Meddling minister
KARL Blythe, pushed out of the cabinet because of the scandal over the government’s shelter programme, Operation PRIDE, was an interventionist minister who would instruct officials to find ways around the government’s audit system when told payments for some projects were being inappropriately routed to the National Housing Development Corporation (NHDC).
In fact, Blythe, the water and housing minister, engaged in tussles with the top executives of the NHDC and he clearly sought to impose his will — and intent to rapidly expand the PRIDE programme — in the face of the officials concerned with procedures and accountability, documents contained in the report of a special investigative report on Operation PRIDE show.
The minister’s style is reflected, for instance, in how Blythe responded in a March 2001 letter to then acting president of the NHDC, Ludlow Gordon when Gordon, raised the issue of the proper agency having to pay for the things which fall within its portfolio.
The matter started with a March 5 letter to Warren Sibblies, then head of technical services at the NHDC from O B McLeod, the senior project engineer at Carib Engineering Corporation Limited (CECL), a subsidiary of the National Water Commission (NWC) and one of the vehicles being used by Blythe to drive Operation PRIDE — a project that was to deliver housing solutions to mainly poor people.
In his letter, Sibblies said that at a recent meeting with a number of officials, including the NHDC’s president, Dudley Shields, Blythe had “instructed that all payments for technical services rendered on account of Relocation 2000, and other projects for which invoices will be forwarded to you prior to formation of the appropriate provident society, should be honoured by you”.
On that basis McLeod asked for payment on an invoice from a company called Trans Caribbean Ltd as well as “others which will be submitted subsequently”.
The following day, Ludlow Gordon, in his capacity of acting president of the NHDC, wrote to Blythe, with an attachment of McLeod’s letter, saying that he was unaware of the instruction.
In any event, Gordon pointed out that expenditure for Relocation 2000, a slum clearance programme, “would not relate to NHDC”.
The point was that the programme was not one of those that was brought under its umbrella in 1998 when Operation PRIDE was rolled into the NHDC because of serious concerns about the management of the PRIDE projects.
“Certainly, expenditure on behalf of provident societies will appropriately be borne by the NHDC,” Gordon said.
But deviations from this, he warned “may give rise to an audit query by the auditor-general, resulting in an appearance before the Public Accounts Committee (of Parliament)”.
Blythe’s response was terse and adamant: “These expenses must be met. I am asking that you find a way to meet them in a manner which will not bring an audit query.”
Indeed, this exchange typifies that Blythe style as captured in the report by the Erwin Angus commission, established in February by Prime Minister P J Patterson after a new scandal had erupted over the Operation PRIDE programme.
At the time, a leaked report by a team of independent consultants who were appointed by Christopher Honeywell, the latest in the NHDC’s slew of CEOs, had suggested over-runs of upwards of $5 billion on a relative handful of PRIDE schemes and that payments were often made without proper reports from quantity surveyors. A selected handful of contractors got the bulk of the work.
The commissioners suggested that the report was crafted for ‘sensationalism’ but still found over-spending on projects of more than $1 billion and a raft of failure to follow procedures to properly protect taxpayers’ resources and to ensure good value for money.
Nonetheless, the report by the independent consultants — and a claim that Honeywell had gone into hiding for fear of his life because he had commissioned it — caused consternation because it was precisely to overcome the same kind of loose management of the programme why PRIDE was made part of the NHDC in 1998.
Under the scheme, people form themselves into industrial and provident societies (IPs) and save towards accumulating the funds to finance a shelter project. Additionally, they can also contribute sweat equity.
The government provides the land and up-fronts the cash for infrastructural development, ostensibly as loans to the IPs, which in turn has responsibility for hiring contractors.
In 1997 the contractor general raised concerns about the process and a public debate helped to push the government into reorganising and slowing down the programme with its transfer to the NHDC.
As part of the restructuring, it was decided by the government to ring-fence the 91 PRIDE projects then in various stages of development. Essentially, 71 of them would be placed on hold and 20 marked as priorities for completion.
Between 1998 and 1999, according to the commissioners, the NHDC, with help from Sugar Industry Housing Ltd, an agency that works with the sugar industry to develop housing in the sector, “had made significant strides in improving the PRIDE implementation process” and had “developed a sustainable way forward for the organisation of the programme”.
Then, enter Blythe.
Blythe, a medical doctor by training and a successful businessman by inclination, is also an ambitious politician who has entertained visions of leading the People’s National Party. In 1999 he became a vice-president of the PNP after waging a vigorous campaign for one of the slots.
He came to Parliament in 1993 as the representative for Central Westmoreland and was made a parliament secretary for health. When in December 1995 Patterson shuffled his Cabinet and Blythe was not offered a full ministry, he sulkingly resigned and headed for the back benches, grumbling that his talents were not being fully utilised.
He got a Cabinet post after the 1997 general election when Patterson created the Ministry of Water, in response to what was a major platform issue prior to the poll. By most accounts, Blythe has had relative success in that ministry, but has irritated technocrats and managers by what they see as ministerial interference, including direct interfacing with line staff.
Blythe was given the housing portfolio, including the NHDC and Operation PRIDE, at the end of 1999 as part of a reshuffle of the cabinet, taking over from the former environment and housing minister, Easton Douglas, who had taken much heat over PRIDE. In retrospect, and certainly based on the findings of the commission, Douglas, who declined a place in the Cabinet once he was moved, did make an attempt to bring order to the management of Operation PRIDE.
