‘Pradoville 2’ audit advises criminal case against PPP/C Cabinet members

- says awardees underpaid by nearly $250M in ‘down-low’ process

The allocation of land at ‘Pradoville 2’ was a clandestine arrangement that was handled personally by former housing minister Irfaan Ali, according to the findings of a recently completed forensic audit, which has said that a criminal case for malfeasance can be made against the PPP/C Cabinet members who benefited.

The special investigation of the Sparendaam Housing Project, which was part of a larger probe of the financial operations of the Central Housing and Planning Authority (CHPA), was conducted by accounting firm Ram & McRae, which found that awardees grossly underpaid for the lots by a total of nearly $250 million, while the state-owned National Industrial and Commercial Investments Limited (NICIL), National Communications Network (NCN) and Guyana Power and Light Inc (GPL) were never reimbursed for millions spent to execute preparatory works.

“Our examination leads to the conclusion that the project was done outside of the established procedures and that Minister Ally [sic] piloted every aspect of the transaction without recourse to the Authority. While the minister has considerable powers under the Housing Act, his role in the issue of titles was well outside of his functions and powers,” the report, seen by Sunday Stabroek, said.

 

Shalimar Ali-Hack
Shalimar Ali-Hack
Priya Manickchand
Priya Manickchand
Robert Persaud
Robert Persaud
Irfaan Ali
Irfaan Ali
Clement Rohee
Clement Rohee
Roger Luncheon
Roger Luncheon
Bharrat Jagdeo
Bharrat Jagdeo

The housing project has been mired in controversy as the beneficiaries were mainly members of the then PPP/C Cabinet and high ranking public officials. The audit report has recommended that the David Granger administration recover the difference between the price paid and the estimated market value; that action be brought against cabinet members for misfeasance in public office; that criminal proceedings be brought against the senior political personages who benefited from the project and the Guyana Revenue Authority should be brought in to review compliance with the relevant tax laws with regard to the lots sold.

As it relates to criminal proceedings, Head of the Special Organized Crime Unit (SOCU) Sydney James told Sunday Stabroek recently that the probe has already started. The ‘Pradoville 2’ audit report is one of four currently been looked at by SOCU.

James explained that the ‘Pradoville 2’ case was initially investigated by the CID Headquarters and advice was given by the police force’s legal advisor, retired Judge Claudette Singh, and Director of Public Prosecutions (DPP) Shalimar Ali-Hack. “We have looked at that advice and… intense investigations are ongoing to bring a settlement in that particular matter,” he said.

Asked whether specific persons are being looked at, he said that the report lists the beneficiaries of land allocated. He declined to indicate whether any of these persons have been brought in for questioning, while stressing that the investigations are ongoing and that he would have to confirm with investigators what stage they are at.

While James indicated that advice was received from the DPP, the report had pointed out that she was an allottee and should therefore not be involved in the matter. It was suggested that in deciding the precise action to be taken, government may wish to consult with a Senior Counsel.

The 25-page report said that the auditor was unable to determine the process involved in the allocation of the lots as both NICIL and CHPA claimed that “they were not involved in the application process, the setting of the price per house lot or the allocation process.”

The report said the claim was troubling, particularly since both NICIL and CHPA had statutory responsibility for the development of the housing scheme and purported ownership of the land.

However, it said interviews conducted with officers of NICIL and the CHPA led the auditing firm to believe that the identification of persons for house lots and the price per lot were determined by Cabinet or a subset thereof. Despite this finding, it noted that the current Minister of State informed the auditor by way of letter that there are no reports at the Ministry of Presidency (formerly Office of the President) concerning the housing project. It was noted that there is a similar absence of records at the CHPA and the Land Registry.

“Officers of the CHPA informed Ram & McRae that Minister Irfaan Ali personally handled the application and the Certificates of Title for the lots at Sparendaam/Goedverwagting by having the Senior Conveyancing Officer for the CHPA take sealed envelopes to the Registrar of Lands Ms Juliet Sattaur,” the report, however, pointed out, before noting that inquiries suggested that sealed envelopes, presumably containing Certificates of Title, were collected from the Registry of Lands and taken directly to Ali.

