The Opposition has ascribed to me corrupt motive in the decision of the UDC, for which I have ministerial responsibility, to acquire property at Ferry which houses the Hydel Group of Schools. Scurrilous statements made by members of the Opposition including, regrettably, the Leader of the Opposition herself, have suggested that this decision was influenced by my association with the Head of the Hydel schools, Senator Hyacinth Bennett, and my desire to “bail out a friend”. I repudiate that assertion and I treat it with the contempt that it deserves.
Last Tuesday, I advised the House of the considerations that informed the decision. It is necessary for me to return to the issue today.
I stated clearly last Tuesday that the acquisition of this property was consistent with the UDC’s development plan for the Caymanas Lands. This plan provides for the mixed-use development of these lands including provision for residential, agricultural, light industrial, commercial, institutional, sport and recreational facilities. The residential component involves the construction of over 4,000 houses, 85% of which will be for low to middle-income families. This will, obviously, require considerable social infrastructure including the provision of schools. The plains of St. Catherine and Clarendon (MinEd – Region 6), with its rapidly growing population, currently suffer from the most acute shortage of school places. The acquisition of this property which falls within the development area and on which an established school exists with over 46,000 square feet of buildings and accommodation for over 1,200 students was entirely complimentary to the development plans for the area. The Opposition has dismissed this as a contrivance. That is absurd! Had the school been located in some isolated place where the UDC had no interest and no development plans, its intervention in purchasing the property could justifiably be challenged.
I refer members of the House to the UDC’s Corporate Strategic Operational Plan for 2006-2011 which was established under the previous administration and appears on the UDC website. It lists among its core business the following: . Housing solutions. Commercial developments. Resorts and attractions. Sports facilities. Hospitals and health centres. Schools
But there was another consideration to which I deliberately referred last Tuesday. Hydel faced imminent closure. The owners of the land had put the property up for sale. Hydel was not able to purchase the property. Earlier efforts to identify commercial financing through the DBJ with the possible assistance of a grant from the CHASE Fund had proved unsuccessful. Private schools, however well run (and Hydel is a well run school), are not known to be huge profit centres, especially when they cater to children of ordinary working families such as the majority of those attending Hydel.
Hydel’s pre-tax profit for 2007 was a modest $13.5 million. Had it been in a position to purchase the land there would have been no need or opportunity for the Government to intervene since its continued operation would have been secured and it would ultimately be integrated into the development plan.
Hydel was served notice to vacate the premises in 2007. To do so would have meant its inevitable closure, the land would most likely have been used for some other purpose and the Government would have been obliged to find school places for the 1,283 students enrolled at Hydel. The Opposition contends that the Government should have built a new school. I quoted figures to indicate that the cost of building a new school – $350,000 – $450,000 per school place – would have meant spending $400M – $500M to accommodate the number of children who would have been displaced. We have bought a property with equivalent accommodation for $168.7 million!
Following the expiration of the notice and the inability of the school to relocate, the owners of the land took the matter to Court. The Court gave Hydel until June 2009 to vacate the premises. The Government had three choices:(1) Allow the school to close with 1,283 students displaced and cram them into the already overcrowded schools in the region;(2) Find $400-$500 million to build a new school;(3) Acquire the land to enable the school to continue to exist.
This government is not in the business of closing schools or allowing schools to be closed where it can be avoided. The fulminations of the Opposition suggest that if it were the government it would have done otherwise, sit back and watch the school close, let the children find somewhere else to go and something else to do. The interests of the children – most of them from struggling, working-class families – are not important. What is important is scoring mean political points, gaining cheap political advantage. I say to them: Shame on you!
The children of Hydel are neither PNP nor JLP. They are children, their education is crucial to their future and we ultimately have a duty to protect and secure that future!
Let me turn to the claim by the Opposition that the property was purchased against the advice of the UDC’s technical officers. The Opposition members quoted from an internal report submitted by the Deputy General Manager with responsibility for Asset Management, a copy of which it evidently has in its possession.
