Legislation to regularise withdrawals from the Capital Development Fund (CDF), which were carried out in contravention of the Bauxite Production Levy Act, was passed on March 1, in the Senate.
The Bauxite (Production Levy) (Validation and Indemnity) Act, which was piloted by Minister of Justice, Senator Mark Golding, also indemnifies the public servants who carried out the withdrawals in good faith.
Opening the debate on the legislation, Senator Golding explained that in 1999, the Government of Jamaica sold shares in Caribbean Cement Company for US$29.8 million or $1.123 billion.
He noted that of the shares sold, approximately US$16.1 million ($606 million) of the amount went to the National Investment Bank of Jamaica (NIBJ), which held some of the shares.
The Minister further explained that the NIBJ declared a capital dividend of $396 million (US$10.5 million) to be paid to the Accountant General.
“Inclusive of the dividend payments, a total of US$24 million ($912 million) was transferred to the Ministry of Finance and planning, while the remaining US$5 million ($210 million) of the total sale proceeds was retained by NIBJ,” Senator Golding said.
He added that the amount retained by the NIBJ was designated to be used to fund the privatisation of the Jamaica Railway Corporation.
The Justice Minister said the Auditor General’s inspection report on the CDF for the year ending March 31, 2000, indicated that Section 12 (3) of the Bauxite Production Levy Act states that “all sums received as payment of the production levy under this Act and all other income from the asset of the fund shall be paid into the Fund.”
“Based on that provision, the Auditor General concluded that failure to pay the proceeds from the sale of the shares into the CDF, appeared to be in breach of that section of the Act,” he stated.
Senator Golding said while the unauthorised withdrawals from the CDF represented a breach of the Bauxite Production Levy Act, the action was done in good faith as the funds were utilised for the purpose of “satisfying the financial obligations of the Government.”
In his comments, Leader of Opposition Business in the Senate, Senator Arthur Williams, noted that it was “clear that there was no untoward motive that led to that breach, but rather that the acts were done in good faith.”
The CDF was established under the Bauxite Production and Levy Act. It was promulgated in 1974 at the time when the Bauxite Production Levy was imposed, and the proceeds of the levy directed to the CDF. The Bill was passed without amendment.