Ewart Brown's plp bourgeois Bling,while the people struggle

by Sal | December 18, 2009 at 11:22 am

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The story Government did not want you to see!
Govt in talks to buy Swan building for $25m

Government was planning to buy a building in the centre of Hamilton for almost $25 million from former Premier Sir John Swan, The Royal Gazette can reveal today.

A temporary gag preventing us from printing details of the secret deal to purchase the Swan Building on Victoria Street — which Finance Minister Paula Cox opposed — was lifted by a Supreme Court judge today.

The confidential Cabinet document was passed to this newspaper on Tuesday by a source who wanted the public to know about the negotiations, which have been ongoing for the past seven weeks.

The leak prompted Government to launch an immediate legal bid to suppress the information. But Mr. Justice Bell rejected its claim in the hearing today.

The proposal to buy the Swan Building from Works and Engineering Minister Derrick Burgess was put before Cabinet on Tuesday. It is not known if Ministers approved or rejected the deal.

The memo from Mr. Burgess is titled Government Office Accommodation Strategy, dated December 14 and marked ‘FOR DECISION’ at the top.

It sought Cabinet approval to proceed with the purchase of the Swan Building for $24.5 million.

The memo also reveals that Government is in negotiations to buy the Par-la-Ville building from HSBC Bank of Bermuda, though does not give details of the sale price.

On October 20, according to the memo, Cabinet authorised Mr. Burgess, along with Deputy Premier Ms Cox, to “engage in further negotiations with the owners of the Swan Building and the Par-la-Ville Building with respect to the purchase of these buildings, including the financial terms accompanying the purchases”.

It said the purchase of the Swan Building was due to be completed on April 1 next year, subject to the existing leases, which currently produce an annual rent of $1.98 million.

The plan, Mr. Burgess stated, was to relocate government departments there from July next year, giving the Government rental savings of about $2.4 million a year.

“The Ministry of Finance is currently sourcing which finance package is the most favourable to Government and will confirm in due course,” he wrote.

The memo shows that Cabinet was asked to consider whether to pay the asking price in full to owners Swanoco Holdings on completion or instead give a down payment of $4.5 million, followed by annual interest-only payments at a rate of seven percent.

The payments would have amounted to about $1.4 million annually, and then the final $20 million would need to have been paid off.

The third option was a finance package with HSBC, with annual interest-only payments, at a rate of 5.25 percent for fifteen years, of $1.286 million.

“In either scenario, the acquisition demonstrates considerable annual savings to Government,” wrote Mr. Burgess.

But he admitted in the memo: “The Minister of Finance has been consulted and does not support the purchase of Swan Building at this time.”

Court papers drafted by Government in its failed bid to suppress the story include an affidavit by Cabinet Secretary Marc Telemaque, in which he says: “Cabinet was divided on the issue proposed in the memorandum.”

The source told this newspaper that Premier Ewart Brown and Mr. Burgess wanted to force through the deal. “Paula Cox doesn’t support it,” said the source. “We have no business buying a building in this climate.

“The official reason why, they would say, would be that Government spends money renting properties and if they own buildings, they no longer have to pay rent.

“But we have buildings in Southside and Dockyard. We simply should not be buying any buildings and to pay seven percent interest... we shouldn’t be paying seven percent.

“I think it’s being done like this for a reason and I think it’s unacceptable. Finance said they don’t support it. If Finance doesn’t support it, it shouldn’t be happening.”

The source said that the interest payments on either deal would mean far more than $25 million was ultimately spent by taxpayers.

“To be paying interest on $25 million is just crazy,” the source said. “We just spent all this money on this new court building. Even if it does make sense to buy a building at some point, you don’t do it if you are in a recession.”

The source explained they leaked the memo because “the public need to know and they have a right to express their views on it. I’m doing it not because I want to spread Government information. It’s a sad story.”

This newspaper advised Mr. Telemaque that the memo had been leaked on Tuesday morning. He asked to be faxed the memo and, when the request was turned down, said: “Your refusal to provide me with the document makes any comment impossible.”

Later requests that day to Mr. Burgess, Dr. Brown and Ms Cox for comment elicited no response.

Millions more wasted in a crushing recession.When seniors cannot afford medicine and basics,hundreds are homeless, many more are unemployed ,those who have work,live paycheck-to paycheck, struggling to pay bills.

The plp Ewart Brown elitists are taking suites in govt buildings with private baths and shower,so they don't have to mingle with their staff.

They want to live in luxury suites,travel to luxury hotels,jet around the globe and party ,instead of serving the public who are paying for it.

Government debt has been climbing big time. It increased by $204.9 million during the financial year 2008/2009 to $483.3 million – a jump of 73% in 12 months.