Blythe’s mandate once he formally assumed the housing portfolio in February 2000, was for a rapid acceleration of Operation PRIDE. He told the NHDC that this programme was to be its primary focus.
The 20 priority projects were to be completed in six months and additional 60 projects were to be started and completed by the second quarter of 2001/2002.
Much of the technical management of the projects were taken out of the NHDC and into the Ministry of Water and Housing, overseen by a coterie of people close to Blythe, with among the most influential being Evan Robinson, his technical advisor, who is substantially employed to the CEL. It appears that the permanent secretary in the ministry, Thorant Hardware was also part of the inner circle.
The commissioners call the group “a brotherhood”.
“The situation deteriorated rapidly with the accelerated pace of project developments to the point at which NHDC resources could no longer keep up with the volume of requisite paperwork,” said the Angus report. “The commission understands that the minister indicated to management that the paperwork could “catch up” with construction. Unfortunately, this served to return NHDC to a situation it had struggled to overcome, in that construction began with incomplete or inadequate designs and there was a general lack of efforts to obtain requisite approvals, ensure loan agreements, implementation and meet regulatory requirements, including government’s ownership of the relevant site(s).”
The rapid pace of expansion also had a debilitating impact on the finances of the NHDC. In the financial year 1998/1999, the NHDC made a net profit of $115.8 million which slipped to $85.4 million the following year. For the financial year 2000/2001, the agency lost $171.36 million, the major cause being loan losses of over $363 million, the bulk of it provisioning for Operation PRIDE.
For the first nine months of the financial year just ended, the NHDC lost $40 million, but again $545 million was provisioned for Operation PRIDE.
It was concern for the deteriorating financial position of the NHDC, and an attempt to get firm handle of the impact of the Operation PRIDE, that had caused Honeywell, with the knowledge of the agency’s chairman, Michael Vaccianna, to commission the February report.
That report was publicly ridiculed by Blythe and Vaccianna, but despite its flaws, the Angus report has indicated that there was clear cause for worry.
Indeed, the commissioners are adamant that Blythe would have had full knowledge of the financial state of the NHDC and the weaknesses in the Operation PRIDE scheme caused by his mandate.
Blythe, whose parents were preachers, has in the past declared himself not to smoke, drink or swear. If he has ever lied he has later confessed the lie.
The commissioners said that Blythe told them that he never gave more than policy guidance in respect of the programme. He insisted that he was not informed that the enhanced pace of project implementation, as he had instructed, was causing a severe negative financial impact on the NHDC and the postponement of several critical steps of paperwork.
“The commission has seen ample documentation to indicate the minister’s full awareness of the situation,” according to the Angus report.
Added the commissioners: “Nothwithstanding the aforementioned viewpoints to the contrary, the commission found significant documented evidence that the minister of water and housing is far more involved in the detailed administration of Operation PRIDE than the commission was led to believe during the course of his interview and that he was, in fact, informed of several problems facing NHDC, including the company’s financial constraints.”
Indeed, in a letter to Blythe in May 2001, Ludlow Gordon, the NHDC’s acting president, outlined the need to bring projects, which were being directed substantially by the minister’s coterie, back into line. There was need for better communication.
“The present approach of starting construction and leaving behind the administrative support can lead to some of the problems experienced in the implementation of the priority projects,” he warned.
In another letter, Gordon referred to Prime Minister P J Patterson’s public statement about a new average price for a scheme at Melrose Mews in Manchester and that people who had previously withdrawn because of high prices could re-apply.
He suggested that the original selection process be the one originally developed for Operation PRIDE, with a ratification with representatives from the groups representing the civil service, nurses, the police and other public service groups and a points system relating to income and family numbers.
Blythe’s response: “Please give the provident society permission to submit names, and persons the right to apply to NHDC. The list should then be taken to me for ratification.
First come; first serve!”
Even before that, in June 2000, there was clearly tension in the relationship between Blythe and then president of the NHDC, Dudley Shields, based on their exchange of letters.
Blythe, in a letter dated June 28, told Shields that seven projects — Belle Aire, Callaloo Mews, Luana, Melrose Mews, Riverton Meadows, Whitehall, McGregor Gardens — as well as others “that were discussed between us” were to be “exempted from the procedures that have been established in regards to the 20 PRIDE projects”. The minister wanted them to progress “as a matter of priority”.
When Shields responded asking for clarification, including the other projects he wanted fast tracked — “as the writer cannot recall the specific context in which the projects were discussed” — Blythe was clearly angry.
“I find your lack of understanding referred to in your letter of June 29, 2000 somewhat suspicious, since it was you who approached me and requested that, in regards to some of the Operation PRIDE projects now on the ground, you were asking that the ban I placed on paying bills they submitted, be withheld,” Blythe said in a long letter discussing decisions that had been taken about financing the project.
Shields responded assuring the minister that he had “no ulterior motives” with his original request and again pointing out that the exemptions that the minister had sought remained unclear.
Shields did not last much longer at the NHDC although it was not clear if he was pushed out.
Blythe’s only public response so far to the report is that he did not abuse his public office for private gain and to invoke the protection of God against those who he claimed to be his enemies.
Added Blythe: “When I consider the thousands of Jamaicans who are now land owners for the first time; when I consider the many, many little children who will not have to carry water on their heads; when I consider my brothers and sisters in Riverton, Callaloo Mews, Hope Glades and the many other areas that were covered by Operation PRIDE, who no longer have to live in rusty zinc houses, who no longer have to have their houses built by old cardboard and boards, then I say to you all — I have no regrets.”