OFFICE of the CONTRACTOR GENERAL of JAMAICA Special

OFFICE OF THE CONTRACTOR GENERAL OF JAMAICA

Special Report of Investigation

Conducted into the Circumstances Surrounding the Procurement of Contracts for the 4M Energy Saving and Light Bulb Distribution Project

Petroleum Corporation of Jamaica (PCJ), the Former Ministry of Industry, Technology, Energy and Commerce (MITEC) and the Ministry of Energy, Mining and Telecommunications (MEMT)

Ministry of Energy, Mining and Telecommunications (MEMT)

Table of Contents

Executive Summary………………………………………………………………. 02

Introduction………………………………………………………………………. 28

Terms of Reference………………………………………………………………. 31

Background……………………………………………………………………….. 33

Methodology………………………………………………………………………. 35

Findings……………………………………………………………………………. 42

Summary of Key Findings……………………………………………………….. 100

Conclusions……………………………………………………………………….. 110

Recommendations………………………………………………………………… 115

Appendices………………………………………………………………………… 124

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 1 of 124 OFFICE OF THE CONTRACTOR GENERAL OF JAMAICA

Special Report of Investigation

Conducted into the Circumstances Surrounding the Procurement of Contracts for the 4M Energy Saving and Light Bulb Distribution Project

Petroleum Corporation of Jamaica (PCJ), the Former Ministry of Industry, Technology, Energy and Commerce (MITEC) and the Ministry of Energy, Mining and Telecommunications (MEMT)

EXECUTIVE SUMMARY

The Investigation of the 4M Energy Saving and Light Bulb Distribution Project was initiated by the Office of the Contractor General (OCG) on Wednesday 2007 October 24.

On 2007 October 23, under cover of letter of even date, the Prime Minister, the Honourable Orrett Bruce Golding, provided the Contractor General with an advance copy of a report which the Minister of Energy, Mining and Telecommunications, the Honourable Clive Mullings, had prepared on the 4M Energy Saving Project. The Honourable Clive Mullings tabled the referenced report in his presentation to Parliament later that same day.

In his presentation, Minister Mullings invited the Contractor General to investigate, inter alia , the contract award process which was utilized for the procurement of contractors for the 4M Energy Saving and Light Bulb Distribution Project (hereinafter referred to as the “4M Project” or the “Project”).

The allegations which were contained in Minister Mullings’ report to Parliament raised a number of concerns. Some of these alluded to impropriety, lack of fairness and transparency in the award of contracts, a breach of the procurement guidelines, mismanagement and a breach of applicable Government administrative and accounting procedures – all in so far as the 4M Project was concerned.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 2 of 124 The OCG’s Special Investigation was initiated in accordance with the discretionary powers which are reserved to the Contractor General under Sections 15 (1) and 16 of the Contractor General Act.

The preliminary review of the Minister’s allegations was informed by the Contractor General Act, the Government Procurement Procedures Handbook (GPPH), the Financial Administration and Audit Act, the Public Bodies Management and Accountability Act, as well as the Corruption Prevention Act.

In general, these references guided the context within which the Investigation was conducted, the methodology which was utilized and the Findings and Conclusions which were reached therein.

The primary means of data collection and evidence-gathering, which were utilized throughout the investigation, was the utility of written Requisitions/Questionnaires which were issued by the OCG in accordance with the provisions of the Contractor General Act, the Voluntary Declarations Act and the Perjury Act.

Requisitions were issued to key representatives of the former Ministry of Industry, Technology, Energy and Commerce (MITEC), the current Ministry of Energy, Mining and Telecommunications (MEMT), the Petroleum Corporation of Jamaica (PCJ) and the Ministry of Finance and the Public Service.

Responses to the said Requisitions/Questionnaires were returned by all respondents, inclusive of the Minister of MEMT, The Honourable Clive Mullings.

The OCG also directed formal Requisitions to two senior representatives of Universal Management and Development Company (UMD), the company which was reported as having received the bulk of the payments, from the PCJ, in relation to the 4M Project.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 3 of 124 Having regard to the serious implications which were inherent in Minister Mullings’ report to Parliament, it was believed that the UMD officials would have welcomed the opportunity to be heard.

However, the sole Director of UMD and the Caribbean Communications and Media Network Ltd. (CCMN), Mr. Rodney Chin, acting on the advice of his Attorney, Mrs. Valerie Neita-Robertson, refused to comply with the lawful Requisitions of the OCG.

By way of letter, which was dated December 20, 2007, a representative of Mrs. Neita- Robertson wrote to the Contractor General on her behalf, advising, inter alia , that:

“Although her client may be compelled to attend your investigation, nonetheless he has been held out as a suspect in matter being investigated and in those circumstances he may not be compelled to give evidence that is likely to incriminate himself. The State may not, (even through a Supreme Court Justice,) compel a citizen to incriminate himself unless Immunity against Criminal Prosecution is granted .” (Attorney’s Emphasis).

The Contractor General, in his written response to Mrs. Neita-Robertson, dated December 27, 2007, advised her that the OCG did not share “ the view which is implicit in your argument that your Client has the right to carte blanche refuse to comply with the subject Requisition of the Office of the Contractor General of December 10, 2007 ”.

The Contractor General’s letter went on to advise that the OCG would “ therefore be taking the requisite steps to formally refer the matter to the Director of Public Prosecutions with a recommendation that criminal proceedings should be instituted against your Client. You may therefore choose to formally pursue yours and your Client’s positions directly with the Director ”.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 4 of 124 The matter was formally referred by the Contractor General to the Director of Public Prosecutions, under cover of letter which was dated the next day, 2007 December 28. The referral, which was made pursuant to Section 29 of the Contractor General Act, currently resides with the DPP.

The lack of cooperation on the part of Mr Rodney Chin, with the OCG’s Investigation, has left the OCG with critical questions which pertain to the 4M Project unanswered.

Several of these questions could only have been answered by Mr. Rodney Chin, particularly in light of the absence of written contracts between UMD and CCMN and the Government of Jamaica, as well as given the absence of other pertinent documentation which relates to the 4M Project.

One of the key questions which arises is whether UMD and CCMN were contractors who were competent and had an established business performance track record.

With respect thereto, the OCG was particularly interested, inter alia , to learn how Mr. Chin would reconcile the fact that UMD was engaged as the Project’s principal contractor to provide project management services to the Government of Jamaica, against the following facts, namely: (a) that the 4M Project was commenced in 2006 July, (b) that UMD and CCMN were organized in the same month, on 2006 July 31 and July 20, respectively (c) that written declarations were made by Senator Spencer, to the OCG, to the effect, inter alia, that he had to “rely on persons that I was familiar with in the past ”1 and (d) that based upon records which were reviewed by the OCG, Ms. Sherine Shakes, the mother of Senator Spencer’s child, was ostensibly held out by UMD to be its principal project management, operations and administrative representative despite the fact that she, Ms. Shakes, conceded to the OCG that she had had no prior project management experience.

1 Kern Spencer’s Response to October 29, 2007 Requisition. Response to Question #19. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 5 of 124 The Findings of the OCG have revealed evidence of breaches of the GPPH, the Contractor General Act, the Financial Administration and Audit Act and the Public Bodies Management and Accountability Act, in the procurement of contracts for the 4M Project and in the execution of the Project itself.

These breaches were due primarily to (a) an apparent failure on the part of the PCJ and MITEC to apply adequate planning, procurement and accounting controls to the development, implementation and execution phases of the Project and (b) what appears to have been an unwarranted, improper and unlawful Ministerial intervention, by State Minister Senator Kern Spencer in at least the procurement processes of the Project – processes which are reserved by law for execution by the Government’s administrative arm and its Accounting and Accountable Officers prior to endorsement by the National Contracts Commission (NCC) and/or the Cabinet as the GPPH may warrant.

Senator Kern Spencer conceded that the initial engagement of eight (8) of the Project’s contractors, in 2006 July, was as a direct result of his attempts to procure goods, works and services to implement the 4M Project, after the management of the Project was conveyed to him, in 2006 June, by Minister Phillip Paulwell. Another contractor, he said, was engaged by him “indirectly”.

The referenced contractors included CCMN, UMD (where Sherine Shakes, the mother of Mr. Spener’s child, was engaged as Project Manager/Business Development Manager), Verdie Mair (who the OCG has confirmed is the grandmother of Mr. Spencer’s child) and Stacey Ann Waite, who is a friend of Sherine Shakes and who Mr. Spencer said he had engaged “indirectly”.

In his written response, dated 2007 November 20, to the Requisitions of the OCG, the Minister explained that “… to facilitate the smooth running of the project, my office made initial contact with the following organizations/persons directly or indirectly, to spare the PCJ and MITEC the embarrassment ”. He then named the nine contractors.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 6 of 124 “I had to rely on persons that I was familiar with in the past and persons who were willing to offer credit and respond to the requirements immediately. The intention was to engage those persons to deal with the emergency situation at hand ”, he said. (OCG’s emphasis).

The OCG has seen no evidence of any written contract between the Government of Jamaica and any of the Project’s suppliers/contractors.

The OCG has also concluded that there was no transparency, fairness, impartiality or merit in the procurement of the contractors for the 4M Project. This was due primarily to the absence of a competitive tendering exercise and the lack of an acceptable selection methodology by which the contractors were engaged, all in contravention of the provisions of the Contractor General Act and the GPPH.

This should not be surprising since several of the Project’s contractors, inclusive of the main contractor – UMD, were hand-picked and engaged by State Minister, Senator Kern Spencer.

In an attempt to regularize the contracting of project management services for the 4M Project, the then existing contract was put to competitive tender by MITEC in 2007 March, several months after the Project had been commenced in 2006 July.

The results of the tender process revealed that UMD’s proposed rate was three times the rate which was tendered by the other bidder, Power Services Co. Ltd. (PSCL). UMD had been previously awarded the contract at the commencement of the Project, having been selected and engaged by Senator Kern Spencer.

It stands to reason, therefore, that had competitive tendering been employed earlier in the 4M Project, the Government of Jamaica would have benefited from a significantly more competitive rate for the project management services which were procured under the Project through UMD.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 7 of 124 Put another way, if the subject reference is to be used, the Government of Jamaica did not receive value for money for the services which were rendered by UMD in its execution of the 4M Project.

It should be noted that despite PSCL’s competitive bid and the endorsement of same by the National Contracts Commission (NCC), in 2007 June, the final steps were never taken to have PSCL replace UMD as the project management services contractor for the 4M Project. This was allegedly attributed to the fact that the completion time for the Project was then fast approaching.

The gravity of the procurement breaches which the OCG’s Investigation has un-earthed, and the mismanagement of the implementation of the 4M Project, are such that neither the Permanent Secretary in the former MITEC nor any of the Accountable Officers at PCJ, was aware of the means by which any of the contractors was engaged. This is despite the fact that three (3) major pieces of legislation were substantially contravened during the process. The sole excepting contractor was the Medallion Hall Hotel, which was contracted in 2007 August, over a year after the Project had been initiated.

In the circumstances, there is no doubt that there was a breach of duty on the part of the Permanent Secretary of the former MITEC and the current MEMT, and on the part of one or more of the Accountable Officers at the PCJ. Quite surprisingly, none of these persons has claimed responsibility on behalf of their respective entities for the 4M Project. This is despite the fact that J$114 Million was expended on the Project and approximately J$153 Million is alleged to be still owing to contractors.

The Permanent Secretary at MITEC and MEMT, who is also a Board member of the PCJ, has claimed limited knowledge of the 4M Project and was not sufficiently apprised of the procurement breach until December 2006/January 2007.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 8 of 124 It must be highlighted that, of the J$114 Million which has already been paid out on the Project, J$24 Million of that sum is an over expenditure which was neither approved by the Board of PCJ, nor brought to the attention of the most senior Accountable Officer at the PCJ, namely its Group Managing Director, Dr. Ruth Potopsingh.

It is important to record that PCJ Officers Dr. Ruth Potopsingh and Mr. Rodney Salmon, Director of Administration and Corporate Secretary, did raise concerns and questions, of one type or the other, about the Project, at various points throughout its planning, implementation and execution.

However, despite the raising of these concerns, the fact still remains that the expansive breaches of the GPPH which are associated with the Project and the serious accounting, financial and administrative management lapses which occurred in its conception, implementation and execution, cannot be denied and must therefore be accounted for.

In answer to one of the OCG’s written Requisitions which was directed to him, Senator Spencer declared, under pain of criminal prosecution, that he had not, inter alia , “received, whether directly or indirectly, any benefit(s), in cash or in kind, as a result of (his) involvement in and/or association with the Project ”.

The OCG has, however, been informed by two witnesses (hereinafter referred to as “Driver A” and “Driver B”), inter alia , that property which the OCG has confirmed was registered in the name of a company in which Senator Spencer is a Director and Shareholder, namely Butterfly Traders Limited, was allegedly utilized in the execution of contracts under the 4M Project. The circumstances are such that it could suggest that an illicit benefit was derived there-from by the Senator, contrary to Section 14 (1) of the Corruption Prevention Act.

Driver A and Driver B had voluntarily and freely provided this information to the OCG and had executed, under the pain of criminal prosecution, formal declarations attesting to the veracity of same. The declarations were executed both before the OCG and before a

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 9 of 124 Justice of the Peace. However, Driver A and Driver B subsequently sought to withdraw the said information.

In addition to the foregoing, the OCG’s Investigation has also made the following determinations and/or uncovered the information which is summarized below:

1. There is no written Heads of Government Agreement which establishes the responsibilities of the Government of Jamaica and the Cuban Government for the 4M Project.

2. No evidence was found to refute the fact that Mr. Spencer had primary and Ministerial responsibility for the implementation of the island-wide 4M Project.

3. The allegation which was made in Parliament by Minister Mullings that the 4M Project implementation was handled by a “Monitoring Committee” which was chaired by then Minister of State, Senator Kern Spencer, was corroborated by Mr. Spencer himself.

However, no one has corroborated Mr. Spencer’s assertion that there were oversight “authoritative groups ”, one of which he said was chaired by Minister Paulwell. Mr. Spencer, himself, stated that the “ authoritative groups ” were adhoc and not formally established.

4. The allegation which was made in Parliament by Minister Mullings that the implementation of the Project was carried out on the “periphery” of the MITEC has not been substantiated.

5. There was no clear Project document detailing the scope and nature of the Project in its initial implementation phase. Even though an announcement for the Project’s implementation occurred in 2006 April, and the Project was

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 10 of 124 commenced in 2006 July, a detailed Project document was not drafted until 2006 October 4. The document was never formally approved.

6. There was some confusion between PCJ and MITEC regarding the issue of which Agency was responsible for executing the 4M Project. Neither MITEC nor the PCJ seemed clear about their designated and/or intended roles and responsibilities in the implementation and execution of the Project.

7. Notwithstanding, there is abundant evidence that one or more aspects of the Project – whether it was its implementation, its financing, its execution and/or its administration were, in one way or the other, attributable to the MITEC and the PCJ.

8. Generally, PCJ played the role of financing facilitators for the Project and handled the approval and payment of invoices which emanated from the Project’s contractors and suppliers. On the other hand, MITEC was involved in the Project at various stages between 2006 May and 2007 June, at which point in time, MITEC sought to remedy the procurement breach as regards the UMD contract.

9. Although the OCG has seen no evidence of any written contract between the Government of Jamaica and any of the Project’s suppliers/contractors, there is, however, evidence to suggest that the following services were required for the Project:

(a) Project Management Services; (b) Transportation Services; (c) Customs Clearance Services; (d) Provision of Meals for Volunteers; (e) Accommodation for the Cuban Volunteers.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 11 of 124 10. Neither the PCJ nor MITEC has admitted to engaging, either directly or indirectly, contractors for goods, works and/or services for the 4M Project. Former Minister of State, Kern Spencer has, however, through his own admission, taken responsibility for the engagement of various contractors for the Project.

11. CCMN, Medallion Hall and Shipping Logistics were registered with the NCC as approved contractors. UMD was not registered with the NCC when it was first engaged on the Project as a contractor. When UMD subsequently applied for NCC registration, it did so under the classification of ‘ Project Management ’ and was advised by the NCC Secretariat, by letter dated 2007 April 10, that “Project Management is classified as Consultant Services ”. Consultants are not required to be registered with the NCC.

12. Apart from UMD and the aforementioned contractors, all of the other contractors who were not classified as consultants, and who were engaged on the 4M Project, would have been required to be registered with the NCC unless they were engaged after February 12, 2007, in which event they would have only needed to be registered if the value of the contract was in excess of $275,000.

13. UMD was the major contractor on the 4M Project. It was incorporated on 2006 July 31 and CCMN, on 2006 July 20. 2006 July was the month in which the 4M Project was commenced. Although Mr. Rodney Chin was declared to be the sole shareholder and Proprietor of UMD, at no time, throughout the entire Investigation, has the OCG seen any written correspondence which was directed to UMD in his care or which was despatched by UMD in his name.

14. Ms. Sherine Shakes, Business Development Manager/Project Manager, UMD, is the mother of State Minister Spencer’s child. She was ostensibly held out by the UMD as one of its principal representatives, if not its principal

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 12 of 124 representative, in all of its dealings with Public Bodies in so far as the 4M Project is concerned.

15. Ms. Shakes, as at, 2007 December 24, admitted to the OCG, in writing, that she “had not had project management experience ”. This was despite the fact that (a) she was identified throughout the 4M Project as UMD’s Project Manager (b) she represented UMD at the 4M Project meetings and (c) UMD was contracted as the main contractor on the 4M Project to provide project management services to the Government of Jamaica.

16. Ms. Verdie Mair is the mother of Ms. Sherine Shakes of UMD, and hence the grandmother of the child of Mr. Kern Spencer. Ms. Mair was listed as one of the contractors who was engaged on the 4M Project by Mr. Kern Spencer. Direct payments of J$700,000 have been reportedly paid to Ms. Mair by the PCJ for catering services.2 Ms. Mair was also separately listed as the first Company Secretary for UMD and CCMN.

17. Mr. Spencer, despite being asked if he had a “ personal or other ” relationship with Ms. Mair, failed to disclose the fact that she was the grandmother of his child.

18. Both Driver A and Driver B have made very serious and far-reaching allegations against State Minister Spencer. The initial allegations were made, inter alia , in a formal interview which was conducted by OCG Representatives with both men on 2008 January 16. These statements were declared, by both men to be truthful, accurate and complete and were so certified in writing to the OCG as well as before a Justice of the Peace.

2 Payment listing from PCJ. Available from Rodney Salmons’ statement dated December 5, 2007 and Minister Mullings’ statement dated November 29, 2007. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 13 of 124 As was previously indicated, however, both men subsequently sought to withdraw their statements after they were allegedly contacted by Senator Spencer and the money which they had initially claimed was owed to them, for services which they had performed in the execution of the 4M Project, was paid.

The OCG is concerned that there is a likely possibility that, subsequent to the making of their statements to the OCG, these two (2) witnesses might have been intimidated and/or coerced into withdrawing the said statements, having regard to the gravity and the very serious import of the information which was conveyed.

The following allegations were included among those which were made by Driver A and Driver B:

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 14 of 124 (f) When the 4M Project ‘scandal’ broke, Driver A was called by UMD and told that things were to be moved to the wharf. These items included bulbs, food items (such as tin mackerel), 9 broken fans and a computer which had been used by the Cubans. (g) Upon arrival at the wharf, Driver A was told by security personnel that because of the investigation, nothing could be placed in the container. Subsequently, and according to Driver A, the bulbs were taken by a ‘truck man’ to a house in Portmore under the instructions of a Mr. Calvin Blackwood, who was allegedly employed to Mr. Spencer. (h) According to Driver A, when he sought to get payment for the work he had done, he heard that the company (UMD) was closed. (i) Driver A also alleges that after being instructed to park the buses at a place called TDK in Portmore, he received a call from Driver B informing him that the buses had been ‘ cut up’ . According to Driver A, he subsequently called Mr. Kern Spencer to enquire about the buses, and Mr. Spencer informed Driver A that the buses were ‘ cut up’ because he did not want ‘ the Labourites’ to know that his (Mr. Spencer) bus was involved in the contract. (j) Driver B indicated that he started to drive for the 4M Project in July 2006 when the initial set of Cubans had arrived and again for a few weeks in 2007 February. (k) Driver B indicated in his statement that he had requested that Mr. Kern Spencer pay him $2,000 per day. However, according to Driver B, Mr. Spencer told him he could only afford $1,500 per day. According to Driver B, this meeting occurred at the residence of Mr. Spencer in Waterworks. (l) Driver B also indicated that on 2007 May 1, he again started to drive for the 4M Project. In response to a question regarding his receipt of instructions, Driver B stated that he sometimes received calls from Ms. Shakes but most of his calls came from a Calvin who works with Mr. Spencer.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 15 of 124 (m) According to Driver B, to the best of his knowledge, the bus he was driving belonged to Mr. Spencer but it was not registered in Mr. Spencer’s name but in the name of a company. When asked who he worked for, Driver B said he was of the opinion that he worked for Mr. Spencer although he did not get direct instructions from Mr. Spencer. (n) Both Driver A and Drive B subsequently sought to withdraw the statements which they made to the OCG. (o) On 2008 January 21, during a visit to the OCG, both men expressed concern that Mr. Spencer had contacted them over the preceding week-end and had informed them that the payments which were outstanding to them would be paid on that day (2008 January 21). (p) It was also alleged by the Drivers that Mr. Spencer told them that he was informed by one Danhai Williams that they had given information to a place in New Kingston. (q) On 2008 January 22, Driver A returned to the OCG and informed representatives of the OCG that he had received the money owing to him. Driver A also indicated that he was told by a Mr. Chin that he (Driver A) should have had a lawyer present when making his statement to the OCG and that in his capacity as a driver, he was not authorized to give any statements in regard to Universal (UMD). (r) Driver A expressed a concern about the number of calls he had received from various individuals in regard to his making a statement to the OCG. (s) Driver A also noted that Mr. Chin had called him and said that it was being circulated at the PNP Headquarters that they, Driver A and Driver B, had gone to Knutsford Boulevard and made statements about the company, Universal (UMD).

