Mon | Oct 25, 2021

‘Mum’s the word’

Ex-board members linked to multimillion-dollar school-feeding scandal claim they’ve not read damning report

Published:Saturday | September 25, 2021 | 12:13 AMJovan Johnson - Senior Staff Reporter
Auditor General Pamela Monroe Ellis
Auditor General Pamela Monroe Ellis
Auditor General Pamela Monroe Ellis’ damning report on the Nutrition Products Limited (NPL) for the period 2015-2021 was released on Tuesday.
Auditor General Pamela Monroe Ellis’ damning report on the Nutrition Products Limited (NPL) for the period 2015-2021 was released on Tuesday.
PAC chairman Julian Robinson
PAC chairman Julian Robinson
Ewart Gilzean, NPL board chairman
Ewart Gilzean, NPL board chairman
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Several former directors of a government company that provides food to schoolchildren and who served during the period of a damning audit say they’ve either not read or have been advised against commenting on the report that has accused them of failing in their duties.

And at least five current board members are from the implicated board.

Auditor General Pamela Monroe Ellis’ report on the Nutrition Products Limited (NPL) for the period 2015-2021 was released on Tuesday. NPL falls under the education ministry.

A range of questionable procurement and recruitment violations were uncovered, including payment of $143 million to companies and individuals connected to board members and management staff, to provide transportation, repairs and maintenance and other services.

The board “failed in oversight responsibility”, was the conclusion from the auditor general, whose report also raised questions about how the education ministry continued to give more money to NPL although demands for its baked and milk-based products fell significantly.

Two boards existed over the period of the audit.

The James Rawle-led one was appointed under the previous People’s National Party (PNP) administration and served up to 2016.

The succeeding Ewart Gilzean-chaired board, the one that’s the subject of the auditor general’s major findings, was appointed in January 2017 by the Cabinet of Prime Minister Andrew Holness.

Its term ended in December 2020 after which a new board led by Dr Aundre Franklin was installed.

‘NOT PREPARED TO DEAL WITH IT’

Gilzean said on Thursday he could not comment on the report because he had not gone through it and needed time to deal with a personal matter first.

“I am not prepared to deal with that at all, not at this stage. …I will respond to the report in due time,” said the businessman.

The former chairman served his first stint from 2007-2013 and would have been answerable to Holness who was education minister up to October 2011, and then Ronald Thwaites who took over the portfolio in 2012.

Gilzean returned under the stewardship of the now scandalised Ruel Reid, a one-time confidant of Holness who was education minister until his dismissal in 2019.

In 2017 when Gilzean was being approved by Cabinet, ministers would have been aware of a 2012 special audit that examined NPL during the time he last served on the board and the adverse results on the performance of the entity.

That report flagged unathorised payments, difficulties the entity faced in meeting its objectives, high production costs and repeated violations of government procurement guidelines.

NPL incurred loss of more than $200 million over the two-year period up to March 31, 2012, raising questions about the company’s survival that were flagged by external auditors, Deloitte and Touche in a 2013 report.

According to the 2021 audit report, NPL paid a distribution company $69.6 million, between November 2010 and January 2021, to provide transportation and haulage services.

The registered owner of three trucks used was an investment company, of which Gilzean is a director and shareholder, and payments to the distribution company stopped in 2013 when Gilzean’s first tenure ended and restarted in 2017, it was revealed.

“Of note, the distribution company received delivery routes with the highest rates and was the only haulage contractor assigned to perform shuttle services, resulting from the decision to centralise the distribution of meals to schools, from the Kingston plant,” the report said.

RISK OF CONFLICT OF INTEREST INCREASED

The risk of conflict of interest increased, it continued, as Gilzean was involved in the decision to centralise, which ended up being a more “costly option”…“demonstrating that the former chairman ignored the principles of fiduciary responsibility and duty of care”.

Gilzean also chaired the contracts and procurement subcommittee of the board and was a member of the finance committee.

It was also revealed that the former chairman’s private business had the same address as the supplier of repairs and maintenance services that received $48 million between August 2018 and November 2020.

Additionally, Gilzean was noted as the employer of an individual who was paid $7.3 million to record minutes of board meetings between April 2017 and February this year.

Gilzean has at least three investment-related companies, according to Companies Office of Jamaica records.

Money Traders & Investment Limited that was incorporated in March 1995 and whose core activity is rental services; Bramking Investments Limited, whose core activity was investments with an incorporation date of December 2003 and Tuscany Investments Limited, a construction company that was incorporated in May 2019.

