Shortly after the BVI Ports Authority board decided in July 2019 to lease a property owned by board member Patsy Lake, the agency’s general counsel recommended several due-diligence measures in relation to the deal.
The next working day, the board made the lawyer redundant, according to former BVIPA Managing Director Lenius Lendor.
During recent testimony in the Commission of Inquiry, Mr. Lendor said he was not consulted on the decision even though General Counsel Natalie Sandiford-Francis was hired at his request shortly after he took up his post in August 2018.
Also without consulting him, the board apparently decided to rent the building for $295,000 per year without following various recommendations from Ms. Sandiford-Francis, according to his testimony.
The former ports leader’s account was among many details about government’s recent leases with private landlords discussed during COI hearings on Sept. 30.
Besides Mr. Lendor, four other witnesses also testified on the topic that day: Deputy Governor’s Office Permanent Secretary Sharleen DaBreo-Lettsome; her predecessor Carolyn Stoutt-Igwe; acting Financial Secretary Jeremiah Frett; and his predecessor Glenroy Forbes.
During Mr. Lendor’s testimony, he provided a look at the inner workings of the BVIPA board that was appointed shortly after the 2019 general election.
The board was “very, very hands-on,” he said, adding that it made major decisions without consulting him and neglected to enact various accountability measures recommended by the general counsel.
Asked by COI Counsel Bilal Rawat about Ms. Sandiford-Francis’s role at the agency, Mr. Lendor said she was hired to provide legal counsel to the BVIPA shortly after he took up the managing director post in August 2018.
“We needed an in-house general counsel because of so many legal matters we had to deal with,” he said. “She [was] reporting to me as the managing director.”
Mr. Rawat then asked about the BVIPA’s decision to rent office space in mid 2019, and about how it chose Mr. Lake’s Pasea Place building near Wickhams Cay II.
“Was there a policy in place by which the Ports Authority would seek accommodation to lease, or was it done on a case-by-case basis?” the counsel asked Mr. Lendor.
Mr. Lendor replied, “I’m not aware of any written — any formal — policy.”
No policy in place
He added that the agency typically had not leased space in the past, but the need arose because some of the staff at Port Purcell were in “cramped conditions” after the 2017 hurricanes.
“In the absence of any formal written policy, we would not have had any specific guidelines to follow, so the usual thing would have been to go out and source suitable accommodation and evaluate the merits of each location, the pros and cons, and make a decision based on the costs and other factors: the location, value for money, suitability for the purpose intended, and so on,” he said.
Mr. Rawat then asked if he was involved in this process.
“Not actively,” Mr. Lendor responded, “because, again, being from St. Lucia, I had been no less than a year in the BVI. I would have deferred to the local persons on the senior management team who know the location and the territory.”
He did, however, say that he and other senior managers and board members had visited two buildings: Palm Grove House in Road Town and Pasea Place.
But Palm Grove House lacked parking and needed a lot of work, according to BVIPA board meeting minutes cited by Mr. Rawat.
Mr. Rawat also asked about how the BVIPA entered into a lease for Pasea Place.
A quote for a commercial space in the building was provided in a July 9, 2019 letter from Vernon Lake of VOP Investments Company Limited to then-BVIPA Chairman Nathaniel Isaac, Mr. Rawat said.
“Were you involved at all in arranging for a quote to be taken?” Mr. Rawat asked Mr. Lendor, who replied, “No, I was not aware of that.”
On July 25, 2019, the BVIPA unanimously passed a motion to enter into a lease for the building with VOP starting on Aug. 1, 2019, according to BVIPA board meeting minutes cited by Mr. Rawat.
Two copies of a lease were sent to Ms. Sandiford-Francis for review, and in a July 30, 2019 memorandum she proposed amendments and advised that documents such as certificates of good standing were needed before the lease could commence, Mr. Rawat said.
Minutes of a BVIPA board meeting the next day show that ex-officio board member Bevis Sylvester asked if the requested documents had been provided by VOP, Mr. Rawat said.
He was informed that they hadn’t been provided, the minutes state.
