Secret settlement unveiled

The National Housing Trust (NHT) signed a non-disclosure agreement (NDA) that blocks it from telling taxpayers about a settlement with a developer from whom it is reclaiming $650 million in a botched deal, leaked documents suggest.

“The parties agree to maintain in confidence the contents, terms, conditions, and the consideration for this settlement agreement,” noted a clause in a document titled ‘settlement agreement’, which is dated November 29, 2023 and was obtained by The Sunday Gleaner.

It continued: “Each party agrees to take every reasonable precaution to prevent disclosure to third parties and each agrees that there will be no publicity, directly or indirectly, concerning this settlement agreement, the discussions of the parties at mediation, or the matters in relation to the claim or the GPP (guaranteed purchase programme).”

The six-page document bears signatures above the names of two officials from the NHT and two from Dexim Holdings Limited, the company that the Trust sued in 2022 for alleged failure to deliver 200 houses under a two-year guaranteed purchase agreement signed in August 2019.

The NHT, which is funded by a tax on employees and workers, has not answered Sunday Gleaner questions on the matter, although it acknowledged receiving them on January 10.

Declined to comment

When contacted last Friday, NHT Managing Director Martin Miller also declined to comment on the details of the agreement.

Dexim’s attorney Michael Williams confirmed that a settlement was reached with the NHT, but he also insisted Friday that he, too, could not provide any additional information.

The NHT reports directly to Prime Minister Andrew Holness and the signing of an NDA by the agency resurrects concerns about their use by public bodies and their restriction on access to information.

“I’ve already asked the attorney general to review the use of confidentiality clauses in government contracts to see what rules and regulations we can put in place to ensure that these clauses are never used in any way, shape or form that could even suggest that Parliament could not get information,” Holness said in February 2019.

He was reacting to reports that state-owned oil refinery Petrojam signed an NDA covering a separation package for Yolande Ramharrack, its former human resource manager who left amid a scandal.

In August 2019, the NHT had committed to buying 200 houses at $12.5 million per unit in Dexim Holdings’ Out of the Blue development in Discovery Bay, St Ann, under a $2.5-billion contract. The project targeted 374 houses. The agreement was amended and the deadline was extended to August 2022.

The NHT’s only obligation was to market and sell the houses to its contributors while Dexim was to deal with all aspects of construction.

However, the NHT filed a lawsuit against Dexim in September 2022, alleging that despite advancing $650 million, it had not received any of the houses and that the company was even selling lots assigned to the Trust. The NHT admitted to making payments before receiving the designs.

The NHT first disbursed $500 million around November 2019, followed by an additional $150 million in January 2021.

Dexim, which defaulted on payments to investors in the project in 2022, disputed the NHT’s allegations and insisted that its operations were significantly impacted by the COVID-19 pandemic and the resulting high costs of goods and services.

At a hearing earlier this month, the parties reportedly indicated to the Supreme Court that they had settled, although the terms remained private.

But, according to the November 19, 2023 document, the NHT and Dexim agreed to cancel the 2019 deal, which effectively means that the NHT would no longer buy any of Dexim’s houses.

It added that within 30 days of the surrender of the agreement, the NHT “shall call upon the advance payment guarantees”, which are essentially the bonds Dexim took out with a local financial institution to secure the $650 million that the Trust had paid over.

The issue has raised questions internally at the NHT, especially relating to potentially missed opportunities from having had $650 million on a project that did not yield any benefit to the Trust or its contributors.

Dexim is also expected to pay the NHT what is stated as a “further payment” of $20 million “in full and final settlement” of the claim. Those funds are to be paid over in two equal instalments – by June 30, 2024, and December 31, 2024.

“It’s a serious blow. And recall there is no interest being collected on the funds. You also have to factor in the significant human resources the Trust threw at this project. Five hundred million dollars in 2019 is not the same $500 million in 2024,” said an official, who was not authorised to speak on the matter.

“Dexim is selling the units at prices well above what the NHT was going to buy. So, it means the company will make the additional $20 million with little sweat and headache. Compare that to the losses to the NHT.”

The NHT, meanwhile, agreed to withdraw its lawsuit against Dexim. The company will also abandon an application it filed.

The two entities agreed that the settlement “is not be construed as an admission of liability on the part of any of the parties” and that there would be no future claims or entitles on the issues covered by the settlement agreement.

NHT and Dexim also decided to pay their own costs – including legal fees – connected to the lawsuit, the disputes under the agreement, and reviews of the settlement.

The officials signing the agreement include the NHT’s managing director and Dexim’s Chief Executive Officer George Neil.

Amid the missed deadlines and alleged impact of COVID-19, Dexim had proposed in 2022 to deliver 50 houses to the NHT at a cost of $18.5 million each – a 48 per cent increase over $12.5 million per house that was in the original contract. The parties did not agree to escalation costs.

That was the cheapest of Dexim’s three proposals as the company said it was also prepared to sell the NHT some houses in the development for $21 million or $27 million per unit.

There is also scrutiny on the performance of the NHT’s guaranteed purchase scheme as well as the level of diligence it did before entering the multibillion-dollar agreement in 2019 and engaging with a company led by Neil.

In 2016, the Office of the Contractor General told the Holness administration not to give a $2.7-billion telecoms licence to Symbiote Investments Limited, a company linked to Neil, because of “adverse traces” against him.

Holness went ahead, but his administration was forced to revoke the licence less than a year later.

At least one representative of the opposition People’s National Party has urged the prime minister to speak on the matter.

“In 2016, the Andrew Holness-led Government approved a $2.7-billion licence to a company called Caricel, and this licence was approved by Andrew Holness to an individual who the contractor general found had adverse traces ... . [Three] years later, the same Andrew Holness Government used the NHT to approve an agreement for $2.5 billion for NHT money – your money – to be used to build houses by that individual who was a major stakeholder in the first company,” Zuleika Jess said on January 14.

jovan.johnson@gleanerjm.com