by Bennette Roach
GoM Premier Donaldson Romeo
DFID’s Martin Dawson
There is no question that the eventual ‘cock-up’ with the now questionable ‘full closure’ really rested with the Government of Montserrat (GoM) who from the time it came to office seemed only to misunderstand suggestions and recommendations or misinterpret them as instructions, as they came from Governor and DFID, who we now know never had it right either, by their own admissions and statements.
A review of the sequence of events and the change of the Board only at the end of November already eleven weeks after coming into office, discounted the story about concerns of the MDC and its governance, which was given according to the story when the task force was announced at the end of January two months later.
We learnt that the Premier already knew of DFID’s suggestion to close MDC before the JMC and other meetings in the UK early in December. The information of that still ‘secret Audit report’ along with the now called “not official” DFID ordered July 2014 GoM Procurement Report, which of itself was a damning one, were no doubt crucial to the decision to change the board; then just as they said, “the suspension of funding for all programmes except for operating expenses and salaries, following the findings of a UK Department for International Development Audit.” That they had said, also exposed “a number of irregularities primarily associated with governance, policy and procedures and risk management.”
That was the excuse for invoking the Agreement in the MoU for 2013/16. We have published before the steps necessary, which included discussion with the GoM how to go forward with MDC.
The idea was, according to a DFID spokesman in the UK, “Given the nature of DFID’s support for the MDC – covering operating costs including staff salaries – it is expected that DFID will honour non-discretionary payments, but all programme work should be paused and no new work initiated.”
It may well be that GoM did not do due diligence as to what the status was; and were just reacting to the suggestion to shut down MDC, giving little or no thought to the repercussions and the precariousness of it all, not considering as pointed out in the article also in this issue of what had been in place since the closing down of the Carrs Bay/Little Bay project from February and the ensuing Aide Memoire in April last year.
Since their return from the UK, it took them another six weeks to decide to put together a task force, ill-conceived and not in keeping with their own promise of ensuring its proper composition to be meaningful.
The very terms of reference revealed their intention, the reason DFID Martin Dawson was at pains to explain that the Option C outcome was not predestined.
All they were supposed to do according to their ToR was “review the operations and functions of the MDC; particularly the governance arrangements of the MDC, and make recommendations in order to ensure that the corporation is fit for purpose and has the capacity and (interestingly) capability to deliver Government’s policy objectives for Investment & Trade and Tourism.”
Prior to that the mistaken statements such as, “However, good governance for State Owned Enterprises (SOE) and statutory corporations requires that they have their own enabling legislation which sets out their mandate and powers.
“The MDC bylaws follow the format of a private company and as such they do not outline the mandate of the MDC, which an enabling Act would have done.”
The Premier had also given away the expected outcome: “… a need to “go and come again.”
That is just a sample of how they erroneously discounted years of work to come up with a structure, company laws, by laws, business cases and more, providing the mandate, that they in their report still say was relevant.
The Governance issues did not reveal that people followed laws which turned out to be inadequate or unlawful! All they have been able to show with some substantiabillity in their report, is that people misappropriated and mismanaged the well put together MDC, something they should be held accountable for.
Up to now they do not know how to follow the laws of Montserrat with regards to what is involved and what is required to carry out their decisions. Dawson claimed that costs/expenses were a factor. But as they continue to compound mistakes following mistakes, they today do not have a clue as to the enormity of the expense of their mistake/s.
What was there to review about tourism, when there was a 2012 tourism strategy plan gathering dust? They put the tourism ‘specialist’, one of the authors of the 2012 tourism strategy plan, on the task force ending up railroading the new and enterprising director already with some disastrous consequences.
GoM had also advised DfID that they would establish a Task Force to review the operations of MDC and make recommendations on how to go forward. A task force which “will be made up of a maximum six persons drawn from Montserratian nationals, residents and other professionals with relevant expertise and familiar with the Montserrat context.” So who comprised the task force? Interim MDC Chairman Julian Daniel, who eventually also acted as CEO; Director of Programs in the Ministry of Finance and Economic Management Joseph Irish, Felicia Lynch who is the Program Manager Public Sector Reform project with the GoM, and the Planning and Development Consultant Jasmine Garraway, who we now understand got herself the job to deal with the Tourism planning. We have commented before on the standard of the Report which was many different ways in our view therefore not unexpected.
So having said that the outcome of the report was predestined, other than detailing how the laws were generally not followed, it also exposes how some of the very members should also be made to account for their stewardship.
Then what about the options? For the purpose of this we will ignore Options a and b. In the Summary Report c and d made available to the public, read as follows:
- c) Immediate closure followed by the creation of a new entity but with a clear distinction between the new entity and government (i.e. the separation between policy and execution)
- d) Immediate scale down and only essential activities continued before creation and handover to a new entity with a clear distinction between the new entity and government (i.e. the separation between policy and execution).
See the below with these two options taken from the Report.
Tell us if you see how the choice opinions are purpose driven with conflict of interests, noticing also that when taking the report without the purpose driven bias Option d was far more suitable and would have provided for a much better outcome that what Montserrat now faces.
They claim that the AG’s opinion on the various matters agree with theirs. We also take issue with the members of the task force and their arguments and must seek expert opinions on their findings.
There were some other suggestions written at the end of the report which suggest the report could not have been read by the Government, but they accepted what they themselves had predestined obviously without any serious study or discussion about where they were, whence they came and how they were going.