Mr. Sylvester then moved a motion that the BVIPA proceed with the lease anyway with the stipulation that the agreement would be voided if the requested due-diligence information was not provided by Aug. 22, 2019, Mr. Rawat said.
On the evening of Aug. 1, 2019 Ms. Sandiford-Francis was told that the BVIPA intended to proceed with the lease immediately, Mr. Rawat said, citing an Aug. 9, 2019 memorandum she sent to Mr. Lendor.
Because of the urgency of the request, Mr. Rawat added, Ms. Sandiford-Francis went to the Land Registry the next day to check the property’s paperwork.
“Her inquiry showed that the property wasn’t owned by VOP Investments Limited, and there is no lease registered which shows that VOP Investments is a registered lessor of the premises,” Mr. Rawat said.
Instead, she found that the property was owned by Ms. Lake, according to her memorandum.
Because of that finding, Ms. Sandiford-Francis told Mr. Lendor it was “imperative” that VOP Investments Limited produce a copy of the lease between Ms. Lake as owner of the property and VOP as lessee.
Ms. Sandiford-Francis also found that the Town and Country Department had “raised a number of issues in relation to an application” concerning the premises, Mr. Rawat said.
To minimise risk to the board in light of this finding, she recommended that the property owner also be required to present proof of compliance with TCPD requirements, Mr. Rawat said.
The general counsel also stated in the memorandum that a search at the Registry of Corporate Affairs revealed that “the correct name of the proposed lessor is VOP Investments Limited, not VOP Investments Company Limited as appears on the proposed lease,” Mr. Rawat said.
Additionally, she included further due-diligence requisitions, he added.
“She recommended that to protect the interests and reputation of the Port Authority, that documentation be obtained in response to the following requisitions, and one was whether any feasibility or other research was undertaken to determine the amount of space required to house staff of the authority,” he said. “[Another was] whether any other premises [were] considered for rental of space. Thirdly, whether any member of the board is an interested party or connected person to this transaction. And fourthly, if any member of the senior management team of the Port Authority is an interested party or connected person in this transaction.”
Mr. Lendor said he had a “very vivid” memory of the Aug. 9 memo because he received it late on a Friday afternoon and thereafter acted quickly: After touching base with Ms. Sandiford-Francis, he said, he forwarded it to the board immediately.
In response, the board held a special emergency meeting the next working day and made Ms. Sandiford-Francis’s position redundant without consulting Mr. Lendor, he recalled.
At the time, he said, she had been in the position for about eight months.
The board then chose to outsource legal counsel for the authority, according to Mr. Lendor.
Board members, he said, did not subsequently discuss the Aug. 9 memorandum’s recommendations with him.
Mr. Rawat also asked Mr. Lendor about the negotiations over the cost of the lease.
“The proposed rent, and we’ve only seen it in the draft, is that the annual rent was going to be $295,000,” Mr. Rawat said. “Were you involved at all in negotiating that rent?”
Mr. Lendor answered in the negative, and said he didn’t know who was involved in the discussions.
“That’s just a figure that came,” he said.
Mr. Rawat asked, “Were you aware of discussions by the board about what the lease terms should be?”
Mr. Lendor replied, “No. Any such matter would have been in the minutes, and, as you could see from the transcript of the minutes, there’s no such discussion.”
He added later that he wasn’t aware of who put the lease before the board.
Mr. Lendor also said he wasn’t asked for input on the works that had to be undertaken to make the building fit for purpose, which Mr. Rawat said included sheetrock walls, doors, paint, electrical wiring, an air-conditioning system, security systems, and finishes.
“Did the board ask you as managing director to take that forward and obtain quotes from contractors for various things?” Mr. Rawat asked.
Mr. Lendor replied, “No, no. Pretty much everything continued in the same vein, where nothing was delegated or passed through the managing director to do.”
No open tender process
He added that no open tender process was used to choose contractors.
“In terms of selecting the contractors, who would be involved in the fitting out?” the counsel asked. “You didn’t play a role in that at all as managing director?”
