The Petrojam Forensic Audit

Word broke this week that Petrojam was asked to submit the workscope/terms of reference for the forensic audit to be carried out into oil losses at the entity.

First I must say the audit needs to be more extensive and must cover more that just “oil” losses and as such I am recommending it be expanded .

With said let me now focus on the main for this piece, which is the fact that Petrojam has been asked to participate in the process required to get the audit completed.

I hear it being said that one cannot ask the management of the entity being audited to help draft the terms of reference(TOR) for the audit, and I am like, whats wrong with our people.

If I run an organization and I have detected “issues”why on earth would I outsource the development of the terms of reference to guide that audit to a consultant. Note I am not suggesting that my internal auditors do the actual audit, what I am saying it would seem nonsensical to me , to remove myself from the process of developing the terms of reference of said audit.

Let’s say for a minute that I am decided to ask a consultant to develop the terms of reference for the company, would I not be expected to review what they have done and make changes to ensure the audit captures the areas of concerns that I may have as a senior manager.

How could I simply allow them to determine the TOR then proceed to put this to tender, issue a contract and then get stuck with a report that may not fully address the areas for which I may have concerns.

To say to me that Petrojam and the BOD should have nothing to do with the work scope/terms of reference and the contract, and that should be outsourced to some outside experts, is simply ludicrous at best.

If that were to the the case and the audit then fails to address the areas that we the public are interested in we would hear

” How could the management have not been involved in the development of the TOR, they are irresponsible and has once again allowed tax payers monies to be spent without the public getting value for money”.

The management of Petrojam as well as the BOD must be involved in the development of the TOR , otherwise the process is likely to fall well short of what is expected.

I am not sure which consultant would be better at understanding an organisation that the people who are a part of the organization.

Sure you can have consultants assist in the process but surely you cannot exclude the management team.

Bless

The $2.5M staff function “scandal” at the Student’s Loan Bureau

In an era of greater levels of accountability at public sector entities , we ought to be very careful that we don’t destroy the character of managers and members of staff of those institution, by calling into question every expenditure without giving context to what is being reported.

I must say, I welcome the fact that more Jamaicans are concerned about wanton waste in the public sector and welcomes initiatives to cut that waste. While we do that, we need to be very careful we do not damage the reputation of the folks who work at these entities by shouting “scandal” when nothing could be further from the truth.

The latest public sector entity to face this onslaught is the Student’s Loan Bureau (SLB). On Friday, Jan 25, 2019 the Gleaner ran a report suggesting gross mismanagement at the SLB and “lavish” spending of $2.5m on a staff function at an all inclusive hotel in Montego Bay

How did we get to the point where a $2.5m staff function becomes a lavish and wasteful expenditure coming at a time when the non performing loan(NPL) has risen significantly.

For this piece I will attempt to put this expenditure in context and you can then decide if its really extravagant spending and a waste of public resources.

The Gleaner says the $2.5m was lavish and was unapproved by the board of directors . If this expenditure in and off itself required specific board approval, then the management would have failed to do the right thing . The board by virtue of its attendance would be seen to have given tacit approval, and would have therefore failed to follow the specific governance guidelines it ought to have uphold.

I however find it odd that a specific function such as a staff retreat would require individual board approval and here is why

Before the beginning of the financial year, the management team would be required to prepare an operational plan for the following year and included in that plan would have been a financial budget.

The financial aspect of the budgeting process would cover two main areas

1. Capital Expenditures
2. Expense Budget ( Really an income statement)

The above would be presented to the BOD for review and approval, so lets assume that this was done. If the expense budget was approved the only other approval required would be Capital Budget approval for the specific capital projects once these were ready for execution. There would be no need for the board to approve specific expenditures on the expense budget side.

I would therefore like for the management of the SLB to correct me on the above statement if I am wrong

That lavish staff retreat

Looking at the financials I am simply baffled at our views on what is considered lavish. Are the critics suggesting the staff retreat should have been kept in the board room and the staff bring their lunches?

I see many companies close for a day, take staff on the north coast for staff functions, with the specific intent of team building, training and development, which is considered a critical part of any organization. Are we saying this ought not to happen in the public sector.

Here are the numbers for that lavish function, a quick review would tell you that the management was not lavish at all and the cost by whatever measure you use appears to have been not significant. It appears that once Jamaicans hear the word millions it conjure up images of a lot of money, but as can be seen in this case, the amount spend was not exorbitant.

You decide if what is above is a management that has gone overboard to host a function for its staff.

Jamaica Council of Churches needs to clarify its position on Venezuela

One week ago the JCC issued a media release , where it asked the government of Jamaica to clarify its position on Venezuela. This came against the background of recent actions taken by the GOJ as its relates to Venezuela

The first, was the decision taken by the government to bring legislation to parliament to purchase a 49% stake of PDVSA held in Petrojam

The second was the decision taken by the GOJ to support an OAS resolution not to recognize the Muduro led Government of Venezuela

Fast forward to yesterday, news broke that the leader of the National Assembly, which happens to also be the opposition leader had declared himself to be interim President amid, wide spread demonstration by the people of that country.