Gilzean is currently chairman of the National Works Agency Advisory Board that falls under the Prime Minister-headed Economic Growth and Job Creation Ministry. He is also on the board of the Rural Water Supply Limited, which runs from Desmond McKenzie’s Local Government and Rural Development Ministry.

Other former NPL board members keeping a shut mouth on the specific issues are Robert Miller of the ruling Jamaica Labour Party (JLP), who is now the Member of Parliament for St Catherine South Eastern.

“I have not seen the report,” he said, noting that the procurement breaches and flagrant disregard for government guidelines came as a shock to him.

Miller, a former chair of the maintenance and production subcommittee, said when he sat on the board no information came to his attention that the chairman and other members were involved in breaches or irregularities.

“We had an issue with the internal auditors that we had; I don’t believe they were really doing their due diligence in certain things,” he said, adding that he would recuse himself from Parliament’s Public Accounts Committee (PAC) when the audit comes before it.

‘SHAME AND DISGRACE’

PAC chairman Julian Robinson said the report is likely to be examined by the committee before the end of October.

“We need to remind people what NPL stands for – Nutrition Products Limited provides meals for poor children in primary schools and secondary schools and it is a shame and disgrace that an entity like that could be subject to these kinds of breaches,” said Robinson, the opposition spokesman on finance, on the 48-year-old entity.

Joyce Young, a former JLP MP caretaker for St Andrew Western, also declined to speak on the issue.

“I am not permitted to speak to anybody right now,” she said before declaring that: I have nothing to hide. I have nothing to fear.”

Donovan Samuels, the JLP councillor for the Tivoli Gardens Division in the Kingston and St Andrew Municipal Corporation (KSAMC), said on Thursday he had not yet read the report and asked The Sunday Gleaner to contact him later that day for a response. Telephone calls since have gone unanswered.

Businessman Rory King, who attended only eight of 29 meetings between April 2017 and March 2019, also said he could not comment on the audit. He was not listed as a board member in the 2019-2020 annual report.

Telephone calls and messages to Krystal Lee, JLP MP for St Ann North Western, have gone unanswered. She was a former chair of the finance and planning subcommittee.

It’s a similar case for Andrew Bellamy, the JLP councilor for the Mona Division in the KSAMC, who is linked with the infamous birthday party allegedly held in breach of COVID-19 rules and which cost participant MP Floyd Green his Cabinet position.

Some of the other board members were: Bustamante Industrial Trade Union’s Alden Brown, who headed the HR committee; entrepreneur Dorothy Finlayson, who led the internal audit committee; health coach Natalie Murray; attorney Robert Collie; Collin Newman and researcher Vicki Hanson.

Brown, Finlayson, Murray, Hanson along with Samuels, the Tivoli Gardens councilor, are current board directors, carryovers from the Gilzean board that the auditor general said “provided minimal oversight of NPL’s strategic and risk management processes as there was no evidence that NPL’s strategic plans were reviewed”.

‘LET THE CHIPS FALL WHERE THEY MAY’

Education and Information Minister Fayval Williams, at a post-Cabinet briefing Wednesday, said the Government “supports the auditor general’s report and see it as a powerful tool for the reform”.

“Let the chips fall where they may,” she said of future investigations, before announcing that Cabinet had approved the establishment of an enterprise team for the privatisation of NPL, which is to be led by the Development Bank of Jamaica.

The auditor general, in highlighting the shifting strategic focus for NPL, recounted that Cabinet mandated divestment in September 2011, a decision reversed when the PNP took power in 2012.

In 2018, another decision came, this time under the current Holness administration, approving divestment, but then the policy changed a year later.

The 2018 privatisation decision was resurrected in July.

Other major audit findings include a current board member whom the auditor general said is the spouse of a shareholder and director of a company that was paid $13.8 million for janitorial services between August 2019 and April 2021.

The former NPL chief executive officer was also revealed to be the director and shareholder of a printing and office supplies company that received $4.2 million from August 2010-November 2020.

In August 2017, NPL employed a human resource manager who only possessed six subjects at the General Certificate of Education (GCE) level, when the position required a Bachelor of Science degree in social sciences with at least six years work-related experience at a middle or senior management level.

The auditor general said the manager stayed in the position until March 31, 2020 and presided over the recruitment of other unqualified individuals.

NPL’s management team, during the period of the audit, was led by Orville Lewinson, Darryl Nelson and Andrew Narine, the incumbent CEO.

jovan.johnson@gleanerjm.com