NHT – $180 Million Expended for Entertainment Facility Unsuitable for Housing Development

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Auditor General's Findings

  1. The audit sought to determine the level of due diligence undertaken by NHT, prior to investments and land acquisitions. In December 2012, the NHT Board approved the purchase of a loan of $180 million from a Merchant Bank in exchange for the Outameni Experience property owned by Orange Valley Holdings Ltd. A January 2013 technical report to the Board indicated that “the property does not appear to facilitate the NHT’s mandate for affordable housing solutions and is more suited for recreational/ heritage type facility.” The sale was finalised on May 27, 2013 and the Auditor General found no evidence to support that the Board’s decision was based on their being clear on how the property would be used. It was therefore not clear how the NHT could explain the investment.
  2. Since the date of the transfer of the title, NHT assumed full responsibility for the on­going operational costs which at the time of the report totaled $28,098,686.00. The NHT had not received approval from the Ministry of Finance prior to spending $13,262,091 to hire a new Park Manager and six former Outameni employees, as is required.

Permanent Secretary (current): Audrey Sewell

Permanent Secretary (at breach): Onika Miller

Breach Category: Resource Management

Breach Type: Lack of Evidence to Support Decisions

  • Breach Details
  • Articles & Reports
  • Accountable Officers
  • Calls To Action

Status: Full Compliance

Year Reported: 2015

Last Assessed: October 2, 2019

Year Resolved: 2016

RECOMMENDATION

  1. In keeping with its responsibility under Section 6 of the Public Bodies Management and Accountability (PBMA) Act, the Board should take the necessary steps to enhance its due diligence process undertaken prior to investments and acquisition of land so as to maximise return on investment and ensure that all properties acquired are suitable for housing development. This due diligence should include an appraisal of all investment opportunities to determine, at a minimum, the cash flow impact and the expected rate of return on the investment.
  2. The Board should also ensure that there is a robust records management system to provide evidence of the due diligence undertaken.
  3. NHT’s Board should instruct management to develop an action plan for all properties that deemed unsuitable for affordable housing development.

JAMP UPDATE

  1. The then Prime Minister, Portia Simpspon-Miller in response to public demand (including a protest by the Emancipation Statue), changed the members of the Board who had not already resigned and retained four of the existing members.
  2. The new board has established a Properties Evaluation sub-committee of the Board and issued instructions to fully examine options for the sale, lease or any viable alternative. Based on the recommendations of the sub-committee, the Board decided to divest the property. Since 2015, the Trust has spent $40.6M on salaries and allowances, $29.3M on security and invested $2.781M on advertisement costs since 2015. The property still remains in the possession and upkeep of the Trust without a buyer.

Rest of details can be found below in link “See ATI Response”

  1. Total spent up to August 31, 2019 on the Outameni property = $290.2Million
  2. The NHT has received approval from the Ministry of Finance for the terms of engagement/payment for the staff now responsible for maintaining property and ensure value for eventual sale.

NOTE: Though the NHT is not yet successful in selling the property, it has been making all reasonable effort to do so. As it is the market that determines the offer and sale, JAMP considers the NHT to be in compliance for having done all that was required of the new Board.

Permanent Secretary Audrey Sewell CD, JP Office of the Prime Minister,
1 Devon Road,
Kingston 10,
Jamaica
876-926-1590
The Most Hon. Andrew Holness ON, MP Office of the Prime Minister,
1 Devon Road,
Kingston 10,
Jamaica
(876) 927-9941 View profile in MP Tracker
Board Chairman National Housing Trust (NHT) Lennox Channer 4 Park Blvd, Kingston 5, Jamaica
Managing Director National Housing Trust (NHT) Martin Miller 4 Park Blvd, Kingston 5, Jamaica

No Calls To Action are currently associated with this breach.

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