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 16 of 124 19. (a) The highly irregular state of affairs which has prevailed in the matter of the planning, implementation and execution of the 4M Project, (b) the absence of transparency, merit, value for money and competition in the award of the Project’s contracts, (c) the flagrant breaches of the GPPH and the Contractor General Act which have occurred in the award of the said contracts, (c) the fact of State Minister Spencer’s improper, un-authorized and unlawful intervention in the Project’s procurement, contract award and contract payment processes, (d) the admitted engagement by Mr. Spencer of UMD, CCMN, Stacie Ann Waite and Verdie Mair, as contractors on the Project, (e) the fact of the personal relationship that Mr. Spencer has or has had with Sherine Shakes and Verdie Mair, (f) the fact that Ms. Shakes is the mother of Senator Spencer’s child, (g) the fact that Ms. Verdie Mair is the grandmother of Mr. Spencer’s child, (h) the fact that Mr. Spencer, in response to a direct Requisition of the OCG, concealed the material fact that Ms. Mair is the grandmother of his child (which is in itself a criminal offence under the Contractor General Act), (i) the fact of Ms. Shakes’ demonstrated role of primacy in the operational, business and administrative affairs of UMD, (j) the fact that Ms. Shakes has admitted that she had no prior project management experience, (k) the fact that, notwithstanding, UMD was contracted on the 4M Project as the principal provider of project management services to the Government of Jamaica, (l) the fact that Ms. Waite was listed in UMD’s 2007 March tender proposal as a technical employee of the company despite the fact that she was also separately engaged by Senator Spencer as a contractor under the 4M Project, (m) the fact that Ms. Mair was listed as the first Company Secretary of both UMD and CCMN despite the fact that she too was also separately engaged by Senator Spencer as a contractor under the 4M Project, (n) the fact that UMD and CCMN are corporate entities which were organized in the same month that the 4M Project was commenced, (o) the fact that UMD and CCMN had no prior business or operational performance track record when they were hand-picked and engaged on the 4M Project by Senator Spencer, (p) the fact that the bulk of the payments which have been made under the 4M Project were made to UMD and CCMN, (q) the fact that UMD and

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 17 of 124 CCMN are alleged to have already received contract payments, under the 4M Project, in excess of $85 Million and $3 Million respectively, (r) the fact that in a letter, which was dated 2007 August 31, Senator Spencer wrote directly to UMD to assure it of the “ legitimacy ” of invoices which it, UMD, had presumably submitted for an additional, outstanding and un-paid sum $143,588,142.05 under the 4M contract, (s) the fact that in the same letter, Senator Spencer gave written assurances to UMD that the outstanding invoices would “ be honoured at the earliest possible date ”, and (t) the fact that on 2007 August 30, Senator Spencer wrote directly to the Permanent Secretary of MITEC, Dr. Jean Dixon, advising her, inter alia , that “ I now place on record the amounts that are legitimately owed to date by MITEC/PCJ ” and, by so doing, certified that the respective sums of $143,588,142.05 and $15,288,942.75 were outstanding by the Government of Jamaica to UMD and CCMN, are, in the OCG’s considered view, all powerfully persuasive and indicative pieces of evidence which, by themselves, or when taken together with the allegations that Driver A and Driver B have made concerning Mr. Spencer’s private involvement in the 4M Project, raise, at a minimum, a very strong inference of an unlawful criminal conspiracy and corruption in the illicit award of the referenced contracts. In the circumstances, the OCG has concluded that the entire matter is one which warrants immediate and intensive investigation by the country’s (criminal) law enforcement authorities.

20. If the allegations which Driver A and Driver B have made are truthful as they had initially declared them to be, they would, at a minimum, suggest that Senator Spencer, whether by himself and/or through his company, Butterfly Traders Limited, was an active private participant in the execution of contracts under the 4M Project at a time when he was the Public Officer and State Minister who, by his own admission, was assigned responsibility for the implementation of the Project. The circumstances of the matter are even more compounded by the fact that Senator Spencer has admitted to the use of his Public Office to facilitate the award of the said contracts. In such circumstances,

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 18 of 124 it is the OCG’s considered view that, at a minimum, a criminal investigation into the matter is warranted to determine, inter alia , if corruption charges should be brought against Senator Spencer.

21. The OCG has seen no evidence which would suggest culpability on the part of then Energy Minister Phillip Paulwell for any of the procurement and contract award breaches which have been associated with the 4M Project. Additionally, besides the fact that Minister Paulwell was the then Minister with primary ministerial portfolio responsibility for MITEC, the OCG has been shown no evidence which would directly and conclusively implicate him for the lapses which have occurred in the Project’s accounting, financing and administrative controls during its implementation and execution phases.

In light of the foregoing and having regard to the other Findings, Information and Conclusions which are discussed in greater detail in this Report, the OCG has respectfully made the following considered recommendations:

1. The PCJ and the MEMT should prepare a written project and implementation policy to guide any future project which is to be undertaken by either of them. The policy must, at a minimum, make provision for:

i. Details of the scope of work for the project; ii. A project implementation plan which should include a detailed breakdown of the estimated project costs, its completion time and its progress benchmarks; iii. The roles, responsibilities and accountabilities of all parties which will be involved in the project; iv. The approvals and authorizations which must be secured before the project is commenced as well as those which must be obtained throughout the execution of the project.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 19 of 124 2. In instances where the GPPH is breached, the responsible agency should seek to remedy the breach in an expeditious and effective manner as opposed to continuing with the implementation of the project in violation of applicable Government procurement procedures and other regulations or laws.

3. The authenticity and legitimacy of any outstanding payment requests or invoices which may have been submitted by UMD, the CCMN and/or Shipping Logistics, for works which were allegedly performed or for goods and services which were allegedly supplied, under the 4M Project, should be verified by the Auditor General and the Attorney General before any further payments are made to any of the referenced suppliers/contractors.

4. Pursuant to the mandatory statutory obligations which are imposed upon a Contractor General by Section 21 of the Contractor General Act, the OCG is hereby formally referring a copy of this Report to the Auditor General on the basis that there is evidence which is recorded herein which would suggest that there was a breach of duty on the part of the Accounting Officer and/or on the part of one or more of the Accountable Officers of MITEC and/or of the PCJ and that one or more of the said Officers may have contravened, inter alia , the provisions of the Financial Administration and Audit Act. The matter is being referred to the Auditor General particularly in light of the provisions which are contained in Sections 16, 19, 20, 25 and 26 of the Financial Administration and Audit Act.

5. Pursuant to the mandatory statutory obligations which are imposed upon a Contractor General by Section 21 of the Contractor General Act, the OCG is hereby formally referring a copy of this Report to the Attorney General on the basis that there is evidence which is recorded herein which would suggest that there was a breach of duty on the part of the Board of Directors of the PCJ or on the part of one or more of its members in contravention, inter alia , of Section 6 of the provisions of the Public Bodies Management and Accountability Act. The matter is being referred to the Attorney General particularly in light of the

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 20 of 124 provisions which are contained in Sections 6, 17 (1) (b) and 25 of the Public Bodies Management and Accountability Act.

6. It is recommended that an immediate review of the accounting, procurement and public administration management practices at the PCJ, the MEMT and at other major Public Bodies be undertaken by the Public Administration and Appropriations Committee of the House of Representatives, the Auditor General and the Ministry of Finance and the Public Service.

The review should be conducted to ensure that adequate procedures, systems, checks and balances are not only implemented, but are aggressively enforced to secure a radically improved level of compliance on the part of Public Bodies and Public Officials with relevant Government approved procedures, regulations and laws.

Particular attention must be paid to the requirements of the Financial Administration and Audit Act, the Public Bodies Management and Accountability Act, the Contractor General Act and the GPPH.

7. It is also recommended that appropriate mechanisms be immediately established to ensure that members of the Executive and the Political Directorate of Government are prohibited from committing the Government to binding contracts, contrary to applicable laws and Government accounting and procurement regulations.

There must be a strengthening of the relevant due diligence systems to ensure that members of the Political Directorate do not usurp or bring undue influence to bear upon the authority of the administrative arm of Government and, in particular, upon the authority of the Accounting and Accountable Officers of Government, thereby inflicting damage to the principles of good public sector accounting, management and governance.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 21 of 124 8. The OCG also recommends that the Auditor General, if he/she has not yet done so, conducts an exhaustive investigation into (a) the circumstances in which monies have been expended and disbursed thus far to the contractors that were involved in the execution of the 4M Project and (b) the expenditure approval processes, as well as the $24 Million over-expenditures at the PCJ, which were related to the 4M Project.

The investigation should be carried out particularly in light of the fact that sums which have exceeded the amounts which were approved by the Board of the PCJ, for the 4M Project, were allegedly expended without the knowledge and/or approval of the entity’s most senior Accountable Officer.

The investigation should seek to determine if any of the said circumstances warrants the initiation of disciplinary or other adverse proceedings against any person. In particular, it should determine who approved or otherwise sanctioned the over-expenditure of J$24 million on the 4M Project.

9. Pursuant to the mandatory statutory obligations which are imposed upon a Contractor General by Section 21 of the Contractor General Act, the OCG is hereby formally referring a copy of this Report to the Corruption Prevention Commission (CPC), the Commissioner of Police (CP) and the Director of Public Prosecutions (DPP).

The referral is being made on the basis that there is evidence which is stated herein which would suggest that property which was allegedly owned by former State Minister Kern Spencer and/or his company, Butterfly Traders Limited, was utilized in the execution of contracts under the 4M Project in circumstances which could suggest that an illicit benefit or benefits may have been derived there-from by the Senator, contrary to Section 14 of the Corruption Prevention Act.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 22 of 124 It is also recommended that the referenced authorities seek to determine whether Senator Spencer and/or his company, Butterfly Traders Limited, were subcontracted by UMD to render services which were associated with the execution of the 4M Project and, if so, whether he derived any illicit benefits there-from contrary to Section 14 of the Corruption Prevention Act.

It is further recommended that the authorities cause the requisite investigations to be commenced into the allegations which have been made against Senator Spencer by Driver A and Driver B to determine if they are true and, if so, what criminal charges, if any, should be brought against Senator Spencer and/or any other person having regard to the outcome of the said investigations.

10. It is recommended that the Corruption Prevention Commission (CPC), the Commissioner of Police (CP) and/or the Director of Public Prosecutions (DPP) commence investigations into the circumstances of State Minister Kern Spencer’s admitted selection and engagement of UMD, the CCMN, Stacie-Ann Waite and Verdie Mair as contractors on the 4M Project.

It is also recommended that the referenced authorities investigate the Senator’s relationship with these persons and the principals of UMD and CCMN, namely Sherine Shakes, who is his daughter’s mother, and Rodney Chin.

The investigations should seek to determine if there was a conspiracy or agreement between the Senator and any or all of the named persons to facilitate, inter alia , what could be the possible commission, on the part of the Senator or on the part of any of them, of an act or acts of corruption contrary to Section 14 of the Corruption Prevention Act, or to otherwise determine if Senator Spencer and/or any of the named persons may have committed an act or acts of corruption or other criminal offence.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 23 of 124 11. Pursuant to the mandatory statutory obligations which are imposed upon a Contractor General by Section 21 of the Contractor General Act, the OCG is also hereby formally referring a copy of this Report to the Director of Public Prosecutions (DPP) on the basis that there is evidence which is recorded herein that former State Minister Kern Spencer may have committed a criminal offence or offences under Section 29 of the Contractor General Act and/or under Section 8 of the Perjury Act by misleading and/or wilfully making a false statement to mislead a Contractor General and/or failing to comply with a lawful requirement of a Contractor General in the execution of his functions under the Act.

12. The OCG is hereby formally referring a copy of this Report to the Director of Public Prosecutions (DPP) on the basis that there is evidence which is recorded herein that Driver A and Driver B, who voluntarily provided certain information to the OCG, may have committed a criminal offence or offences under Section 29 of the Contractor General Act and/or under Section 8 of the Perjury Act by misleading and/or wilfully making a false statement to mislead a Contractor General in the execution of his functions under the Act.

It is, however, also recommended that the Director of Public Prosecutions and/or the Commissioner of Police commence formal investigations to determine if Driver A and/or Driver B may have been unlawfully intimidated, coerced, threatened or otherwise induced by a person or persons to withdraw the said statements and/or to deny their veracity, in an effort to pervert the course of justice or to obstruct a Contractor General in the lawful execution of his functions, contrary to Section 29 of the Contractor General Act.

The OCG also strongly recommends that an urgent determination be made by the Director of Public Prosecutions and/or by the Commissioner of Police as to whether the safety and security of Driver A and/or Driver B are in likely jeopardy and if so what measures may be deemed appropriate to ensure , inter alia , their safety.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 24 of 124 13. The OCG respectfully recommends that the Cabinet should move to immediately develop and implement a comprehensive over-riding policy to be applicable to all Public Bodies. The policy should govern, restrict or prohibit the award of Government contracts by a Public Body to a Minister and/or to a Public Official or to any entity in which a Minister, Public Official or a close family relative may have a pecuniary interest. The OCG has made this recommendation before.

14. The OCG would also like to respectfully recommend that the House of Representatives and the Senate discontinue what appears to be the practice, in some instances, of granting carte blanche approvals of Exemption Motions which are made on behalf of Members of Parliament under Section 41 of the Constitution of Jamaica.

Section 41 requires a Parliamentarian to vacate his seat should he or any firm in which he is a partner, manager or director, becomes a party to a Government contract, unless he has received an exemption from the Senate or the House of Representatives.

A Section 41 Exemption Motion was approved by the Senate in favour of Senator Spencer on 2004 July 23. The Motion was expressed to relate to Butterfly Traders Limited. Butterfly Traders Limited is the same entity which is the registered owners of certain vehicles, at least one of which was alleged to have been utilized in the execution of contracts under the 4M Project. The Motion had provided that Butterfly Traders Limited “ may from time to time enter into contracts with the Government of Jamaica and its affiliated Agencies, to provide services ”. No conditions or restrictions were attached.

Exemption Motions, such as that which was granted to Senator Kern Spencer, in 2004, once approved, will permit Parliamentarians (and/or companies or partnerships in which they have an interest) to enter into prospective contracts

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 25 of 124 with the Government of Jamaica without any requirement for the Parliamentarian to disclose the particulars of the said contracts.

If this practice is not discontinued, then the very purpose that the framers of our Constitution had intended to secure in promulgating Section 41, namely to achieve transparency and full disclosure in the commercial affairs between a Parliamentarian and the People whom he was sworn to serve, will be defeated.

(Note: The foregoing recommendation is not intended in any way to infer or to suggest that Butterfly Traders Limited was a recipient of a ‘ Government contract’ , within the meaning of the Constitution or the Contractor General Act, in so far as the execution of the 4M Project is concerned).

15. Finally, the OCG feels overly compelled to hereby repeat a recommendation which has been made, ad infinitum, by successive Contractors General over the years. The recommendation can be traced as far back as to the OCG’s 1996 and 10 th Annual Report to the Parliament of Jamaica.

In that Report, the then Contractor General, Mr. Gordon Wells, had this to say: “Unless there is legislation with effective penalty clauses, some agencies will continue to ignore the (Government’s procurement) guidelines ”.

In calendar year 2006, similar recommendations were formally made by the Contractor General, to the State, on no less than three occasions. The recommendation was also formally made in 2007, in the Contractor General’s 2006 and 20 th Annual Report to the Parliament of Jamaica.

Despite the foregoing and the publicly stated intentions of the current administration to fast track legislation to effectively cure this aged mischief, senior Public Officials have been flouting the GPPH and the provisions of the

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 26 of 124 Contractor General Act. They have done so not only with seeming impunity but with scant regard for the law and the OCG.

In the premises, it is again being respectfully recommended that Parliament should move with despatch and with a sense of urgency to elevate the GPPH to laws and, where appropriate, to ensure that breaches of same are attended with the imposition of punitive sanctions, inclusive of strict criminal penalties.

As was stated in the OCG’s 2006 Annual Report to Parliament, “… unless and until the State is perceived to be leading and comprehensively supporting the fight to bring probity, transparency and accountability to the Jamaica Public Sector procurement process, and to root our corruption from its midst, the journey for the OCG and, by extension, the country, will be a long, arduous and challenging one”.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 27 of 124 INTRODUCTION

On 2007, October 24, the OCG, acting on behalf of the Contractor General, and pursuant to Section 15 of the Contractor General Act, 1983, initiated an investigation into the circumstances which were related to the procurement of goods, works and services for the 4M Project.

On 2007 October 23, under cover of letter of the same date, the Prime Minister, the Hon. Orrett Bruce Golding, provided the Contractor General with a copy of Minister Clive Mullings’ report on the 4M Project.

Minister Mullings tabled the report in his presentation to Parliament later that day. In his presentation, Minister Mullings “invited the Contractor General to investigate the circumstances in which such huge payments were made to these suppliers without the required procurement procedures being followed ”.

The allegations which were contained in Minister Mullings’ report to Parliament raised a number of concerns and allegations in relation to the administration of the 4M Project. They alluded to impropriety, lack of fairness and transparency, a breach of the Government’s procurement guidelines, mismanagement and a breach of applicable administrative and accounting procedures. Below is a synopsis of the allegations which were outlined by Minister Clive Mullings 3:

• The Government of Jamaica would be required to: o Meet the costs of clearance, storage and delivery of the bulbs. o Meet the costs for the transportation of the Cuban Volunteers. • Payments in respect of invoices submitted were made by PCJ on the instructions of the Chairman of the Board. • PCJ had already paid J$114,079,126.08 for the implementation of the project, details of which are listed below:

3 Statement to Parliament by Minister Clive Mullings, dated October 23, 2007. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 28 of 124 o UMD was paid a total of J$85,612,320.00. o UMD was incorporated 2006 July 31, around the same time that the island-wide distribution of bulbs commenced. o The services of UMD were not tendered and there was no evidence of any contract having been awarded to this company in relation to the project. o UMD was not registered as a contractor/supplier with the National Contracts Commission. o Payments were made upon presentation of itinerant invoices. o CCMN was paid a total of J$3,310,000.00. o CCMN was incorporated on 2006 July 20. o Rodney Chin was the sole shareholder and director for UMD and CCMN. • Subsequent to these payments being made, additional invoices were submitted totalling J$162,489,380.90. • The implementation of the Project was carried out “on the periphery” of the Ministry and was not subjected to its normal internal management, accounting and audit controls. • Project implementation was handled by a “Monitoring Committee” which was chaired by then Minister of State, Senator Kern Spencer. • By way of a letter which was dated 2007 August 31, the then Minister of State wrote to the Permanent Secretary and to each supposed creditor advising them that their invoices “have been verified and confirmed to fall within the scope of work and rates approved by the Monitoring Committee” and “will be honoured at earliest possible date.” • These invoices, if paid, would bring the total expenditure, not including expenses financed through Members of Parliament from the Social and Economic Support Programme, to J$276,568,506.98.

These allegations, amongst others, raised several concerns for the OCG, especially in light of the perceived absence of adherence to the GPPH and the Government contract award principles which are enshrined in Section 4 (1) of the Contractor General Act.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 29 of 124 At the commencement of the investigation on 2007 October 24, the OCG undertook a review of the allegations which were contained in Minister Mullings’ statement to Parliament. This was done in an effort to determine the direction of the Investigation as well as the most efficacious method by which to proceed.

It is instructive to note that after the allegations were made in Parliament by Minister Mullings, the Leader of the Opposition, the Most Hon. Mrs. Portia Simpson-Miller, requested that former Minister, Mr. Phillip Paulwell and former Minister of State, Mr. Kern Spencer, prepare a report on the 4M Project.

A copy of the report was requested from both Ministers in the OCG’s 2007 October 29 Requisition to them and was furnished as a part of the responses which they provided to the OCG.

The Terms of Reference of the OCG’s Investigation into the 4M Project were primarily developed in accordance with the mandates of the Contractor General as are stipulated in Section 4 (1) and Section 15 (1) (a) to (d) of the Contractor General Act, 1983.

Additionally, the OCG was guided by a recognition of the very important responsibilities which are imposed upon Public Officials by the GPPH, the Financial Administration and Audit Act, the Public Bodies Management and Accountability Act and the Corruption Prevention Act.

