Economy or integrity: the OCG and JDIP

The two dominant views on popular government today are an economic view and a good-governance view. The economic school says that governments that create jobs, grow the economy, lower taxes and keep inflation down will make more people earn to be able to improve their lives. They will have confidence in government. This is what makes governments popular.

The good-governance view is that none of this will happen if government is not fair, honest, and trustworthy. If government gives only some people special favours, steals money and deceives the people, the people will not be motivated to work, pay taxes, and be good citizens. Society will be unproductive. However, when government practises integrity, society will be better off and government will be popular.

The Golding administration has actually done very badly both on the economy and governance. Recent polls show a wide gap (49 per cent to 31 per cent) between those who believe the PNP does a better job of managing the economy and those who say the JLP does. The polls and the statistics also say the PNP did better to create jobs. Earlier surveys confirmed that the JLP has lost the confidence of many on questions of integrity. The Coke affair and the debacle of the Manatt-Coke commission report have sunk the Government's standing on integrity. The current scandal over the Jamaica Development Infrastructure Programme (JDIP) only adds to the perception of bad governance.

Between Economy and Integrity

The Government hopes to spur economic activity through JDIP. It is the centrepiece in the GOJ-Planning Institute of Jamaica 'Growth-Inducement Strategy'. That strategy earmarked spending of $14.4 billion. But a cloud of doubt hangs over the programme's integrity. Government would like to get the best of both worlds from JDIP. We will have to wait to see how much growth or whose growth it stimulates. But the controversy over Audley Shaw and the overpriced Christiana road is only one aspect of the programme that raises major concerns over its integrity.

The Office of the Contractor General (OCG) is the country's leading integrity institution. It published a report on June 27 that is worth citing: The JDIP represents the first occasion in the history of Jamaica that a major roadwork rehabilitation contract of this value and magnitude has been awarded by the Government of Jamaica to a single contracting entity, CHEC, and has been so awarded without competition. Indeed, it is important that the public is made aware of the fact that the National Contracts Commission (NCC), in its letter of January 20, 2010, written to the Ministry of Transport and Works, with copy to the NWA, expressly stated that it was " ... concerned that a contract of this size (i.e., US$400 million) should be entered into without competition in order to ensure that value for money was being obtained". CHEC is China Harbour Engineering Company Limited.

The theory of good governance is that transparency in competition will bring value for money which is what taxpayers want if they are to trust Government. When Government is not open and the economy is not competitive, you will have neither good government nor good economy.

Transparency and Accountability

The theory of good governance goes further. It says there must be accountability. When rules of open and competitive bidding are violated or ignored, the offenders must give or be taken to account. But here is what the OCG report goes on to say: "The OCG has utilised its statutory powers, under the Contractor General Act, to compel the production of information regarding JDIP subcontracts and to make the information public."

What the OCG is saying is that it only has power to reveal the lack of transparency, absence of sufficient checks and balances, and failure of competition, all of which undermine taxpayers' rights to getting value for money. It cannot do more than reveal information that just 15 subcontractors will get $14.4 billion worth of contracts; that of this, Y.P. Seaton, in the news regarding another controversy with the OCG, will receive contracts worth $3.7 billion, or 26 per cent of the total amount; that another five companies will receive approximately $8 billion worth of contracts, or 56 per cent of the total amount. Six companies in all will receive the lion's share, or nearly $12 billion in contracts.

The OCG pointed out that the presidents of the Private Sector Organisation of Jamaica (PSOJ) and the Jamaica Chamber of Commerce (JCC), along with the director of the National Integrity Action Forum, called for the full particulars of the contracts and subcontracts to be made public. Some of these particulars have now been made public. So what next?

The OCG concludes its report, saying, "The OCG continues to remain firmly planted in its belief that exposing Government action to public scrutiny is the most effective weapon for ensuring probity in the handling of the taxpayers' money." I agree that exposure is a critical part of good governance and integrity in government. But it is not the most effective weapon.

Strengthening Checks and Balances

We need to strengthen those checks and balances that are missing. The GOJ-PIOJ and private-sector stakeholders agreed to a growth-inducement plan centred on the $14.4 billion of the Chinese loan. The PIOJ technicians and private-sector businessmen were there. They approved the plan. If they didn't propose it, they certainly endorsed it. They should have insisted on checks and balances against secrecy in the award of these bonanza contracts. Otherwise, they will appear to have been duped into a government plan with their stamp of approval given to a process that is now so heavily criticised, not least by the OCG itself.

They have authored sloppy governance. We, therefore, also need to strengthen the PSOJ's own Code of Corporate Governance. The code is not even binding. Should there not be provisions in these codes for corporate Jamaica to comply with the contractor general's requirements for competitive bidding and transparency in the award of contracts? What sanctions should apply for not complying?

Corporate Jamaica has been weak in enforcing business and market integrity. It might well be that its own members are connected as shareholders, directors or other stakeholders in those CHEC-contracted companies. Should these connections not be disclosed as part of the PSOJ's own Code of Corporate Governance? What sanctions might apply, and would the PSOJ have the will to apply them?

We run a small and incestuous private sector. We have heard of '21 families' controlling corporate Jamaica through overlapping directorates. Even Christopher Bovell, long-standing JLP treasurer was acting chairman of the PSOJ's Corporate Governance Committee, the one responsible for coming up with the code of governance. This is the mix of politics and business that seriously compromises the will of the PSOJ.

Despite the early warnings in Parliament, we still allowed the Manatt-Coke matter to drag on and drag us down $23 billion poorer. We have been warned in Parliament about this road programme too. Omar Davies has been put in charge of transport and works to monitor this programme. Let us not allow it to make us $14.4 billion poorer. These are too great a cost of bad governance.

Robert Buddan lectures in the Department of Government, Mona, UWI. Email feedback to columns@gleanerjm.com and robert.buddan@uwimona.edu.jm.