Seaga
Erica Virtue, Staff Reporter
MORE THAN a decade after their construction in the late 1980s, questions have been raised about the manner in which the more than 1,000 houses were allocated in the Denham Town/Hannah Town housing schemes.
In addition, the National Housing Trust (NHT) has been accused of bypassing normal procedure when it purchased units in the schemes which were already occupied since, at the time, NHT was not in the business of buying and selling houses.
"Some of the houses bought by the NHT were occupied almost a year prior to the acquisition," according to a 1989 audit conducted by Touche Ross, Thorburn and Company, now Deloitte and Touche. "The NHT would normally carry out an exercise to ensure that it has an appropriate contributor population to afford the number and the price of units. This was not done," the audit pointed out.
The scheme was built by the Ministry of Housing in the late 1980s and the contractors were Ashtrom, a Government-owned construction company, and Kingston Industrial Works (KIW). The houses were distributed under "a special benefit order" to "give preference in the selection system to persons resident in the Denham Town/Hannah Town areas".
A source inside the NHT explained that a 'special benefit order' refers to the Trust's response to certain circumstances as in the case of the Denham Town/Hannah Town housing schemes.
According to the Touche Ross audit, "The board met on October 27, 1988 to approve a revised budget which increased its earlier approval of $41.7 million for the scheme on April 21, 1988 to $77 million". The NHT had committed to pay $37 million for the units to the Housing Ministry in 1988, but the figure was later increased to $41.7 million. Just before the 1989 General Election, the Trust agreed to pay $77 million as it increased its stake into the scheme. It is not clear if each of the payments was to acquire additional units in the scheme.
There are similarities between the 1989 Touche Ross audit on the NHT and the 2002 Angus Commission Report into the Government's housing project, Operation PRIDE, which led to the resignation of Housing Minister Dr. Karl Blythe and the board of the National Housing Development Corporation. Such similarities include a number of "material departures from the law, normal procedures and prudence in the management of the resources of the Trust" and Operation PRIDE.
Touche Ross, like the Angus Commission, pointed to interference in the housing projects. Shirley Williams, who headed the Bureau of Management Unit in the office of then Prime Minister Edward Seaga, was integrally involved in establishing the price of the units to make them affordable and in the design of the Special Mortgage Repayment Plan, according to the audit.
This role, under the laws governing the NHT, is a function of the Trust.
In the 2002 Angus/Operation PRIDE report, the Housing Ministry carried out similar price tailoring in order to make PRIDE schemes available to some individuals. This, the report said, contributed to the cultivation of nonchalance in ensuring the existence, accuracy and proper execution of sale agreements, loan agreements and other critical pre-contract documentation.
The 1989 Touche Ross audit said the NHT Board acted irresponsibly as it disbursed money while having full knowledge that the sums could not be recovered.
The 1989 audit said that prior to the disbursement of the first $12 million for the Denham Town units by the Trust, the then Managing Director and the Director of Planning had knowledge that the units were already occupied and that the residents of the area could not afford the units.
"To have disbursed the $12 million with that information and without the guidance of the Board was irresponsible," said the audit which noted that the disbursement was made on October 24, 1988.
The audit disclosed further that "The Board at its meeting on January 25, 1989 deferred decision on the purchase of an additional $15 million of units in the scheme. Despite this, an agreement and further disbursement for $15 million was made on January 27, 1989. There is also no evidence of approval by the Board for another disbursement of $10 million on February 9, 1989."
While there were changes to the NHT's Board, members between 1985 and 1989 were Oliver Jones (chairman), Holden Hammond (managing director), Samuel Stewart, Maurice Stoppi, Harry Armstrong, Howard Mitchell, Lascelles Beckford, Daniel Leslie, Lloyd Goodleigh, Peter Milligen, Ian McConnell, Eran Spiro, Owen Dawes, Dr. Paul Chen-Young, Shirley Williams and M. O'Reggio-Alexander.
Asked if between 1985 and 1989 the Trust was in the business of buying already built houses for resale to beneficiaries, in a written response the NHT said: "In the financial year 1982/83, the NHT's role was changed from being a provider of both mortgage and interim finance to that of providing mortgage finance only. This remained in place until 1989 when the Trust returned to its role as a mortgage financier and developer."