The OCG was also mindful of Section 21 of the Contractor General Act, which mandates a Contractor General to consider whether he has found, in the course of his Investigation, any evidence of a breach of duty, misconduct or criminal offence on the part of an officer or member of a Public Body and, if so, to refer same to the appropriate authority.

The findings of the OCG’s Investigation into the 4M Project are premised primarily upon an analysis of the statements and the documents which were provided by the respondents who were requisitioned.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 30 of 124 TERMS OF REFERENCE

The primary aim of the Investigation was to ascertain whether there was compliance with the provisions of the GPPH and the Contractor General Act (1983). The following specific objectives were targeted:

Specific Objectives 1. Identify the procurement process which was employed by the PCJ, the former MITEC, the current MEMT, and/or any one who purported to act on their behalf in the procurement of goods, works and services in the execution of the 4M Project;

2. Determine whether there were any breaches of the Government’s procurement procedures, or whether there were any conflicts of interest in the awarding of contracts by the PCJ, MITEC and/or by MEMT and/or by anyone who acted on their behalf and who was responsible for the execution of any aspect of the 4M Project;

3. Determine the veracity of the allegation which was made by Minister Mullings that the “implementation of the Project was carried out on ‘the periphery’ of the MITEC and was not subject to its normal internal management, accounting and audit controls ”;

4. Determine whether the contracts which were undertaken by the Project’s contractors were consistent with the scope of works for the Project;

5. Determine whether the contracts which have been undertaken to date, were so undertaken in accordance with negotiated rates and whether those rates were comparable to prevailing market rates;

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 31 of 124 6. Determine whether the contracts which were awarded under the Project were awarded fairly and on merit;

7. Determine whether the contract award process for the Project was transparent;

8. Determine whether there is any evidence which would suggest impropriety on the part of any Public Officer, Public Official, individual or entity who was involved or associated with the award of any contract which was related to the Project.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 32 of 124 BACKGROUND

On Tuesday, 2007 October 23, the Contractor General received a letter from the Prime Minister, the Honourable Orette Bruce Golding, enclosing a statement which was attributed to the Hon. Clive Mullings.

The statement was to be made in Parliament later that day. In his letter to the OCG, Mr. Golding stated that, “ the matter warrants investigation in different aspects, including the application or absence of the required procurement procedures .”4

Minister Mullings’ presentation to Parliament, that day, highlighted numerous allegations surrounding the procurement of the contracts, the associated costs and the propriety of the actions which were taken by senior Public Officials with regard to the 4M Project. Included in the allegations were the following assertions:

1. The Petroleum Corporation of Jamaica had already paid out a total of J$114,079,126.08 to various suppliers/contractors of which J$85,612, 320.00 was paid to Universal Management and Development Company;

2. Invoices amounting to J$162,489,380.90 were submitted by the various contractors/ suppliers and were awaiting payment;

3. Implementation of the Project was carried out on the ‘ periphery ’ of MITEC.

Mr. Mullings’ presentation, on 2007 October 23, also alluded to the likelihood that the procurement of contractors/suppliers by the PCJ, for the 4M Project, was not conducted in compliance with the GPPH.

4 Letter from Mr. Orette Bruce Golding, Prime Minister of Jamaica, dated October 23, 2007. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 33 of 124 Minister Mullings, with reference to UMD, indicated in his statement to Parliament that “the services for which Universal Management and Development Company Ltd was paid were not tendered and no evidence can be found of any contract having been awarded to this company in relation to the project .”5

The reported payments, which were in excess of the J$15M threshold and which were made to UMD, would have required endorsement by the NCC as well as subsequent Cabinet approval.

On Wednesday, 2007 October 24, the Contractor General formally convened an Investigation into the 4M Project.

Letters were directed that same day by the Contractor General to the Prime Minister, the Honourable Orette Bruce Golding, the Minister of Energy, the Honourable Clive Mullings, the Accounting Officer and Permanent Secretary of MEMT, Dr. Jean Dixon and an Accountable Officer and the Group Managing Director of PCJ, Dr. Ruth Potopsingh, to formally advise them of the commencement of the OCG’s Investigation into the 4M Project.

5 Statement to Parliament by Minister Clive Mullings, October 23, 2007. Pg 3. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 34 of 124 METHODOLOGY

As was previously indicated, the Terms of Reference of the OCG’s Investigation into the 4M Project were primarily developed in accordance with the mandates of the Contractor General as are stipulated in Section 4 (1) and Section 15 (1) (a) to (d) of the Contractor General Act, 1983.

The Terms of Reference of the Investigation, and the development of the written Requisitions/Questionnaires which were utilized throughout the course of the Investigation, were also guided by the OCG’s recognition of the far-reaching responsibilities and requirements that are imposed upon Public Officials by the GPPH, the Financial Administration and Audit Act, the Public Bodies Management and Accountability Act and the Corruption Prevention Act.

In addition, the OCG was guided by Section 21 of the Contractor General Act, which mandates a Contractor General to consider whether he has found, in the course of his Investigation, any evidence of a breach of duty, misconduct or criminal offence on the part of an Officer or member of a Public Body.

In any such event, a Contractor General is obliged to formally refer the matter to the appropriate person or authority that is competent to initiate such proceedings in the matter as may be deemed appropriate. The Contractor General is also required, in all such instances, to lay a special report thereon before Parliament.

A preliminary set of Requisitions/Questionnaires, dated 2007 October 29, was sent by the Contractor General to key representatives of the former MITEC and the PCJ and to Minister Clive Mullings.

Further Requisitions/Questionnaires were subsequently directed to other Public Officials, and representatives of alleged Project contractors who were considered material to the Investigation. Where it was deemed necessary, follow-up Requisitions were directed to a

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 35 of 124 number of respondents in an effort to clarify several issues which were identified in their initial declarations and responses.

The form of written Requisition, which was specifically designed by the Contractor General for the Investigation, required each respondent to provide, under the pain of criminal prosecution, complete, accurate and truthful written answers to a specified list of written questions and to make a formal declaration attesting to the veracity of same before a Justice of the Peace.

The Requisitions were issued pursuant to the powers which are reserved to the Contractor General under the Contractor General Act and in particular, Sections 4, 15, 17, 18 and 29 thereof. The Requisitions were also issued pursuant to Sections 2 and 7 of the Voluntary Declarations Act and Section 8 of the Perjury Act.

The OCG considered the referenced procedure to be necessary in order to secure the integrity and evidentiary cogency of the information which was to be elicited from respondents. The implications of the subject requirements also served to place significant gravity upon the responses as well as upon the supporting documents which were required to be provided by respondents.

Section 29 of the Contractor General Act provides as follows:

“Every person who - (a) willfully makes any false statement to mislead or misleads or attempts to mislead a Contractor-General or any other person in the execution of his functions under this Act; or (b) without lawful justification or excuse - (i) obstructs, hinders or resists a Contractor-General or any other person in the execution of his functions under this Act; or (ii) fails to comply with any lawful requirement of a Contractor-General or any other person under this Act; or

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 36 of 124 (c) deals with documents, information or things mentioned in section 24 (1) in a manner inconsistent with his duty under that subsection, shall be guilty of an offence and shall be liable on summary conviction before a Resident Magistrate to a fine not exceeding five thousand dollars or to imprisonment for a term not exceeding twelve months or to both such fine and imprisonment .”

Section 8 of the Perjury Act provides , inter alia , as follows:

“Every person who knowingly and wilfully makes (otherwise than on oath) a statement false in a material particular and the statement is made- (a) in a voluntary declaration; or …. (c) in any oral declaration or oral answer which he is required to make by, under, or in pursuance of any enactment for the time being in force, shall be guilty of a misdemeanour, and liable on conviction on indictment thereof to imprisonment with hard labour for any term not exceeding two years, or to a fine, or to both such imprisonment and fine ”.

Requisitions/Questionnaires were directed by the Contractor General to the Public Officers/Officials who are listed below. In addition, comprehensive reviews of relevant information were undertaken by the OCG to assist it in its Investigation. Details of these are also summarized below.

1. The following Public Officials were required to provide written responses to formal Requisitions which were directed to them by the OCG:

a. The Hon. Clive Mullings, Minister with portfolio responsibility for MEMT; b. Dr. Jean Dixon, Permanent Secretary, MEMT;

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 37 of 124 c. Dr. Ruth Potopsingh, Group Managing Director, PCJ; d. Dr. John Cooke, former Chairman of the Board, PCJ; e. Mr. Phillip Paulwell, former Minister, MITEC; f. Mr. Kern Spencer, former Minister of State, MITEC; g. Mr. Reginald Budhan, Senior Director, Policy Planning, Projects and Research Division, MEMT; h. Mr. Rodney Salmon, Company Secretary/Director of Administration, PCJ; i. Mr. Colin Bullock, Financial Secretary (no Declaration was required); j. Ms. Gaye Mitchell, Commissioner, Inland Revenue Department (no Declaration was required).

2. Detailed Requisitions were also directed to the below-named representatives of UMD and CCMN who were deemed sufficiently knowledgeable to assist the OCG in its Investigations:

a. Mr. Rodney Chin - Director/Proprietor, UMD and CCMC. b. Ms. Sherine Shakes, Business Development Manager/Project Manager, UMD.

3. A detailed review of the certified statements, supporting documents and the records which were provided by the respondents to the OCG’s Requisitions, was undertaken.

4. An examination and analysis of the Quarterly Contract Award (QCA) Reports which were routinely submitted to the OCG by the former MITEC, for the period 2006 June to 2007 September, and by the PCJ for the period 2006 June to 2007 September, was also undertaken.

5. Follow up Requisitions/Questionnaires, requesting clarification on certain issues, were directed by the OCG to the following Public Officials:

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 38 of 124 a. Mr. Phillip Paulwell b. Dr. Jean Dixon c. The Hon. Clive Mullings d. Mr. Kern Spencer

6. A clarification interview session was convened and conducted by OCG representatives with Dr. Ruth Potopsingh and other senior representatives of the PCJ, on Friday, 2007 November 23. The other senior PCJ representatives who were present at the interview session of 2007 November 23 were:

a. Mr. Godfrey Perkins, Project Officer b. Mr. Rodney Salmon, Director of Administration/ Corporate Secretary c. Mr. Richard McDonald, Deputy Group Managing Director d. Ms. Wakheen Murray, Legal Officer

7. A historical and comparative analysis of the procurement practices of the PCJ, MITEC and MEMT was undertaken. The process was aided by a review of (a) the information which was presented in spreadsheet Appendix 1 from MEMT and the PCJ, in response to the OCG’s Requisition, (b) the information which was submitted to the OCG by the PCJ and MITEC in fulfilment of the OCG’s 2006 July 11 QCA Requisitions to them, and (c) the contract award recommendations which the subject entities had submitted to the National Contracts Commission (NCC) for its endorsement.

8. A detailed review of all of the contracts which were endorsed by the NCC between 2006 January to 2007 October, in favour of MITEC and the PCJ, was undertaken to determine whether any of the said contracts were associated with the 4M Project.

9. An interview was conducted on 2008 January 16 with Driver A and Driver B.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 39 of 124 10. A review of certain vehicle registration, ownership and ownership transfer information which was provided to the OCG by the Inland Revenue Department, under cover of letter which was dated 2008 January 18, was also undertaken. This information was submitted in response to a written Requisition of the OCG of the same date. The information which was received relates to certain vehicles, at least one of which was alleged to have been used in the provision of services under the 4M Project. The vehicles were alleged by Driver A and Driver B to have been owned by State Minister Senator Kern Spencer and/or by Butterfly Traders Limited.

Copies of all of the initial Requisitions/Questionnaires which were directed by the OCG to intended respondents are appended hereto as Appendix 1 .

Security Precautions employed in the Presentation, Submission and Publication of the 4M Project Report To protect the identity, personal safety, security and/or privacy of witnesses, respondents and the Officers of the OCG who have provided information to the OCG and/or who have otherwise participated in the subject Investigation, the following precautionary measures have been undertaken in the publication of the OCG’s 4M Project Investigation Report.

1. The names and addresses of the two (2) witnesses who were interviewed by the OCG on 2008 January 16, namely Driver A and Driver B, have been removed from the Report.

2. Save and except for the name of the Contractor General, the names and job titles of all OCG Officers who have participated in the Investigation have been removed from all relevant references that are embodied in this Report. In any instance where an OCG Officer’s name has been removed from the body of this Report, the name has been replaced with the following letters: ‘ ONR ’ – meaning ‘ Officer’s Name Removed’ .

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 40 of 124 To assist the Director of Public Prosecutions, the Commissioner of Police and the Commission for the Prevention of Corruption with their respective investigations and/or deliberations herein, and to ensure that the safety of Driver A and Driver B are secured, the personal identification and address particulars of Driver A and Driver B will be formally submitted, herewith, under seal, to the referenced authorities, together with copies of all relevant statements and records of information which Driver A and Driver B have made or have disclosed to the OCG in the matter of the 4M Project.

The said statements and records of information contain significant background details which relate to the allegations and disclosures which were made by Driver A and Driver B and which are summarized in this Report.

Included in the records of information, is an extensive electronic recording of the entire interview which was conducted by OCG Representatives with Driver A and Driver B on 2008 January 16. The recording was made, with the permission of Driver A and Driver B, pursuant to the powers which are reserved to the Contractor General by Section 17 (1) of the Contractor General Act.

Section 17 (1) of the Contractor General Act provides as follows (in relation to the conduct of Investigations):

“A Contractor General may adopt whatever procedure he considers appropriate to the circumstances of a particular case and, subject to the provisions of this Act, may obtain information from such person and in such manner and make enquires as he thinks fit .”

The recording will be handed over to the Commissioner of Police.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 41 of 124 FINDINGS

The Genesis of the 4M Project During the period, January to April of 2006, then Minister of Energy, Phillip Paulwell, initiated an energy saving pilot project in his political constituency of East Kingston and Port Royal. The initiative was reportedly aimed at assisting Jamaica to reduce its annual oil imports. 6

This energy-saving pilot project was gestated as a result of Minister Paulwell having met with President Fidel Castro of Cuba in October of 2005, when a gift of 73,026 7 compact fluorescent bulbs was made to the Minister by the Cuban Government. The pilot project was funded by the PCJ and was undertaken in collaboration with the Cuban Government.

In April of 2006, Minister Paulwell announced that the Cuban Government would make an additional donation of four (4) million bulbs – each at an estimated value of US$5.00 – thus bringing the total value of the donation to approximately US$20Million.

Consequently, it could be said that the 4M Project was an expansion of a pilot energy- saving initiative that had begun in early 2006.

In his Budget Speech of 2006, Minister Paulwell announced that he had negotiated the donation of 4 million compact fluorescent bulbs to Jamaica and that this was done in his capacity as Vice President of the Council of Ministers for PetroCaribe 8.

The scope of the 4M Project was therefore expanded to involve all sixty (60) political constituencies of Jamaica following after the implementation of the pilot project in East

6 Report entitled, “Visit of the Minister of Commerce, Science and Technology- Honourable Phillip Paulwell, 13-15 October 2006” Pages 4-6. 7 Report entitled “History/Brief on 4M Energy Saving Project” provided by Dr. Jean Dixon in response to November 26, 2007 Requisition. 8 Minister Paulwell’s Budget Speech, Sectoral Presentation 2006- Contribution by the Hon. Phillip Paulwell, M.P. Minister of Industry, Technology, Energy and Commerce: Pages 12-14. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 42 of 124 Kingston and Port Royal. The benefits which were to be derived from the 4M Project were to include: 9

i. Replacement of 4 million bulbs – estimated to save the country approximately 456,785.10 MWH annually.

ii. Reduction of the country’s annual oil imports by 30,000 barrels - an estimated annual savings of US$2.5Million.

iii. Reduction of carbon emissions into the atmosphere - estimated reduction

of 43,000 tons of CO 2 annually; estimated annual potential to earn Carbon Credits of US$645,000 (assuming US$15 per ton).

The Findings of the OCG have revealed that a documented record of the replacement of the incandescent bulbs, with the compact fluorescent bulbs, was considered to be a critical tool in determining the benefits which were to be derived from the Project since documentation was deemed to be an important element in assessing the prospective claims for carbon emission credits.

As such, the use of the Cuban volunteers was deemed essential to the success of the venture. A group of Cuban volunteers was therefore engaged to assist Jamaican volunteers in the distribution of the bulbs. The primary role of the Cubans was that of ensuring “Quality Control” of the project.

According to Mr. Paulwell, in his statement to the OCG, dated 2007 November 30, the use of the Cuban Volunteers in the distribution process was premised on the fact that “the Cubans were already trained, they had experience in an exercise of this nature, their level of discipline was impressive and these considerations outweighed the alternative of

9 Document entitled “History/Brief on 4M Energy Saving Project”; Page 2. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 43 of 124 identifying, training and deploying a team from Jamaica given the costs in terms of money and time which the exercise would attract if the Cubans did not assist .”10

The Investigation revealed that Jamaica would not be paying for the 4 million bulbs that were donated by the Cuban Government. However, indications were that Jamaica would incur some expenditure as a result of the costs which were to be associated with the distribution and storage of the donated bulbs.

These costs, however, were expected to be recouped from the sale of the carbon credits which would be earned as a result of the energy-saving initiative. As such, the Project was expected to pay for itself in the long run.

It is the understanding of the OCG, that MITEC was mandated to develop an implementation strategy for the 4M Project and that the PCJ would provide funding for the Project via its energy efficiency program 11 .

However, the OCG has seen no evidence of any written agreement establishing the terms and conditions of the arrangements, nor the responsibilities or obligations of either the Cuban or Jamaican Government under the program. The availability of a written document would definitively speak to the responsibilities of the interested parties and would have substantially informed the Investigation which was to be undertaken by the OCG.

Formal Requisitions were directed by the OCG to several of the respondents in an effort to obtain a copy of a written document which outlined the genesis of the 4M Project and the agreement, if any, between both Governments, and under which the roles and responsibilities of the parties would have been hopefully defined.

10 Statement by Mr. Phillip Paulwell, dated November 30, 2007. Response to Question # 5. Also refer to response to question # 4. 11 Minutes of Meeting to discuss Energy matters held May 31, 2006. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 44 of 124 However, to date, none of the representatives of the former MITEC, the current MEMT nor the PCJ, who were requisitioned by the OCG, have provided the OCG with any such document. In the circumstances, the OCG has concluded that no such document exists.

Mr. Paulwell, in his statement of 2007 November 30, also stated that he “ cannot recall any formal document that was reviewed and mutually agreed by both parties .”12 He articulated that the mutually agreed terms between the Government of Jamaica and the Government of Cuba provided, inter alia 13 , as follows:

i. “Fluorescent bulbs would be provided by Cuba. ii. Cuba would ensure that the programme to replace incandescent bulbs with fluorescent bulbs was efficiently undertaken. In doing so, the Cuban team would document all aspects of the operation also ensuring that information be needed in support of the claims for Carbon Credits would be properly recorded. iii. Jamaica would be responsible for all charges related to clearing of the Bulbs. iv. Social Workers/Volunteers from Cuba would be a part of the implementation process together with Jamaican volunteers. v. Accommodation, Local Transportation and Meals for the Cuban team would be provided by Jamaica.”

The OCG has found that prior to the commencement of the Project, there was no Project document prepared for guiding the responsible individuals and/or entities who were involved in its implementation.

In fact, when Minister Paulwell ‘ delegated responsibility’ to then State Minister, Senator Kern Spencer, he indicated that he had “ had discussions with former Minister of State Kern Spencer during which [he] gave general directives as regards the islandwide

12 Statement by Mr. Phillip Paulwell, dated November 30, 2007. Response to Question #1. 13 Statement by Mr. Phillip Paulwell, dated November 30, 2007. Response to Question #2. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 45 of 124 distribution of the bulbs donated by the Republic of Cuba .” He added that he was “unable to provide documentary evidence of these directives which were given orally .” 14

Based upon the documents which were presented to the OCG, a Project document for the 4M Project was not drafted until 2006 October 4. This was three months after the Project’s implementation had begun in 2006 July, and six months after the announcement of the island-wide launch of the project in April 2006. The document was never officially approved.

With reference to the absence of a written agreement between the Government of Jamaica and the Government of Cuba, and the lack of an implementation document, it must be noted that on 2006 May 12, Mr. Robert Stephenson, Advisor to the PCJ, wrote to then Chairman of the Board, Dr. John Cooke, suggesting, inter alia 15 , that

i. The magnitude of the expanded project would require a new project; ii. The expanded project would require a bilateral agreement between the Governments of Jamaica and Cuba to be undertaken by the Ministry of Foreign Affairs; iii. The PCJ would be the implementing organization after approval of the Cabinet; iv. The storage of the bulbs should be undertaken by the JDF and the PCJ would work out the modalities for distribution.

These suggestions were forthcoming before the expanded Project was implemented in 2006 July under the supervision of State Minister Spencer.

