To investigate claims of overspending, potential conflicts of interest, and a lack of oversight on the unfinished Sea Cows Bay Harbour Development Project, the Commission of Inquiry called opposition member Julian Fraser to testify on July 14.
The hearing largely centred around concerns raised in a 2014 auditor general report that detailed the project’s origins and raised questions about how the overseeing ministry changed, how progress stalled for years, how government awarded petty contracts without consulting Cabinet even when cost estimates skyrocketed, how Mr. Fraser’s siblings were involved, and how several related contracts weren’t fulfilled before government pulled the plug on the whole endeavour.
Origins
The project began in 1991, when the Ministry of Natural Resources established a steering committee to consider a reclamation plan for the harbour, as COI Counsel Bilal Rawat summarised from the auditor general’s report.
Mr. Rawat said the steering committee didn’t submit a detailed plan, but instead created a proposal for future bulkheading to be done without direct cost to the community.
He noted that these decisions were made before Mr. Fraser entered politics in 1999.
Mr. Fraser said under his direction as natural resources and labour minister, the Ministry of Natural Resources and Labour commissioned a conceptual development plan in September 2001. Later, as communications and works minister, he presented that plan to the Executive Council in October 2002, and it was adopted.
Mr. Rawat read from the auditor general’s report that the “tendering process was to be waived to allow the Ministry of Communications and Works — which, by this time, you were leading — to engage contractors to procure materials for bulkheading the harbour at Sea Cows Bay.”
Mr. Fraser said that was true.
Mr. Rawat read out the other conditions of the agreement, which essentially transferred control of the project and its financing from the NRL Ministry to the CW Ministry.
The latter ministry, Mr. Fraser noted, would have had to get funding approval from the Ministry of Finance before incurring any costs.
Mr. Rawat asked the former minister if he ever returned to Cabinet to later adjust the terms of the project, perhaps to seek a major contract to deal with the majority of the project.
“We had not progressed to that point,” Mr. Fraser said.
$1.35m estimate
The audit report explained that the NRL Ministry entered into a contract with AR Potter and Associates in February 2003 to create the designs for the project, “authorised by Hon. Fraser as district representative and signed by the [NRL] permanent secretary.”
The company estimated the project cost at $1.35 million, the report noted.
But Mr. Fraser objected to one point on his involvement, stating that district representatives don’t have the power to authorise contracts.
Mr. Rawat asked why the NRL Ministry entered into the contract after the CW Ministry had taken over the project.
Mr. Fraser replied that the two ministries were working in tandem, and he guessed it was easier for NRL to sign because it had already been allocated the money.
Mr. Fraser later objected to the $1.35 million estimate included in the report.
“I want to enter into the record that that figure is impossible,” he said, arguing that works up to that point essentially just included schematic drawings. “I don’t know where that figure came from, how it was arrived at. And as a professional myself, I know that it’s out of the realm of design development scope.”
Mr. Rawat said that was simply the figure AR Potter estimated for the construction costs; the company was paid about $25,000 of its $47,000 fee, according to the auditor general’s report.
Mr. Fraser, who left the CW Ministry in 2003 when the Virgin Islands Party lost power in that year’s election, told the COI that he didn’t remember his involvement in any contract negotiations with AR Potter, but he didn’t see any reason he would have intentionally distanced himself from the project discussion.
“There is no denying that I knew about her engagement,” he said of his involvement after leaving the ministry. “How she progressed with the job, I’m not sure that I had ever had any contact with her, but I knew she was engaged.”
Project progress
An assessment by the Public Works Department showed that the submitted designs were incomplete regarding the bulkhead section of the project, and a full geotechnical study would be required to move forward, according to the audit report.
Mr. Rawat noted there was a “hiatus” in the project, with little done until 2006, when it was slated as a capital project.
Mr. Fraser returned to the CW Ministry in August 2007 after the VIP returned to power in that year’s election, but he never saw the AR Potter contract or its design drawings, he claimed.
However, things seemed to be moving by then: Geotech Associates Ltd of Trinidad got the green light to conduct a geotechnical survey after government prepared terms of reference for a consultant to design the bulkhead in April 2006, Mr. Rawat said.
Asked if he thought that was an appropriate way forward, Mr. Fraser said yes.
However, Mr. Fraser said in his annotated draft version of the auditor general’s report — which he provided to the commission — that after November 2006, no further progress was made and funds were reallocated for road paving and drainage works in District Three.
