Editorial: Mirages, big talk and due diligence

Anthony Hylton's problem is that he is trying too hard for that singular achievement - something that would be a defining symbol or legacy that just might propel him to the leadership of his party.

The danger here is a tendency to trade in mirages and for fleeting possibilities to be construed as concrete realities, about which grand declarations can be made. Which is how we interpret the investment minister's blunder in the Krauck Systems-Anchor Finance Group fiasco, for which he was, on Tuesday, tossed under the bus by the Cabinet.

Mr Hylton may argue that his tossing is not that far and not necessarily fatal. For he was provided by his colleagues with a wee bit of face-saving wiggle room to salvage the deal - so long as he doesn't involve them. Anthony Hylton, in the circumstances, has a difficult and dangerous high-wire act. And he has been offered no safety net.

Mr Hylton's failure here was not that he entertained prospective investors and/or deal pitchers who subsequent due diligence suggested couldn't finance their proposed projects. Indeed, it would be irresponsible of any minister of government, much more the one with responsibility for investment, to not seriously engage people who wanted to pitch deals worth an estimated US$5 billion.

THE SMART THING TO DO

Further, we feel that too much has been made of whether the Austro-German project management firm, Krauck Systems, and its Middle East/American partner, Anchor Finance Group, could finance the projects from their own resources. Dealmakers often don't have - or have to use - their own cash. Their expertise, sometimes, is being able to bring deep-pocketed individuals and enterprises together. What smart people and governments do in the circumstances is to conduct their due diligence to get a sense of whether the project proposer/investor can deliver, and that if they can't, ensure they don't saddle you with financial or other liabilities. Jamaica, it appears, is not in danger of the latter.

However, what Mr Hylton did first was to talk. In his search for vindication that he was giving flesh to the idea of Jamaica as a logistics hub, which he champions, he sold the Krauck-Anchor investment as fait accompli.

ILL-DEFINED VENTURES

Then the questions began about the bona fides of the companies and whether they had, or could raise, the capital to finance the still ill-defined ventures. Inevitable, too, were questions about Mr Hylton's judgement, and openings for political attacks. Only afterwards came the announcement of a memorandum of understanding, with subtly shifting terms of references that eventually emphasised due diligence on Krauck and Anchor, rather than the fleshing out of the deal they wished to advance.

The Cabinet accepted the conclusion of the National Logistics Initiative Council that the information provided by Krauck and Anchor does not support proceeding with them on the logistics initiative. But Mr Hylton was given the face-saving green light to continue to batter along with the consortium "to see whether additional, credible due-diligence information is forthcoming".

There is a lesson here for Mr Hylton, once he emerges from his embarrassment. And it is not that he shouldn't listen to people pitching ideas. He must do that. It's part of his remit.

But he must be careful of mirages and be able to separate them from what is real. Further, his big talk should come after, not before, due diligence.