered and took his seat).

(Mr. Franklyn Witter, M.P., St. Elizabeth, South Eastern, 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).

(The Minister of Industry, Commerce and Investment, the Honourable Karl Samuda, entered and took his seat).

(Dr. St. Aubyn Bartlett, M.P., St. Andrew, Eastern, entered and took his seat).

(Mr. Derrick Smith, M.P., St. Andrew, North Western, entered and took his seat).

5 ANNOUNCMENTS

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

Ministry Paper No. 52 Cabinet Agenda Issues for May 25, 2010 (Cabinet Office)

Nutrition Products Limited Annual Report for the Year 2005/2006 (Ministry of Education)

Formal Notice of Commencement of Special Statutory Investigation – Proposal to Divest the Government of Jamaica’s Forty-five Percent (45%) stake in Jamalco (Office of the Contractor-General)

NOTICES OF MOTIONS GIVEN ORALLY

Mr. Desmond Mair, M.P., St. Catherine, North Eastern, gave notice that at the next meeting of the House he would move:

WHEREAS in a landmark decision, the Supreme Court in April 2008, upheld by the Court of Appeal in February 2009, ruled that the then Member of Parliament for Portland, Western, who by his positive act of renewing, as an adult, his United States of America passport, was in contravention of Section 40, subsection 2 of the Constitution;

AND WHEREAS as a consequence of the same ruling it was held that the said Member was disqualified to be elected to the House of Representatives and hence his nomination for the General Elections held on the 3rd of September, 2007, was declared null and void and of no legal effect;

AND WHEREAS the Member of Parliament for St. Catherine, South Central, has publicly declared that she was born in the United States of America and holds a United States of America passport;

AND WHEREAS this Member publicly acknowledged in August 2009, that she still held a United States of America passport;

BE IT RESOLVED that this Honourable House invite the Member of Parliament for St. Catherine, South Central, to renounce immediately her position as a Member of this Honourable House in accordance with the principle of law upheld by the ruling of the Court of Appeal.

The Minister of Education and Leader of the House, the Honourable Andrew Holness, on behalf of the Minister of Finance and the Public Service, gave notice that at the next meeting of the House he would move to introduce and have read a first time a Bill entitled “AN ACT to Amend

6 the Tourist (Duty-Free) Shopping System Act, so as to change the name of the Act and of the licences, permits and shops governed thereby and to establish a duty-free shopping system for arriving passengers and for connected matters.

The Minister of Education and Leader of the House, the Honourable Andrew Holness, gave notice that at the next meeting of the House he would move:

WHEREAS subsection (1)(g)(i) of section 41 of the Constitution of Jamaica requires a Member of this Honourable House of Representatives to vacate his seat if any firm in which he is a partner, or any company of which he is a director or manager, becomes a party to any contract with the Government of Jamaica for or on account of the public service or if he becomes a partner in a firm, or a director or manager of a company which is a party to any such contract;

AND WHEREAS the Member of Parliament for Manchester, Central is a director of Proven Management Limited which may from time to time deal in securities issued or guaranteed by, or provide financial services pursuant to contracts with, the Government of Jamaica and other public sector entities;

AND WHEREAS the Member has disclosed the nature of such contracts and interests of the company of which he is a director:

BE IT RESOLVED that this motion be referred to the Ethics Committee for consideration and report.

He further gave notice that at a later stage that day he would move for the suspension of the Standing Orders to enable him to take the motion.

(The Minister of Youth, Sport and Culture, the Honourable Olivia Grange, entered and took her seat).

(Mr. Robert Pickersgill, M.P., St. Catherine, North Western, entered and took his seat).

QUESTIONS AND ANSWERS TO QUESTIONS

The Reverend Ronald Thwaites asked the Prime Minister the following question:

1. Since this Government took office, will the Prime Minister please itemize the use of private attorneys to represent the State?

2. Will the Prime Minister please name the firms/individuals and the reasons for them to be employed other than the State Attorneys in each instance as well as the fees incurred and projected?

7 3. Will the Prime Minister please set out the principles which are applied in respect of the use of private counsel by the Government?

The Prime Minister replied as follows:

Answer to Part 1

(a) Daisy Coke, Mike Fennell, Edwin Jones, Pauline Findlay v Orette Bruce Golding and the Attorney-General

The firm Livingstone, Alexander & Levy and Mr. Richard Small were engaged because germane to the matter before the Court was the appointment as Solicitor-General of member of the same department. It would not have been appropriate, therefore, for State attorneys of that department to act in the matter. The fees paid were $3.7 million.

(b) Portia Simpson Miller v Orette Bruce Golding and the Attorney-General

The firm Livingstone, Alexander & Levy and Mr. Richard Small were retained for the same reasons stated above; fees paid were $3.4 million.

The firm Livingstone, Alexander & Levy was retained as it would have been inappropriate for lawyers of the Attorney-General’s Department, the majority of whom are members of LOSA, to appear in a matter in which they would be in an obvious conflict of interest. The fees paid were $4.2million.

