George Norton
December 20 ,2020
-says $137.5M still owed over use
The Audit Office of Guyana has recommended that the Guyana Police Force (GPF) conduct an in-depth investigation into the Health Ministry’s rental of the Sussex Street, Charlestown drug bond under the former government as well as institute charges where necessary.
The Office has also requested that the Ministry of Legal Affairs (MoLA) advise the Ministry of Health to bring closure to this matter since it appears that there is a $137.5 million balance in rental payments owed for use of the property.
The bond, which was leased from businessman Larry Singh under the former APNU+AFC government, has been the subject of controversy since it was revealed in the National Assembly’s Committee of Supply that it had been rented for $12.5 million a month as part of an emergency procurement and then left empty for two months.
The recommendation to involve the GPF is one of three included in the final report of a special audit conducted at the request of Attorney General Anil Nandlall.
The Sussex Street drug bond (Stabroek News file photo)
It was Nandlall who first brought the issue to the public’s attention when he questioned then Minister of Public Health Dr George Norton about the particulars of the procurement.
Norton had initially said that with the “exorbitant price called by the New GPC” for storage at its Ruimveldt warehouse and the conflict of interest posed by using a facility run by a potential drug supplier, there was an urgency to find new storage. It later emerged that the Sussex Street facility was in fact a converted house and was still being renovated. In addition, no payment had been made to New GPC.
In the wake of controversy over the deal, then-president David Granger had appointed the Cabinet Sub-Committee to examine it. Then Natural Resources Minister Raphael Trotman, who headed the committee, subsequently announced that it was found that the committee found that Norton misled Parliament on the contract and the minister subsequently issued an apology to the National Assembly. It also recommended that the contract be reviewed.
‘Breached’
According to the 11 page report, released by Nandlall, the then Ministry of Public Health did not adhere to proper procedures when it entered into a contract with Linden Holding Incorporated (LHI) to lease lot 29 Sussex Street property to serve as an offsite medical storage facility.
Tender board procedures were not followed, it concluded, after noting that there was no public tendering, and in fact, no procurement procedures were applied in the awarding of the three year contract to LHI.
This a breach of Sections 25 (1) and 10 (1) of the Procurement Act, which states that subject to subsection (2), public tendering is mandatory. For such tendering an invitation to tender or to prequalify, as applicable, is mandatory, the report quotes the law as stating, while noting that it also requires that the procuring entity shall maintain a record of the procurement proceedings including the means used to solicit suppliers or contractors and a record of any such advertisements.
The explanation proffered for this breach was dismissed by the Audit Office, which highlighted that the facility which was “required on an emergency basis” was not utilized for two months even though $37 million had already been paid to the owner.
“[Rent] was paid for the months of July and August 2016 and the warehouse was not utilised for storage during the said months by the Ministry,” the report highlights.
In fact, over the period July 2016 to August 2018, the ten ministry paid a total of $337.5 million to LHI, inclusive of a $12.5 million security deposit.
Questions about who authorized the lease agreement revealed a Cabinet decision dated July 12, 2016, more than a month after the date of the agreement.
According to the report, the agreement, date 1 June, 2016, was not signed until 20 July 2016.
At that point the Ministry did not have the funds necessary to conclude the agreement and had to approach the National Assembly for these monies. A Supplementary Appropriation was passed by the National Assembly on 26 July 2016 in the sum of $62.5 million.
“On 27 July 2016, a Contingency Fund Advance Warrant No. 8/2016 was approved by the Finance Secretary in the sum of $63,541,249.600 …of this amount, the sum of $25,000,000 relates to the Sussex Street Bond, while the balance of $38,541,249.60 is payable to New GPC for rental of warehouse facility at Ruimveldt,” the report explains.
Once the agreement became public, the ministry made attempts to end the contract.
These attempts were stymied by a provision in the tenancy agreement, which stated that “the tenancy may be determined, with due cause, by either party giving to the other 12 months previous notice in writing”.
There is evidence that the ministry attempted to activate this clause by sending an Initial Notice of Quit letter, dated 31 October 2016 to LHI. The letter, written by the former Permanent Secretary Trevor Thomas, stated that the ministry intended to quit on/before 1 November 2017.
The letter, which was received by an individual at LHI on November 8, 2016, was, however, unsigned and issued without the official letterhead of the Ministry.
As November 2017 drew close, then Permanent Secretary Colette Adams reminded LHI on October 3, 2017 of the Ministry’s intention to quit and surrender the premises.
LHI responded through a lawyer’s letter that stated that it had not received the notice to quit and that the notice now being shown to the company was unsigned and therefore could not be viewed as valid.
Additionally, LHI maintained that the relevant clause specified that the tenancy cannot be terminated by the either party “without due cause,” notwithstanding 12 months’ notice in writing.
Adams wrote to the MoLA seeking advice on the way forward. The advice received, nearly a year later on September 2018, stated that “given that the Tenant has given notice, and has vacated the premises as at 31st day of August, 2018, no further payments of rental are contractually due, nor ought to be paid”.
While the advice was requested in 2017 and provided in 2018, the records presented to the Audit Office shows that the MoLA outsourced the request with approval from the National Procurement and Tender Administration Board (NPTAB) in 2019.
The law firm of Hughes, Fields and Stoby was granted this contract on 30 May 2019 for a sum of $690,000, the report states.
Noting that the ministry was still occupying the facility as recently as October 24, 2019, the Audit Office has recommended that the MoLA be approached once again with intentions of bringing closure to this matter.