Prime Minister Keith Rowley yesterday conceded that the government owed money to many contractors but he challenged the circumstances in which some of that debt was incurred and said there was a problem with “the Government’s financial ability to pay some of the debt.”
Speaking at the post-Cabinet news conference at the Magdalena Grand Hotel, Lowlands, Tobago, Rowley answered questions on a wide range of subjects including a possible investment in Tobago by the region’s top hotelier, Jamaican Gordon “Butch” Stewart, and implementation of the death penalty.
“The bottom line is the Government is taking responsibility for valid debts and will discharge them but we have to examine the circumstances to ensure that it is not paying what’s left of taxpayers’ potential in circumstances that ought never to have seen taxpayers’ support,” said Rowley.
Describing Government as a continuum, the Prime Minister made it clear that when an administration changed, the responsibility of the State to settle debts undertaken by previous administrations remained.
On the issue of the nature of the debt to contractors, Rowley said: “One of the things that happened in the previous period of time — I do not want to say the previous administration because I do not want to pass the problem of today onto the last administration — is that many people were let loose on the Treasury to spend money that they did not have in their portfolios.”
He gave an example of a small state company in which the chairman, without going through the tenders committee, awarded $400 million in contracts during the election season last year.
The contracts were to rehabilitate 37 kilometres of rural roads, said the Prime Minister.
“The point I am making is that kind of money could have been incurred when there was no money known to pay it,” said Rowley.
He cited another example of what he described as the removal of money from the Treasury, involving the
construction of a head office for $180 million and the
payment of ten per cent of
the contract sum, $18 million, to a contractor.
He said while the contractor was expecting money to advance the project, the State company did not have the money, “except that they found $18 million to pay the contractor, which was the original objective. And since they cannot progress the project, the contractor is attempting to walk away under the guise of delay.”
The Prime Minister explained that under binding international building law (FDIC rules), if a client could not fund a contractor going forward, the contractor could terminate the contract.
“But we found out that the bond that covered the $18 million expired two days after he got the contract,” the Prime Minister said, saying that circumstances like that meant Government cannot “run out and pay contractors willy nilly.”
Rowley cited a third example of a contractor who was saying that Government owed him $1 billion.
“That might well be so but the question you have to ask yourself: This contractor was really a benefactor of the national community because to run up $1 billion of work with no money coming to you, we must say thank you very much for being so kind to us.”