(d) Arbitration between Island Woods Development Limited and the Ministry of Education re extension to Morant Bay High School

The firm Livingston, Alexander & Levy was retained because the Solicitor-General was at the time engaged in two other arbitration matters and it was considered that the requisite expertise would be best obtained from the private bar. No fees have yet been paid but are projected to be $2.5 million.

(e) Honourable Shirley Tyndall, Patrick Hylton, Omar Davies & Jamaica Redevelopment Foundation v Honourable Justice Boyd Cary, Charles Ross and Warrick Bogle

Mr. Paul Beswick of Ballentine, Beswick & Company, along with Dr. the Honourable Lloyd Barnett and Dr. Adolph Edwards have been retained because the Solicitor-General is preoccupied with a number of matters of national importance and the Deputy Solicitor- General is already appearing in the matter on behalf of FINSAC. No fees have yet been paid. The projected costs are yet to be finalized.

8 (f) Matters relating to the Extradition Treaty between Jamaica and the United States of America and an application to the Supreme Court for a declaratory order.

Dr. Lloyd Barnett and Dr. Adolph Edwards were retained to represent the Attorney- General in the matters. The precise fees have not yet been determined as the application was withdrawn.

Answer to Part 2

Please see answer to Question 1

Answer to Part 3

Private counsel is retained where:

(a) State attorneys with the requisite skills and experience are not available having regard to the circumstances of their engagement in other matters and need for expedition in the particular matter.

(b) A conflict of interest involving State attorneys may arise.

The Reverend Ronald Thwaites asked the Minister of Finance and the Public Service, the following question:

1. Will the Minister please state what are the levels of arrears owed to creditors by Government-owned or –controlled entitles at this time?

2. Will the Minister please state what the consequences are of such arrears to the country’s fiscal deficit?

3. Will the Minister please state what the plan is to pay off these arrears and prevent recurrence?

4. Will the Minister please indicate how do these arrears impact on the Government’s capacity to provide basic social services?

The Minister of Finance and the Public Service replied as follows:

Answer to Part 1

At March 31, 2010, the Self-financing Public Bodies had Accounts Payable balances of $80,004.56 million as follows: $ Selected Public Bodies $72,153.79M $ Other Public Bodies 7,850.77M $80,004.56M

9 As at March 31, 2010, all Government Ministries, Government Agencies & Departments had Accounts Payable balances of $5m176.6M. (Please see appendix for details)

Answer to Part 2

Jamaica’s fiscal accounts are currently done on a cash basis, thus expenditure is recorded when a payment is actually made and not necessarily when it is incurred. Similarly, revenue is recorded when the cash is actually received. Accordingly, within the fiscal year, expenditure incurred by Central Government but not paid would not worsen the fiscal deficit targeted for the year. Arrears would of course contribute to the fiscal deficit whenever they are paid off in subsequent years. The Public Bodies finance their outstanding balances from internally generated resources and therefore any arrears would have been factored into the fiscal deficit estimated for a given fiscal year.

Answer to Part 3

Except for Air Jamaica Limited for which a provision was made in the 2010/2011 Budget, the Public Bodies are expected to finance the outstanding balances from internally generated resources. It should be noted also that the Self-financing Public Bodies prepare accounts on the accrual basis, under which it is normal for recognition to be made of balances outstanding at the end of the accounting period.

In the case of Central Government the different Ministries, Departments & Agencies are working out payment plans with the various creditors within the context of the execution of their budget allocations. The implementation of the Fiscal Responsibility framework, the Central Treasury Management System and other on-going reforms will ensure closer scrutiny over GOJ expenditure and significantly improve financial management within the public sector, thereby reducing the incidences of accumulation of arrears.

Answer to Part 4

The payment plans and schedules worked out between MDAs and creditors are designed to ensure that provision of basic social services is not adversely impacted.

Mr. Colin Fagan, M.P. St. Catherine, South Eastern, asked the Prime Minister the following questions:

1. Can the Prime Minister say how the local authorities will benefit from the Chinese loan after giving up 50% of their Parochial Revenue Fund (PRF) over the next five months?

2. Can the Prime Minister state how the councils will finance programmes related to the PRF on the reduced amount over the five months?

3. Can the Prime Minister explain what method will be used to determine which roads get fixed?

4. Can the Prime Minister state if the funds promised to the councils will be accessed directly?

The Minister of State in the Office of the Prime Minister, with responsibility for Local Government, the Honourable Robert Montague replied as follows:

Answer to Part 1

The benefit to be accrued from this loan facility to the Local Authorities is US$100 million over five (5) years.

Answer to Part 2

Each council will determine how they will continue to prioritize, and implement prudent fiduciary measures in the implementation of programmes to ensure they operate within their stipulated budgets.

Answer to Part 3

The methodology for the selection and prioritization of roads to be repaired or rehabilitated will continue to be the prerogative of each Local Authority as has always been the case prior to this loan facility.

