JCC head raises red flag over US$500m POSWDL loan

GEISHA KOW­LESSAR-ALON­ZO

Se­nior Re­porter

geisha.kow­[email protected]

The mat­ter con­cern­ing the Port-of-Spain Wa­ter­front De­vel­op­ment Ltd (POSWDL), a sub­sidiary of the Ur­ban De­vel­op­ment Cor­po­ra­tion of T&T (UDe­COTT), as out­lined in the Au­di­tor Gen­er­al's Re­port, has sur­faced as a sig­nif­i­cant point of con­tention re­gard­ing the trans­paren­cy of sov­er­eign debt.

Cen­tral to the is­sue is a US$500 mil­lion (ap­prox­i­mate­ly TT$3.37 bil­lion) fi­nanc­ing arrange­ment that seems to have been struc­tured to "ob­scure" the gov­ern­ment's true fi­nan­cial ex­po­sure.

Un­der the ad­min­is­tra­tion of the Peo­ple’s Na­tion­al Move­ment (PNM), POSWDL se­cured a 15-year fi­nanc­ing arrange­ment with UMB Bank NA (Kansas City, Mis­souri).

The arrange­ment was an­chored by a 30-year sub­lease agree­ment ex­e­cut­ed on Feb­ru­ary 19, 2025, be­tween the sub­sidiary and the Of­fice of the Pres­i­dent.

The re­port, which was laid in Par­lia­ment last Fri­day, high­light­ed that rather than a tra­di­tion­al gov­ern­ment guar­an­tee, POSWDL’s as­sets—specif­i­cal­ly the high-val­ue wa­ter­front prop­er­ties—were pledged as se­cu­ri­ty.

Con­tact­ed yes­ter­day, Joint Con­sul­ta­tive Coun­cil (JCC) pres­i­dent Fazir Khan told Guardian Me­dia the trans­ac­tion ap­peared struc­tured so that the bor­row­ing did not for­mal­ly sit on the Gov­ern­ment’s bal­ance sheet as di­rect debt, yet the re­pay­ment stream is ul­ti­mate­ly be­ing fund­ed by pub­lic mon­ey through lease pay­ments.

"That cre­ates a long-term fis­cal oblig­a­tion for the State, whether or not it is la­belled a sov­er­eign guar­an­tee or booked as pub­lic debt. This is pre­cise­ly the type of arrange­ment that can ob­scure the State’s true ex­po­sure if not re­port­ed ful­ly and trans­par­ent­ly,” Khan said.

"If the lease pay­ments are ef­fec­tive­ly matched to debt re­pay­ment amounts un­der the se­cured notes, and if the State is the ul­ti­mate source of the rev­enue stream used to ser­vice that fi­nanc­ing, then the pub­lic is en­ti­tled to know the full eco­nom­ic re­al­i­ty of the arrange­ment. The con­cern here is not on­ly le­gal­i­ty, but trans­paren­cy, ac­count­abil­i­ty and whether the form of the trans­ac­tion was used to avoid the ap­pear­ance of in­creased pub­lic debt," he ex­plained.

Good gov­er­nance, Khan fur­ther stat­ed, re­quires that gov­ern­ments dis­close not on­ly di­rect debt, but al­so ma­te­r­i­al con­tin­gent li­a­bil­i­ties, off-bal­ance-sheet com­mit­ments and long-term pay­ment oblig­a­tions that bind fu­ture ad­min­is­tra­tions and tax­pay­ers.

On the ques­tion of whether Pres­i­dent Chris­tine Kan­ga­loo act­ed with­in of­fice re­gard­ing the loan is­sue, the JCC pres­i­dent cau­tioned, "We have to be care­ful based on the ma­te­r­i­al quot­ed; the Pres­i­dent was a par­ty to the sub­lease in the ca­pac­i­ty of the of­fice rep­re­sent­ing the State, not nec­es­sar­i­ly as a per­son­al or in­de­pen­dent de­ci­sion-mak­er ex­er­cis­ing uni­lat­er­al fi­nan­cial au­thor­i­ty."