The report made the following recommendations to which I will respond:
(1) The inputs of the Ministries of Finance and Education to be obtained
. The UDC was not seeking funds from the Government’s budget that would have required the endorsement of the Ministry of Finance. It was sourcing funds from the DBJ secured by assets which are to be divested in keeping with government policy to divest developed assets and use the proceeds for further development. The DBJ facility would, therefore, be temporary pending the sale of these assets. Furthermore, a representative of the Ministry of Finance actually sat on the Board of the UDC
. Hydel is already registered with and recognized and regulated by the Ministry of Education. The Ministry of Education is already short of school places in St. Catherine. It was aware of the dilemma facing Hydel, had been in discussions with Hydel and was concerned about the possible closure. What conceivable advice could the Ministry of Education be expected to provide – that the school should be allowed to close?
(2) The property should not be acquired until audited financial statements for Hydel were presented
This advice presumes that Hydel is an investment whose rate of return must meet investment standards. Hydel is a school – not a Coney Island! It is, indeed, an investment – not in terms of the dollars it generates but an investment in our children, their potential and their future.
(3) Other possible options should be considered by Hydel to purchase the land
What other options? How does a school with an operating surplus of $13.5 million purchase a property for $168.7 million?
(4) The sale price to be contemplated should be between US$2.25M and US$2.35M
That is exactly what was transacted. The decision to purchase the property was taken on July 17th when the exchange rate was $72.17. The purchase price of $168.7 million was the equivalent of US$2.337 million.
(5) Consideration should be given to whether a new school should be constructed instead of purchasing land with an existing school
As I have already pointed out, we would have had to spend $400M – $500M to build a new school of equivalent size.
Private schools are an important part of our education structure. Government intervention to support and retain them is not new. And it is not something with which the previous government is unfamiliar.
When some years ago Priory, a private school, ran into financial difficulties that threatened its closure, the then Government intervened and assumed the responsibility for the payments of salaries for all its teachers. What inference are we to draw from the Opposition’s cheap political posturing in the case of Hydel? Priory had long been known to cater to students from a less challenged socio-economic class. Hydel caters to children from low to middle-income families. It was perfectly alright for the previous Government to intervene to “bail out” Priory but for this Government to rescue Hydel is a scandal. What inference are we to draw?
I repeat: Government’s intervention to facilitate private schools is not new. The Government recently authorized the transfer free of cost to the Wolmers Trust of 5.6 acres of land at 2 Marescaux Road on which Wolmers Girls School has its Lower School and playfield. Is that nepotism? Is that a scandal?
The Government recently approved the assignment of the former Ministry of Transport and Works building at 58 Hagley Park Road to the Promise Learning Centre, a private school catering to children with autism and other learning disabilities and which would no longer be allowed to remain at North Avenue where it was established. Is that nepotism? Is that a scandal?
Spurious insinuations have been made by the Opposition regarding the involvement of the DBJ. I have already explained that the DBJ is simply providing bridging finance for UDC projects which is secured by more than $3 billion of assets that are to be divested. The additional $560 million borrowed is not exclusively for the purchase of the Ferry property, the cost of which is $168.7 million, but includes financing for a number of projects.
The Opposition says that this transaction is a “bail-out” of a “friend”. We should perhaps examine real bail-outs. The Mavis Bank Coffee Factory has long been associated with a former PNP Minister, now deceased. The principal officer of the company is a current Opposition Senator. When the Mavis Bank Coffee Factory encountered financial difficulties, the then Government intervened by providing inadequately secured loans, part of which had to be converted to equity. As at February 2008, the government’s exposure with accumulated interest was $792.1 million. The DBJ has decided to put the Mavis Bank Coffee Factory up for sale. It will suffer significant losses because the value of the property is far below its exposure. Was that a “bail-out for a friend” or a bail-out for the coffee industry?
Contrary to the nasty allegations made by the Opposition, the decision of the Government to acquire the lands on which Hydel is sited met two important criteria:(1) It was consistent with the development plans for the Caymanas Lands being actively pursued by the Government;(2) It has prevented the demise of a well run school providing education for over 1,200 children in an area desperately short of school places.
The Opposition Leader has invited the Contractor-General to investigate the purchase of this property. I welcome his investigations and I urge him to respond favourably to the Opposition Leader’s request. He has a duty to monitor the integrity of the transaction. I have that duty too but, in addition, I have a duty to protect the interests of our children. As Prime Minister, I accept full responsibility for the decision by the Board of the UDC for which I have ministerial responsibility.
It is ironic, if not ludicrous, for this Opposition to use this as a basis for accusing this Government of corruption. It will be a long time before those on that side can regain the moral authority to accuse anyone of corruption!