The people are demonstrating about super high inflation, lack of drinking water, medicine, food shortages, and constant disruption of electricity. In addition the people are complaining about human rights issues and people going missing when they try to speak out.

The people are frankly fed-up with the atrocities and abuse that have characterized the Muduro regime.

Commonsenseja find its ironic that folks who complain about “interference” of the leadership of Jamaica in the judiciary when there was no such interference would accept a President appointing a Chief Justice and then instructing that person to carry out acts to legitimize the Presidents demands.

I am simply amazed at the thinking among some people who really ought to know better, which leads one to ask, what’s their agenda

I do expect to hear from the JCC before the end of today.

Bless

Who are the people who stand to make at least US$20M from the Petrojam deal if the GOJ bows to pressure

So Paul Burke has indicated he will be making at least US $1m if he is able to successfully broker a deal for the sale of PDVSA shares in Petrojam, he would be all smiles.

That figure however pales in comparison to the US$20M purportedly at stake to be made if the GOJ agrees to the demand of PDVSA.

The people of Jamaica needs to realize the the extra money involved will be coming from our pockets to profit private interest , which something we cannot afford to happen.

The people who are caught up in the political plays are being distracted by those shouting “expropriation” while missing the much bigger picture .

The GOJ must there do everything possible to protect tax payers of this country, we simply cannot afford to allow the bleeding of Petrojam to continue .

Bless

$13.2b Scandal in the making ?

The news on Petrojam came fast and furious this week after former General Secretary Colin Campbell unwittingly opened a giant bag of worms. Colin in an attempt to strengthen the PNP position on opposition to the government attempt to buy back the shares owned by Venezuela in Petrojam , gave information to suggest the government had offers but was refusing to engage the bidders.

The gleaner later in the week broke news that a local company AA Lime Hall made a $100m( $13.2b) bid for PDVDA 49% stake in Petrojam. Further checks however revealed some troubling information

1. One of the listed directors has been dead now for over two years
2. Another director was suspend by the GLC of Jamaica for misconduct in a real estate transaction
3. A third director has been indicted by the AG in Maryland for theft and shoddy workmanship.

We had barely begun to digest that information before we heard that a company owned by former General Secretary of the PNP , Paul Burke had made a US$55m ($7.2b) for PDVSA shares in Petrojam.

It should be noted that in 2013 Paul Burke was hauled before the courts for outstanding taxes of over $100m and was committed to a hospital bed to avoid arrest.

So we have Paul Burke, Colin Campbell and Phillip Paulwell , who incidentally were also a part of the Trafigura scandal and involved in taking money from Venezuela to pay back the “gift” are also involved in this new Venezuelan matter .

This is much bigger than Trafigura and may be the single biggest post independence scandal this country has ever seen.

There is talk of potential Kick@!@## at play here and we certainly hope that is not true, but they way things are shaping up, one cannot dismiss those reports.

We see what happens next week.

Those bids for PVDSA shares in Petrojam has the smell of rotten fish .

There is something wrong with the bids that have come in for the sale of PDVSA 49% share holding in Petrojam.

First one company has made an offer for US$100M for the 49% stake being held by PDVDA, while offering the GOJ just US$55M for the GOJ 51% stake in Petrojam.

Next another company makes a US$55M bid for the shares held by PDVSA , this was a company owned by Paul Burke, who is a former General Secretary of the PNP.

The GOJ has reported that it has been in negotiations with PDVSA to acquire its 49% share holding, and after repeated overtures they don’t seem willing to conclude a deal.

What we have now learned is PDVSA is demanding a lot more than the GOJ is offering and appears to be have sent a counter offer close to the bid made by A&A Lime Hall .

It would appear to me that third parties who seem to have a monetary interest in Petrojam are attempting to frustrate the process and extort more from the GOJ than the GOJ is willing to pay Venezuela

So here is my thoery

1. Make an offer to PDVSA which is substantially more that the GOJ is offering them.
2. Hope the GOJ increase their bid to closer to that bid made by the third party
3. If the GOJ increase their offer closer to that bid then hopefully the sale can be concluded
4. Split the difference between the original offer and the final sale price
5. Some people smile all the way to the bank.

If the GOJ goes the way of using legislation to take back the shares the dolly house mash up and no one ends up smiling all the way to the bank.

Is this really what is taking place.

It has better not be as if it is it would be the great great grand mother of all scandals.

The investigations continues .

Company in which Paul Burke is the sole owner submits U$55M Bid for PDVSA stake in Petrojam

Paul Burke confirmed today, that a company owned by him
, Cheriton Trading Investments,  has made a US$55M bid for PDVSA stake in Petrojam

Paul Burke is a staunch PNP supporter, a registered member of the party and former General Secretary and considered in some circles to be a major power broker in the party.

Its is ironic the Venezuela stake in Petrojam have the interest of Paul Burke, Colin Campbell and Phillip Paulwell.

No wonder the PNP is so much against the move by the government to retake its shares from petrojam as obviously the PNP and its insiders have some really serious interest in Petrojam.

One therefore have to now question the sincerity of all the PNP spokesmen/women and what are their real interest in Petrojam.