Funding
Mr. Rawat asked if project funds were used for other purposes in District Three. Mr. Fraser pointed to some examples in the budget estimates for that year, including $1.27 million for concreting roads — but he said most of that was spent outside Sea Cows Bay.
“I don’t know if it is — if you see things like this appearing in this report out of wilfulness or out of ignorance of the budgeting process, but whatever it is, it’s wrong,” he said.
Mr. Rawat pointed out that even though these works were carried out in other areas like Duffs Bottom, Pleasant Valley and Albion, they still fall within Mr. Fraser’s District Three.
He then asked Mr. Fraser to clarify his specific objections to the auditor general’s report.
“Well, that was meant — that was meant particularly to confuse you and give you the impression that monies were taken from the Sea Cows Bay development project and used elsewhere,” Mr. Fraser replied. “That’s what this whole report is built on. It’s built on misleading people.”
He said the report gives the impression there was no accountability in how the funds were allocated.
“I’m telling you that it’s absolutely perfectly legitimate and authorised for the funds that have been used in the way they have been used, here and elsewhere in the report,” he said.
Petty contracts
Two years after Mr. Fraser returned to the CW Ministry, the ministry in 2009 awarded Systems Engineering Ltd two petty contracts for a total $123,000 in connection with the SCB project, according to the auditor general’s report.
Mr. Fraser said he was made aware of the contracts after they were issued but was not involved in the mechanics. The Ministry of Finance would have signed them, he said, and he thought Public Works recommended the company when it didn’t have anyone capable of doing the work in house.
Asked why the company got paid $27,400 more than the contracted amount, Mr. Fraser said the funding specifics were “above my pay grade.” He added that the permanent secretary would have handled it, but he didn’t know specifically who that was at the time.
Systems Engineering, basing its work on that done by AR Potter, set out the bulkheading in two phases with a bill of quantities set at $6.65 million in September 2010, according to the report.
“But you’ve got a situation,” Mr. Rawat told Mr. Fraser. “You’ve said that you didn’t see the AR Potter contract, you didn’t know about the AR Potter contract. That had estimated the project construction costs of 1.3 million. That was in 2003 — you’re now in 2010, and the project cost is now 6.6 million. Did no one draw that to your attention as the minister?”
“No,” Mr. Fraser said, noting that AR Potter wouldn’t have been able to come up with an accurate estimate because the engineering work had not been done at the time.
He said Public Works costed the project at $6.65 million.
Regardless, Mr. Rawat asked if the substantial increase in projected cost for a project located in his district and being overseen by his ministry would have been brought to his attention as a government leader.
Mr. Fraser said no.
Mr. Rawat asked, “No one came to you and said, ‘Minister, we’ve now got a bill of quantities for this project. It’s going to be over $6 million?’”
“No,” Mr. Fraser said.
Land reclamation
The commission then delved into some of the claims the auditor general made about potential conflicts of interest in the project.
Earl Fraser, a shareholder in Hannah Reclamation Limited and brother to Julian Fraser, applied to lease a seabed at the western end of the harbour in December 2010, according to the report.
Then in November 2011, government engaged seven petty contractors for bulkhead work on the west side. The auditor general’s report said the latter was done at the request of Julian Fraser.
However, Mr. Fraser was quick to note that bulkheading wasn’t done solely in the 200 feet of land leased to Earl Fraser: Rather, he told the COI, it spanned 1,520 feet of the harbour.
Mr. Rawat asked if he had recused himself from the Cabinet meeting on May 18, 2011, when members approved Earl Fraser’s contract. He said he would have declared an interest, but he couldn’t recall the specifics of the meeting.
Contract selection
Returning to the seven petty contracts, Mr. Rawat asked how the contractors were selected. Mr. Fraser said they would have been selected from interested parties in his district. Ministries normally base their selection on recommendations from the relevant district representative, and ultimately the minister of finance signs the contract, he said.
Mr. Rawat noted that though all seven contractors received a 10 percent deposit on their $96,000-$97,000 contracts, only two completed the job and got full payment. He asked if the remainder were asked to repay the deposit.
“Oh, I don’t know. I wouldn’t know,” Mr. Fraser said, noting that it was the government that stopped the work and claiming the work would have been done if he was still minister at the time.
Mr. Rawat also pointed out that two of the contractors, Earl and Kenneth Fraser, were Julian Fraser’s brothers.
“Were you not aware from them that they had not completed the work?” Mr. Rawat asked.