Other documents which were reviewed by the OCG revealed that, on 2006 May15, Dr. Ruth Potopsingh wrote to Dr. Jean Dixon stating thus: “ With the expansion of the project

14 Statement by Mr. Phillip Paulwell, dated November 30, 2007. Response to Question #6. 15 Memo from Robert Stephenson, Advisor, PCJ, dated May 12, 2006 to Dr. John Cooke former Chairman PCJ. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 46 of 124 from a Pilot to an island-wide project, it is necessary that a plan be put in place to execute this .” 16

The letter from Dr. Ruth Potopsingh further stated that “ … we would appreciate details from your Ministry of the expectations of the PCJ in implementing this expanded Project.” However, the OCG has seen no written evidence that Dr. Jean Dixon responded to Dr. Ruth Potopsingh’s request.

Following this series of events, Dr. Ruth Potopsingh wrote to Minister Paulwell on 2006 May 31, to confirm the PCJ’s understanding of the island-wide project. In her letter to the Minister Paulwell, it was noted that any assistance which was required from the PCJ “should be requested in advance in order that the necessary approvals can be given in a timely manner.”17

Further to the aforementioned, a meeting was also held with the Permanent Secretary, MITEC, on 2006 May 31, at which time the island-wide distribution Project was discussed. Decisions were taken to develop a Project document, as well as a schedule for implementing the Project, amongst other related decisions.18

It is evident that the need to plan the implementation of the island-wide Project, prior to its actual implementation in 2006 July, was identified by PCJ and MITEC. Based upon the documents which were reviewed by the OCG, however, except for the unedited Minutes of the referenced meeting, there was no other indication of any other action which was undertaken during the period 2006 May to June to strategically plan the implementation of the Project.

16 Letter to Dr. Jean Dixon from Dr. Ruth Potopsingh dated May 15, 2006. 17 Letter to Minister Phillip Paulwell from Dr. Ruth Potopsingh dated May 31, 2006. 18 Minutes of Meeting to discuss Energy Matters, May 31, 2006. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 47 of 124 Engagement of Contractors - General Mr. Kern Spencer, in his statement to the OCG, dated 2007 November 20, stated that he engaged the services of various suppliers in 2006 July, through his office, to facilitate the smooth running of the project after it was ‘suddenly handed to him’.19

Mr. Spencer further stated that “I had to rely on persons that I was familiar with in the past and persons who were willing to offer credit and respond to the requirements immediately. The intention was to engage these persons to deal with the emergency situation at hand. Thereafter, I expected that the personnel within PCJ and MITEC would have carried out their duties and rectify the situation for the rest of the project.”20 (Emphasis added.)

Mr. Spencer admitted to having first made contact with the following contractors 21 : i. Medallion Hall Hotel ii. Mico Foundation iii. Chelsea Hotel iv. Caribbean Communications and Media Network v. Shipping Logistics vi. Herald Printers vii. Universal Management and Development Company Ltd./Mr. Rodney Chin viii. Verdie Mair and ix. Stacey Ann Waite (indirectly)

According to Mr. Spencer, he engaged the foregoing contractors because he knew them and needed persons “ who were willing to offer credit ” for the goods and services which were to be procured for the Project.

19 Statement by Kern Spencer dated November 20, 2007. Page 7. 20 Statement by Kern Spencer dated November 20, 2007. Page 8. 21 Statement by Kern Spencer dated November 20, 2007. Page 7. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 48 of 124 It is instructive to note that Section 24E (2) of the Financial and Administration and Audit (FAA) Act provides that “ no credit agreement shall be entered into without the prior approval of the Minister .” However, the OCG has seen no evidence to suggest that such an approval was sought and/or granted.

Furthermore, Section 24E (1) of the FAA Act also provides that credit agreements or agreements for deferred financing must be with an approved contractor, which means a contractor which is included on the NCC’s list of approved contractors.

It must be noted that UMD applied for NCC registration and was advised, by way of letter dated 2007 April 10, at the hand of the National Contracts Commission Secretariat, that “ Project Management is classified as Consulting Services. The National Contracts Commission did not approve your application on the grounds that it has not yet established a Register of consultants .” 22

The OCG’s Investigation has determined that CCMN, Medallion Hall and Shipping Logistics were registered with the NCC as approved contractors. Therefore, apart from UMD and the aforementioned contractors, all of the other contractors who were not classified as consultants, and who were engaged on the 4M Project, would have been required to be registered with the NCC unless they were engaged after February 12, 2007, in which event they would have only needed to be registered if the value of the contract was in excess of $275,000.

However, there is no record to show that the remaining contractors who were engaged were on the NCC’s approved list of contractors. Consequently, any credit agreements (i.e. agreements where-under goods or services were to be supplied but were to be paid for at some future date which was beyond the end of the Financial Year in which the goods or services were supplied) which may have been entered into with these unregistered contractors would have been so entered in contravention of Section 24E (1) of the FAA Act.

22 Letter from the NCC to UMD dated April 10, 2007. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 49 of 124 There is a significant gap between 2006 April, when Minister Paulwell announced the launch of the island-wide Project, and the Project’s actual commencement date of 2006 July.

It is the OCG’s opinion that the perceived ‘ emergency situation’ , to which State Minister Spencer had alluded, in contracting persons outside of the required procurement procedures, could have been avoided had proper planning been executed by the Ministry, and/or by the PCJ, during those approximate three months.23

According to the Report on the 4M Project, which was prepared at the Request of Minister Clive Mullings, Mr. Kern Spencer had acted as project manager and implementer for the island-wide expansion of the Project.

The report indicated that because of the demands which were associated with the Project, Mr. Spencer approached UMD to provide overall project management services at a rate of J$300,000 per month. The alleged actions of Mr. Spencer would constitute a clear breach of Section 2.1.3.4 of the GPPH which states that all sole source or direct contracting, which is $1M or greater in value, must receive the prior written approval of the NCC, through the Accounting Officer of the procuring entity.

The OCG is, however, unable to speak definitively to whether UMD delivered the services for which they were contracted and/or whether the services and/or works which they performed could be classified solely as that which the NCC would deem to be consultancy services.

This is attributable to the fact that there was no written contract with UMD, although the contract’s scope of work was apparently discussed and agreed with UMD by Minister Spencer. Accordingly, there is no yard stick by which performance of the contractor or the implementation of the contract can be definitively evaluated.

23 Statement by Kern Spencer dated November 20, 2007; Page 8. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 50 of 124 According to the Report on the 4M Project, which was prepared at the request of Minister Mullings, between 2006 July and December, UMD advised the Ministry that they were responsible for the following services:

1) Coordination of landing arrangements for the social workers; 2) Coordination of work permits for social workers; 3) Arranging for transportation of social workers and bulbs to constituencies.

However, when faced with the need to pay for the Project, State Minister Spencer sought the intervention of Minister Paulwell. Subsequently, a letter was sent by Minister Paulwell to the PCJ Board Chair, Mr. John Cooke, in July of 2006, seeking further financial and technical support for the Project.24

The Report further indicated that in January of 2007, UMD advised that they had assumed full management for the Project with responsibility for accommodation, transportation and meals.25

The Report to Minister Mullings also indicated that, arising from difficulties which were associated with the payment of invoices which were submitted by UMD to PCJ, in 2007 February, the Permanent Secretary requested the MITEC’s Senior Director of Policy, Planning, Projects & Research (SDPPR), Mr. Reginald Budhan, to review the Project, and to take steps to resolve the difficulties.

It was at this juncture that UMD’s engagement was highlighted as a serious breach of the procurement procedures and the recommendation was made that steps should be taken to regularise its engagement.

24 Report on 4M Bulb Project and Reasons which led to Procurement Breach. Prepared at the Request of Minister Clive Mullings; Pages 3-4. 25 Report on 4M Bulb Project and Reasons which led to Procurement Breach; Pages 7-8. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 51 of 124 According to the Report on the 4M Project, which was prepared at the Request of Minister Clive Mullings, UMD made up-front payments to several third party service providers for which they submitted claims to PCJ.

However, the claims were not being honoured, and UMD allegedly experienced financial difficulties. In consequence, State Minister Spencer requested PCJ to review the invoices and to make the requisite payments. PCJ made the payments. UMD was allowed to continue its role as the Project manager, with price ceilings being set on certain services.26 Where there were variations, UMD had to seek the requisite approvals from the Ministry.

By way of letter, which was dated 2007 November 30, State Minister Spencer wrote to Mr. Reginald Budhan refuting some of the referenced assertions which were contained in the Report to Minister Mullings, regarding the circumstances which led to the procurement breaches in the implementation of the 4M Project. This letter was appended to Mr. Spencer’s statement to the OCG, which was dated 2007 December 5. 27

In the referenced letter, and with specific regard to UMD, Minister Spencer stated that, “You are incorrect that I told you that I approached the principal of UMD and requested the provision of personnel who would provide overall project management services to the project and agreed to a cost of $300,000. This is totally incorrect. It was also totally inaccurate for you to have stated that there was no written contract but the scope of work was discussed and agreed.”28

The letter of the same date goes further to state that, “ This would have been totally inaccurate as UMD was not initially engaged as project managers. They were one of the persons/entities contacted in the emergency situation.”29

26 Statement made to the OCG by Mr. Reginald Budhan dated 19 December 2007, response to Question 28. 27 Letter dated November 30, 2007 from Mr. Kern Spencer addressed to Mr. Reginald Budhan. 28 Letter from Kern Spencer to Reginald Budhan dated November 30, 2007. Page 2. 29 Letter from Kern Spencer to Reginald Budhan dated November 30, 2007. Page 2. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 52 of 124 According to Mr. Kern Spencer, “UMD, while providing meals for the Cubans at MICO during the emergency situation was not engaged or paid as project managers. They provided voluntary assistance in this area for July, August and September 2006. It was not until the end of December 2006, after rigid plans were undertaken for the Cubans to return that UMD apparently was now unable to continue to provide voluntary service submitted a bill to the PCJ for services with respect to project coordination for the month of October and November 2006. The figure of $350,000 was consistent with the quotation that they submitted from early August 2006.”

Mr. Kern Spencer’s letter further highlights aspects of the report to Minister Mullings which, according to Mr. Spencer, was not correct. One of the other issues which was raised in Mr. Spencer’s letter included a statement to the effect that “ It should be noted that no significant sums were paid out to UMD between July 2006 and February 2007 and that all invoices were submitted to the PCJ, who verified and paid bills .” 30

Mr. Spencer’s assertions have not negated the fact that he had already admitted to initiating, through his office, contact with various contractors and, further, the actual engagement of the contractors. His assertions have also not negated the fact that there is no evidence of a written contract between UMD and the Government of Jamaica.

Mr. Spencer also indicated in his statement that several of the providers had submitted letters of interest and quotations to the PCJ for comparison and selection. However, the documents which were submitted to the OCG did not provide any evidence that these quotations were actually the basis upon which the contractors were selected. The method of contracting appeared to be that of Sole Sourcing, and the justification given was that an ‘ emergency situation’ was at hand.

However, as a result of the 3-month timeline which transpired between the announcement of the Project in 2006 April and the actual commencement date of 2006 July, it is the opinion of the OCG that the utility of the so called ‘emergency ’ procurement procedures

30 Letter from Kern Spencer to Reginald Budhan dated November 30, 2007. Page 2. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 53 of 124 was not only irregular but was wholly inappropriate and substantively and contextually inapplicable.

The procurement of goods, works and services for the Project, having regard to its nature and scope, would not fall within the ambit the Emergency Procurement Procedures as are prescribed in the Ministry of Finance’s Circular No. 3, dated 2006 January 10, entitled: Procedures for Emergency Contracting .

Furthermore, there is no evidence to suggest that either the GPPH or the Ministry of Finance Circular No. 3, dated 2006 January 10, was utilised in the procurement for all goods, works and services for the 4M Project.

It must also be noted that Dr. Ruth Potopsingh, the Group Managing Director of the PCJ, asserted in her statement to the OCG, dated 2007 November 8, that “the Petroleum Corporation of Jamaica did not award any contracts in regard to the 4M Bulb Distribution Project .”31

However, an agreement with Eco Tech, for the trading of Carbon Credits valued at J$1,042,650, was signed by PCJ at the request of Minister Paulwell in 2007 February. 32 There is no evidence to suggest that the contract with Eco Tech was awarded via a competitive process, or that the contract award was transparent and based upon merit.

Engagement of Contractors - Ministry’s Involvement – According to Permanent Secretary With regard to the award of contracts by the former MITEC, Dr. Jean Dixon, the Ministry’s Permanent Secretary, in her statement which was dated 2007 November 16 to the OCG, said, “ the Ministry awarded no contracts in relation to this project.”33

31 Statement by Dr. Ruth Potopsingh dated November 8, 2007; Page 10 and accompanying “Appendix 1”. 32 Statement by Dr. Ruth Potopsingh dated November 8, 2007; Page 9. 33 Statement by Dr. Jean Dixon dated November 16, 2007; Page 3 and accompanying “Appendix 1” . ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 54 of 124 In her statement, she went further to explain that during a meeting which discussed the Project, she became aware that a third party, UMD, was carrying out services in relation to the Project and had instructed that UMD’s engagement should be formalised.

Dr. Jean Dixon also stated that the Ministry made no payments in relation to the Project. In fact, in her statement of 2007 December 11, Dr. Dixon stated that “This project was not approved for funding through the Ministry’s budget, and I did not approve any payment to UMD nor did I give authorization for approval by any representative of the Ministry, and I have not seen where any such approval was made. Please note that the Ministry’s representatives have no authority to approve payments from the budget of any other entity.”

Dr. Dixon also noted that a detailed Project cost was not known and apparently no overall Project document was considered necessary to inform the decision to expand island-wide.

As such, it is the OCG’s understanding that there was an assumption that the MPs would fund the Project from the Social and Economic Support Programme (SESP). Consequently, the true cost for the Project’s implementation only became known as the Project progressed.

As such, neither the PCJ, nor the Ministry, has admitted to engaging, either directly or indirectly, contractors for goods, works and/or services for the 4M Project.

The former Minister of State, Senator Kern Spencer has, however, through his own admission, taken responsibility for the engagement of various contractors.

Additionally, there is no evidence to indicate the procurement method, if any, which was applied in contracting the various suppliers of goods, works and services for the Project. The OCG has therefore concluded that the engagement of UMD was a breach of Section 2.1.3.4 of the GPPH that states that all sole source or direct contracting, which is greater

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 55 of 124 than $1M in value, must receive the prior written approval of the NCC through the procuring entity’s Accounting Officer.

One might argue that, as a representative of the Ministry, State Minister Spencer’s engagement of UMD was a contract which was entered into by the Ministry. However, it is the administrative arm of the Ministry, and not the political directorate, through which the procurement process must be routed and preliminarily approved. It is also these Officers who must ensure that Government contracts are procured in accordance with the GPPH and the Contractor General Act.

Accordingly, the UMD contract, along with the others, were entered into outside of the established and authorized channels which were permissible under the law. They were not subjected to the approval of the requisite Accounting Officer and/or the Accountable Officers of the procuring entity.

Analysis of NCC Contract Endorsement Reports and OCG QCA Reports The analysis of the NCC Contract Analysis Report revealed that there was only one contract which was endorsed by the NCC on behalf of the PCJ. There is no evidence of any contract which was endorsed by the NCC, on behalf of MITEC, in relation to the 4M Project.

The remedial action, i.e. the competitive tendering of the project management services contract for the Project, began in 2007 January. The tender documents were made available to the public in 2007 March. 34 The contract which was endorsed by the NCC, on behalf of the PCJ, was to be awarded to Power Services Co. Ltd. (PSCL) for project management services 35 .

34 Tender document and evaluation report submitted to the NCC. 35 Extract of NCC Contract Analysis Report. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 56 of 124 This recommendation for award was made by the NCC on 2007 June 20. However, the contract was never formally awarded by either MITEC and/or PCJ 36 . The referenced recommendation for the award of the contract to PSCL was made in 2007 June, when the 4M Project was already well underway. The Project was started in 2006 July and would end prematurely in 2007 August, a mere two months after the PSCL recommendation was made.

PCJ explained that they were asked by MITEC to execute the contract with PSCL. PCJ, in turn, requested documentation on the remaining cost for completing the Project. They were given an approximate figure of US$2.3 million.37 The PCJ Board decided that the cost was too high and that the PCJ did not have the required funds, having already approved the expenditure of an estimated J$30 Million for the Project.

Accordingly, the PCJ did not approve the funding and signing of the proposed contract with PSCL. A decision was, however, taken at that PCJ Board Meeting to approve an additional $60 Million towards the 4M Project. 38 As a result, UMD continued to provide the project management services under the 4M Project.

A 2007 October report to Minister Clive Mullings reveals that, “the SDPPR 39 considered the engagement of UMD as a serious breach of the procurement process. However, while a written contract did not exist and there was a major breach of the procurement process, it was concluded that an oral contract existed between the Minister of State and UMD and as such UMD should be paid.”40 It can therefore be inferred that the position which was taken was that the former Minister of State Kern Spencer had bound the Government of Jamaica to a contract with UMD.

36 Report to Minister Clive Mullings; Page 8. See letter dated August 10, 2007 from Reginald Budhan to Dr. Ruth Potopsingh. Mr. Budhan explained to Dr. Potopsingh the reason for not executing the contract with Power Services Co. Ltd. 37 Minutes of the Meeting of Board of Directors held on Tuesday July 10, 2007. Item # 13 Page 7. 38 Letter dated 10 August 2007 from Mr. Reginald Budhan, addressed to Dr. Ruth Potopsingh. 39 SDPPR- Senior Director Policy, Planning and Research - Mr. Reginald Budhan. 40 Report to Minister Clive Mullings; Page 7. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 57 of 124 In light of the foregoing, and the significant expenditures which had then been expended to date on the Project, the following requirements of the GPPH must be noted:

1. All Government contracts which are $4 Million and over in value must receive NCC endorsement prior to award; 2. All Government contracts which are J$15 Million and over in value must receive NCC endorsement as well as Cabinet approval before they can be awarded.

Even though it has been stated by Mr. Spencer that his intention was to use the contractors on a short term basis, the method of their initial procurement was, notwithstanding, a breach of the GPPH.

The OCG acknowledges the fact that the Accounting Officers of Public Bodies have a certain level of autonomy in determining the amount of funds that can be spent. However, the principles and requirements of the Contractor General Act, the Government’s Procurement Policy and the GPPH, with regard to competitiveness and meritorious award of contracts, must be adhered to in order to ensure transparency, impartiality and compliance with the law.

One critical concern of the OCG was the level of expenditure which was reported by the PCJ in its QCA Reports covering the 2 nd Quarter of 2006 through to the 3 rd Quarter of 2007.

In light of Dr. Ruth Potopsingh’s statement that no contracts were awarded by the PCJ for the 4M Project, the OCG sought clarification on the disjoint between the QCA Reports, Appendix 1 to the OCG’s 2007 October 29 Requisitions which was sent to Dr. Dixon and Dr. Ruth Potopsingh, and the statement which was made by Dr. Potopsingh.

By way of an OCG letter, which was dated 2007 November 23, and through the utility of an interview session which was convened on the same day with Dr. Potopsingh and

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 58 of 124 senior representatives of the PCJ, the OCG actively sought to reconcile the conflicting information which had been presented by the PCJ and Dr. Potopsingh.

At the referenced interview, it was revealed to the OCG that, “prior to the last quarter, 3rd quarter 2007, payments were being reflected for individual payments made on the QCA and not contracts.” Mr. Godfrey Perkins, Project Officer, PCJ, noted that “ what was entered was payments which were made over a period of time .”41

In a letter from the PCJ, which was dated 2007 November 23, Mr. Perkins reiterated that, “… the list included several payments made between $250,000 and $3,999,999 which did not represent contracts entered into by the PCJ. This was based on a misunderstanding of the requirements stipulated by the Office of the Contractor General.”42

The OCG’s attempt to reconcile the information which had been presented in the QCA Reports, Dr. Potopsingh’s statement and Appendix 1, revealed the following:

a. PCJ had been reporting payments to the various suppliers on its QCA Reports from 2 nd Quarter 2006 to the 3 rd Quarter 2007.43 b. MITEC did not report any contracts which were related to the 4M Project on their QCA Reports for the 2 nd , 3 rd and 4th Quarters of 2006 or the 1 st , 2 nd or 3 rd Quarters of 2007 44 . c. Payments which were made by the PCJ for the 4M Project were in line with the responsibility which they had declared for the Project’s implementation, i.e. to provide financing.

According to the PCJ, it was asked by Minister Paulwell to provide advance financing for the Project. This is verified in a letter which is dated 2006 July 20, from Minister

41 Statement by Dr. Ruth Potopsingh; November 23, 2007. 42 Letter from Mr. Godfrey Perkins, dated November 23, 2007. 43 Letter from Godfrey Perkins, dated November 23, 2007. See Records of interview with Dr. Ruth Potopsingh on Friday November 23, 2007. 44 QCA Reports submitted by MITEC. See Appendix 1 from Dr. Jean Dixon in response to OCG 2007 October 29 Requisition. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 59 of 124 Paulwell to the PCJ Board Chairman, John Cooke, and in which J$30M was sought for further financial and technical support over 18 months for the Project’s island-wide distribution.

To date, the OCG has seen no evidence of any written contract between the Government of Jamaica and any of the suppliers which have been paid by the PCJ, pursuant to the execution of the 4M Project.

