Press Statement on Recent Changes to the Composition of the Boards of: St. Kitts Urban Development Corporation Ltd St Christopher Air and Sea Ports Authority by Hon Wendy Colleen Phipps (Minister)

Members of the Federal CabinetMembers of the Local Media Houses

I join Mr Lesroy Williams in welcoming you to this special press briefing today which, although intended to be brief, is designed to provide some clarity on recent changes to the composition of the Boards of the St. Kitts Urban Development Corporation Ltd (UDC) and the St. Christopher Air and Sea Ports Authority (SCASPA).

I have been appointed as Minister with responsibility for Transport and Urban Development, by virtue of Instruments dated May 9th and May 11th 2022. In order to better familiarize myself with the various Boards that fall under these portfolios I would have commenced a process of engaging in meetings with senior management of the Boards, as well as the review of pertinent organisational documents.

Below are some of my findings thus far:

SCASPA
Based on my introductory meeting to familiarize myself with SCASPA it came to my attention that some 62 persons were hired between January 2022 to May 2022.

My concern was further heightened by the fact that a number of persons who are newly hired were being paid significantly more than other employees who had been hired between 4-10 years prior – to do virtually the same jobs.

What has exacerbated this situation is that in spite of my written and oral directive to place a freeze on hiring, five (5) additional hires were done, with a number of them being paid at this exorbitant rate.

The net effect of this situation is that these 67 new hires create extra payroll burden to SCASPA of almost $2 million per year.

This unfortunate situation comes at a time when SCASPA is illiquid and is unable to cover its expenditure.  In fact, the Ministry of Finance has confirmed that between September 2020 to December 2021, it has rendered financial assistance to SCASPA to the tune of $17,287,767. What is even more disconcerting is the fact that the Board and management of SCASPA will most likely be making a capital call on the Ministry of Finance by July 2022, in the amount of some $7.3 million. (This is documented in the March 2022 report of the Ministry of Finance’s Government Entities Monitoring Unit, which has determined that SCASPA “presents a HIGH financial risk to the Government.”)

It should be stated that SCASPA, like most entities, would have been affected by the Covid-19 pandemic.  At the front end of the pandemic a number of initiatives would have been taken in order to curtail expenditure. However, these moves have not significantly improved the authority’s financial outlook.  As such, to engage in a hiring spike when one’s organisation is insolvent and cannot meet its operational costs is not only unsustainable.  It is also irresponsible.  These practices give reasonable expectations to new employees that there is now job security for them when, in fact, the employer can ill afford such an expansion in its wage bill.

Apart from this spike in hiring at SCASPA, my research would have uncovered a number of instances regarding conflicts of interest where some members of the Board would have benefitted from the sale of goods and services to SCASPA.  This situation runs contrary to the St Christopher Air and Sea Ports Authority Act CAP 8.07.  I make particular reference to Part II: Section 17 – Powers and Duties, Part 3 (a) which states that the Authority shall “operate the ports as appears to it best calculated to serve the public interest.”    

SKUDC
I now move on to my observations, thus far, at the St. Kitts Urban Development Corporation Ltd (UDC).  These observations are based on the Minutes of the Corporation which I would have obtained from the Secretary.  (I am still awaiting the receipt of several pertinent documents I requested from the Corporation.)

Based on my perusal of the Minutes, it is clear that corporate credit cards were issued to both the Chairman and the Chief Executive Officer.  The credit limit on the card issued to the Chairman is EC$26,250 while the one issued to the CEO carries a limit of EC$48,750.  The Minutes further state that the cards “are to be used to make purchase[s] on behalf of the Corporation.”

It is unclear what levels of control have been exercised over these expenditure that will be covered by the credit cards.  It is also rather irregular for corporate purchases to be routinely paid by credit cards.

What is also of keen concern for our Ministry is the fact that there is a great divide between the credit limit of these two UDC credit cards and the credit limit of the Federal Government’s chief financial advisor, the Financial Secretary.  The credit limit of the Financial Secretary, reconfirmed as recently as yesterday, is EC$10,000. 

My research has also uncovered that the issue of conflicts of interest would have been evident at the Board level of the UDC.  Independent and credible verification proved that one director of the Corporation had been asked to resign as a result of him writing a cheque to himself.  It should also be noted that the said Director, according to the Minutes, “was charged with spearheading the project” to construct a Security Guard Hut at the marina –  a topic that has been the subject of much public commentary over the past several months including, but not limited to, discourse on the high cost differential re: construction of a structure of such size and simplicity.  (The original estimate was pegged at $227,000, which was subsequently reduced to $150,000, according to the Minutes.  In the said set of Minutes, queries were also raised as to who would have authorized the project’s mobilization fees, and to whom were such cheque payments made.)

A number of other areas of concern have also surfaced in my review of the Minutes of the Board meetings of the UDC.  One case in point is a listing of “UDC Projects/Financial Obligations which is an outline of the large amounts that were to have been paid out by the UDC in 2021. While most of these expenses were related to operational costs within the UDC’s mandate, there appears to have been provision of support to the former Deputy Prime Minister, Hon Shawn Richards, in the amount of approximately $100,000 for the outfitting of his box at the CPL.  This line item is listed as “support for Minister and Staff Incentives.”

While I await the submission of the list of items, financial and otherwise which I have requested from the UDC, we remain rather concerned, as a Government, by the reports that documents that may have been pertinent in assessing the performance and compliance of the Corporation are no longer available.  We are equally concerned over other reports that efforts have been made to execute significant contracts without the courtesy of consultation with the new Minister.

Conclusion
In light of these matters at SCASPA and the UDC, the following changes have been made:

In the case of UDC, three (3) new members were appointed to serve along with four others whose tenure will continue.In the case of SCASPA, three (3) new members were also appointed to serve along with others whose tenure will continue.

To those directors who no longer serve these two Statutory Corporations, we thank you for your service.

In light of these matters – much of which can rise to the level of accounting irregularity and a breach of fiduciary responsibility – the Ministry is finalising arrangements for an external audit of the operations of both Corporations.  We are rather concerned about the manner in which the UDC and SCASPA are being managed.  Hence the reason for an independent audit.

Ladies and gentlemen of the media, I sincerely thank you for your presence here this morning.

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