(Jamaica Gleaner) The Contractor general has found a number of breaches of procurement rules in a deal struck between NIF and hotel group Blue Diamond Hotels and Resorts but has recommended no punitive action, opting instead to use the case as a teaching moment for the public sector.
The agency has also put the National Insurance Fund (NIF) on notice that it would be taking a microscope to the deal struck with another foreign hotel group, Melia Hotels.
The Office of the Contractor General (OCG), following a probe of the management agreement for Braco Resort in Trelawny, noted in a report dated February that there were clear breaches of contracting guidelines and reminded both NIF and the Ministry of Labour and Social Security that such breaches were in fact ‘criminal’.
The OCG concluded that the “actions and inactions” of the NIF and the ministry were “improper, irregular and inappropriate”. On Wednesday, NIF Senior Director of Investments Audrey Deer-Williams told the Financial Gleaner that the agency would make no comment on the report at this time.
She said the procurement process for upgrades at the Trelawny property was under way ahead of Braco’s planned reopening for winter 2014 under Melia’s management.
Refurbishment is estimated at over J$1 billion.
NIF in late 2011 contracted Blue Diamond Hotels and Resorts to manage Braco Resort, which is owned 100 per cent by the pension fund. The management agreement called for Blue Diamond to pay NIF US$500,000 in the first six months of operation ending April 2013, and then US$1.3 million per year if the contract was extended beyond the interim period. The arrangement was approved by Cabinet in August 2011.
Blue Diamond – in addition to rental terms – promised as part of the Sunwing Travel Group to increase airlift to Jamaica by two planes in support of the hotel at its reopening.
The hotel company would also provide the funding for investments in hardware, soft goods, staff and training, guest satisfaction, plant maintenance “to meet or exceed” Braco’s existing condition, and committed to “cover all operating costs of the hotel, including any potential operating losses during the period of this interim agreement”, the OCG report said.
The interim arrangement was not extended for a year to May 31, 2013. NIF last year contracted with Melia for the same property.
Blue Diamond was said by NIF and the ministry to be the only company willing to accept a six-month lease for Braco – an offer made following assessments of offers from Karisma Hotels and Resort Corporation Limited,Blue Diamond, Desires Hotel, and H10 by Ocean Hotels, according to the Contractor General’s report.
But, citing a number of breaches, the OCG additionally notes that Blue Diamond only became National Contracts Commission-certified after the agreement was reached. “The OCG cautions that pursuant to Section 40 of the Public Sector Procurement Regulations (2008), the breaches and contraventions of the procurement guidelines, which have been identified herein, amount to a criminal offence and carries with it sanctions, upon conviction in a Resident Magistrate’s Court, of a fine not exceeding one thousand dollars and/or to imprisonment for a term not exceeding three months or to both such fine and imprisonment,” the report states.
The Contractor General, however, made no recommendation for action against NIF, only that it be more closely monitored.
Instead the report chose to lecture Government’s accountable officers as a body on their obligations under the law.
The OCG, headed by Dirk Harrison, reminded all heads of government agencies and accountable officers that guideline breaches are serious and may attract penalties, saying they constitute a “criminal offence”, even when Cabinet has approved the contracts.