"During the period in which the Trust focused solely on mortgage financing, the organisation provided some mortgage loans to beneficiaries of previously built housing units."
The NHT, which was under the portfolio of the Office of the Prime Minister, was instructed to allow the residents who were already occupying the units, the majority from Mr. Seaga's West Kingston constituency, to remain in the houses and regularise their tenancy after the 1989 general election. The JLP lost the election.
The Sunday Gleaner was unable to ascertain who gave the instructions which were obeyed by the Trust as its then managing director, Holden Hammond, could not be reached for comment and then Prime Minister Edward Seaga said he had not seen the audit and therefore could not comment.
But did the NHT operate a special programme under which non-contributors could benefit from NHT-purchased houses which are for resale?
"There have been instances in the past where the NHT was mandated to regularise the tenancy situation in some communities. In the case of the Denham Town and Hannah Town housing schemes, both communities were developed by the Ministry of Housing and were occupied prior to the NHT taking over the loans. Not all the occupants and eventual beneficiaries of these units were NHT contributors," a faxed response from the Trust said.
The NHT did not say who gave the mandate, what was the process, or what circumstances would cause it to vary its method of processing units for allocation.
"The NHT has criteria which prospective beneficiaries are expected to meet before they can qualify for a loan. However, in a few instances where units are occupied before the NHT assumes possession of the mortgage portfolio, the Trust has had to treat the situation differently," the fax said.
The 1989 audit pointed to the Shirley Williams designed "Special Mortgage Repayment Plan" - the 'special benefit order' through which the occupants would pay for the houses.
Jamaica Labour Party's Olivia 'Babsy' Grange three weeks ago confirmed with The Sunday Gleaner an arrangement for an interview with both Mr. Seaga and Ms. Williams. Ms. Wiiliams did not turn up at the time and no explanation was given for her absence. She has not returned subsequent telephone calls to her office.
Mr. Seaga, now Leader of the Opposition, said that "it was not true that the houses in both Denham Town and Hannah Town were captured". He said information available to him was that a survey was done to ascertain the income bracket of the individuals in the area to determine mortgage affordability. Mr. Seaga insisted that he could comment no further as he had not seen the Touche Ross audit.
The audit pointed to roles played in the Denham Town/Hannah Town housing project by the Ministry of Housing, under the leadership of Bruce Golding, as well as the Office of the Prime Minister, through a special unit headed by Miss Williams, and the then NHT chairman Oliver E. Jones.
Former Construction Minister Bruce Golding, whose Ministry was said to have "identified the beneficiaries", said the NHT did not fall under the Construction Ministry but under the Ministry of Finance and Office of the Prime Minister. "What I do recollect is that, in order to facilitate persons who were not regular contributors to the NHT, a system of housing or mortgage bonds was set up, so that they could become qualified by purchasing these bonds," Mr. Golding said.
By purchasing NHT bonds (shares), non-contributors would have earned points which would be considered towards mortgage qualifications.
According to the audit, Mr. Oliver Jones, then NHT chairman, was a signatory to the three agreements totalling $37 million in payouts to purchase units in the scheme from the Ministry. Mr. Jones told The Sunday Gleaner that he too was unaware that an audit was done. But when the relevant portion of the document was read to him, he said, as NHT chairman, he would not normally sign cheques unless there was an emergency and he was under instructions to do so.
He said: "I normally would not sign cheques at NHT. That would be between the managing director and the chief financial director. I do not know what they (the auditors) would mean by a signatory, but surely, it is possible that I could have signed in an emergency. I have no problems with that."
According to Mr. Jones, 15 projects were under way at the time and he believed that the payments were for work done at different stages of construction. He said recommendations for payments to the contractors would have to be made by the technical committee of the NHT and payment made. Mr. Jones said Ms. Williams, or then NHT managing director, Holden Hammond, would be able to assist with more information.
However, Mr. Hammond, who later became a JLP candidate, could not be contacted for comment.