Ministerial Responsibility – Management of the 4M Project Mr. Phillip Paulwell, in his statement of 2007 November 12, to the OCG, indicated that he had delegated responsibility for the implementation of the island-wide project to the former Minister of State, Mr. Kern Spencer. Mr. Paulwell also noted that his knowledge of the island-wide project was limited as a result of his having delegated the referenced responsibilities to Mr. Spencer.

There is no evidence to refute the fact that Mr. Spencer had primary responsibility for the island-wide implementation of the 4M Project, Indeed, through his own admission, and by way of letter which was dated 2006 July 3, Mr. Spencer wrote to Dr. John Cooke, PCJ Board Chairman, advising that he had been given “ the task as Minister of State in this Ministry to ensure that this project is carried out effectively .”45 .

Accordingly, on a Ministerial level, the management of the island-wide Project resided with Mr. Kern Spencer. However, the public entity with responsibility for the island- wide Project has been the subject of what can be termed ‘internal confusion’.

The OCG’s Investigation team concluded that this ‘internal confusion’ was as a result of the lack of clear guidelines for operation together with details of the roles and responsibilities of both the PCJ and MITEC.

45 Letter from Minister Kern Spencer to Dr. John Cooke dated 2006 July 3. Letter was also copied to Dr. Ruth Potopsingh and Mr. Rodney Salmon, both of PCJ. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 60 of 124 In addition, despite the late draft of a Project document in 2006 October, which was three months after the initial start of the island-wide project in 2006 July, there is little evidence to establish that the responsibilities which were detailed in the document were actually carried out during the implementation process. In fact, according to Reginald Budhan, Senior Director, Policy, Projects, Planning & Research (MEMT), “ ….there was no formal approval of the document .” 46

Public Body Responsibility – Management of the 4M Project – Correspondence between MITEC and PCJ: The “Periphery” In his allegations which were made in Parliament, Minister Mullings stated that, “ the implementation of the Project was carried out “on the periphery” of the Ministry and was not subject to its normal internal management, accounting and audit controls .” The OCG sought to determine the basis upon which this allegation was made.

Although no clear definition of “ the periphery ” was provided by the Minister, his further statement that the Project was “ … not being subjected to its normal internal management, accounting and audit controls ” of the Ministry, provides the context within which the OCG has investigated the matter.

It must be acknowledged that the investigation of the management mechanisms of a Public Body is not a part of the core mandates of the OCG. However, to the extent that Public Body management mechanisms may impact upon the contract award process, it was deemed to be prudent to explore the matter.

On the basis of correspondence which was reviewed by the OCG, it appears evident that:

1. Both the PCJ and MITEC were not clear as to their designated and/or intended roles and responsibilities in the implementation of the 4M Project. Reference is made to correspondence between representatives of the PCJ and MITEC on the

46 Statement by Reginald Budhan dated December 19, 2007. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 61 of 124 issue of managing the implementation of the Project.47 The Ministry (MITEC), had responsibility for the implementation of the Project in several instances. However, the Ministry also appeared to have had the expectation that the PCJ was primarily responsible for the implementation of the Project.

On the other hand, the PCJ has maintained the position that, in accordance with then Minister Paulwell’s letter, dated 2007 July 20, to the then Chairman of the PCJ Board, Mr. John Cooke, it (PCJ) was facilitating the Project by providing funding and some technical support, while primary responsibility for the Project resided with MITEC.

2. There was no clear Project document detailing the scope and nature of the Project in its initial implementation phase. Even though an announcement for implementation occurred in 2006 April, and the Project was commenced in 2006 July, a detailed document was not drafted by the former MITEC until 2006 October 4.

As such, the Project appears to have been rushed and not properly planned, with the responsible entities having no clear guidelines of their respective areas of responsibility or a modus operandi .

The matter regarding the “ the periphery ” is discussed further in the following section of the Report.

Project Budget, Payment Approvals and Cost Overruns Based upon documents which the OCG has reviewed, it is evident that there was a cost overrun of approximately J$177 million, inclusive of outstanding payments totalling J$153 million, in the implementation of the 4M Project.

47 Letter dated July 20, 2007 from Mr. Fitzroy Vidal, MITEC, to Mr. Richard McDonald PCJ . See also letter dated July 18, 2007 from Mr. Richard McDonald to the Permanent Secretary, MITEC. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 62 of 124 The Minutes of the PCJ Board meeting, dated 2007 July 10, indicate that the former MITEC submitted to the PCJ, a budget for further financial support in the sum of US$3 Million.

The Minutes also indicate that, “After further discussion, the additional amount of $60 Million was approved. Proper expenditure reports were to be received for this amount and for the first J$30 Million ”48 . The total budget approved by the Board of the PCJ, for the 4M Project, was therefore J$90 Million.

It must be noted that Dr. Jean Dixon is also a member of the Board of the PCJ 49 . With reference to the meeting of 2007 July 10, Dr. Dixon declared interest and excused herself during the discussion pertaining to the 4M Project.

Given Dr. Jean Dixon’s role as the Permanent Secretary in the Ministry which had made the budget request to the PCJ, as a matter of policy, she would have been required to refrain from any discussions on the matter. This would prevent the appearance and/or actual occurrence of a conflict of interest.

Notwithstanding, it would be reasonable to expect that Dr. Dixon would have been privy to previous Minutes of the Board of Directors of the PCJ, as well as any previous discussions and decisions which were made by the Board with regard to the 4M Project. The same would also hold true for the Minutes of the Meeting of 2007 July 10, from which Dr. Dixon had excused herself.

With regard to the amounts which were paid to the various contractors, which was in excess of J$114 Million, the OCG deemed it prudent to ascertain how an over expenditure of such a magnitude could have occurred.

48 Minutes of the Meeting of the Board of Directors held on Tuesday July 10, 2007 at 5:00pm. Item # 13. Page 7. 49 List of Board of Directors, Petroleum Corporation of Jamaica. Provided by Dr. Ruth Potopsingh on November 23, 2007. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 63 of 124 According to Dr. Ruth Potopsingh, in a statement which was made to the OCG, “ it is noted that such payments for the expanded project exceeded the J$90M approved by the Board of Directors by approximately J$24M.”

Dr. Ruth Potopsingh went further to explain that the over-expenditure was not brought to her attention by either Mr. Rodney Salmon, Director of Administration/Corporate Secretary or by Mr. Henoy Russell, Financial Controller. She stated that she only became aware of the over-expenditure when investigations into the 4M Project were launched.50

Dr. Potopsingh further stated that the explanation which was given by Mr. Rodney Salmon was that the extra J$24M was taken from the PCJ’s regular Conservation Budget. The referenced over-expenditure relates only to payments which have actually been made to suppliers/contractors, and does not include outstanding invoices as at 2007 August 31.

By way of letters which were dated 2007 August 31, Mr. Kern Spencer wrote to various suppliers indicating that their respective invoices had been approved.

Effectively, therefore, Mr. Spencer, as at 2007 August 31, had committed the Government of Jamaica to further payments totalling approximately J$153M for the goods, works and services which had been provided by the respective suppliers/ contractors, in the execution of the 4M Project. 51

In order to ascertain whether the implementation of the 4M Bulb Project was conducted on the ‘periphery’ of the Ministry, it is necessary to establish a detailed understanding of the Project itself and the assigned roles.

According to a 2006 October 4 Project document which was produced by the Energy Division of MITEC, the statement was made that “The Government of Jamaica (GOJ),

50 Statement by Dr. Ruth Potopsingh dated November 8, 2007; Page 5. 51 Letters from Minister Kern Spencer dated August 31, 2007 and listing of outstanding invoices provided by Mr. Rodney Salmon of the PCJ. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 64 of 124 through the Ministry of Industry, Technology, Energy and Commerce (MITEC), will implement the project with the support of the Cuban Government .”52

It is not absolutely clear whether MITEC and /or PCJ strictly adhered to the October 4 Project Document.

In fact, according to Reginald Budhan, Director, Policy, Projects, Planning & Research (MEMT), “ While the project document proposes a project steering/monitoring committee, there was no formal approval of the document. The oversight arrangement for the project was different from the proposed arrangement contained in the project document .”

It must be noted that the same document contained a Budget estimate of US$3,095,568.59 and was predicated on the lessons which were learnt from the Pilot Project.

It is apparent that up to and including 2006 October, the Ministry had claimed responsibility for the implementation of the 4M Project. However, the OCG has seen no evidence to suggest that the PCJ, while acting as financing facilitators for the Project, approved the proposed US$3M budget that was prepared by the Ministry.

Therefore, given the apparent miscommunication regarding assigned responsibilities for the Project, it is apparent that there was a breakdown in the accountability and management responsibilities within the former MITEC and its department, the PCJ.

In light of the foregoing, the OCG believed it prudent to examine the issues of accountability and responsibility within the context of the requirements which are imposed in relation thereto by the Financial Audit and Administration Act (FAA Act) and the Public Bodies Management and Accountability Act.

52 MITEC 4M Energy Saving Project, dated October 4, 2006; Section K page 17. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 65 of 124 The records of the Ministry of Finance indicate that the Accounting Officer for both MITEC and PCJ is Dr. Jean Dixon.

In a letter, which was dated 2007 December 6, and which was written in response to a formal OCG Requisition of 2007 November 26, which was directed to the Financial Secretary, the Deputy Financial Secretary stated that “ The Permanent Secretary of the Ministry of Industry, Technology, Energy and Commerce (MITEC) is the Accounting Officer for that Ministry and all portfolio entities that fall under the Ministry, which would include the PCJ .” 53

The 2007 December 6 correspondence from the Ministry of Finance also stated that “Pursuant to the FAA Act, Accounting Officers are responsible for the propriety of procurement expenditure affected by their portfolio entities. Accordingly, all Accounting Officers are required to adhere to the procedures contained in the Handbook of Public Sector Procurement Procedures .”

Section 16 (2) of the FAA Act puts the matter beyond doubt. Its states that “ An accounting officer shall be responsible for the financial administration of the department specified in a designation under subsection (1) and shall be accountable to the Minister for (a) the assessment and collection of, and accounting for, all the moneys lawfully receivable by his department, …(and) (c) making any payment required to be made in relation to such appropriation ”.

Pursuant to Section 2 (1) of the FAA Act, the Accountable Officers of the PCJ would include Dr. Ruth Potopsingh, Group Managing Director, Henoy Russell, Financial Controller, Rodney Salmon, Director of Administration and Corporate Secretary of the Board of PCJ, and Dr. Jean Dixon, by virtue of her being appointed by the Minister as the Accounting Officer for MEMT, formerly MITEC.

53 Letter from Mr. Robert Martin, Deputy Financial Secretary, Ministry of Finance and the Public Service. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 66 of 124 These individuals, in accordance with Section 24F of the FAA Act, are vested with the authority and responsibility, inter alia , to make commitments and payments and, in accordance with Section 19C of the Act, they are authorised and are held responsible to certify and approve the payment of vouchers.

Section 20 (1) of the FAA Act is instructive on the sanctions which may be imposed upon Accounting Officers, Accountable Officers and Officers who may be found to have failed in their duties. An “ Officer ” is defined in Section 2.1 of the Act as “ any person in the employ of Government”.

Section 20 (1) Financial Audit and Administration Act provides as follows:

“20. (1) If it appears to the Financial Secretary upon a report by the Auditor-General that any person who is or was an officer- (a) has failed to collect any moneys owing to the Government for the collection of which such person is or was at the time of such employment responsible; (b) is or was responsible for any improper payment of public moneys or for any payment of such moneys which is not duly vouched; or (c) is or was responsible for any deficiency in, or for the loss or destruction of, any public moneys, stamps, securities, stores, or other Government property, and if, within a period specified by the Financial Secretary, an explanation satisfactory to him is not furnished with regard to such failure to collect, improper payment, payment not duly vouched, deficiency, loss or destruction, as the case may be, the Financial Secretary may surcharge against the said person the amount not collected or such improper payment, payment not duly vouched, deficiency, loss or the value of the property destroyed, as the case may be, or such lesser amount as the Financial Secretary may determine.”

In so far as the responsibilities that are imposed by law upon the Board of Directors of the PCJ are concerned, it being a “ Public Body ”, it is also instructive to record the provisions which are contained in Sections 6, 17 and 25 of the Public Bodies Management and Accountability Act.:

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 67 of 124 Section 6 of the Public Bodies Management and Accountability Act provides as follows:

“6. Every board shall- (a) take such steps as are necessary- (i) for the efficient and effective management of the public body; (ii) to ensure the accountability of all persons who manage the resources of the public body; (b) develop adequate information, control, evaluation and reporting systems within the body; (c) develop specific and measurable objectives and performance targets for that body”.

Section 17 of the Public Bodies Management and Accountability Act provides as follows:

“Every director and officer of a public body shall, in the exercise of his powers and the performance of his duties (a) act honestly and in good faith in the best interests of the public body; and (b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances including, but not limited to the general knowledge, skill and experience of the director or officer”.

Section 25 (1) and (2) of the Public Bodies Management and Accountability Act provide as follows:

“(1) If the Court is satisfied on an application by the Attorney-General that any person has contravened any of the provisions of- (a) section 4 (acquisition of shares and payment of dividends); (b) section 5 (exercise of borrowing powers); (c) section 6 (corporate governance); (d) section 14 (general duties of auditors); (e) section 15 (failure to furnish information to auditor); (f) section 20 (levels of emoluments);

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 68 of 124 (g) section 21 (restriction on formation of new companies), the Court may exercise any of the powers referred to in subsection (2). (2) The Court may- (a) order the person concerned to pay to the Crown such pecuniary penalty not exceeding one million dollars; or (b) grant an injunction restraining that person from engaging in conduct described in subsection (1)”.

4M Project Oversight Body (Monitoring Committee) One of the allegations that was made by Minister Clive Mullings was that the 4M Project implementation was handled by a “ Monitoring Committee ” which was chaired by then Minister of State, Senator Kern Spencer.

The OCG’s Requisitions, dated 2007 October 29, required all respondents, with the exception of Minister Clive Mullings, to answer a series of questions regarding the existence, composition and functions of any oversight body or bodies which existed in relation to the 4M Project.

Respondents were asked a series of questions which included the following: • Was there any oversight body, other than PCJ, MITEC and the MEMT, for the Project? If yes, please list the name(s) of each such oversight body/bodies. • What were/are the Terms of Reference governing each oversight body/bodies? • Which person(s), authority or entity appointed and/or approved the establishment of each oversight body? • List the members (past and present) of each oversight body and their designated responsibilities. • From whom did each oversight body receive its directives? • Did any of these oversight bodies issue written Project status and/or progress reports to the PCJ, MITEC and MEMT or to any other authority? If yes, please indicate to whom and provide a certified copy of each such report.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 69 of 124 Detailed below are the discrepancies in the responses which were received from the respondent Public Officials:

Responses – Dr. Ruth Potopsingh In response to Questions #6, 8 and 9 of an OCG Requisition which was dated 2007 October 29, Dr. Ruth Potopsingh indicated that she was unaware of any oversight body and that there were no official appointments. However, in her statement of 2007 November 8, Dr. Potopsingh stated that she had nominated three senior members of staff to “ attend meetings as necessary” 54 .

Further, in her statement and in response to Question #9 of the OCG’s 2007 October 29 Requisition, Dr. Potopsingh went further to say that, “ I do not consider the above named persons as being part of a formal oversight body ”55

In light of Dr. Potopsingh’s response to Question #9, which is referenced above, the OCG sought clarification on the matter in the OCG interview session which was conducted with her and with other PCJ Officials on 2007 November 23. At the interview, Dr. Potopsingh stated that, “… she does not know if there was a formal oversight body. The officers of PCJ attended meetings conducted by MITEC, and as far as she knows, the Officers had no decision making powers. ”56

Responses – Mr. Kern Spencer Mr. Kern Spencer, in his statement to the OCG, which was dated 2007 November 20, named three groups of varying authority which he considered to be oversight bodies, albeit ‘ adhoc ’ oversight bodies 57 . Below is a bulleted composition of the oversight bodies as identified by Mr. Spencer:

54 Persons nominated by Dr. Potopsingh include Mr. Cleaveland Smith, Energy Efficiency Coordinator, Mr. Richard McDonald, Group Operations Manager and Mr. Stephen Sterling, Manager, Planning and Implementation. 55 Statement by Dr. Ruth Potopsingh, dated November 8, 2007; Response to Question #9. 56 Statement by Dr. Ruth Potopsingh, dated November 23, 2007; Response to Question #11. 57 Statement by Mr. Kern Spencer, dated November 20, 2007; Response to Question #9. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 70 of 124 Monitoring Committee/Implementation Committee (Body # 2) 1. Kern Spencer- MITEC 2. Fitzroy Vidal- MITEC 3. Reginald Buddan[sic] - MITEC 4. Conroy Watson- MITEC 5. Steven Sterling- PCJ 6. Cleveland Smith- PCJ 7. Richard McDonald- PCJ 8. Victor Milo and another representative from Cuba 9. Sherine Shakes

A more Authoritative Group (Body # 1A) comprised of: 1. Minister Phillip Paulwell (Chair) 2. All Members of Body # 2 3. The Cuban Ambassador 4. Dr. Potopsingh

According to Mr. Spencer, this group was chaired by Minister Paulwell and met on approximately five (5) occasions between June 2006 to June 2007.

Authoritative Group ( Body # 1B) comprised of: 1. Dr. Jean Dixon, Permanent Secretary 2. Included all members of the monitoring committee (Body # 2) 3. Dr. Potopsingh 4. Mr. Rodney Salmon

After providing a list of the respective ‘authoritative ’ groups, Mr. Kern Spencer responded to Question #9 of the OCG Requisition, which was dated 2007 October 29, by saying: “ The bodies were adhoc and not formally established, therefore no terms of reference was developed by any technical person with the PCJ or the Ministry. ”58

58 Statement by Mr. Kern Spencer, dated November 20, 2007; Response to Question #9. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 71 of 124 Further, in his statement of 2007 November 20, Mr. Spencer admitted to appointing the Monitoring/Implementation Committee. However, according to Mr. Spencer, “ I am unable to say who appointed the other bodies. Suffice it to say. The body chaired by the Minister was likely to have been appointed by him. In relation to Body 1B, the Permanent Secretary, as the senior public servant is likely to have established that body .” 59

In response to the same question, Mr. Spencer also noted that “ There seem to have been confusion as to which was the entity formally in charge of the Project. The PCJ said it was the ministry and the ministry saw it as the PCJ’s responsibility, therefore there was no written formal establishment of any of the bodies.” 60

According to Mr. Spencer, in reference to the Monitoring Committee/ Implementation Committee, “ The main purpose was to oversee the timely implementation of the project” 61 . Mr. Spencer also indicated, in response to a further question, that “The Monitoring Committee/Implementation Committee received directives and instructions from the authoritative groups.” 62

Responses – Dr. Jean Dixon In her response to Question #6 of the 2007 October 29 OCG Requisition, Dr. Dixon stated that, “ I have no knowledge of any other oversight body except the one chaired by the former Minister of State.” 63

With regard to a question which was asked about the Terms of Reference which governed the oversight bodies, Dr. Dixon further stated that, “The only documented reference to TOR for a Project Steering Committee is on page 22 of the draft project document.” 64 It must be reiterated that the Project document of which Dr. Jean Dixon referred was never formally approved for the 4M Project.

59 Statement by Mr. Kern Spencer, dated November 20, 2007; Response to Question #10. 60 Statement by Mr. Kern Spencer, dated November 20, 2007; Response to Question #10. 61 Statement by Mr. Kern Spencer. dated November 20, 2007; Response to Question #11. 62 Statement by Mr. Kern Spencer, dated November 20, 2007; Response to Question #12. 63 Statement by Dr. Jean Dixon, dated November 16, 2007; Response to Question #6. 64 Statement by Dr. Jean Dixon, dated November 16, 2007; Response to Question #7. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 72 of 124 Dr. Dixon also stated that she had “…no knowledge of formal approval of the oversight body/project implementation committee” 65 as well as, “The records available disclose a single oversight body.” 66

In regard to the membership of any of the Project oversight bodies, Dr. Dixon stated that , “I have no knowledge of the full membership but on an alternative basis Messrs. Jerico Hanson, Fitzroy Vidal and Conroy Watson and Ms. Keva Steadman of the Energy Division and much later Mr. Reginald Budhan of the Policy Division participated in meetings” 67

Responses – Phillip Paulwell Minister Phillip Paulwell, in his statement of 2007 November 12, stated that, “There was an Implementation Committee chaired by Minister of State, Hon. Kern Spencer.” 68

Mr. Paulwell was unable to provide details of the composition of the various oversight bodies as listed by Mr. Spencer. When asked “From whom did each oversight body receive its directives?” Mr. Paulwell stated that it was “Minister of State, Hon. Kern Spencer.” 69

Scope of Works and Competitiveness of Rates The 4M Project had various facets which required the provision of goods, works and services. In light of the fact that there was no written Project document which was strictly adhered to by either the PCJ or by MITEC in the implementation of the Project, any determination as to the Project’s approved scope of works would at best be difficult.