Mr. Lendor replied that he didn’t know local construction companies very well and said that the board was “very hands-on” in this respect.
“These things were not just delegated to management to do,” he said.
He also noted that in his experience government boards typically deal mainly with policy matters, but that the board appointed shortly after the February 2019 general election was “very much involved in operational matters.”
“That particular board was very hands-on,” Mr. Lendor said. “I have been reporting to boards for the past 20 years. That one was the most hands-on of all.”
Besides Messrs. Isaac and Sylvester and Mses. Lake and Sylvester, the board included Vincent Wattley, Keith Flax, Damien Lettsome, and Tamara Wheatley-Hodge, along with Mr. Lendor as an ex-officio member.
In January 2020, Mr. Lendor himself was replaced after about a year and four months in his position as managing director.
John Samuel, who had run unsuccessfully as a Virgin Islands Party candidate in the 2019 general election, then took over for a three-month post.
Also during the hearing, Mr. Rawat asked Mr. Lendor about a July 31, 2019 presentation Ms. Sandiford-Francis delivered to the BVIPA board during the time the lease discussions were in progress.
In the presentation, he said, she outlined documents she drafted in keeping with advice from the National Risk Assessment Council, which in 2016 recommended policies dealing with conflicts of interest; money laundering, bribery and corruption; and political interference.
Asked about the policies, Mr. Lendor said they were drafted in part or in full by Ms. Sandiford-Francis, but they weren’t implemented by the board during his time there.
“Following the submission of these draft policies, the board actually did not really even, as far as I know, discuss it at any length, far less approve it, so it did not go further than just a draft,” he said.
Even without these policies in place, however, there was a general practice to declare any conflicts of interest, he said.
Mr. Lendor explained that board members would draw any conflicts “to the attention of the chairman and the rest of the body” and “physically leave the room” during related discussions.
He recalled that Ms. Lake left the room at an “appropriate time” when the board discussed leasing her building.
Attempts to reach Messrs. Sylvester and Lake; Ms. Lake; and current BVIPA Chairman Kelvin Hodge for comment weren’t successful.
The same day that Mr. Lendor testified, the COI also asked other public officers about government decisions to lease private properties after the 2017 hurricanes.
Mses. DaBreo-Lettsome and Stoutt-Igwe — the current and former permanent secretaries for the Deputy Governor’s Office — answered questions together.
Mr. Rawat noted correspondence that showed rent prices increasing after hurricanes Irma and Maria in 2017 and cited an Office Accommodation Committee meeting chaired by Ms. Stoutt-Igwe in 2018.
“Landlords were demanding rent increases (some outlandish) since the passage of the 2017 hurricanes, although they had not made any improvement at all to their accommodation,” he said.
Ms. Stoutt-Igwe explained the situation further.
“Following the hurricanes, a number of properties were devastated, including some of the rented properties. Insurance premiums started to increase,” she said. “So of course there were some landlords, especially if the leases were up for renewal, they started submitting notices that the rents would increase.”
She added that some owners invested money to rebuild, but others who didn’t still asked for increases.
“We realised that it was a trend, and we needed some guidance from [Mr. Forbes] as the financial secretary,” she said. “In earlier years, buildings were prepared, restroom facilities — if you needed to have 10 cubicles, 10 divisions, those were done. But in recent years, basically all you got was a shell.”
This trend began before the hurricanes, requiring government to invest money to outfit spaces to accommodate public officers, she explained.
After the hurricanes, buildings including the Rita Frett-Georges Building, Skelton Bay Lot, Cutlass Towers, and the RG Hodge Plaza were all utilised for government offices, Mr. Rawat said.
He added that Cabinet gave exceptional approvals for the DGO and the Ministry of Transportation, Works and Utilities to change rental agreements in order to relocate departments.
Ms. DaBreo-Lettsome explained that government had to move quickly since private companies were negotiating with building owners at the same time.
“We had to give them a package that was as attractive,” she said. “We couldn’t do that to the extent that the private sector could, so what we did was ask Cabinet for just an approval with the relevant bodies involved … if we needed to negotiate a little bit upward.”