Last report was that a Liquidator had not yet been on board, either out of ignorance or straight non-compliance issues. A search of the Corporation in the Registry of Companies could be telling; and there are serious legal issues faced by the Corporation on the closure and where some staff issues are concerned, not to mention the type of discrimination meted out to some people
Report Options on MDC closure discussed in detail (from the Task Force Report) We can see why this report is kept secret. The means do not justify the end!!
Option 3: Immediate closure, followed by the creation of a new entity with clear separation between the entity and government and temporarily subsume any on-going activities into government or outsource (as necessary).
Pros
- Cost Savings: this option ensures that no further sunk costs are incurred in the MDC which is clearly not functioning at full capacity as several staff advised and the CEO confirmed, given the lack of financing to build out the Little Bay/Carr’s Bay Master Plan. DFID funding of MDC operations was to take the organisation to July 2016. A decision to liquidate now could save those costs and re-apply them to getting government the support it needs to get the new entity right.
- Time to reflect: If MDC’s operation ceases then with the exception of key strategic initiatives it provides an opportunity for government to determine what should happen with the Master Plan and assisting with the development of National Trade & Investment and Tourism policies & strategies. These actions are critical to ensuring any new entity is properly positioned, in-terms of its relationship with central government and the scope of its mandate.
Get it right – this option provides the opportunity to get the governance issues resolved from the out-set, and ensuring that central government officers who are responsible for the respective policy areas are intimately involved in this. This could include developing a new DFID business case that would consider (i) changing the legal structure from a public limited company to a State Owned Enterprise, or an Executive Agency (though the Attorney General advised that the Constitution may not permit this). Either of these options would have their own enabling Act which would make clear that government regulations for public financial management and procurement must be complied with and placing penalties in the act for contravention by the Board; (ii) reviewing the mandate to include tourism, (iii) developing the business plan, (iv) developing an appropriate structure that will execute the business plan, and, has the key positions needed, positioned at the correct level, with robust job descriptions and remuneration at the correct levels, (v) ensuring all the governance requirements are addressed prior to startup of the new entity, i.e. develop all the policies, systems and procedures needed to run the operation
- Restore public and investor confidence: If, which is not known both investor and public confidence in MDC is low; a new organisation, properly launched should restore confidence to these stakeholders.
- Re-tool for Sustainability: Tourism has lost its way in light of debilitating circumstances. This option presents the best opportunity, to simultaneously retrofit the institutions responsible for tourism policy and regulation as well as the marketing and promotion machinery, and to streamline and refocus attention on planning developing and promoting a new and sustainable tourism industry
Cons
- Redundancies: Immediate closure would of course impact the MDC staff. All MDC contracts can under the contract be terminated on one months’ notice, or one month’s pay in lieu; the latter would be the preferred approach so as not to compound the hardship employees may experience;
- Credibility: The same arguments above as regards credibility could be made, even though the subsuming into government concerns only key ongoing initiatives such as: Estate Management of Marine Village leases; Small Business Loan Facility, Some Tourism activities. Annex 7 shows the current on-going activities
- Complacency: The possibility that the short term arrangement for temporarily placing the execution aspects of the tourism under the Office of the Premier will extend beyond into the long term. (Note long-term, policy, strategy and regulation of the tourism product will reside in the Office of the Premier permanently as recommended in the on-going Functional Review of that Office)
Conclusion: The Pros far outweigh the Cons with this option. It is the reviews teams preferred option.
- e) Option 4: Immediate scale down and only essential activities continued before creation and handover to a new entity with clear separation between entity and government
Pros
- Manage ongoing activities as before- Assuming there are key initiatives that cannot easily be subsumed back into government, pending the establishment of a new entity, then this option allows a few core employees to be retained ensuring that there is continuity of the work activities with minimal upheaval to the clients of MDC (currently only the Small Business facility and infrastructure (Marine Village) have active clients)
- Saves some costs: In this option since only core employees needed for on-going activities would be retained and the remainder made redundant there would still be a cost saving that could be applied to preparing for the new entity
- Presence in the market: It is possible that as concerns investors that MDC has connected with previously; though they don’t appear to be active, and government may wish to review whether these potential investors are consistent with the policy direction the new government has, but if they are it might be more beneficial for MDC to continue to make contacts with those investors until the new entity is established.
Cons
- Unfairness; If some employees are retained over others it may be seen as unfair; the selection criteria would need to be clear and transparent;
- Management; The biggest cost of MDC is Senior management salaries. Whilst it is possible for an Executive Chair to remain in position to manage the MDC in the short-term there are serious issues with the Directors, e.g. A complainant, an under-performing Director who appears to disregard instructions and a Director whose background and experience is less than desirable for the position and unlikely to be able to carry the relevant function without a more experienced technician which would mean further costs would be incurred.
- Presence in the Market: On the flip side if MDC is to be liquidated they would be unwise to contract with any further clients on-behalf of Government as the contract would be frustrated as the contracting party (MDC) would cease to exist. This is likely to negatively impact investor confidence, and cause frustration in the changeover
- Credibility: To keep MDC operational when it may have suffered even further knocks to its credibility, and then transition straight to the new entity may actually negatively impact the new entity as it may be seen as “business as usual’’ with just a name change.
- Capacity Building: A skeletal operation at MTB will mean that the remaining tourism staff will be even more isolated and lacking direction in executing their functions.
Conclusion: The pros and cons with respect to this option, though not equally weighted, are close. However, the most significant factor in the decision not to recommend this option is there little in the way of on-going activities are what there is can easily be subsumed into government temporarily; in addition it would be cleaner both in-terms of administration, staff morale and adverse publicity to make one clear decision to liquidate. Also, this would enable the full the cost savings to be realized.