In aiding Ali, Sattaur, the report said, appeared to have breached or caused to be breached the statutory and administrative procedures for the issuing of Certificates of Title.

Undervalued

The report added that the awardees made payments to the CHPA but these were significantly lower than the market value. “No files were maintained by CHPA for any of the plots allocated by a process that can be described as lacking transparency at best,” it further said.

It was stated that of the 28 lots, totalling 12.1187 acres, only 3.9693 remain unallocated.

It was explained that lots were allocated to six Cabinet members—former president Bharrat Jagdeo, cabinet secretary Dr Roger Luncheon and ministers Priya Manickchand, Dr Jennifer Westford, Robert Persaud and Clement Rohee—along with other persons with connections to the government.

Of the awardees, Mortimer Mingo, then Chairman of Region Ten, had informed the auditor in an interview that he stopped the cheque paid for his allocation after he discovered from enquiries that he had been misled by Luncheon into believing that the lands were being offered to all regional chairmen. The report said that despite the stopping of the cheque, the Register at the Land Registry indicates that a Certificate of Title was issued in favour of Mingo and that a payment had been made to the CHPA for $1,383,500. No receipt was issued by the Finance Division of the CHPA for such a payment, it was noted.

The report said that the land was sold/offered at a price of $5 million per acre compared with a price of $14.6 million per acre for land with far inferior infrastructure offered by the government on the East Bank Demerara and a valuation of $35.5 million per acre by a leading professional firm which engaged in such valuations.

Using the valuation provided by the firm, it was stated, the auditor calculated the underpayment by each of the persons to whom lots were issued. The total underpayment based on the valuation used is $247, 794,941 or $239, 342, 927 if the allocation to Mingo is excluded.

The report also highlighted that the payments for the costs of upgrading the infrastructure for the Sparendaam project were borne by NICIL, NCN and GPL. However, it added that no reimbursement was received by NICIL from the CHPA for the infrastructure costs, amounting to approximately $71 million, that could be verified. It said too that NICIL also carried out works in respect of the relocation and modernization of NCN’s radio operations at a cost of $185.6 million, for which it received additional shares in NCN.

‘Egregious’

The report made specific reference to Jagdeo, Manickchand, Persaud, Rohee and Luncheon.

Jagdeo, it said, appeared to be central to all decisions relating to the project and would have benefited significantly from dealings in land transactions with the state.

Stating that enormous power comes with a great obligation, the auditor said he appeared to have “fallen well short of basic standards of propriety and decency that should be the hallmark of any democracy,” having appropriated for himself two acres of land.

The report noted that the former president was previously an allottee of land at Goedverwagting, popularly known as “Pradoville 1,” where a house was built and later sold for a reported $120 million in 2010. It had never been occupied.

The Land Register, the report said, stated that Jagdeo was allotted land at “Pradoville 2” on September 2, 2010 although based on the standard agreement of sale he was not eligible for a lot, having been the owner of real estate within the three years preceding the allocation.

It was pointed out that Jagdeo signed the Order vesting the ‘Pradoville 2’ area into a government company, NCN. That land, the report said, was never sold or legally exchanged by NCN nor was a proper vesting Order or other instrument effected to remove the ownership of the land from NCN.

“Mr Jagdeo’s role appears egregious. He allocated or caused to be allocated to himself not one but two lots, totalling 1.9603 acres of land… Moreover, the acreage of the land sold to him was approximately six times the average of the other residential lots, the acreage of which ranged from 0.23 acres to 0.3005 acres,” the report said.

It was pointed out that Jagdeo also caused the area to be provided with three transformers, which cost over $8 million, but he paid GPL “nothing.”

The report said that the tax implications and consequences of transactions in which Jagdeo was involved should be reviewed. It added that there is some uncertainty as to whether Jagdeo, as a former president, is subject to any taxation or is only exempted from taxation under the specific legislation giving him such exemption.