Ms. Stoutt-Igwe stated that she preferred decisions to be left to Cabinet, though she understood government was squeezed for time.
Cabinet also waived tender processes to retrofit the RFG Building to the tune of $621,000, which Ms. DaBreo-Lettsome said coincided with works started on the Ralph T. O’Neal Administration Complex.
Cutlass Tower dispute
Mr. Rawat also discussed a dispute between government and Ms. Lake over offices in the Cutlass Tower in Road Town.
The government had entered into a five-year lease agreement with Lake Development Company Limited for the third and sixth floors of the building in 2014 and 2015, Mr. Rawat said. He added that this space housed the VI Shipping Registry.
After the 2017 hurricanes left the building uninhabitable, government asked Ms. Lake, the owner of the company, to “secure and restore” the building, according to Mr. Rawat.
In response, Ms. Lake’s lawyer wrote government in July 2018, stating that the government hadn’t paid rent for ten months even though it kept using the floors for storage.
Government proposed paying partial rent for those months, but Ms. Lake disputed the amount it proposed, Mr. Rawat said.
No consensus was reached until May 2019, after Ms. Lake demanded nearly $23,000 to repair partitions erected by the VISR, he said. Repairs had to be made to the building, during which time the VISR was housed in the RG Hodge Plaza on a month-to-month basis, Mr. Rawat said before giving Ms. DeBreo-Lettsome a chance to comment.
She responded, “It is not a norm for us to recommend a building that has challenges for government to engage. There was a challenge with this particular arrangement. I think there was a breakdown in communication at several points in the process.”
Current lease numbers
As of the end of 2020, government had 75 active leases for properties with private owners, including parking and storage spaces, according to Ms. DaBreo-Lettsome. Government owns more than 100 buildings, she added.
Mr. Rawat asked if government plans to own or rent most of the buildings it uses in the future. Ms. DaBreo-Lettsome said a combination of the two approaches is planned for now.
“The intention is to decrease the amount of money that we’re spending on leases but to strengthen the maintenance of government-owned buildings,” she said. “When this government came into power, they adopted the SMART standards for buildings’ designs, which are internationally recognised.”
Properties are sourced by using real estate companies and a social media group with a name like “BVI Apartments,” she added.
Ms. DaBreo-Lettsome also told the commission that leasing is managed through the Office Accommodation Committee, which is chaired by the DGO permanent secretary.
The committee also includes the Ministry of Finance represented by the deputy financial secretary; the health and safety officer in the Department of Human Resources; the Department of Disaster Management; departments that handle inspections; the Survey Department; the Attorney General’s Chambers; the Land Registry; and the Inland Revenue Department, she added.
When Mr. Rawat asked if there is a policy in place governing how the government enters into lease arrangements with private landlords, Ms. DaBreo-Lettsome said the OAC recently began preparing a “public estate framework” that she said “will allow the Deputy Governor’s Office to have a better oversight on the entire estate that is owned by government.”
Ms. DaBreo-Lettsome went on to explain that after accommodation requests are received by the DGO, applications are stamped and recorded.
Applications must include a justification for the need for the space and a description of current working arrangements, according to the PS.
Applications must also include cost projections and budgetary allocations within the department that could cover the estimated cost, she said, adding that a site visit is then conducted.
After that, the OAC ensures that the landlord is in good standing with Land Registry, she added.
Recommendations are sent to the minister of finance, who either approves the agreement or sends it back, according to Ms. DaBreo-Lettsome.
If approved, a Cabinet paper is drafted, presented, and voted upon in Cabinet. Approved papers are sent to the attorney general and finally signed by the premier and the landlord, she said.
Registered at court
The lease is then submitted to the Inland Revenue Department and registered in the High Court if the lease term is longer than two years, she said.
“We wanted to ensure that there is documentation of the final lease with the courts,” Ms. DaBreo-Lettsome said. “Some landlords are very willing to do so. Others have said it is not a requirement.”