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THA wins Milshirv case
The Tobago House of Assembly (THA) does not require the permission of the Minister of Finance to enter into special financing arrangements for its construction projects, a High Court Judge ruled yesterday.
Although Justice Ronnie Boodoosingh ruled that the Finance Minister’s approval was unnecessary, in his 18-page judgment delivered in the Port-of-Spain High Court yesterday, he stated that such financing agreements for construction projects still required a competitive tender as prescribed under the Central Tenders Board (CTB) Act. He said the THA was not outside the purview of the legislation and could not seek to find unapproved ways to get around perceived inefficiencies and problems in the legislation.
“At the end of the day the THA, as does the central government, deals with public funds and it must operate with the supervisory mechanisms that exist for overseeing the spending of public funds, however imperfect those mechanisms are,” Boodoosingh said.
The ruling comes a little under two years after issues of the THA’s ability to enter into a Build, Own, Lease Transfer (BOLT) agreement for a $142 million Milshirv Adminstration Complex in Shirvan, Tobago, were raised by Prime Minister Kamla Persad-Bissessar and Attorney General Anand Ramlogan during the campaign for the THA elections last January.
After questioning the lack of Cabinet consultation and approval for the project Ramlogan’s office had filed a judicial review challenging the decision and seeking to quash the deal. However, during a pre-trial stage, the lawsuit was converted to one of statutory interpretation where Boodoosingh was asked to determine whether the THA required central government’s approval before signing the contract as well as if such a contract needed to be awarded under the supervision of the Central Tenders Board.
The decision has rendered Boodoosingh’s judgment on the issue as hypothetical and academic since the project was no longer being contested. In his judgment, Boodoosingh ruled that although BOLT agreements were financing agreements, they did not require approval as they were not an attempt to borrow money for capital expenditure, which required such, as prescribed in the THA Act.
BOLT agreements are a form of non-debt based financing where a client gives permission to a company to use its money to construct a facility on their land (client). The client then repays the construction costs by entering into a lease with the company for renting the facility for a prescribed period. On the completion of the lease, ownership of the facility will be transfered to the client. It allows the client to utilise recurrent expenditure rather than an up front lump sum payment.
Although Boodoosingh ruled that the THA did not need approval, he still suggested that consultation takes place in the interest of “good governance and efficency”. “Without consultation, the THA risks that the Minister of Finance will not allocate recurrent expenditure each year to cover the payment of the lease. “The THA would then place itself in the precarious position of having to find alternative sources of funding or to redistribute funds from other recurrent expenditure to apply to its rental payments,” Boodoosingh said.
John Jeremie, SC, Kerwyn Garcia and Stuart Young represented the THA. Senior Counsel Alvin Fitzpatrick and attorneys Lesley-Ann Lucky-Samaroo and Martin George appeared for the Attorney General.
In a release sent yesterday afternoon, the THA’s secretary for the Division of Finance and Enterprise Development Joel Jack said the THA welcomed Boodoosingh’s decision as it was consistent with its long-held position on the issue. “This has always been the position of the THA which, prior to the establishment of the Milshirv project, sought the advice of Senior Counsel to ensure that the assembly, as is its custom, was operating according to law,” Jack said.
However, Jack said the THA was disappointed that the issue was politicised during the runup to last year’s election. He stated that the THA supported Boodoosingh’s suggestion on collaboration with central government, since the assembly had been advocating for such for some time. Jack also accepted Boodoosingh’s ruling on the requirement of a tender process for BOLT agreements.