The company is listed as Management Consultants and therefore does not appear to have any experience in the energy sector and one is therefore left to one what is the real intent of this “offer”.

The company incidentally is registered at 6 Cheriton Road( East Kingston) which is the constituency of Phillip Paulwell. Is there any connections or just coincidence .

Are PNP connected folks try to capture Petrojam

This requires some more investigation.

Opportunities abound on the Jamaica Stock Exchange

One of the flaws I find with the educational system in Jamaica and particularly amongst black people, is we have not be taught how to many money work for us.

Some years ago I listened an interview by Michael Lee Chin where we espoused the value of using others people money to make money, I have found that to be a profoundly true statement.

Contrary to the widely held belief by some people that one need not chase money because ” you ago dead lef it anyway”, I have found this has been a ruse by some meant to keep others down.

Many Jamaicans complain daily about how bad things are and nuttin nah gwan. I have found that even those who make good money but does not seem to know the utility of money . I heard a man on TVJ Tuesday night say ” Tell the camera mon to put the camera pon me shoes. You see deh shoes yah, a 9 grand it cost eno boss , so unno tink seh a likkle 7 grand a week can feed me and buy tings”.

Anyway the main thrust of this is to show that despite the many challenges we face, nothing prevents us ( well maybe lack of info) from participating in the stock market where the potential exist to make more than average returns on your investment.

There is a common saying that with increase rewards( returns on investment) comes greater risk and that is true to some extent, but the fear of taking risk should not keep you out of the market, the key is to manage the perceived risk.

Growing up we were told ” Don’t put all your eggs in one basket) and the that is so true when it comes into investing in equities.

I would suggest this year you sit with a stock broker and have them explain the working of the market, help you determine your risk profile and determine which investment is best for your given that profile which takes into effect your investment horizon, expected returns, age and of course emotions, since that plays an ever increasing role in how people react to good or bad news.

Listed below are the top ten performers for 2018 on both the Main as well as JNR.

People are making, so why should you be left out.

These are real returns and are completely tax free.

Happy Investing in 2019

Bless

A&A Lime Hall Development Limited seeks to purchase Petrojam Shares, but… I have some questions

The business gleaner today reported that A&A Lime Hall Development Limited has made a US$100M offer to purchase the Venezuelan 49% stake in Petrojam for US$100 while offering Jamaica just $55m for its 51% stake

We are being told the company is registered in St James and the principals are as follows

Shareholders in Lime Hall are listed as attorneys-at-law Arlene Gaynor and Anesia Lindo, both of St James addresses. Directors are listed as Arlene Gaynor; Paul Seaton, a businessman of St James; and Newton Gaynor, businessman of Bowie, Maryland, United States.

http://jamaica-gleaner.com/article/business/20190116/venezuelas-shares-petrojam-being-offered-us100m

So who are these people

Newton Gaynor businessman of Bowie, Maryland USA

Something appears to be amiss as it relates to this person based on the following

Attorney General Racine Sues Home Contractor For Illegal, Shoddy Construction Projects and Wage Theft

https://oag.dc.gov/release/attorney-general-racine-sues-home-contractor

I don’t want to cast any aspirations on the individual but I would love for him to confirm if he is the person charged by the Attorney in the District of Columbia.

Case file

18-06-05-gaynor-stamped-complaint-packageDownload

More information needed before I can comment further, but certainly this needs some more investigation.

Bless

Close Petrojam and end the cesspool of corruption

There has been much talk about the buy back of the Venezuelan 49% holding in Petrojam, and as usual the debate has moved from economics to politics as it always seem to be in this country.

I firmly believe that despite ones friendship and support you may have gained over time at the end of the day one needs to look out for his/her interest first, above the interest of any others, that’s just a fact of life.

At this stage I am not of the belief that the government of Jamaica needs to own/control an oil refinery at all. In fact I would to suggest that the government hasten to buy back its 49% and then shutdown the biggest source of corruption in the entire Western hemisphere

I find that any entity that is awash with money tends to have loose systems of accountability and become a feeding tree for the politicians and those well connected to the political system.

I am not of the view that Petrojam has served the interest of Jamaica well over the years, for sure it has made many men and women very wealthy at the expense of the rest of the country.

We could very well import the finished products we need at much better prices than we are receiving from Petrojam given the grossly inefficient operation that exist at that place.

The inefficiency comes from old outdated equipment, lax management of the assets of the entity which results in significant leakages.

To spend more money, which due to poor project management would result in cost overruns and coupled with the fact that the corrupt practices at Petrojam and deeply entrenched, is simply unwise and would exhibit lack of fiduciary responsibility on the path of the government as well as lack of foresight.

Lets not put more money into the criminal enterprises that are connected to this state entity, instead let’s use that money where more people of the country stand to benefit .

The fact is that, ordinary Jamaicans and business have to pay for these inefficiencies, which results in the price of fuel being inflated by as much as 20% because the cost of this “waste” must be recorded from its consumers.

Petrojam has been a feeding tree for decades and a source of unfettered corruption, its time to bring that to an end now.

Bless