Manickchand, the report noted, constructed a house on her lot and later reportedly sold the house and land for $100 million. The report said that as a member of Cabinet and government, she was in a position of trust which in law generally precludes her from making a profit. “The legal implications and consequences of the disposal and gains should be enquired into by the Guyana Revenue Authority and appropriate action taken,” the report said, while adding that Manickchand should be requested to produce a copy of her application and the accompanying affidavit in which she asserted her eligibility. “In any case, it does appear that Ms Manickchand would have realized a significant capital gain which would fall to be taxed under the Capital Gains Tax Act and require a tax compliance certificate. These matters can be confirmed by the Guyana Revenue Authority,” the report said.

With respect to Persaud, it was stated that he acquired his lot in 2010 but later transferred it into the names of his wife and children. In 2014, the title was transferred to a company, LSR Inc, of which the sole director and secretary is Andrew Pollard.

The report stated that the auditor had evidence that LSR Inc paid $8 million penalty to CHPA for the sale of the land but was unable to determine the basis for the penalty. It was stated too that there is evidence that Persaud’s wife, Kamini, sought and obtained from the High Court an Order made by then Chief Justice (ag) Ian Chang, dated 8 October, 2012, to transfer the property to LSR Inc for the sum of $90 million. The report recommended that the series of transactions be investigated, including compliance with the terms under which the land was allocation and the relevant tax laws.

Rohee, the report said, completed construction of a building on the lot sold to him but he did not take up residence. “It is unclear when the property was constructed but it was reported to us that he occupied a government property until May, 2015. We were also informed that Mr Rohee had purchased a lot from the government in Eccles, East Bank Demerara but we were unable to confirm this,” the report said.

With regard to Luncheon, the report said that there was some uncertainty concerning his property as the Property Register shows an original entry for him and Florrie Lorette Ramnauth as joint holders but Luncheon’s name was crossed out, while the word ‘jointly’ remains. The Land Registry, it was noted, also had an original entry with both names but Luncheon’s name was crossed out and initialed “HA.”

The report also noted that Luncheon was a director of NICIL and that he should have exercised caution in allowing the entity to be part of “a scheme to transfer public property for the benefit of members of the Cabinet including himself and others and allowing the funds of NICIL to be disbursed on a project which he knew or ought to have known was at the very least controversial and possibility unlawful and improper.”

Like in the case of Manickchand, the report stated that as members of Cabinet and government, Persaud, Rohee and Luncheon were in positions of trust and that the legal implications and consequences of the disposal and gains should be enquired into and appropriate action taken.

“Cabinet members take an Oath of Office to faithfully execute their office and that in the execution of the function of their office they will honour, uphold and preserve the Constitution. It is submitted that the participation in any scheme in violation of the laws of the country constitute a violation of their Oath. This is compounded and made more egregious where those who share collective responsibility for the decision are direct beneficiaries therefrom,” it added.

Meanwhile, it also stated that while the then minister of finance Dr Ashni Singh was not a beneficiary of the project, his role as minister and NICIL Chairman was “egregious… (and) he violated his Oath of office.” It was stated that he must have known that the lots were being sold below market value, resulting in a loss of revenue to the state. “We do not believe that the law should allow such conduct to go without sanction,” the report said.

Construction period expired

According to the report, nine persons paid for their lots and were issued Certificates of Title but have not commenced construction. They were identified as Ali-Hack, Westford, Dr Rajendra Singh, former CEO of GuySuCo, Professor Compton Bourne, private sector executive Ramesh Dookhoo, Lisavetta Ramotar, who is the daughter of former president Donald Ramotar, former PPP/C minister Shaik Baksh, George and Nada Hallaq and Future Development International Inc, which was under the directorship of a New GPC officer.

The report said that despite several inquiries at CHPA, the auditor is yet to see a sale agreement, file or record for any of the nine persons. “However applying the rules for the sale and purchase of such lands, the period of construction has long expired. In the circumstances, the titles to such lands should be cancelled and monies returned by the CHPA,” the report said before informing that at least three of the nine persons “did not meet the criteria for the allotment of land.” It was pointed out that both Ali-Hack and Dookhoo were already property owners, while Bourne was not resident in Guyana for six months prior to any application for a house lot.

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