APNU/AFC Govt breached Procurement Act – Auditor General

Sussex St bond scandal

…paid $337.5M to Larry Singh in 2 years
…criminal probe, disciplinary actions recommended

Following a special audit into the Sussex Street, Georgetown bond scandal, the Audit Office of Guyana has found that there were clear breaches of the Procurement Act and recommended that the Police be called in and the Legal Affairs Ministry take disciplinary steps where necessary.

According to the report on the special audit produced by Auditor General Deodat Sharma and addressed to Attorney General and Senior Counsel Anil Nandlall, the contract for a medical storage bond was not advertised or publicly procured by the former A Partnership for National Unity/Alliance For Change (APNU/AFC) Government. This is a breach of Tender Board procedures and the Procurement Act of 2003.
The then Public Health Ministry had always claimed that they rented the bond from Linden Holdings Inc because it was needed on an emergency basis. However, the Audit Office found that despite $25 million being paid for the first two months the bond was rented (July and August 2016), the bond was not used until the third month.
Another issue is the fact that the bond was underutilised and under-equipped, despite contractual stipulations. For instance, the contract mandated that the building would be equipped with 16 upright refrigerators. But at the time of physical verification on April 11, 2017, only 14 were seen.
“The contract stipulated that there should be central air condition on both levels and back up of twelve 18,000 BTU air conditioning units. However physical verification revealed that ten of the units were 18,000 BTU, while two were 12,000 BTU,” the AG also found.

Additionally, physical verification done by the Audit Office in 2017 found that the bond contained only 472 IUD kits and associated supplies and 1200 umbilical cord clamps. In addition, there were 2130 amphotericin 50mg injections and 8300 condoms.

Contract
There is also uncertainty about the date the contract actually ended. The contract was supposed to last from June 1, 2016, to until June 30, 2019. In accordance with the need for one-year notice, then Permanent Secretary of the Ministry of Public Health, Trevor Thomas had sent an initial Notice of Quit letter dated October 31, 2016, informing Linden Holdings of the intention to vacate the premises by November 1, 2017.
“However, examination of this letter revealed that it was unsigned and issued without the official letterhead of the Ministry. Evidence was seen whereby someone would have signed a Document Transmission Slip on 8 November 2016 receiving the Notice to Quit,” the AG said.

Further, Linden Holdings Inc, which is owned by Larry Singh, has always contended that because of the lack of official letterhead or stamp, the Notice to Quit is not valid. This was cited by Singh’s lawyer, late Senior Counsel and former acting Chief Justice Ian Chang, back in October 2017.
Additionally, Chang had noted that the Notice to Quit lacked “due cause”. In the letter, Singh’s legal team had maintained that the agreement continued for its fixed three years term until June 2019, in which case the Government would still have $137.5 million outstanding for him minus a $12.5 million security deposit.
“Mr Chang stated that his client Linden Holding Inc rejects any wrongful repudiation by the Ministry and elects to treat the Agreement of Tenancy of the 1st June 2016 as subsisting beyond the 31st October 2017 to the expiry of the fixed term of three (3) years i.e. until the 30th June 2019,” the AG found.
However, former Attorney General Basil Williams had sought a legal opinion on the matter and such was given by law firm Hughes, Fields and Stoby for the sum of $690,000. According to the legal opinion, Larry Singh should not be given any further payments “given that the Tenant has given notice, and has vacated the premises as at 31st day of August, 2018.”

Recommendations
In his recommendations, the Auditor General urged that the Legal Affairs Ministry be engaged “with intentions of bringing closure to this matter and if necessary appropriate disciplinary action should be taken against any culpable officer(s)” and that “the Guyana Police Force be called in to conduct an in-depth investigation and institute charges where necessary.”
Larry Singh, who was recently sued for another multimillion-dollar contract (this time over the failure to supply weapons and ammunition) came to prominence back in 2016, when it was revealed during consideration of Financial Papers, that the former Government was renting the Sussex Street bond from him for $12.5 million per month for the storage of drugs and medical supplies.
It was also discovered that $25 million was initially spent as a security deposit, in addition to $12.5 million, representing monthly rentals from August to December 2016. The criticism that erupted led then President David Granger to set up a Cabinet sub-committee to investigate the matter and make recommendations.
That committee comprised former Natural Resources Minister Raphael Trotman as the Chairman, former Prime Minister Moses Nagamootoo and then Minister of State Joseph Harmon. The committee concluded that the contract should be terminated or renegotiated since a similar facility could have been found at a cheaper rate.
During the debate on the 2017 Budget in December 2016, a parliamentary delegation accompanied by the media visited the Bond and found condoms, lubricants and some unused refrigerators, but no pharmaceuticals and medical supplies. By the time the then Government exited the arrangement in 2018, over $300 million had already been paid over to the businessman for the bond. (G3)