He added that the trans­ac­tion may still raise le­git­i­mate ques­tions about whether the con­sti­tu­tion­al and fi­nan­cial ar­chi­tec­ture was used prop­er­ly, whether the arrange­ment should have been more trans­par­ent­ly treat­ed as a pub­lic li­a­bil­i­ty, and whether Par­lia­ment and the pub­lic were giv­en a full and fair pic­ture of the State’s oblig­a­tions.

If, how­ev­er, prop­er ap­provals ex­ist­ed, Khan said the Pres­i­dent’s role may have been for­mal and reg­u­lar.

Mean­while, sources close to the trans­ac­tion sug­gest­ed that the man­ner in which the process was con­duct­ed "crip­pled" the sub­sidiary by sad­dling it with long-term li­a­bil­i­ties that do not re­flect the State's true fis­cal po­si­tion.

"That is not in keep­ing with how gov­ern­ment loans should be be­cause a gov­ern­ment loan is sup­posed to re­flect the true sta­tus of the debt of the gov­ern­ment. So what they de­cid­ed is to hide the debt, right, in one of UDe­COTT’s sub­sidiaries," sources fur­ther not­ed.

The sources added that the in­volve­ment of the Pres­i­dent in sign­ing the sub­lease has raised ques­tions about pro­pri­ety. They said while the Pres­i­dent acts on the ad­vice of the Cab­i­net, the use of the ex­ec­u­tive’s of­fice to an­chor a mul­ti-bil­lion-dol­lar pri­vate fi­nanc­ing deal is viewed by some as an over­reach or a tac­ti­cal ma­noeu­vre to pro­vide a "sov­er­eign-like" se­cu­ri­ty to lenders with­out Par­lia­men­tary over­sight.

Wad­ing in on the is­sue, econ­o­mist Mar­i­ano Browne clar­i­fied that any per­ceived im­pro­pri­ety re­gard­ing Pres­i­dent Kan­ga­loo’s sig­na­ture on the UDe­COTT loan doc­u­ments is a mis­un­der­stand­ing of the T&T Con­sti­tu­tion.

As the Port-of-Spain Wa­ter­front is sit­u­at­ed on State land, the Pres­i­dent’s ap­proval is a le­gal re­quire­ment for lever­ag­ing the as­set, he said.

Browne em­pha­sised that the Pres­i­dent acts as a "mere func­tionary" in this ca­pac­i­ty.

"The way the Con­sti­tu­tion is writ­ten, she (pres­i­dent) has to sign off. She doesn't have any say, she doesn't have any free­dom of op­tion," he added.

The Of­fice of the Pres­i­dent re­spond­ed to the mat­ter on Sat­ur­day, re­ject­ing any sug­ges­tion that the Pres­i­dent was “the au­thor, ar­chi­tect, or wrong­do­er in re­spect of any trans­ac­tion in­volv­ing the State,” adding that pres­i­den­tial func­tions are car­ried out in ac­cor­dance with the Con­sti­tu­tion and the laws of T&T.

Guardian Me­dia al­so con­tact­ed for­mer min­is­ter of pub­lic ad­min­is­tra­tion and dig­i­tal trans­for­ma­tion Allyson We­st­on on the is­sue.

West, in a What­sApp re­sponse, is­sued a ro­bust de­fence re­gard­ing the trans­paren­cy of the state-run en­ter­prise’s fi­nanc­ing, dis­miss­ing al­le­ga­tions of "sur­rep­ti­tious" bor­row­ing as fun­da­men­tal­ly mis­lead­ing.

Ad­dress­ing re­cent cri­tiques con­cern­ing UDe­COTT, West clar­i­fied that the agency’s fi­nan­cial ma­noeu­vres were not on­ly legal­ly sound but sub­ject to rig­or­ous Par­lia­men­tary over­sight.

