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Money muddle

Western Hospitality Institute’s low contributions raise red flag

Published:Sunday | May 2, 2021 | 12:23 AMJovan Johnson - Senior Staff Reporter
The HEART/NSTA Trust’s corporate building at the corner of Oxford and Belmont roads in Kingston.
File The HEART/NSTA Trust’s corporate building at the corner of Oxford and Belmont roads in Kingston.
Dr Cecil Cornwall.
Dr Cecil Cornwall.

The Cecil Cornwall-led Western Hospitality Institute (WHI), which has campuses in three parishes and received millions from the education ministry to deliver programmes, only declared two employees per year for 2017-2019 in payroll taxes to the...

The Cecil Cornwall-led Western Hospitality Institute (WHI), which has campuses in three parishes and received millions from the education ministry to deliver programmes, only declared two employees per year for 2017-2019 in payroll taxes to the HEART/NSTA Trust.

A Sunday Gleaner investigation has also found that WHI’s average monthly contribution to HEART since 2013 was approximately $1,818, indicative of a very lean staff complement.

Cornwall, whose institution is now the subject of a Sunday Gleaner-inspired expanded probe by the auditor general, has refused to discuss the findings.

“If you want to speak, you speak through my lawyer. I don’t owe you anything. Yuh too damn out of order,” he snapped when contacted by our news team on April 15 without disclosing the name of the lawyer.

“Don’t you ever call back my phone. I’m a private citizen. Don’t you damn call back my phone.”

The developments come as very senior officials in the education industry quietly express fears about what an investigation could unmask about the approximately $7 billion spent over the last decade on technical and vocational education and training (TVET).

The Integrity Commission, Jamaica’s main anti-corruption body, has also reportedly taken an interest in an official at the ministry over an undeclared asset. The commission does not comment on its investigations.

HEART, the state’s multibillion-dollar training agency, is funded by a three per cent tax on employers’ gross monthly wage bill, which is then used to train Jamaicans to meet the needs of industries like tourism.

Employers become eligible to pay HEART contributions when their pre-tax wage bill exceeds $14,444. They get a relief if they have HEART trainees.

The contributions are to be paid on a monthly basis, which does not appear to have been the case with WHI, even during the period when Cornwall served on HEART’s board (2015-2017) and its audit and corporate governance subcommittees (2016-2017).

The employers’ annual return submitted to the tax authorities for 2017, 2018 and 2019 show that WHI only declared two employees for each of those years. No HEART trainee was listed.

The smaller the gross wage bill, the lower the amount of taxes to be paid.

Outstanding contributions

Indications are that an audit conducted by HEART in mid 2017 revealed a significant number of outstanding contributions dating back to 2011.

The full audit results and actions taken are unclear, but what followed were dozens of payments in 2019 to cover almost a decade of arrears.

A senior tax official in the Government said WHI’s average monthly payment of $1,818 suggests that a “very small number of persons” were employed at an institution teaching out of three locations of the institution which brands itself as the country’s premier hospitality training school.

For example, the expert said the $1,813.81 paid for May 2019, when divided by three per cent (the tax rate) would result in $60,460 – WHI’s total wage bill for that month.

“That’s a very, very small amount, given the size of the operation,” said the expert.

WHI operates in Montego Bay, St James, where it’s headquartered; Mandeville, Manchester; and in Negril, Westmoreland, where the campus there was refurbished last year through a $10-million grant from the Japanese government.

Information up to December 2020 shows that approximately 1,200 students were enrolled at the institute.

WHI’s website does not provide any information on the school’s leadership or faculty structure.

However, its Facebook page and posts on the professional networking site LinkedIn suggest that some of the positions at WHI up to this year include vice-principal, registrar, dean of academics and student affairs, chief financial officer, examination director, recruitment manager and project manager.

Most of those positions were dated during the period when WHI declared two employees in its tax records.

WHI offers at least 25 programmes which span bachelor’s, associate degrees and certificate courses, website information indicates.

As at March this year, only five of those programmes were accredited by the University Council of Jamaica, on whose oversight body Cornwall sat from 2016-2020.

Although a private entity, as an educational institution, WHI may be benefiting from certain reliefs, but that is not clear.

Cornwall, WHI’s president, has refused to speak on the issues and no responses have been received to questions first emailed on April 15.

“I leave you with your information … . I have nothing more to say,” said Cornwall in a telephone conversation on April 22 after reaching out to this newspaper.

Questions on WHI’s compliance, among others, were submitted to HEART on April 15 but are yet to be answered.

According to Section 24 of HEART’s legislation, employers convicted for non-payment of contributions could be asked to pay a fine of $5,000, pay triple the outstanding the amounts or, in default, face imprisonment of up to 12 months.

Those are the same penalties if an employer is found guilty of making false declarations.

The law also empowers HEART to inspect the accuracy of data submitted by employers, including demanding the employment records of all staff.

WHI, which was established in 1988, was registered with the Companies Office of Jamaica in 2004.

Employers owe approximately $675 million to HEART, but the recovery of those arrears is “uncertain”, according to the agency’s latest annual report (2019/2020).

HEART projects to collect $13.3 billion in contributions this financial year, $2 billion more than it expects for the COVID-impacted year that ended March 31.

Expanded probes

The WHI’s tax issues are emerging two weeks after the Auditor General Pamela Monroe Ellis was asked to expand a probe at the education ministry to include two multibillion-dollar programmes, following revelations by this newspaper.

“We must answer to public concerns,” said Education Minister Fayval Williams on why she was asking for an audit of the Career Advancement Programme (CAP) and the Centre of Occupational Studies (COS), TVET programmes funded by HEART.

Not only is the WHI the chief financial beneficiary of CAP and COS, but its president has been chairman of the committee which governs CAP, and the key driving force behind the establishment of the centre.

CAP and COS’s staff structure have also, over time, been revolving doors for WHI employees, including in 2019 when Jahraski Young left his job as WHI principal to take up the directorship at COS.

Cornwall has denied a conflict of interest, saying he was not interested in “trivialities”.

The auditor general was previously examining the relationship involving the education ministry, the WHI and the Joint Committee on Tertiary Education (JCTE), which is also headed by Cornwall.

The JCTE, which represents tertiary institutions in Jamaica, would negotiate with the ministry on how members could benefit from implementing CAP and COS programmes.

The JCTE was also the entity that shocked officials last year after it became private in February 2019, blocking the auditor general’s investigation into use of government funds connected to the Caribbean Maritime University scandal.

Data obtained through access to information requests show that for the period 2017-2020, the WHI ($158 million), MXP Catering ($60.5 million) and the JCTE ($59 million) accounted for almost 50 per cent of the $594 million spent by the COS.

MXP shares the same address as WHI in St James and its proprietor, Michael Foster, was a project officer at JCTE and served as recruitment manager at WHI.

An analysis of a CAP disbursement report for 2014-2020 reveals that at least $2 billion was paid out to schools over the period, with WHI topping the list with $224 million, following by Institute of International Recognised Qualifications (IIRQ – $206 million).

CAP and COS fell under the direct oversight of then Chief Education Officer Dr Grace McLean (2009-2019) and incumbent Dr Kasan Troupe (2019–present), who ultimately reported to permanent secretaries Elaine Foster-Allen (2012-2015), Dr Maurice Smith (2015-2016), and Dean-Roy Bernard (2016-2019).

COS was established in July 2016, while CAP has been under the ministry’s control since 2013.

McLean is now acting permanent secretary.