Gov't hiding 'real issues' in Chinese deal - OCG
Published:Friday | May 28, 2010 | 12:00 AM
Contractor General Greg Christie has slammed the Government for its attempt to justify a proposed multibillion-dollar deal to sell its 45 per cent stake of the Jamalco alumina refinery to Chinese firm Zhuhai Hongfan Non-ferrous Metals and Chemical Engineering Limited (Hongfan). He accused government bureaucrats of "obfuscating" the real issues when it responded to the initial alarm he raised about the deal.
In a media release, responding to concerns raised by the Office of the Contractor General (OCG) two weeks ago, permanent secretary in the Ministry of Energy and Mining (MEM), Hillary Alexander, pointed to, among other things, operating losses at Clarendon Alumina Production Company (CAP), which created a debt of more than US$400 million, an obligation, she said which cannot be accommodated in the current economic programme with the International Monetary Fund (IMF).
But in a sharp rebuke, Christie described the ministry's response as an "interesting attempt ... to obfuscate the real issues which are the subject of the OCG's contention in the matter".
"As you are very much aware, the OCG's primary contention is that the proposed multibillion-dollar Government of Jamaica/Port Reliant/Hongfan contract award is not one which was borne out of an open, competitive and transparent tender process," the OCG letter which was released to the media said.
"Indeed, to date," the contractor general continued, "you have failed to provide to the OCG an acceptable explanation for your ministry's aberrant and potentially damaging conduct in not putting this major asset divestment to public competitive tender."
In the letter, which was copied to the prime minister and other state officials, Christie pointed to the ministry's references to the "drain on the public purse" and the allusion that the IMF standby agreement made no provision for the servicing of CAP's J$36-billion debt.
"While the OCG is acutely aware of the referenced constraints, we must, however, respectfully caution you that neither of these two considerations gives you, your ministry or the GOJ a licence to bypass those of the government contract principles which are mandated by Section 4(1) of the Contractor General Act."
"The law on the matter is crystal clear, and you are bound by it," the scolding continued. "Government contracts must be 'awarded impartially and on merit' and 'in circumstances, which do not involve impropriety or irregularity', and it is the OCG that is empowered to make this final determination - not you, the MEM or unspecified 'experts in the industry."
Questionable actions
Christie maintained that ministry's action was questionable, and had not been subject to a competitive tender process.
The Chinese firm had all but put pen to paper to close the deal when the OCG stepped in.
Any agreement between the Government and the Chinese needs the blessing of Alcoa Minerals, Jamaica's partner in Jamalco.
Under the Jamalco agreement, Alcoa has the right to match any offer made by a third party for the Government's stake in the company.
Once equal partners, Jamalco is now 45 per cent minority owned by Jamaica's Clarendon Alumina Productions and 55 per cent by Alcoa.
The American firm, though always the operating partner, gained the additional 5.0 per cent equity in exchange for its financing of a 125,000-tonne Early Works Expansion project that was meant to be the precursor to a larger upgrading of the refinery.
In the middle of the decade, Alcoa and the Government agreed on a US$1-billion project to double Jamalco's capacity, but that arrangement foundered on their inability to secure the supply of LNG as a power source for the plant.
Alexander was unavailable to comment on the matter.