(Jamaica Gleaner) Contractor General Greg Christie has described as “irregular and highly improper” the execution of a contract between the Government and Dehring, Bunting and Golding (DB&G) for the sale of receivables before a formal written agreement was finalised.
At the same time Christie, in his probe of what Finance Minister Audley Shaw had labelled “Sweetheart Deals” between the People’s National Party Government and the investment bank in March 2004, concluded that the transaction was not subject to competition.
As such, he said, he was unable to conclusively determine that the transaction was fair, transparent and/or indicative of the most beneficial terms and conditions which could have been derived by the Government, given the lack of competition.
Christie opened his probe into the matter in May 2008 after Shaw told the Parliament a month earlier that receivables from the sale of National Commercial Bank shares as well as receivables due from AIC were sold to DB&G by the finance ministry at a discount.
Shaw had alleged that the instruments were sold to DB&G “under very questionable circumstances” because the firm was close to the then Government.
But Peter Bunting, one of DB&G’s principals at the time who is now an Opposition parliamentarian, argued that the deal was struck at a time when the Government was facing a challenge to meet its fiscal target.
Failure to meet that target, Bunting said, would have been damaging to the economy, as it would result in expectations of higher public sector borrowings and higher interest rates in the coming year.
Christie, in his report, said he found that the AIC receivables were sold at a discounted rate to DB&G and included the payment of a one per cent arrangement fee by the finance ministry.
According to Christie, it was DB&G that approached the ministry with the idea.
However, he said that sworn evidence obtained from the finance ministry indicated that “it is not a common practice to offer discounts on financial instruments whilst simultaneously paying a handling fee”.
The contractor general also said that DB&G sold J$852 million of the AIC receivables to the National Housing Trust (NHT) and the National Insurance Fund (NIF) “at a price which varied from that at which it had bought the said receivables”.
He concluded that DB&G presented the NHT with the terms and conditions of the AIC receivables transaction on March 15, 2004, prior to the finalisation of a formal signed agreement with the finance ministry on March 26, 2004.