AVIEW FROM THE HILL By John Barritt

A million here, Mr. Editor, a million there, and pretty soon you're talking about some serious money. It's a line my colleague Dr. Grant Gibbons, a former Finance Minister, likes to use a lot when talking about Government finances. It would occasionally elicit a knowing chuckle. Not so these days. The state of those finances today are no laughing matter.

The new Auditor General pulled no punches in her first report to the Legislature and to the people of Bermuda when she wrote and I quote:

"My examination indicated serious internal control deficiencies in the management of various capital development projects which carry a book value of $90 million at March 31, 2009 and total authorised funding of $152 million. These deficiencies led me to question the appropriateness of certain transactions and the underlying value of the assets at March 31, 2009."

If this sounds familiar, it ought to. Her predecessor Larry Dennis issued a similar qualified opinion when he delivered his report almost one year ago. He didn't pull any punches either.

"My examination," he wrote, "indicated deficiencies in internal control over the expenditures of a capital project whose capital development expenditures for the year and period subsequent to the year-end but prior to the audit report date totalled $13,243,881 and whose total authorised funding budget is $78 million.

"In addition, my examination indicated efficiencies in the internal controls over purchasing and the valuation of certain services totalling $5,512,742."

As a result, Mr. Dennis felt compelled to issue a further special report which zeroed in on the Ministry of Works and Engineering, Department of Tourism and the Berkeley Performance Bond, and again he did not mince his words when he wrote:

"My extended audit procedures revealed persuasive evidence of inappropriate behaviour and seriously compromised internal control systems. The internal controls that should have prevented such behaviour were rendered ineffective by ministerial intervention and failure by senior civil servants to carry out their responsibilities, and in some cases, to resist actual or perceived ministerial pressure."

The memory of an elephant is not required to recall the reception that Mr. Dennis' report received from the Government. It was nasty and it was personal. The Premier led the charge: he publicly questioned Mr. Dennis' motives, accused him of politicising the office, and he vilified his work as an abuse of power. Race even crept in.

But today vilification has turned into vindication – happily for Mr. Dennis perhaps, but sadly for us the taxpayers.

For the second year running, we get a qualified opinion – and from the new post holder who is promising her own special investigation and report into the deficiencies which she has found. The new Auditor General referred to capital projects, plural. Mr. Dennis had only focused on one: the new Magistrates' Court/Police building.

Which new projects then? The Dockyard marina? Port Royal? TCD? Which Ministries – and how is that this was allowed to happen? Inquiring minds want to know and they want to know now.

Minister of Finance Paula Cox took the position in a Ministerial Statement to the House that it would be "premature" to comment until the Auditor General has completed and reported in her special investigation.

The Finance Minister referred to "the usual parliamentary procedure" whereby a Special Audit Report will be tabled and referred to the Public Accounts Committee (PAC) for review, and subsequent report and recommendation, which will feature a formal response from Government through the Minister of Finance.

The trouble with this archaic practice is that it highlights another serious deficiency. It could be a long, long time before we hear from PAC. That's the way the system has been working around here for years. Or not. Meetings can be stymied by lack of a quorum, although the current chair Bob Richards recently declared that he is going to press on regardless.

The simple answer of course is to increase membership – a recommendation of PAC a few years back – but that hasn't made its way into the revised Rules. Yet. Meetings also continue to be held in private and that's just plain wrong and contrary to modern recommended practice. It's another revision to the Rules that Government continues to resist. Please don't ask me to explain why. It defies all reasonable explanation.

There is clearly a crying need for a more robust, active and timely PAC to not just investigate and report after the fact, but as projects go along, so as to ferret out misuse and abuse before the costs run into extra millions of dollars.

The Premier and his Cabinet colleagues try to explain them away as overspends, but think of how the money could have been spent more effectively on more pressing and vital issues to the community like policing: with more X-ray machines for containers at the docks, more CCTV cameras, more modern computer software and hardware, and the additional manpower required to make them work.

Instead they want to distract us with the issue of who should have operational control. For my money, it should continue to be the Police Commissioner – with help from whatever advisory bodies he needs.

There is a pattern too, to these overspends. Change orders and lavish expenditures be damned. Money in the millions is being spent like there's no tomorrow and of course there is a tomorrow – and any responsible Government should be preparing, and prepared for the worst. A sample of recent headlines tells us what might be around the corner:

¦ Need is up, donations down: Salvation Army

¦ Bank deposits fall by $500 million

¦ Real GDP growth slowed to .07 percent in 2008

¦ Health insurance premiums set to jump next year after claims spike

¦ Don't expect to see more waves of [insurer] start-ups

Tourism isn't looking very promising either – forget platinum – and jobs for Bermudians appear to be shrinking monthly.

Meanwhile, Government debt has been climbing big time. It increased by $204.9 million during the financial year 2008/2009 to $483.3 million – a jump of 73% in 12 months.