Friday 27 November, 2020

Pinnock directed US$1m contracting at heart of CMU scandal - colleague

Professor Fritz Pinnock

Professor Fritz Pinnock

By Lynford Simpson

President of the Caribbean Maritime University (CMU), Professor Fritz Pinnock, was the one who directed that a company known as Logistics Company One be engaged by the now scandal-hit university to provide building materials to the tune of approximately US$1 million, according to another top executive of the institution.

The claim was made during Tuesday’s sitting of Parliament’s Public Accounts Committee (PAC) by Elaine Hayden, Director of Special Projects and Strategic Initiatives at the CMU. Hayden, a trained project manager and information technology professional, pointed the finger at Pinnock under questioning from Opposition member, Peter Bunting.

Logistics Company One, which is reportedly registered in Florida as Business Supply Source (BSS), has found itself at the centre of the scandal involving Pinnock and the former Minister of Education, Ruel Reid, who was forced out of the Cabinet in March, 2018. Both men are before the courts on multiple fraud and corruption-related charges in what investigators say was a $55 million scheme.

Reid’s wife, Sharen, his daughter, Sharrelle and Kim Brown-Lawrence, the Jamaica Labour Party (JLP) Councillor for the Brown’s Town Division of the St Ann Municipal Corporation, have also been charged in the matter.

The nearly US$1 million expenditure with Logistics Company One was the biggest of many by the East Kingston-based institution that breached Government procurement guidelines, based on a subsequent damning Special Audit Report from Auditor General Pamela Monroe-Ellis.

When asked by Bunting: “How did you come across this sourcing company?” Hayden replied: “I was advised by the president… he had gone to some conference and had come back”.

Hayden told the parliamentary committee that her project team constantly kept Pinnock abreast of their efforts to find a company to source the sandwich panels that were to be used in the construction of several buildings that were to be established by the university.

“And so I was instructed (by Pinnock) that this is a sourcing company, and that we’re to deal with them going forward,” Hayden said.

She told the PAC that she was part of the project committee, and that she reported directly to Pinnock.

She said all projects were first taken to the management of the CMU and, once approved, a project plan and initial costing are developed before they are taken back to the executive management and projects committee.

Hayden said she was responsible for construction projects, including the one involving the sandwich panels. She explained that the project dated back to 2016.

She said with the guidance of Pinnock, the project committee had been trying to source sandwich panels from as far back as that year. She said at the time BSS was engaged, the CMU’s financial position meant there was need to build quickly while using material that could withstand the elements, since the university is located near the sea.

Hayden said they looked overseas, including to Trinidad and Tobago, where sandwich panels were used in construction at the University of the West Indies (UWI) campus there.

“We tried to source entities; we sought to look through the directory and to find entities which could provide (the panels), and we found none. I think it was late 2017 (that) I was advised by the president that he had found a sourcing company which would be able to provide the materials. We gave them the material listing in terms of the size of the buildings,” Hayden outlined.

She said the initial plan was to build a lecture theatre, auditorium and an administrative building. The project manager said BSS was provided with information and they in turn reported back with preliminary information around February 2017. She insisted that Pinnock was kept abreast of the developments

Hayden also shared that she was subsequently instructed to scale down the size of the buildings, and focus only on the lecture theatre. She said at that point she advised the president that the CMU would need to go through the (procurement) process, and a letter was written to then Permanent Secretary in the Ministry of Education, Dean-Roy Bernard, seeking permission to pursue the direct contracting option. She said permission was received in February 2017.

Hayden told the PAC that she then took a personal decision to ascertain whether BSS was in fact a sourcing company.

“When I looked at the fact that we were told that they were a sourcing company and we had gotten permission to direct contract with them, I then said to the president that I would prefer that they show that they are in fact a holding company,” she said.

Peter Bunting (file photo)

However, the project manager said that “In discussion with the ministry, it was said to be a misguided approach because if we had approval for direct contracting, then we should’ve just proceeded.”

When Bunting asked Hayden in which month she was introduced to BSS by Pinnock, she said it was February.

“The very same month that it was incorporated,” Bunting noted. In response, Hayden said she later found that to have been the case.

The seeming lack of oversight and an adequate system to ensure due diligence, though detailed in the AG’s report which was submitted at the end of 2019, had Opposition members of the PAC at the sitting repeatedly stating that the CMU and those who were in charge of its operations were “on a frolic of their own”.

Bunting went repeatedly to the AG’s report, including page 31, where it was highlighted that based on information submitted by the CMU, five bidders, including BSS, were invited to bid for the supply of sandwich panels. The report noted that the CMU did not provide the basis on which the five companies were selected.

It noted that “CMU breached the procurement guideline which requires international competitive bidding and/or local competitive bidding for procurement of goods above J$60 million."

The AG’s report also noted that CMU had set a March 6, 2018 deadline for the bidders to respond, however the eventually selected company, bidder one or Logistics Company One (BSS), was non-responsive up to that deadline, having submitted its bid on March 13, 2018 – one week after the stipulated deadline.

According to the response that was provided for the AG, “CMU facilitated the process by providing the (BSS) bid documents to the other suppliers, which were submitted through Logistics Company One (BSS) to the CMU on March 13, 2018.”

Bunting noted also, that BSS, in submitting the lowest quotation one week after the deadline, attached the bid quotes of the other bidders with its submission.

“I have never seen a stronger prima facie case of corruption, I’ve never seen it,” Bunting stated. He said this was especially so since full payment of US$621,000 was made to BSS on April 13, 2018, just one month after the bid was received and despite the absence of a formal contract, a bank guarantee or an irrecoverable letter of credit to secure CMU’s interest, as was pointed out by the AG. The payment was also notably made only two days after the CMU’s Procurement Committee gave its approval.

While BSS submitted the lowest bid of US$621,000, the amount would eventually rise to US$989,000, which would have placed BSS fourth on the list of bid quotes.

The AG found no evidence that the contract was submitted to the National Contracts Commission (NCC) or Cabinet for approval, a clear breach of the Government procurement guidelines. Yet, on June 6, 2018, CMU paid BSS a further US$368,303 for high beams, steel and other assembly materials. These were not included in the original contract, and the steel was sourced overseas because it was cheaper there, Hayden said.

“Mr Chairman, this company was formed at the same time, and obviously specifically to bid for this contract. It did not meet the bidding deadline, so it was not responsive,” said Bunting as he addressed PAC Chairman, Mark Golding.

Bunting further argued that BSS was provided with the bids from the other companies to ensure that it could come in below their levels.

“Ultimately, it was paid 50 per cent more than its original bid, the payments were expedited without any contract or security for the payment, especially given that this company was not two months’ old and would have had no balance sheet or track record to support that,” Bunting further indicated.

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