However, there is evidence to suggest that the following services were required for the Project:

65 Statement by Dr. Jean Dixon, dated November 16, 2007; Response to Question #8. 66 Statement by Dr. Jean Dixon, dated November 16, 2007; Response to Question #10. 67 Statement by Dr. Jean Dixon, dated November 16, 2007; Response to Question #9. 68 Statement by Mr. Phillip Paulwell, dated November 12, 2007; Response to Question #8. 69 Statement by Mr. Phillip Paulwell, dated November 12, 2007; Response to Question #12. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 73 of 124 1. Project Management Services; 2. Transportation Services; 3. Customs Clearance Services; 4. Provision of Meals for Volunteers; 5. Accommodation for the Cuban Volunteers.

There was no written contract between the PCJ or MITEC and the main contractors, UMD or CCMN, which would outline the terms and conditions and the deliverables of either of the referenced contractors.

Attempts have been made by the OCG to determine the basis upon which the payment of invoices, which were submitted by the various contractors/suppliers, were actually approved to ensure that the GOJ had actually received the services for which it had paid.

Information which was received by the OCG, indicates that the invoices were reviewed and approved for payment by Mr. Rodney Salmon, the Director of Administration/Corporate Secretary at the PCJ, prior to payment by the PCJ.

It must be noted, however, that Mr. Rodney Salmon had written to State Minister Kern Spencer and Dr. Ruth Potopsingh, to indicate that there were discrepancies with the invoices that needed clarification.

By way of letter, which was dated 2006 August 24, Mr. Rodney Salmon wrote to Mr. Spencer stating that, “I would appreciate for the sake of good order and to assist the Petroleum Corporation of Jamaica (PCJ) to operate within the Government’s procurement guidelines, if you would get responses to the matters raised below.” 70

70 Letter dated August 24, 2006 from Mr. Rodney Salmom addressed to the Honourable Kern Spencer. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 74 of 124 This initial letter to Mr. Spencer highlighted inadequacies in the invoices which were submitted to the PCJ. The inadequacies included missing dates, lack of supporting documents and a need for explanations on some of the invoices amongst other issues.

On 2007 March 14, Mr. Rodney Salmon wrote to Dr. Ruth Potopsingh expressing concern with regard to a series of invoices to be approved. According to the letter of 2007 March 14:

“The major concerns of the Petroleum Corporation are: • All the invoices are for amounts in excess of $120,000 and should have has [sic] at least three (3) price quotations and be reviewed by the Procurement Committee • The quantum of the payment to Universal Management and Development Company Ltd. (UM&DCo.) may have, or has already reached that amount which may place PCJ in a situation to explain why the National Contracts Commission was not asked to approve the Contract with UM&D Co. • PCJ is being asked to pay for services and goods for which it has no certification that the services were rendered or the goods received.”

At the close of his letter, Mr. Salmon requested the advice of Dr. Potopsingh whilst also positing recommendations for the way forward. By way of letter, which was dated 2007 March 14, Dr. Potopsingh responded to Mr. Salmon confirming a meeting to be held with Minister Spencer and his Project implementation team, at which time the procedures for the contracting and awarding of services would be indicated.

The discrepancies which were raised by Mr. Salmon, in his letter of 2007 March 14, included concerns as to whether or not the works had actually been performed by the relevant contractors. Such concerns do not necessarily speak to whether or not the goods, works or services were within the agreed scope of works but rather the legitimacy of the claims of the contractors who did not have written agreements outlining their deliverables.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 75 of 124 The payment listing which was provided to the OCG by Minister Clive Mullings, and by Mr. Rodney Salmon of PCJ, revealed that payments were in fact made to various contractors for goods, works and services in consideration for the provision of meals, transportation, project management services, customs clearance charges, etc. 71 .

The problem, however, is that in the absence of an approved Project document, difficulty will be encountered in comparing the goods, works or services which were rendered for the Project, against that which was actually needed and approved.

In light of the fact that there was initially no competitive tendering to inform the preliminary contracting of the different suppliers which were paid by the PCJ, the OCG has had to rely upon the results of the tender exercise which was concluded in 2007 June to secure an indicative costing for the referenced services.

It was expected that this exercise would establish whether or not the PCJ and MITEC had been paying rates which were comparable to market rates.

It must be reiterated that in the selection of a contractor, cost is not the only criteria which is used to assess tenders which are submitted. However, the rate to be charged is still a key component of the overall weighting and, as such, can be ascertained from the bids which were submitted in 2007 June.

The tender report which was submitted to the NCC by MITEC, in 2007 June, for the procurement of Project related management services, has revealed the following data: 72

Bidder Bid Price/ Bulb (J$) Bid Price Assuming 2.6 Million Bulbs (J$) UMD Ltd 8.85 23 Million PSCL LTD. 2.783 7.236 Million

71 Payment listing provided by Messrs. Clive Mulllings and Rodney Salmon. 72 Tender Evaluation Report; Page 7. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 76 of 124 Of the two bids which the Ministry received, the bid which was presented by UMD, viz. $23 Million, was approximately three times the $7.236 Million bid which was submitted by PSCL. In fact, PSCL’s bid was much closer to the comparable estimate of $7.8 Million which was prepared by MITEC.

If the quotation which was presented by UMD was in any way in keeping with the rates which were charged during the earlier phases of the 4M Project, it would be reasonable to conclude that the GOJ, through MITEC and the PCJ, did not receive the most competitive rates for the project management services which were provided.

Put another way, if the subject reference is to be used, the Government of Jamaica did not receive value for money for the services which were rendered by UMD in its execution of the 4M Project.

Further, it is also evident that had competitive tendering been utilized, as the GPPH demands, the GOJ would have had some objective basis upon which to select contractors which could have provided the most competitive rate for the services provided.

Application of Procurement Guidelines and Policy – Competitive Tendering, Competence and Track Record of Contractors/Suppliers Based upon statements which were submitted to the OCG by the Permanent Secretary in the MEMT, Dr. Jean Dixon, Group Managing Director of the PCJ, Dr. Ruth Potopsingh and Mr. Kern Spencer, it is apparent that the engagement of the contractors/suppliers which were utilized throughout the 4M Project were not undertaken on any readily identifiable basis or merit.

It should be noted that UMD, which is the main contractor/supplier at the centre of the 4M Project, was formally registered as a corporate entity on 2006 July 31 – a date which is in very close proximity to the timeframe within which the 4M Project was commenced.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 77 of 124 One of the OCG’s concerns with the award of the contract for project management services to UMD, was the apparent lack of transparency which was evident in the ‘procurement ’ process. It is difficult to state with any certainty that the contract was awarded impartially and on merit.

The OCG must place upon record the fact that numerous attempts were made by it to obtain information from the sole director of UMD and CCMN, Mr. Rodney Chin.

Given the claims which were made by State Minister Spencer that contractors had submitted letters of interest regarding the Project, the OCG was of the view that providing Mr. Rodney Chin with an opportunity to be heard would have substantially assisted the discovery process by bringing clarity to assertions and allegations which, it appeared, would be best answered by the entity which was listed as the Project’s main contractor.

Despite the OCG’s attempts, however, Mr. Rodney Chin, who had initially indicated a willingness to respond to the lawful Requisitions of the OCG, subsequently refused to comply, while acting on the advice of his Attorney.

The history of the events which surrounds Mr. Chin’s refusal to comply with the OCG’s lawful Requisitions include two letters which were directed to the Contractor General by his Attorney, Mrs. Valerie Neita-Robertson. The first letter was dated 2007 December 17. In that letter, Counsel argued, inter alia , that “ my client is neither a Jamaican Government employee nor is he an Officer of Administrator of any Public Body ”.

In response to Mrs. Neita-Robertson’s letter of 2007 December 17, the Contractor General, by way of letter which was dated 2007 December 19, informed Mrs. Neita- Robertson that “the powers of the Contractor General to lawfully compel your Client to comply with the subject Requisition are clearly set out, inter alia, in Section 18 (1) of the Contractor General Act. These powers are not confined to Requisitions which are

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 78 of 124 directed to ‘a Jamaica Government employee or an Officer or Administrator of any Public Body’, as your letter would seem to inaccurately suggest ”.

Consequently, Mr. Rodney Chin was given a final deadline of 2007 December 24 by which to comply with the OCG’s Requisition, failing which Mrs. Neita-Robertson was advised that the matter would be referred to the Director of Public Prosecution without further notice given to her or to her client.

By way of letter, which was dated December 20, 2007, a representative of Mrs. Neita- Robertson wrote to the Contractor General on her behalf, advising, inter alia , that: “Although her client may be compelled to attend your investigation, nonetheless he has been held out as a suspect in matter being investigated and in those circumstances he may not be compelled to give evidence that is likely to incriminate himself. The State may not, (even through a Supreme Court Justice,) compel a citizen to incriminate himself unless Immunity against Criminal Prosecution is granted .”

The letter then requested that the OCG “ stay any action until (Mrs. Neita-Robertson’s) return to the island ” which the letter indicated would be 2007 December 30.

The Contractor General, by way of letter which was dated 2007 December 27, responded to Mrs. Neita-Robertson’s letter of 2007 December 20, informing her that, while taking note of the new point which was raised in her letter of December 20, the OCG did not share “ the view which is implicit in your argument that your Client has the right to carte blanche refuse to comply with the subject Requisition of the Office of the Contractor General of December 10, 2007 ”.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 79 of 124 against your Client. You may therefore choose to formally pursue yours and your Client’s positions directly with the Director ”.

The matter was formally referred by the Contractor General to the Director of Public Prosecutions, under cover of letter which was dated the next day, 2007 December 28.

The lack of cooperation on the part of Mr Rodney Chin, with the OCG’s Investigation, has left the OCG with critical questions which pertain to the 4M Project unanswered.

Several of these questions could only have been answered by Mr. Rodney Chin, especially in light of the absence of a written contract between UMD and CCMN and the Government of Jamaica, as well as in the absence of other pertinent documentation which relates to the 4M Project.

One of the questions which arises is whether UMD and CCMN were contractors who were competent and had an established business performance track record.

According to Mr. Kern Spencer, his initial selection of the Project’s contractors/suppliers was premised on a presumed need to “rely on persons that I was familiar with in the past and persons who were willing to offer credit and respond to the requirements immediately .”73

In response to a question about his prior knowledge of the capability of the contractors, Mr. Spencer indicated that he either had previously utilized the contractors or had some knowledge of their capabilities in various regards.

With specific reference to CCMN and UMD, Mr. Spencer stated that he “ … had seen features, DVDs and documents that they [CCMN] have produced, UMD - I have been

73 Kern Spencer Response to OCG October 29, 2007 Requisition; Response to Question #19. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 80 of 124 familiar with services offered by Director Chin in terms of transportation, construction, public relations/events promotions and catering services .” 74

It is instructive to note that knowledge of UMD’s capability for the provision of services on the Project was identified by Mr. Spencer as a criterion in his selection. Given the fact that both UMD and CCMN were incorporated at the Registrar of Companies on 2006 July 31 and July 20 respectively, the companies could not have had a track record as registered entities, by which Mr. Spencer could have been guided to inform his decision to approach both companies.

Lack of Transparency in the Award of Contracts The award of contracts for the 4M Project lacked transparency. The findings are:

1. Senior officials at MITEC and the PCJ were unaware of the methods or means by which the various individuals/persons were contracted to provide goods, works and services for the 4M Bulb Distribution Project; 2. There is no evidence to establish that a competitive tender process took place; 3. There was no evidence that the procurement process was approved by the procurement committee/committees of the MITEC and/or the PCJ; 4. There was no evidence that the contracts were endorsed by the NCC and/or by Cabinet, as the case might be, where their values so required; 5. The opportunity and criteria for suppliers/contractors to be selected were never publicized until competitive tendering was initiated in 2007 March; 6. There is no documentary evidence to establish that contracts were actually entered into with the suppliers/contractors.

The aforementioned are a few of the reasons which speak to the lack of transparency and competition in the selection of the various suppliers/contractors. Of course, the most astounding aspect of the findings is that the senior representatives of the Public Bodies

74 Kern Spencer. Response to OCG October 29, 2007 Requisition: Response to Question # 20. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 81 of 124 which are implicated, namely the PCJ and MITEC, were unaware of how the suppliers/contractors were selected.

Despite this, approximately J$114 Million of the Government’s funds have been disbursed to these suppliers/contractors and invoices, amounting to approximately J$153 Million, are still outstanding for payment, based upon PCJ documents which were reviewed.

Having established that there was no fairness, transparency or readily defensible merit in the award of the contracts under the 4M Project, the issue of prima facie evidence of impropriety in the award of the contracts must be addressed. In so doing, the OCG notes that:

i. Direct payments have been made to Ms. Stacie Ann Waite, who, at the time of tendering in 2007 March, was listed by UMD in their proposal as a technical employee of the company. The payments which were made to Ms. Waite were for meals which were supplied to the Cubans and refreshments for the Cuban Energy program. Ms. Waite is also listed by Ms. Sherine Shakes, Project Manager, UMD as a friend of 16 years 75 .

ii. The payment listing from the PCJ also indicates that a Ms. Verdie Mair had been paid J$700,000.00 for catering services. Ms. Mair, who is listed by Mr. Kern Spencer as one of the persons with whom his office first made contact, is the mother of Ms. Sherine Shakes, Project Manager, UMD, and the grandmother of Mr. Spencer’s child. Mr. Spencer did not disclose this association in any of his representations to the OCG. It is instructive to note that Ms. Verdie Mair is also listed as the first Company Secretary for both UMD and CCMN.

75 Statement by Ms. Sherine Shakes, dated December 24, 2007. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 82 of 124 iii. Ms. Sherine Shakes, who is the mother of former State Minister Senator Kern Spencer, has played a principal role at UMD, particularly in so far as it relates to her liaising with public entities, on behalf of the UMD. Evidence on record reveals that:

(a) The UMD’s application to the NCC for registration as an approved supplier, which was submitted to the OCG by UMD and which was dated 2007 March 27, lists Ms. Sherine Shakes as the Contact Person/Agent for the firm; (b) The same application for registration was signed by Ms. Shakes. She listed her status in the firm as that of Business Development Officer/ COO. (c) Ms. Shakes was identified throughout the 4M Project as UMD’s Project Manager. She also represented UMD at the 4M Project meetings which were convened at the MITEC and/or PCJ. (d) At the time of the competitive tendering in 2007, Ms. Shakes was listed as a Technical Employee of UMD in their project proposal which was submitted in response to the 2007 March Request for Proposals. It must be noted that in her written response of 2007 December 24, to the OCG’s Requisition, Ms. Shakes indicated that, “ … I have not had project management experience prior to the Project .” 76 (e) On 2007 August 31, Mr. Kern Spencer wrote to Ms. Shakes at UMD, in her capacity as UMD’s Project Coordinator, to inform her that outstanding bills, to UMD, totalling J$143,588,142.05, would be honoured by the Government. (f) By way of letter, which was dated 2007 October 17, Ms. Shakes, in her capacity as UMD’s Project Manager, wrote to Dr. Jean Dixon regarding the outstanding payments and what she characterized as “… the length of time that has elapsed in the settling of these outstanding payments .” (g) At no time, throughout the entire Investigation, has the OCG seen any written correspondence or documentation, regarding the 4M Project,

76 Statement by Sherine Shakes, dated December 24, 2007; Response to Question #8 ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 83 of 124 which was either directed to UMD in the care of its Sole Shareholder and Proprietor, Mr. Rodney Chin, or which was despatched by UMD in the name of the said Mr. Chin. (h) It is therefore evident that Ms. Sherine Shakes has been ostensibly held out by the UMD as one of its principal representatives, if not its principal representative.

Alleged Impropriety on the Part of State Minister Kern Spencer On Friday, 2008 January 11, two alleged former employees of Mr. Kern Spencer and/or Butterfly Traders, of which Mr. Spencer is a Director and Shareholder 77 , visited the OCG requesting to speak with the Contractor General. The men were informed by a representative of the OCG that the Contractor General was not in office. The men then proceeded to inform the representative of the reason they had come to the OCG.

In their initial representation, which has been documented in keeping with the OCG’s internal procedures for creating File Notes on official verbal communications with external stakeholders, the men alleged that they had been driving buses for Mr. Spencer/Butterfly Traders Limited to assist in transporting Cubans and light bulbs for the 4M Project.

However, they were now owed large sums of money which they were trying to recoup. According to the men, they had visited Minister Clive Mullings’ Office with the intention of receiving some form of assistance and were told that the OCG was investigating the matter and would be better able to help, hence, their visit to the OCG.

On Wednesday, 2008 January 16, both men returned to the OCG with the same complaint which they had made a few days earlier. On this occasion, both men were interviewed by representatives of the OCG.

77 Particulars of Directors of Butterfly Traders Ltd; Obtained from the Office of the Registrar of Companies. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 84 of 124 Their verbal statements were reduced to writing and were certified by them as being truthful, accurate and complete before OCG representatives and also before a Justice of the Peace pursuant to Sections 18 and 29 of the Contractor General Act, Sections 2 and 7 of the Voluntary Declarations Act and Section 8 of the Perjury Act.

The alleged former employees, previously referred herein to as ‘Driver A’ and ‘Driver B’, expressed numerous and very serious allegations which will, in the OCG’s opinion, require investigation by the appropriate authorities, particularly by the Director of Public Prosecutions, the Commissioner of Police and the Corruption Prevention Commission.

As regards matters which pertain to the statutory criminal offence of ‘ Corruption ’, and the investigation of acts of Corruption, it is instructive to note, at this juncture, the following provisions which are contained in Sections 14, 15 and 5 of the Corruption Prevention Act:

Section 14 of the Corruption Prevention Act (Acts of Corruption) provides, inter alia , as follows:

14. (1) A public servant commits an act of corruption if he- (a) solicits or accepts, whether directly or indirectly, any article or money or other benefit, being a gift, favour, promise or advantage for himself or another person for doing any act or omitting to do any act in the performance of his public functions; (b) in the performance of his public functions does any act or omits to do any act for the purpose of obtaining any illicit benefit for himself or any other person; (c) fraudulently uses or conceals any property derived from any such act or omission to act. (2) A person commits an act of corruption if he offers or grants, directly or indirectly, to a public servant any article, money or other benefit being a gift, favour, promise or advantage to the public servant or another person, for doing any act or omitting to do any act in the performance of the public servant's public function.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 85 of 124 (3) A person commits an act of corruption if he instigates, aids, abets or is an accessory after the fact or participates in whatsoever manner in the commission or attempted commission of or conspires to commit any act of corruption referred to in subsection (1) or (2). (6) Any public servant who improperly uses for his own benefit or that of a third party- (a) any classified or confidential information that he obtains as a result of or in the course of the performance of his functions; or (b) any property belonging to the Government or any statutory body or authority or any government company or any body providing public services which he has access as a result of or in the course of the performance of his functions, commits an act of corruption. (7) Any person who is or is acting as an intermediary or through a third person who seeks to obtain a decision from any Ministry or Department of the Government or any statutory body or authority or any government company or any body providing public services whereby he illicitly obtains for himself or for another person any benefit or gain (whether or not the act or omission to act from which the benefit or gain is derived is detrimental to the Government) commits an act of corruption. (8) Any public servant who for his own benefit or for that of a third person, diverts any property belonging to the Government or any other person, which is in his custody for the due administration of his duties commits an act of corruption.

Section 15 of the Corruption Prevention Act (Offences) provides, inter alia , as follows:

15. (1) Any person who commits an act of corruption commits an offence and is liable- (a) on summary conviction in a Resident Magistrate's Court- (i) in the case of a first offence to a fine not exceeding one million dollars or to imprisonment for a term not exceeding two years, or to both such fine and imprisonment; and

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 86 of 124 (ii) in the case of a second or subsequent offence to a fine not exceeding three million dollars or to imprisonment for a term not exceeding three years or to both such fine and imprisonment; (b) on conviction in a Circuit Court- (i) in the case of a first offence to a fine not exceeding five million dollars or to imprisonment for a term not exceeding five years or to both such fine and imprisonment; and (ii) in the case of a second or subsequent offence to a fine not exceeding ten million dollars or to imprisonment for a term not exceeding ten years or to both such fine and imprisonment.

Section 5 of the Corruption Prevention Act (Functions and Powers of Commission for the Prevention of Corruption) provides, inter alia , as follows:

5. (1) The functions of the Commission shall be- (d) to receive and investigate any complaint regarding an act of corruption. (2) The Commission shall have power to summon witnesses, require the production of documents and to do all such things as it considers necessary or expedient for the purpose of carrying out its functions.

The findings of the OCG’s interview sessions with Driver A and Driver B have revealed the following 78 :

Driver A was employed to Butterfly Traders in 2003. Driver A began driving for the 4M Project in January 2007. Money totalling J$343, 000 is owing to Driver A. Driver A was responsible for a 34-seater Mitsubishi Bus. This bus was allegedly registered in the name of Kern Spencer and was transferred to Butterfly Traders in 2005.