Answer to Part 4

This question is not clear and therefore needs some clarification in order to receive the appropriate response.

PUBLIC BUSINESS

The Minister of Education and Leader of the House, the Honourable Andrew Holness, having obtained suspension of the Standing Orders moved:

11 AND WHEREAS the Member has disclosed the nature of such contracts and interests of the company of which he is a director:

BE IT RESOLVED that this motion be referred to the Ethics Committee for consideration and report.

Seconded by: Mr. Roger Clarke. Agreed to.

Mr. Othneil Lawrence continued debate on the motion:

BE IT RESOLVED that this Honourable House of Representatives approve the plans and programmes being pursued in the areas of production, commerce and infrastructure and further approve the policy projections as announced for the Financial Year 2010/2011.

Mr. Othneil Lawrence having spoken for 30 minutes, the Minister of Education and Leader of the House moved that the time of his speech be extended by 10 minutes.

Seconded by: Mr. Desmond Mair. Agreed to.

(Mr. Tarn Peralto, M.P., St. Mary, South Eastern, entered and took his seat).

(Mr. Fitz Jackson, M.P., St. Catherine, Southern, entered and took his seat).

Further debate on the substantive motion was by leave deferred.

The Prime Minister, the Honourable Bruce Golding moved:

THE CRIMINAL JUSTICE (PLEA NEGOTIATIONS AND AGREEMENTS) ACT ______

The Criminal Justice (Plea Negotiations and Agreements) Regulations, 2010, Resolution ______

WHEREAS under the provisions of section 21 of the Criminal Justice (Plea Negotiations and Agreements) Act (hereinafter referred to as “The Act”), the Minister may make Regulations generally for the purpose of giving effect to the provisions of the Act;

AND WHEREAS under that section the Minister made The Criminal Justice (Plea Negotiations and Agreements) Regulations, 2010, on the 11th day of February, 2010;

AND WHEREAS the section provides that Regulations made under the section shall be subject to affirmative resolution:

12 NOW, THEREFORE, BE IT RESOLVED by the House of Representatives:

1. This Resolution may be cited as The Criminal Justice (Plea Negotiations and Agreements) Regulations, 2010 Resolution.

2. The Criminal Justice (Plea Negotiations and Agreements) Regulations, 2010 which were laid on the Table of the House of Representatives on the 23rd day of February, 2010, are hereby affirmed.

Seconded by: Mr. Desmond Mair. Agreed to.

The Prime Minister, the Honourable Bruce Golding moved:

THE LEGAL AID ACT ______

The Legal Aid (Excepted Offences) (Amendment) Regulations, 2010, Resolution ______

WHEREAS under the provisions of subsection (1)(a) of section 28 of the Legal Aid Act the Minister, after consultation with the Legal Aid Council, may make regulations prescribing the offences, matters or proceedings or the categories of offences, matters or proceedings in respect of which legal aid shall not be granted;

AND WHEREAS under those provisions the Minister made the Legal Aid (Excepted Offences) (Amendment) Regulations, 2010, on the 11th day of February, 2010;

AND WHEREAS subsection (3) of the section provides that regulations made under subsection (1)(a) of the section shall be subject to affirmative resolution:

NOW, THEREFORE, BE IT RESOLVED by the House of Representatives as follows:

1. This Resolution may be cited as the Legal Aid (Excepted Offences) (Amendment) Regulations, 2010, Resolution.

2. The Legal Aid (Excepted Offences) (Amendment) Regulations, 2010, which were laid on the Table of the House of Representatives on the 23rd day of February, 2010, are hereby affirmed.

Seconded by: Mr. Desmond Mair. Agreed to.

The Leader of the Opposition, the Most Honourable Portia Simpson Miller continued debate on the motion:

13 BE IT RESOLVED that this Honourable House of Representatives approve the Report of the Joint Select Committee of Parliament which was set up to consider and report on the following Bills entitled “AN ACT to Amend the Bail Act”; “AN ACT further to Amend the Firearms Act”; “AN ACT to Amend the Offences Against the Person Act”; “AN ACT to Amend the Parole Act”; “AN ACT to Make interim provision in relation to the grant of bail in specified circumstances”; and “AN ACT to Make interim provision extending the power of arrest and detention under sections 50B and 50F of the Constabulary Force Act” which was laid on the Table of the House on the 9th day of December, 2008, be approved.

The Leader of the Opposition having spoken for 30 minutes, the Leader of the House moved for the suspension of the Standing Orders to enable her to continue her speech to its conclusion notwithstanding the time limit on speeches.

Seconded by: Mr. Luther Buchanan. Agreed to.

ADJOURNMENT

At 6:40 p.m., The Minister of Education and Leader of the House moved that the House do now adjourn to Wednesday, June 9, 2010 at 2:00 p.m.

Seconded by: Mr. Franklyn Witter. Agreed to.

The House adjourned accordingly.

------Delroy Chuck, M.P. Speaker