A Guardian Media investigation has unearthed a damning whistleblower report inside the Telecommunications Services of Trinidad and Tobago (TSTT) which details specific questionable procurement practices and mega-million dollar deals without board approval.
While the State company is denying all the details contained in the report, its author, former executive vice president Mobile, Nicole Kerry Lumkin, is standing by her statements.
The Lumkin report, obtained by Guardian Media, details the special treatment granted to two companies owned by the same man.
News of the mismanaged finances comes even as TSTT, citing dire financial straits, let go over 500 employees last month to maintain its viability. The reports show that the company may have mismanaged more than half a billion dollars between 2013 and 2018.
Guardian Media made contact with TSTT’s Senior Manager, Corporate Communications, Marsha Caballero, last Thursday and was told that the company needed time to respond appropriately. The company sent its response to questions on the documents late yesterday. In that response, TSTT is denying any financial impropriety and accused this media house of “targeting” its chief executive officer, Dr Ronald Walcott.
In the first week of the year, Guardian Media received a packet of documents, including two internal audits, one by TSTT’s former internal audit manager Maitland Daniels, another by the company’s chief internal auditor Randy Marcano and an internal report by Lumkin.
The Lumkin report contains several questions, including why two cell phone retailers were granted special privileges with TSTT without board approval even though the deals were a financial strain on the company. In one of the documents, Lumkin questioned the relationship between TSTT, CellMaster and Mizova. According to the document, the two retailers were paid a flat fee of $9 million and $10.5 million respectively instead of a commission on sales like all other retailers.
Lumkin described the two contracts as “notoriously bad million-dollar contracts” which were allowed to continue in the absence of board approval and limited returns for TSTT.
Both retail outlets are owned and operated by Richard Smith, who is related to the former sport minister Darryl Smith.
Lumkin, in her report, detailed the financial viability of all TSTT retailers and found that while the average cost per transaction with other retailers ranged from $64 to $115, CellMaster carried a $546.68 fee per transaction and Mizova was paid a massive $9,971.51 per transaction. While other retailers got a commission ranging from three to 13 per cent, CellMaster earned a 21 per cent versus Mizova’s 16 per cent.
“TSTT simply makes a huge loss at the Mizova stores of more than $9,000 per transaction,” Lumkin noted in the report.
“To date, TSTT has spent approximately $50 million on these two contracts.”
She added that the only “responsible” thing to do was to terminate the two contracts. However, that was never done.
Under the banner “important facts,” Lumkin said that the original CellMaster contract was valued at approximately $27 million between 2011 and 2014. She claimed that the contract never received board approval.
“I have not been able to find the original business case or any other material that properly justifies this contract,” Lumkin said.
Lumkin said the “original Mizova contract was approved via the CEO financial authority limit and was valued at $3.5 million.” That contract expired since January 31, 2015.
“Again, this contract did not receive board approval, and I have not been able to find the original business case or any other material that properly justifies this contract,” Lumkin said in her report.
Aside from that preferential treatment, Lumkin also noted that before Ronald Walcott became TSTT’s chief executive officer, “he directly managed CellMaster from 2011 to 2013 as Head of the Prepaid and Channel Management Department.”
Lumkin proposed that both contracts be terminated and had the support of the executives. However, by January 2016 the contract documents for the two companies were back on the table. She said she wrote to the executives but never received a response. By January 25, 2016, she was informed that the two contracts would continue and would go forward for board approval.
“I was also told that the CEO would present them at the Tenders Committee meeting and that my presence was not necessary,” Lumkin said.
Lumkin said she later learned that both CellMaster and Mizova contracts submitted new proposals to TSTT “not very different from the current arrangements.”
“It must be noted that the CEO by his actions and his letter dated February 16 has taken charge of these new negotiations,” she said.
TSTT: ‘Baseless and
TSTT categorically denied any relationship between CellMaster, Mizova and Walcott. The company also dismissed the report by Lumkin despite her senior position at the company at the time it was written.
“No formal report from the EVP Mobile Services was ever documented,” TSTT said in its response.
TSTT said that in January 2016, the Board of Directors approved and ratified all CellMaster and Mizova contracts and the Tenders Committee asked Lumkin to produce a comprehensive assessment for a long-term solution related to the two agreements.
“After more than a year, the former acting EVP Mobile Services never presented this business case or assessment,” the company said.
“The BoD, after interviewing both the former acting EVP Mobile Services and the CEO, along with assessing and analysing both submissions, concluded that all of the assertions and allegations were baseless and unsubstantiated and that these contracts were part and parcel of normal business arrangements,” the company said.
“Immediately after this matter was assessed by the Board’s Steering Committee, the former acting EVP Mobile Services applied for voluntary separation from the company. The request was granted.”
TSTT added: “Our records show that Dr Walcott was not the person who introduced CellMaster or its principals to TSTT and that Dr Walcott was not acquainted with Mr Richard Smith prior to his joining TSTT. Dr Walcott was introduced to the principals of CellMaster by the then EVP Mobile,” the report said.
TSTT then threw responsibility for the extension of the CellMaster and Mizova contracts back at Lumkin. Walcott, in response to questions, said he also believed that Lumkin was seeking to “malign” his name and character.
Read part two of this story tomorrow