$3 million for TPP piles despite not having trade license-Report
However, it’s important to note that the Auditor General Ms Sonia M. Webster, in her report, addressed the process both before and after the halting of the project by the Dr. Smith Administration.
On page 9 (47) of Ms Webster’s report she stated that “the initial process, which was being expedited, contained several shortcomings which could function to the detriment of the Government and the BVI Ports Authority. Efforts to secure independent expert knowledge on the format, structure and provisions of Public Private Partnership (PPP) agreements were sought only after steps were in the advanced stages for drafting the terms of the parties’ relationship.”
$3M dollars of Ports money to purchase piles for TPP-no trade license
After outlining in our previous article published on October 31, 2013 about the unfair advantage given to Tortola Port Partners (TPP), according to the Auditor General’s Report, another new fact has been unearthed.
On page 7 (39) the reports says, “the three million dollars for purchasing piles was approved by the Board, but the transaction was not pursued for reasons not disclosed in the record. Despite the push to purchase piles for use by Tortola Port Partners, the Department of Trade advised that no application for a trade license had been received from the developer to do business in the BVI.”
In June 2012, before the project was stopped by Premier Smith, the Financial Secretary Neil M. Smith sought independent legal advice from specialists in the field of Public Private Partnerships (PPP). A team of lawyers from the firm of Baker & McKenzie LLP in the UK reviewed the proposed Project Development Agreement (PDA), the Heads of Understanding (HOU) agreement and the Ground Lease that had been drafted for execution by the Authority and the Developer.
Legal review confirmed BVI was at grave disadvantage
The independent legal review clearly cemented that the Government and the BVI Ports Authority would have been the loser in the agreement with the developer TPP, according to the report.
On page 7 (45) the agreement was not in the BVI’s interest because among other things:
- Absence of guarantees or a performance bond which would require the controlling entities for the developer to provide substantive support or security for its obligations should it be unable to perform as contracted;
- Allocation of risk drafted in a manner to heavily favour the Developers;
- Failure of the development documents to state how the project will be financed;
- Absence of performance standards. These are especially desirable to regulate the operation of the Pier Park ensuring it is operated and maintained to acceptable standards
- Absence of a positive obligation on the Developer to carry out the Environmental Assessment, abide by its conclusions and carry out its works in accordance with strict environment requirements and standards;
- Failure of the agreements to give the Authority approval rights for the initial design and any changes;
- Absence of stipulation which would required the Developer to assume the risk for the performance of its subcontractors;
- Absence of a provision stipulation ownership of the pier;
- Absence of safeguards preventing the Developer from transferring shares at least until after the works are complete;
- Absence of a provision which allows the Authority or the Government to set in to remedy situations or in case of a default;
- Existing ambiguity as to the nature and purpose of the HOU. The document is being referred to in the PDA in a manner which suggests that it is a full form of agreement when usually an HOU is used simply to document key terms which would be embodied in detail in a more substantive agreement;
- Failure of the PP Agreement to set out obligations of the cruise lines in detail. In particular, nature of their use of the pier (guaranteed passenger numbers and ships per year), whether the agreement is binding or contingent on other provisions, whether cruise lines are contributing to the cost of the project and consequences of the cruise lines failing to sue the pier as agreed;
- Failure to make provision for the Authority to be a party to the berthing agreement. This is desirable as the Authority will be continue to operate the pier and the agreements are a major source of revenue for the project;
- Failure of the HOU to stipulate whether the decisions of the Cruise Industry Planning Board are binding or simply advisory. Though this is likely to be the latter.
Project lacked transparency even after it was halted by Dr. Smith
Despite all this, Premier Smith claimed in his statement of November 1, 2013 that the recommendations his government obtained “were based on assessments of legal, financial and technical reports engaged by experts….” “Which concluded that the TPP proposal; was more favourable to the BVI.”
While it is accurate of the Premier that his Government stopped the Port Pier process in August 2012 and “issued an open invitation to tender” as outlined in his statement last Friday, the AG Report throws cold water on the transparency process after it was halted by the National Democratic Party Government.
On page 10 (59) the report clearly stated that “the provisions in the invitation for expression of interest mirrored the previously accepted proposal from the Tortola Port Partners to a considerable extent which may have created an unfair advantage. This opens the door whereby the impartiality of the process could be challenged.”
BVI Investment Club’s Role in Project- conflict of interest?
On Page 11 (62) of the Auditor General’s Report, Ms Webster raised the involvement of the BVI Investment Club.
“The involvement of BVI Investment club raises potential issues of conflict of interest in the following respects:
- The principal of PFK (BVI) Ltd., the firm engaged to prepare a business case for the initial Tortola Port Partners/BVIG PPP is also a President of, and public figure for, the BVI Investment Club;
- The declarations of interest for election candidates published and Gazetted on 10, October 2011 show more than one elected member with shareholding interest in subsidiary companies owned by the BVI Investment Club.”
Town and Country Planning Dept shut out-Report
Another important fact in the Auditor General’s report is found on page 5 (28).
Under the laws of the Virgin Islands, specifically the Planning Act which governs public and private sector developments, all projects in the VI must be approved by the Planning Authority. It’s the law.
However, the report reveals “significantly, the Town and Country Planning Department (TCP) which is the Government’s primary advisor on development ideas, concepts and planning issues was notably absent from the cross agency consultations solicited for this major development scheduled to take place in central Road Town. The Department did, however, receive development plans for approval in March 2012 (submitted on behalf of the then Managing Director of the Authority Mr Vincent O’Neal) that were limited to the Disney affiliated pier expansion and Welcome centre.”
In other words, the Virgin Islands Party (VIP) project with Disney followed the rules and sought TCP's approval.
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59 Responses to “$3 million for TPP piles despite not having trade license-Report”
Mr Premier as a should be Respectable person stop please stop while you a still creaping and Cline Skelton mistakes it making your administration really can't be trusted,for the morogrity of us on VG that vote for you,we a fed up of you guys just like we fed up of Ralph were now gonna vote in young Blood
BUT VIP was only talking with Disney about dock and visitor centre-- not the complete landside monstrosity. And they are guilty at getting the Disney fox in the hen house. NDP took it to a whole new level.
I often commented on the lack of input by town and Country, a basically useless dept considering they are overruled by ministers and favourites all the time. They have no teeth let alone vision or understanding of historic preservation.
This behavior persists and I hope the AG does an audit of the AIRPORT which falls under the same suspicion.
What is the prudent way out of this mess? Assuming that no binding agreements has been signed with these "investors", he would do well to bring this proposed project to a halt and begin with a clean slate. Hold off on this $35 million dollar loan which is being persued by the the Ports Managing Director. Reassign Claud to duties in the Library and make Mark the Minister for culture. Their continued presence in their present position will do more harm than good.
Dr Smith listen, to do nothing is not an option. Please don't wait for the UK to show you the door.
So tell me why no one jumping up on M. M@l**e and his greed also getting the best of him? He's all in and through this deal and don't be surprised if he's not the leader. After all he advises the premier on the financial affairs of the country.
M**k and M***n will make enough mischief for the NDP to give the VIP a chance to win with Fraser as Leader and bring back pain and suffering to the people while they live in luxury and wealth.