78 Statement by Driver A, dated 2008 January 16. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 87 of 124 According to Driver A, he was told by Mr. Spencer that he worked for a man named ‘Chin’, although he was driving a bus owned by Mr. Spencer. Driver A, on one occasion, transported bulbs to a ‘government house’ in Waterworks on Sharrow Drive (the last House on Sharrow Drive). These bulbs included 193 boxes of 24 bulbs each and 118 boxes of 14 bulbs each. After the elections, Driver A, concerned about the police coming to him, tried to move the Bulbs from the ‘government house’ to the Ministry, and went to the offices of UMD to obtain the keys to the house. Driver A was told by UMD that they could not find ‘any key’. When the 4M Project ‘scandal’ broke, Driver A was called by UMD and told that things were to be moved to the wharf. These items included bulbs, food items (such as tin mackerel), 9 broken fans and a computer which had been used by the Cubans. Upon arrival at the wharf, Driver A was told by security personnel that because of the investigation, nothing could be placed in the container. Subsequently, and according to Driver A, the bulbs were taken by a ‘truck man’ to a house in Portmore under the instructions of a Mr. Calvin Blackwood, who was allegedly employed to Mr. Spencer. According to Driver A, when he sought to get payment for the work he had done, he heard that the company (UMD) was closed.

Driver A also alleges that after being instructed to park the buses at a place called TDK in Portmore, he received a call from Driver B informing him that the buses had been ‘cut up’. According to Driver A, he subsequently called Mr. Kern Spencer to enquire about the buses, and Mr. Spencer informed Driver A that the buses were ‘cut up’ because he did not want ‘the Labourites’ to know that his (Mr. Spencer) bus was involved in the contract.

On Wednesday, 2008 January 16, when Driver A gave his statement to the OCG, he was not in possession of any documentation to indicate that he was in fact an employee of Mr. Kern Spencer and/or Butterfly Traders Ltd. Nor was he in possession of any registration

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 88 of 124 information regarding any of the vehicles. He, however, indicated that he would obtain the necessary documents and deliver same to the OCG.

On Thursday, 2008 January 17, Driver A returned to the OCG to sign his written statement and have it witnessed by a Justice of the Peace. At that time, he supplied to the OCG:

1. A letter dated 2006 October 12, on a Butterfly Traders Letterhead, signed by Mr. Kern Spencer, authorizing him to conduct business on the company’s behalf in regard to a particular vehicle. 2. A Scotiabank Transaction Record which Driver B purportedly had received for a cheque lodged in respect of payment for work done under the 4M Project. 3. A list of three licence plate numbers which he had obtained from the insurance company where the buses were insured by Butterfly Traders Ltd.

On Friday, 2008 January 18, the OCG wrote to the Commissioner of the Inland Revenue Department requesting historical ownership/ownership transfer information and vehicle description and identification particulars as per the registration particulars which were provided by Driver A. Listed below are the registration particulars of the vehicles which were provided by Driver A.

1. Registration Plate No. – PC-1911 2. Registration Plate No. - PC-5301 3. Registration Plate No. – PC-1871

The Inland Revenue Department responded to the OCG’s written Requisitions on the same day, formally and in writing. In its response, it revealed that all of the three (3) vehicles that were queried were indeed currently registered to Butterfly Traders Ltd.79 In one instance, a vehicle had been transferred from Mr. Kern Spencer’s name in 2005, and

79 Vehicle registration information obtained from the Inland Revenue Department. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 89 of 124 subsequently registered to Butterfly Traders Ltd., corroborating one of Driver A’s statements.

In the premises, the allegations are that property which was owned by the then Public Official, Mr. Kern Spencer, was actively engaged and utilized in the execution of contracts which were directly related to the 4M Project, which itself was being executed by UMD. The OCG, however, has not been able to determine whether any benefits were received by Mr. Kern Spencer, as a result of the referenced property being utilized in the execution of contracts under the 4M Project.

However, sufficient prima facie evidence exists to warrant the intervention, inter alia , of the Commission for the Prevention of Corruption and the Director Public Prosecutions to determine, inter alia , whether Mr. Spencer was in fact subcontracted to UMD to provide services for the 4M Project and/or whether he and/or his company received any illicit benefits in consequence of the provision of the said services, contrary to Section 14 of the Corruption Prevention Act.

On 2008 January 21, Driver B returned to the OCG to sign the statement which he had made at the OCG on 2008 January 16 80 . In his statement to the OCG, Driver B indicated that he started to drive for the 4M Project in July 2006 when the initial set of Cubans had arrived and again for a few weeks in 2007 February.

Driver B indicated in his statement that he had requested that Mr. Kern Spencer pay him $2,000 per day. However, according to Driver B, Mr. Spencer told him he could only afford $1,500 per day. According to Driver B, this meeting occurred at the residence of Mr. Spencer in Waterworks.

Driver B also indicated in his statement that on 2007 May 1, he again started to drive for the 4M Project. In response to a question regarding his receipt of instructions, Driver B

80 Statement from Driver B, taken at the OCG on Wednesday 2008 January 16. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 90 of 124 stated that he sometimes received calls from Ms. Shakes but most of his calls came from a Calvin who works with Mr. Spencer.

According to Driver B, to the best of his knowledge, the bus he was driving belonged to Mr. Spencer but it was not registered in Mr. Spencer’s name but in the name of a company. When asked who he worked for, Driver B said he was of the opinion that he worked for Mr. Spencer although he did not get direct instructions from Mr. Spencer.

It must be noted that on 2004 July 23, an Exemption Motion was approved on behalf of Mr. Kern Spencer, pursuant to Section 41 of the Constitution. Section 41 requires a Member of the Senate to vacate his or her seat if any firm in which he or she is a partner, director or manager, becomes a party to any contract with the Government of Jamaica, unless he or she has been exempted by the Senate from doing so.

The particular Exemption Motion was expressed to relate to Butterfly Traders Limited. It stated that Butterfly Traders Limited “ may from time to time enter into contracts with the Government of Jamaica and its affiliated Agencies, to provide services .” 81

The Exemption Motion, which was granted to then Senator Kern Spencer, did not specify a particular contractual arrangement nor the public entity or entities that contracts could be entered into with.

Indeed, no restrictions were attached to the Exemption. It therefore appears that Mr. Kern Spencer was granted a carte blanche Exemption by Parliament which authorized his company, Butterfly Traders Limited, to enter into prospective Government contracts with no specific parameters, restrictions or conditions imposed, and without his having to disclose the particulars of any such future contract to Parliament.

81 Extracts of Section 41 Motions submitted to Contractor General, Greg Christie, by the Clerk of the Houses of Parliament (Acting), under cover of letter, dated 2006 May 31. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 91 of 124 There is no evidence that Butterfly Traders Limited was the recipient of a Government contract under the 4M Project (i.e. a contract which was awarded directly to it by a Public Body). However, the OCG’s investigation has revealed that there is evidence that property belonging to Butterfly Traders Limited was allegedly utilized in the execution of the 4M Project.

Return Visits to the OCG by Driver A and Driver B It must be noted that on January 21, 2008, both Driver A and Driver B returned to the OCG. Driver B had been scheduled to come to the OCG to sign a statement on that particular day. However, prior to Driver B signing his statement, both men expressed concern that Mr. Spencer had contacted them over the preceding week-end and had informed them that the payments which were outstanding to them would be paid on that day (2008 January 21).

Both drivers expressed concerns about the statements which they had given to the OCG and queried whether the forthcoming payments would have any impact upon those statements. It was also alleged by the drivers that Mr. Spencer told them that he was informed by one Danhai Williams that they had given information to a place in New Kingston.

It was explained to the drivers that the OCG was not involved in effecting payments on Government contracts and had nothing to do with Mr. Spencer having approached them over the weekend. 82

On 2008 January 22, Driver A returned to the OCG and informed representatives of the OCG that he had received the money owing to him. Driver A also indicated that he was told by a Mr. Chin that he (Driver A) should have had a lawyer present when making his statement to the OCG and that in his capacity as a driver, he was not authorized to give any statements in regard to Universal (UMD).

82 OCG File Note, dated January 22, 2008. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 92 of 124 Driver A expressed a concern about the number of calls he had received from various individuals in regard to his making a statement to the OCG. Driver A also noted that Mr. Chin had called him and said that it was being circulated at the PNP Headquarters that they, Driver A and Driver B, had gone to Knutsford Boulevard and made statements about the company, Universal (UMD).

During his visit to the OCG, Driver A also stated that his Attorney, whose name he could not recall because the Attorney was known to and obtained by Driver B, wanted a copy of the statement he had made to the OCG. Driver A was informed that his Attorney should make a written request to the Contractor General who would make a determination on the matter.

The OCG also asked Driver A if he had been threatened or intimidated in any way. In response, Driver A said no. However he indicated that he was looking on the current situation one way and other persons are seeing this differently. In his opinion, he, ‘ could be paid off today and lose his life tomorrow’ . However, he had made no complaint to the police.

Written Request by Driver A and Driver B to Withdraw Statements of 2008 January 16 On 2008 January 24, the OCG received two letters, dated 2008 January 22 and 21, respectively, from Driver A and Driver B requesting that the statements which they had given to the OCG, on their own volition, on 2008 January 16, be withdrawn.

In the letters from Driver A and Driver B, both men indicated that they might have given the OCG information that was not true and/or correct.

In the referenced letters, Driver A indicated that he did not get proper legal advice. Driver B cited a similar position whilst indicating that, “I am also uncomfortable because the statement was typed by one of your officers and then given to me to sign”.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 93 of 124 It must be noted that in each instance, prior to having the documents signed, the individual statements which were volunteered by Driver A and Driver B were read back to them by a representative of the OCG and were afterwards accepted and declared by them to be complete, truthful and accurate. Furthermore, they were so declared by them before a Justice of the Peace.

The letters, dated 2008 January 21 and 22, either refuted and/or contradicted the information which both men had given in their statements to the OCG on 2008 January 16. In each instance of the letters dated 2008 January 21 and 22, both men acknowledged that;

1. They were employed to Universal Management and Development Company Ltd; 2. They drove vehicles which were owned and registered to UMD; 3. They received instructions from UMD and were not employed to or paid by any other entity or person.

It should be noted that, unknown to Driver A and Driver B, independent investigations which were conducted by the OCG, with the Inland Revenue Department, have challenged the assertion which was made in #2 above. The vehicle identification particulars which were disclosed to the OCG by Driver A confirms that the said vehicles were registered to Butterfly Traders Limited and not to UMD.

It must also be noted that prior to the interview sessions of January 16 and the statements being reduced to writing by representatives of the OCG, both men gave their consent to have the interviews audio taped and were read Section 29 of the Contractor General Act.

Section 29 outlines, inter alia , the applicable criminal sanctions for misleading and/or wilfully making a false statement to mislead a Contractor General or for obstructing a Contractor General in the execution of his functions under the Act.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 94 of 124 Having been read Section 29 of the Contractor General Act, at the outset of the interview sessions, both men were asked if they understood that which was read to them and both responded in the affirmative.

At the outset of their initial approach to the OCG, both Driver A and Driver B had stated that they were owed money for the work which they had performed on the 4M Project. However, in the letters dated 2008 January 21 and 22, both men indicated that they had now been paid in full by the company and/or Mr. Chin.

OCG’s Response to Driver A’s and Driver B’s Requests to Withdraw Statements Following the OCG’s receipt, on 2008 January 24, of the respective written requests of 2008 January 21 and 22 January 22, from Driver B and Driver A, to withdraw their statements of 2008 January 16, the OCG formally responded to both Drivers by way of letter which was dated 2008 January 28.

The OCG’s letter to Drivers A and B reiterated the OCG’s stance that they acted on their own volition in providing information to the OCG and that, before making their statements, they were fully apprised of the minimum legal sanction which would apply if they misled or provided the OCG with false information.

The following are verbatim extracts from the OCG’s 2008 January 28 letters to Driver A and Driver B:

“We wish to remind you that, on your own volition, and without being requisitioned or subpoenaed to do so, you voluntarily appeared at the Offices of the Contractor General and freely offered to the OCG, the information which you are now seeking to withdraw. You were in no way compelled, coerced or induced to provide the OCG with your information”.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 95 of 124 “The voluntary disclosures which were made by you were made with the clear and unequivocal understanding that if they were in any way false or misleading, you would become liable to criminal prosecution under Section 29 of the Contractor General Act. Your voluntary disclosures of January 16, 2008, were reduced to writing, read back to you and were accepted and declared by you to be complete, truthful and accurate and, furthermore, were so declared by you, in writing, before a Justice of the Peace”.

“The Commission of the Contractor General is an independent Commission of the Parliament of Jamaica. Section 24 (1) of the Contractor General Act mandates, inter alia, that “A Contractor General and every person concerned with the administration of this Act shall regard as secret and confidential all documents, information and things disclosed to them in the execution of the provisions of the Act”.

“Section 29 (c) of the Act provides that any person who deals with any information in a manner which is inconsistent with Section 24 (1) of the Act, “shall be guilty of an offence”.

“In the circumstances, we regret that we will be unable to accede to your request to provide you with the record of our interview with you of January 16, 2008 at this time. The record of our interview with you will, however, be provided to you in due course. If you so wish, we will also transmit a copy of same directly to your attorney should you provide us with his/her name and address”.

”To the extent that you have now declared, before a Justice of the Peace, that the information that you have voluntarily and freely provided to the OCG is not truthful, we are obliged to caution you that, at a minimum, you are liable to be prosecuted for the commission of a criminal offence under the provisions which are contained in Section 29 of the Contractor General and/or Section 8 of the Perjury Act”.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 96 of 124 “I would respectfully suggest that you should proceed, without delay, to provide your attorney with a copy of this letter and to disclose to him/her the full and true particulars of this matter as you know them to be”.

Discrepancies between Statement and Evidence from Documents Reviewed – Kern Spencer In its cross referencing of the documents and statements which have been submitted to it by respondents during the course of its Investigation into the 4M Project, the following has been revealed:

Mr. Kern Spencer, by way of the OCG’s written Requisition to him, which was dated 2007 October 29, was asked the following question:

“Do you know, or have you had a personal, business or other relationship with, any of the principals, shareholders, directors, partners, officers and/or employees of any of the Contractors who have been contracted to provide, goods, works or services for the Project (hereinafter referred to as a ‘Contractor Representative’)? If yes, please indicate: i. The name of the Contractor; ii. The full name of the Contractor Representative and his/her relationship with the Contractor; iii. The length of time that you have known the Contractor Representative; iv. A full description of the nature of the relationship between yourself and the Contractor Representative ;”

In his written response to the question, which was dated 2007 November 20, Mr. Spencer acknowledged that he had had some form of relationship with the following persons: Mr. Rodney Chin of UMD, Ms. Sherine Shakes of UMD and Mr. Leighton Davis of Shipping Logistics.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 97 of 124 He advised, in writing, that Ms. Sherine Shakes was known to him for “ nine years ”, that “about seven years ago we had an intimate relationship that produced a Child ”, that his “friendship (with Ms. Shakes) ended in December 2002”, that she was a graduate of the University of the West Indies, and that she became “ an employee of UMD in October 2006, some four months after UMD was first engaged in the emergency situation in July 2006 ”.

However, Mr. Spencer failed to disclose to the OCG, that Ms. Verdie Mair, a contractor on the 4M Project, was the mother of Ms. Sherine Shakes and, consequently, was the grandmother of his child.

This is despite the fact that in an earlier question which appeared in the OCG’s 2007 October 29 Requisition to him, Mr. Spencer had listed Ms. Verdie Mair as one of the contractors/ suppliers which had been initially contacted by his office.

Further, in another question which had appeared in the same OCG Requisition, he described his “ personal, business or other relationship ” with Ms. Mair in the following terms: “ Verdie Mair – Have done catering work for me in the past ” – thus concealing the fact that Mrs. Mair was personally and otherwise known to him as the grandmother of his child.

In the OCG’s Requisition of the same date, Mr. Kern Spencer was also asked:

(a) “ Have you or any person acting on your behalf, received, whether directly or indirectly, any benefit(s), in cash or in kind, as a result of your involvement in and/or association with the Project? If yes, please provide a comprehensive statement of all relevant particulars, inclusive of a description of the benefit(s) received. In any case where the benefit was received by a person who was acting on your behalf, please also provide the full name, profession and address of the person(s) and a description of the relationship which you have had with that person(s).”

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 98 of 124 Mr. Kern Spencer’s response to the aforementioned question was “ No ”. However, given the prima facie evidence which has been unearthed by the OCG’s Investigation, via the statements which were initially made to the OCG by Driver A and Driver B, the veracity of Mr. Spencer’s response has been challenged and as such, the matter clearly requires deeper investigation.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 99 of 124 SUMMARY OF KEY FINDINGS

1. There is no written Heads of Government Agreement which establishes the responsibilities of the Government of Jamaica and the Cuban Government for the 4M Project.

2. Mr. Kern Spencer was given management and oversight responsibility for the implementation of the 4M Bulb Distribution Project. However, this responsibility was delegated through verbal instructions which were received from his senior Minister, Mr. Phillip Paulwell.

3. No evidence was found to refute the fact that Mr. Spencer had primary and Ministerial responsibility for the implementation of the island-wide 4M Project.

4. The allegation which was made in Parliament by Minister Mullings that the 4M Project implementation was handled by a “ Monitoring Committee ” which was chaired by then Minister of State, Senator Kern Spencer, was corroborated by Mr. Spencer himself.

5. The allegation which was made in Parliament by Minister Mullings that the implementation of the Project was carried out on the “ periphery ” of the MITEC has not been substantiated..

6. There was no clear Project document detailing the scope and nature of the Project in its initial implementation phase. Even though an announcement for the Project’s implementation occurred in 2006 April, and the Project was

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 100 of 124 commenced in 2006 July, a detailed Project document was not drafted until 2006 October 4. The document was never formally approved.

7. There was some confusion between PCJ and MITEC regarding the issue of which Agency was responsible for executing the 4M Project. Neither MITEC nor the PCJ seemed clear about their designated and/or intended roles and responsibilities in the implementation and execution of the Project.

8. Notwithstanding, there is abundant evidence that one or more aspects of the Project – whether it was its implementation, its financing, its execution and/or its administration were, in one way or the other, attributable to the MITEC and the PCJ.

9. Generally, PCJ played the role of financing facilitators for the Project and handled the approval and payment of invoices which emanated from the Project’s contractors and suppliers. On the other hand, MITEC was involved in the Project at various stages between 2006 May and 2007 June, at which point in time, it sought to remedy the procurement breach as regards the UMD contract.

10. Mr. Kern Spencer, through his offices, made contact with the following Project contractors. The contractors were engaged on the Project by and/or through him.

(a) Medallion Hall Hotel (b) Mico Foundation (c) Chelsea Hotel (d) Caribbean Communications and Media Network (e) Shipping Logistics (d) Herald Printers (e) Universal Management and Development Company Ltd./Mr. Rodney Chin (f ) Verdie Mair

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 101 of 124 (g) Stacey Ann Waite (indirectly)

11. In his written response, dated 2007 November 20, to the Requisitions of the OCG, the Minister explained that “… to facilitate the smooth running of the project, my office made initial contact with the following organizations/persons directly or indirectly, to spare the PCJ and MITEC the embarrassment ”. The Minister then named the nine contractors.

“I had to rely on persons that I was familiar with in the past and persons who were willing to offer credit and respond to the requirements immediately. The intention was to engage those persons to deal with the emergency situation at hand ”, he said. (OCG’s emphasis).

12. The OCG has seen no evidence of any written contract between the Government of Jamaica and any of the Project’s suppliers/contractors. However, there is evidence to suggest that the following services were required for the Project:

(a) Project Management Services; (b) Transportation Services; (c) Customs Clearance Services; (d) Provision of Meals for Volunteers; (e) Accommodation for the Cuban Volunteers.

13. Neither the PCJ nor MITEC has admitted to engaging, either directly or indirectly, contractors for goods, works and/or services for the 4M Project. Former Minister of State, Kern Spencer has, however, through his own admission, taken responsibility for the engagement of various contractors for the Project.

14. No evidence has been found as to the procurement methodology which was utilized in the engagement of the Project’s contractors.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 102 of 124 15. Mr. Spencer’s admission of his purported engagement of the named Project contractors, together with the fact that the Accounting and/or Accountable Officers of the PCJ and MITEC have denied any involvement in the procurement of the contracts, confirms that the said contractors were procured in circumstances which would constitute, at a minimum, a grave, flagrant and fundamental breach of the Contractor General Act and the GPPH.

16. Several lapses were evident in the accounting, financial and administrative aspects of the Project’s development, implementation and execution phases.

17. Breaches of the GPPH in the procurement of contractors for the 4M Project were identified and acknowledged by the former MITEC in 2007 January.

18. Remedial actions to correct the procurement breaches, with respect to the then held UMD contract, were initiated shortly after 2007 January and the services for project management were put to competitive tender in 2007 March. A recommendation that a new project management services contract should be awarded to Power Services Co. Ltd. (PSCL) was endorsed by the NCC on 2007 June 20. However, the award was never made.

19. Due to the estimated cost which was provided by MITEC for the completion of the Project, the PCJ refused to sign the proposed contract with PSCL – the lowest bidder in the 2007 March competitive tender process. Given the fact that the completion timeline was fast approaching, PSCL was never formally engaged to provide the GOJ with the proposed services. In consequence, UMD was allowed to continue providing project management services on the 4M Project.