Mr. Fraser, however, acknowledged only that he knew five contractors didn’t finish because government had stopped them.
“It’s not the only project that the government stopped works on,” he said. “They stopped work on every project that was going on in my district.”
Actual role
Mr. Rawat also asked about the specifics of Mr. Fraser’s involvement in the project.
“You couldn’t sign the contracts, on your evidence,” the counsel said. “You weren’t aware of some of the details — for example, bill of quantities — so what role did you actually play as minister for communications and works on this project?”
Mr. Fraser replied: “You actually would direct the policies of the council, direct the policies of the council. That is your — making sure that they say that the execution of the bill of quantities were taken care of by Public Works, somebody would do that. Making sure that the works that were prepared by Systems Engineering got converted into contract documents and all that stuff, and making sure that the project moved forward.”
Mr. Rawat asked, “Is that just a matter for you as minister to simply ask whether these things are being done, or did you get involved in some of the details?”
“Getting involved in the details: No, that’s not my job,” Mr. Fraser said.
Cabinet
The commission also questioned why Mr. Fraser never brought a detailed plan for the project to the Executive Council or the Cabinet between its initial approval in 2002 and when works stopped in 2011, even after Public Works estimated it would cost $6.65 million.
Mr. Rawat reviewed part of the auditor general’s report that said government had entered into petty contracts, engaged dayworkers, and gotten a bill of quantities “for a significant sum” but still didn’t have approval from the Planning Authority, approval for any major contracts from Cabinet, or a government-appointed project manager “to ensure that the public interest is safeguarded and public funds applied to the project are duly certified within the scope of the project.”
Mr. Rawat asked, “When was all that going to happen?”
“It’s going to happen in due course,” Mr. Fraser said.
He added that he could have taken the matter to Cabinet for consideration, but he wasn’t required to do so unless a major contract needed approval.
Accounting issues
In general, Mr. Fraser told the COI, he saw no problem with how the people heading the project had approached it.
However, he did criticise the process used for issuing petty contract vouchers, which he said don’t require a detailed enough description of the project. He also said that tracking money spent under different subheads gets confusing.
Mr. Fraser added that he didn’t know how much of the project’s original budget had been spent by 2011, but it was at least enough to cover the contracts issued to that point.
“From the time the Executive Council approved it, there was never enough money there to do the work, and that’s probably one of the reasons they allowed the project to go ahead through the use of petty contracts, because they know they couldn’t go out for a major contract,” he said. “They didn’t have the money for a major contract at the time, but in order to keep — in order to keep progress going.”
The project, he insisted, was urgent.
“One of the things you have to understand about the Sea Cows Bay Harbour, is that if nothing is done, the harbour keeps getting smaller and smaller because people keep increasing the size of their reclamation, as is pointed out here by the auditor general,” he said. “And one day, if you don’t put a stop to it, you will have no harbour, so the government had to move.”
Beyond the permanent secretary’s role in overseeing the accounts, Mr. Fraser said there was no designated project manager.
Private or public?
Mr. Rawat asked Mr. Fraser to respond to the auditor general’s assertion that the project was carried out in a manner that gave the “impression of a private undertaking that was being financed by the government.” Mr. Fraser replied that it was “ridiculous” to focus on only one of the nine people with reclamations in the area.
But Mr. Rawat said the claim focused more on Mr. Fraser’s alleged conduct — liaising with other entities, not adequately involving the accounting officer, and not making complete records available.
Mr. Fraser replied, “As the minister responsible for the subject and based on the constitutional responsibility to exercise direction and control over that department, including directing the implementation of government policy as it relates to that department, I have done nothing that was not my constitutional role on the project. If someone else didn’t do their constitutional role, you can’t blame me for that.”
Mr. Rawat then asked, “Just to be clear, what you did not do was treat the Sea Cows Bay Harbour Project as your own private project?”
“Of course not,” Mr. Fraser replied.
Works stop
Mr. Rawat asked Mr. Fraser to provide any detail he could about what happened to the project after 2011.
“Well, as soon as the elections were had and our government changed, all the projects in my district were discontinued,” he said. “All the people who had contracts had their contracts stopped. I expected them to restart at some point, but it never happened.”
Mr. Fraser said he noticed some contracts were issued to new contractors but he didn’t know much of what happened afterward. He added that he was still in a position to recommend contractors as the district representative.
Though he “was out in the streets making noise,” he said, he didn’t recall ever asking the premier why the projects stopped.