West point­ed­ly not­ed that the cur­rent Op­po­si­tion bench­es in both the House of Rep­re­sen­ta­tives and the Sen­ate in­clude two for­mer min­is­ters of fi­nance and a for­mer min­is­ter in the Min­istry of Fi­nance.

"You do re­alise that there are two for­mer min­is­ters of fi­nance and a for­mer min­is­ter in the min­istry of fi­nance cur­rent­ly sit­ting on the op­po­si­tion bench­es in the HoR and the Sen­ate who would be much bet­ter placed to ad­dress this is­sue, as they would have been di­rect­ly in­volved in ar­rang­ing these trans­ac­tions," she said.

West ex­plained that un­der Sec­tion 28 of the Ur­ban De­vel­op­ment Act of 2005, the cor­po­ra­tion is ex­plic­it­ly grant­ed the au­thor­i­ty to bor­row funds for its op­er­a­tions.

This au­thor­i­ty, she not­ed, is ex­er­cised with the con­cur­rence of the Min­is­ter of Fi­nance and has been utilised through­out the com­pa­ny's his­to­ry to ful­fil its de­vel­op­men­tal man­date.

"There are sev­er­al State agen­cies, in­clud­ing UDe­COTT, which have been grant­ed au­thor­i­ty by the acts un­der which they were cre­at­ed to bor­row funds for their op­er­a­tions (ref­er­ence S.28 of the Ur­ban De­vel­op­ment Act of Trinidad and To­ba­go 2005). UDe­COTT sim­ply, with the con­cur­rence of the Min­is­ter of Fi­nance, ex­er­cised this au­thor­i­ty. It would have done this sev­er­al times since its cre­ation to fund the ful­fil­ment of its man­date," she said.

Ad­dress­ing the spe­cif­ic con­cern of why cer­tain mul­ti-bil­lion-dol­lar loans do not ap­pear di­rect­ly in the na­tion­al ac­counts, West ex­plained that since the Gov­ern­ment of T&T is not the "bor­row­er on record" for these spe­cif­ic trans­ac­tions, the debt is ap­pro­pri­ate­ly re­flect­ed on UDe­COTT’s in­ter­nal books rather than the cen­tral gov­ern­ment's ledger.

She cit­ed the con­struc­tion and out­fit­ting of the In­ter­na­tion­al Wa­ter­front and the Gov­ern­ment Plaza as prime ex­am­ples of this fi­nan­cial struc­ture.

"But to claim or in­sin­u­ate that the loans are sur­rep­ti­tious is com­plete­ly false and mis­lead­ing, as all state agen­cies are re­quired to sub­mit au­dit­ed ac­counts in which such loans would have been re­flect­ed. And the Par­lia­ment, through the mech­a­nism of the Joint Se­lect Com­mit­tee process, has over­sight au­thor­i­ty of the ac­tiv­i­ty of those State en­ter­pris­es," West said.

West added that to claim those loans crip­pled the com­pa­ny is al­so in­cor­rect, as the loan oblig­a­tions were ful­ly cov­ered by a sub­lease be­tween UDe­COTT and the Min­istry of Pub­lic Ad­min­is­tra­tion, un­der which the lat­er as­sumed re­spon­si­bil­i­ty for mak­ing an­nu­al lease pay­ments which cov­ered the oblig­a­tions un­der the loan.

"Those pay­ment oblig­a­tions were al­ways ful­ly fund­ed in MPA’s an­nu­al bud­get al­lo­ca­tion on which, as min­is­ter, I was usu­al­ly ques­tioned in the an­nu­al bud­get Stand­ing Fi­nance Com­mit­tee process. There was no sub­terfuge in­tend­ed or in­volved. And fur­ther to seek to ma­lign the good name and char­ac­ter of the Pres­i­dent of our great Re­pub­lic is tru­ly rep­re­hen­si­ble," she added.