20. The results of the tender exercise of 2007 March, indicate that, through competitive tendering, the GOJ could have received a significantly more competitive rate than that which was being charged by UMD. Conversely, the

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 103 of 124 results would also indicate that the Government did not receive value for its money in its engagement of UMD under the 4M Project.

21. There is an approximate over-expenditure of J$177 Million on the Project. This includes outstanding payments which total J$153 Million and which did not have the approval of the Board of the PCJ or its Group Managing Director, Dr. Ruth Potopsingh.

22. Dr. Jean Dixon, the Permanent Secretary in the former MITEC, is also a member of the Board of Directors at the PCJ.

23. Contrary to the provisions of the GPPH, there was no competitive tender procedure employed in the engagement of any of the Project’s suppliers/contractors, prior to the tender exercise which was undertaken in 2007 March.

24. There was no transparency in the award of the contracts which were associated with the 4M Project.

25. There was no evidence of fairness or merit in the award of contracts for the 4M Project.

26. CCMN, Medallion Hall and Shipping Logistics were registered with the NCC as approved contractors. UMD was not registered with the NCC when it was first engaged on the Project as a contractor. When UMD subsequently applied for NCC registration, it did so under the classification of ‘ Project Management ’ and was advised by the NCC Secretariat, by letter dated 2007 April 10, that “Project Management is classified as Consultant Services ”. Consultants are not required to be registered with the NCC.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 104 of 124 27. Apart from UMD and the aforementioned contractors, all of the other contractors who were not classified as consultants, and who were engaged on the 4M Project, would have been required to be registered with the NCC unless they were engaged after February 12, 2007, in which event they would have only needed to be registered if the value of the contract was in excess of $275,000.

28. UMD was the major contractor on the 4M Project. It was incorporated on 2006 July 31 and CCMN, on 2006 July 20. 2006 July was the month in which the 4M Project was commenced. Although Mr. Rodney Chin was declared to be the sole shareholder and Proprietor of UMD, at no time, throughout the entire Investigation, has the OCG seen any written UDM correspondence which was directed to UMD in his care or which was despatched by UMD in his name.

29. Ms. Sherine Shakes, Business Development Manager/Project Manager, UMD, is the mother of State Minister Spencer’s child. She has been ostensibly held out by the UMD as one of its principal representatives, if not its principal representative, in all of its dealings with Public Bodies in so far as the 4M Project is concerned.

30. Ms. Shakes, as at 2007 December 24, admitted to the OCG, in writing, that she “had not had project management experience ”. This was despite the fact that (a) she was identified throughout the 4M Project as UMD’s Project Manager (b) she represented UMD at the 4M Project meetings and (c) UMD was contracted as the main contractor on the 4M Project to provide project management services to the Government of Jamaica.

31. Ms. Verdie Mair is the mother of Ms. Sherine Shakes of UMD, and hence the grandmother of the child of Mr. Kern Spencer. Ms. Mair was listed as one of the contractors who was engaged on the 4M Project by Mr. Kern Spencer. Direct payments of J$700,000 have been reportedly paid to Ms. Mair by the PCJ for

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 105 of 124 catering services.83 Ms. Mair was also listed separately as the first Company Secretary for UMD and CCMN.

32. Mr. Spencer, despite being asked if he had a “ personal, business or other ” relationship with Ms. Mair, concealed the fact that she was the grandmother of his child.

33. Property which was alleged by Driver A and Driver B to be owned by Mr. Kern Spencer and/or his company, Butterfly Traders Limited, and to have been utilized in the execution of contracts under the 4M Project, was confirmed by the OCG to be registered in the name of Butterfly Traders Limited.

34. Butterfly Traders Limited is a company of which Mr. Kern Spencer is a Director and Shareholder.

35. Both Driver A and Driver B have made other very serious and far-reaching allegations against State Minister Spencer. Some of the statements were declared, by both men, under the pain of criminal prosecution, to be truthful, accurate and complete and were so declared in writing to the OCG as well as before a Justice of the Peace. Both men subsequently sought to withdraw their statements after they were allegedly contacted by Senator Spencer and the money which they had initially claimed were owed to them, for services performed in the execution of the 4M Project, was paid.

36. The allegations, if they are proven to be true would, at a minimum, suggest that Senator Spencer, whether by himself and/or through his company, Butterfly Traders Limited, was an active private participant in the execution of contracts under the 4M Project at a time when he was the Public Officer and State Minister who, by his own admission, was assigned responsibility for the

83 Payment listing from PCJ. Available from Rodney Salmons’ statement, dated December 5, 2007 and Minister Mullings’ statement, dated November 29, 2007. ______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 106 of 124 implementation of the Project. The following allegations were included among those which were made by Driver A and Driver B:

(a) Driver A was employed to Butterfly Traders in 2003 and began driving for the 4M Project in January 2007. $343,000 was allegedly owing to him as at the time of his visit to the OCG. (b) Driver A was responsible for a 34-seater Mitsubishi Bus. This bus was allegedly registered in the name of Kern Spencer and was transferred to Butterfly Traders in 2005. (c) According to Driver A, he was told by Mr. Spencer that he worked for a man named ‘Chin’, although he was driving a bus owned by Mr. Spencer. (d) Driver A, on one occasion, transported bulbs to a ‘government house’ in Waterworks on Sharrow Drive (the last House on Sharrow Drive). These bulbs included 193 boxes of 24 bulbs each and 118 boxes of 14 bulbs each. (e) After the elections, Driver A, concerned about the police coming to him, tried to move the bulbs from the ‘government house’ to the Ministry, and went to the offices of UMD to obtain the keys to the house. Driver A was told by UMD that they could not find ‘any key’. (f) When the 4M Project ‘scandal’ broke, Driver A was called by UMD and told that things were to be moved to the wharf. These items included bulbs, food items (such as tin mackerel), 9 broken fans and a computer which had been used by the Cubans. (g) Upon arrival at the wharf, Driver A was told by security personnel that because of the investigation, nothing could be placed in the container. Subsequently, and according to Driver A, the bulbs were taken by a ‘truck man’ to a house in Portmore under the instructions of a Mr. Calvin Blackwood, who was alleged to be employed to Mr. Spencer.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 107 of 124 (h) According to Driver A, when he sought to get payment for the work he had done, he heard that the company (UMD) was closed. (i) Driver A also alleges that after being instructed to park the buses at a place called TDK in Portmore, he received a call from Driver B informing him that the buses had been ‘cut up’. According to Driver A, he subsequently called Mr. Kern Spencer to enquire about the buses, and Mr. Spencer informed Driver A that the buses were ‘cut up’ because he did not want ‘the Labourites’ to know that his (Mr. Spencer) bus was involved in the contract; (j) Driver B indicated that he started to drive for the 4M Project in July 2006 when the initial set of Cubans had arrived and again for a few weeks in 2007 February. (k) Driver B indicated in his statement that he had requested that Mr. Kern Spencer pay him $2,000 per day. However, according to Driver B, Mr. Spencer told him he could only afford $1,500 per day. According to Driver B, this meeting occurred at the residence of Mr. Spencer in Waterworks. (l) Driver B also indicated that on 2007 May 1, he again started to drive for the 4M Project. In response to a question regarding his receipt of instructions, Driver B stated that he sometimes received calls from Ms. Shakes but most of his calls came from a Calvin who works with Mr. Spencer. (m) According to Driver B, to the best of his knowledge, the bus he was driving belonged to Mr. Spencer but it was not registered in Mr. Spencer’s name but in the name of a company. When asked who he worked for, Driver B said he was of the opinion that he worked for Mr. Spencer although he did not get direct instructions from Mr. Spencer. (n) Both Driver A and Drive B subsequently sought to withdraw the statements which they made to the OCG.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 108 of 124 (o) On January 21, 2008, during a visit to the OCG, both men expressed concern that Mr. Spencer had contacted them over the preceding week-end and had informed them that the payments which were outstanding to them would be paid on that day (2008 January 21). (p) It was also alleged by the drivers that Mr. Spencer told them that he was informed by one Danhai Williams that they had given information to a place in New Kingston. (q) On 2008 January 22, Driver A returned to the OCG and informed representatives of the OCG that he had received the money owing to him. Driver A also indicated that he was told by a Mr. Chin that he (Driver A) should have had a lawyer present when making his statement to the OCG and that in his capacity as a driver, he was not authorized to give any statements in regard to Universal (UMD). (r) Driver A expressed a concern about the number of calls he had received from various individuals in regard to his making a statement to the OCG. (s) Driver A also noted that Mr. Chin had called him and said that it was being circulated at the PNP Headquarters that they, Driver A and Driver B, had gone to Knutsford Boulevard and made statements about the company, Universal (UMD).

37. The OCG has seen no evidence which would suggest culpability on the part of then Energy Minister Phillip Paulwell for any of the procurement and contract award breaches which have been associated with the 4M Project. Additionally, besides the fact that Minister Paulwell was the then Minister with primary ministerial portfolio responsibility for MITEC, the OCG has been shown no evidence which would directly and conclusively implicate him for the lapses which have occurred in the Project’s accounting, financing and administrative controls during its implementation and execution phases.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 109 of 124 CONCLUSIONS

(1) The procurement method which was utilised by Mr. Kern Spencer, in selecting the contractors for the provision of goods, works and services on the 4M Project is contrary to that which is outlined in the GPPH. Although the method of contracting which was utilized by Mr. Kern Spencer, viz. direct contracting, is akin to the Sole Source methodology, it was not subjected to the same considerations and requirements as are stipulated within the GPPH or the Ministry of Finance & Planning Circular No.17, which is dated 2007 May 15 and which is entitled Public Sector Procurement Policy & Procedural Guidelines for Sole Sourcing.

(2) There was, in fact, a breach of the procurement process in the awarding of contracts to UMD, CCMN and all the other contractors who were engaged by Mr. Kern Spencer on the 4M Project. The OCG has seen no evidence of competitive tendering and/or approval from the PCJ or MITEC procurement committees, nor from the NCC, for any of the contractors/suppliers who were paid by the PCJ. There is evidence to suggest that remedial action to correct the procurement breach for the contracting of project management services was initiated by MITEC in 2007 January. However, no action was actually undertaken to remedy the breach since, in the end, UMD was allowed to continue its performance of the contract under the Project.

(3) The OCG is unable to speak definitively about whether UMD delivered the services for which it was contracted. This is to be attributed to the fact that there is no evidence of a written contract with UMD and the applicable scope of work was apparently discussed and agreed with UMD by the former Minister of State, Mr. Kern Spencer without same being reduced to written contractual terms. Furthermore, with the absence of an approved Project document, the OCG is unable to determine whether the works which were undertaken by the contractors under the Project were compliant with the scope of the works for the 4M Project. As such,

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 110 of 124 there is no yard stick by which performance of the contract can be definitively evaluated.

(4) The allegation by the Minister of Energy, Mr. Clive Mullings that the “implementation of the Project was carried out on the periphery of the MITEC and was not subject to its normal internal management, accounting and audit controls” cannot be accepted carte blanche. From documents reviewed, it is evident that the implementation of the Project was not carried out on the periphery of the Ministry. The following are some of the reasons why there cannot be a carte blanche acceptance of the Minister’s allegation:

1. Up to and including 2006 May 31, the Permanent Secretary of the former MITEC held discussions with representatives of the PCJ, at which time discussions were held on the implementation of the island wide project;

2. On 2006 October 4, the Energy Division of MITEC prepared a 4M Project Document which was intended to guide the implementation of the island- wide project;

3. In 2007 January, the Permanent Secretary in MITEC was sufficiently aware of the procurement breach and gave instructions to remedy the situation.

4. On an alternative basis, Mr. Jericho Hanson, Fitzroy Vidal and Conroy Watson and Ms. Keva Steadman of the Energy Department of MITEC, and Mr. Reginald Budhan of the Policy Division of MITEC, participated in meetings in relation to the Project.

These activities all took place within a seven month period and it is therefore evident that, from the outset, the Ministry had knowledge of the Project and was occasionally involved in its implementation.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 111 of 124 (5) It is evident that the implementation of the 4M Project was not subject to the Ministry’s normal internal controls. From our findings, we can conclude that:

1. Neither the Ministry nor PCJ was aware of the means by which the suppliers/contractors were initially contracted.

2. Payments have been made by an agency of the Ministry to contractors/suppliers who were not properly procured and tentative remedial action, albeit that it was not undertaken until seven months after, was never carried through.

3. Neither the Ministry nor the PCJ was willing to accept responsibility for the implementation of the Project months after it was in progress.

4. There is an over-expenditure of approximately J$167 Million, including outstanding payments totalling J$143 Million, which did not have the approval of the Board of PCJ nor of its Group Managing Director, Dr. Ruth Potopsingh.

5. In contravention of the Financial Administration and Audit Act, the Contractor General Act and the GPPH, contracts were negotiated and entered into by the political directorate of the Ministry and they were not approved by the Accounting Officer, Accountable Officers and the procurement committees of the PCJ and/or MITEC.

6. The Board of Directors of the PCJ, the Accounting Officer of MITEC and the PCJ and/or one or more of the Accountable Officers of the PCJ and/or the MITEC have failed, at least, partly, in the discharge of the responsibilities which have been respectively imposed upon them by the Public Bodies Management and Accountability Act and the Financial Administration and Audit Act.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 112 of 124 (6) (a) The highly irregular state of affairs which has prevailed in the matter of the planning, implementation and execution of the 4M Project, (b) the absence of transparency, merit, value for money and competition in the award of the Project’s contracts, (c) the flagrant breaches of the GPPH and the Contractor General Act which have occurred in the award of the said contracts, (c) the fact of State Minister Spencer’s improper, un-authorized and unlawful intervention in the Project’s procurement, contract award and contract payment processes, (d) the admitted engagement by Mr. Spencer of UMD, CCMN, Stacie Ann Waite and Verdie Mair, as contractors on the Project, (e) the fact of the personal relationship that Mr. Spencer has or has had with Sherine Shakes and Verdie Mair, (f) the fact that Ms. Shakes is the mother of Senator Spencer’s child, (g) the fact that Ms. Verdie Mair is the grandmother of Mr. Spencer’s child, (h) the fact that Mr. Spencer, in response to a direct Requisition of the OCG, concealed the material fact that Ms. Mair is the grandmother of his child (which is in itself a criminal offence under the Contractor General Act), (i) the fact of Ms. Shakes’ demonstrated role of primacy in the operational, business and administrative affairs of UMD, (j) the fact that Ms. Shakes has admitted that she had no prior project management experience, (k) the fact that, notwithstanding, UMD was contracted on the 4M Project as the principal provider of project management services to the Government of Jamaica, (l) the fact that Ms. Waite was listed in UMD’s 2007 March tender proposal as a technical employee of the company despite the fact that she was also separately engaged by Senator Spencer as a contractor under the 4M Project, (m) the fact that Ms. Mair was listed as the first Company Secretary of both UMD and CCMN despite the fact that she too was also separately engaged by Senator Spencer as a contractor under the 4M Project, (n) the fact that UMD and CCMN are corporate entities which were organized in the same month that the 4M Project was commenced, (o) the fact that UMD and CCMN had no prior business or operational performance track record when they were hand-picked and engaged on the 4M Project by Senator Spencer, (p) the fact that the bulk of the payments which have been made under the 4M Project were made to UMD and CCMN, (q) the fact that UMD and CCMN are alleged to have already received contract payments, under the 4M Project, in excess

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 113 of 124 of $85 Million and $3 Million respectively, (r) the fact that in a letter, which was dated 2007 August 31, Senator Spencer wrote directly to UMD to assure it of the “legitimacy ” of invoices which it UMD had presumably submitted for an additional, outstanding and un-paid sum $143,588,142.05 under the 4M contract, (s) the fact that in the same letter, Senator Spencer gave written assurances to UMD that the outstanding invoices would “ be honoured at the earliest possible date ”, and (t) the fact that on 2007 August 30, Senator Spencer wrote directly to the Permanent Secretary of MITEC, Dr. Jean Dixon, advising her, inter alia , that “ I now place on record the amounts that are legitimately owed to date by MITEC/PCJ ” and, by so doing, certified that the respective sums of $143,588,142.05 and $15,288,942.75 were outstanding by the Government of Jamaica to UMD and CCMN, are, in the OCG’s considered view, all powerfully persuasive and indicative pieces of evidence which, by themselves, or when taken together with the allegations that Driver A and Driver B have made concerning Mr. Spencer’s private involvement in the 4M Project, raise, at a minimum, a very strong inference of an unlawful criminal conspiracy and corruption in the illicit award of the referenced contracts. In the circumstances, the OCG has concluded that the entire matter is one which warrants immediate and intensive investigation by the country’s (criminal) law enforcement authorities.

(7) If the allegations which Driver A and Driver B have made are truthful as they had initially declared them to be, they would, at a minimum, suggest that Senator Spencer, whether by himself and/or through his company, Butterfly Traders Limited, was an active private participant in the execution of contracts under the 4M Project at a time when he was the Public Officer and State Minister who, by his own admission, was assigned responsibility for the implementation of the Project. The circumstances of the matter are even more compounded by the fact that Senator Spencer has admitted to the use of his Public Office to facilitate the award of the said contracts. In such circumstances, it is the OCG’s considered view that, at a minimum, a criminal investigation into the matter is warranted to determine, inter alia , if corruption charges should be brought against Senator Spencer.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 114 of 124 RECOMMENDATIONS

The OCG has considered and reviewed all of the information which has been disclosed to it by the referenced respondents and witnesses over the course of its twelve (12) week Investigation into this matter. Hundreds of pages of documents have been reviewed.

There is evidence which suggests that the GPPH and several Acts of Parliament have been contravened in the procurement, implementation and execution phases of the 4M Project. These would include the Contractor General Act, the Financial Administration Act, the Public Bodies Management and Accountability and the Corruption Prevention Act.

In the circumstances, it is the OCG’s considered and respectful opinion that the following remedial measures and/or corrective actions should be taken by the appropriate State authorities and agencies:

(a) Details of the scope of work for the project; (b) A project implementation plan which should include a detailed breakdown of the estimated project costs, its completion time and its progress benchmarks; (c) The roles, responsibilities and accountabilities of all parties which will be involved in the project; (d) The approvals and authorizations which must be secured before the project is commenced as well as those which must be obtained throughout the execution of the project.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 115 of 124 2. In instances where the GPPH is breached, the responsible agency should seek to remedy the breach in an expeditious and effective manner as opposed to continuing with the implementation of the project in violation of applicable Government procurement procedures and other regulations or laws

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 116 of 124 provisions which are contained in Sections 6, 17 (1) (b) and 25 of the Public Bodies Management and Accountability Act.

Particular attention must be paid to the requirements of the Financial Administration and Audit Act, the Public Bodies Management and Accountability Act, the Contractor General Act and the GPPH.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 117 of 124 8. The OCG also recommends that the Auditor General, if he/she has not yet done so, conducts an exhaustive investigation into (a) the circumstances in which monies have been expended and disbursed thus far to the contractors that were involved in the execution of the 4M Project and (b) the expenditure approval processes, as well as the $24 Million over-expenditures at the PCJ, which were related to the 4M Project.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 118 of 124 It is also recommended that the referenced authorities seek to determine whether Senator Spencer and/or his company, Butterfly Traders Limited, were subcontracted by UMD to render services which were associated with the execution of the 4M Project and, if so, whether he derived any illicit benefits there-from contrary to Section 14 of the Corruption Prevention Act.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 119 of 124 11. Pursuant to the mandatory statutory obligations which are imposed upon a Contractor General by Section 21 of the Contractor General Act, the OCG is also hereby formally referring a copy of this Report to the Director of Public Prosecutions (DPP) on the basis that there is evidence which is recorded herein that former State Minister Kern Spencer may have committed a criminal offence or offences under Section 29 of the Contractor General Act and/or under Section 8 of the Perjury Act by misleading and/or wilfully making a false statement to mislead a Contractor General and/or failing to comply with a lawful requirement of a Contractor General in the execution of his functions under the Act.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 120 of 124 13. The OCG respectfully recommends that the Cabinet should move to immediately develop and implement a comprehensive over-riding policy to be applicable to all Public Bodies. The policy should govern, restrict or prohibit the award of Government contracts by a Public Body to a Minister and/or to a Public Official or to any entity in which a Minister, Public Official or a close family relative may have a pecuniary interest.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 121 of 124 with the Government of Jamaica without any requirement for the Parliamentarian to disclose the particulars of the said contracts.

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 122 of 124 Contractor General Act. They have done so not only with seeming impunity but with scant regard for the law and the OCG.

______

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 123 of 124

OFFICE OF THE CONTRACTOR GENERAL OF JAMAICA

Special Report of Investigation

Conducted into the Circumstances Surrounding the Procurement of Contracts for the 4M Energy Saving and Light Bulb Distribution Project

Petroleum Corporation of Jamaica (PCJ), the Former Ministry of Industry, Technology, Energy and Commerce (MITEC) and the Ministry of Energy, Mining and Telecommunications (MEMT)

Ministry of Energy, Mining and Telecommunications (MEMT)

APPENDICES

______4M Bulb Distribution Project Office of the Contractor General 2008 January Page 124 of 124