Bousquet’s Bulletin: What happens when comfort letters breed discomfort?

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By Earl Bousquet

Saint Lucia’s economic development minister Guy Joseph is (again) being called upon to answer questions about the authenticity of what’s been presented as an official government-backed ‘comfort letter’ in his name, authorizing a local agent to seek US $62 million in funding on the international financial market for a ‘hospital’ and ‘street-lighting’ project that apparently has not seen the light of day.

The published November 12, 2018 ‘letter’ – on what looks like the official letterhead of the ‘government of Saint Lucia’s ministry of economic development, housing, urban renewal, transport and civil aviation; and with what also looks like the minister’s signature – is addressed ‘To Whom It May Concern’.

It authorizes the holder, a Saint Lucian company – PAJOAH’s Limited & Associates – to negotiate with any entity for a US$62 million loan for funding a ‘Street lighting project’ and ‘St Jude hospital project’.

It also says: ‘Upon submission of proof of funding, the government has agreed to enter into a contractual agreement with PAJOAH’s to repay the US $62 million loan at a rate of 3.59 percent interest over a 15-year period, once the projects are successfully completed.’

The ‘comfort letter’ ended with an assurance that PAJOAH’s ‘are permitted to use this letter… for suitable financial institutions that would be able to provide the requisite funding for those prestigious projects.’

The moment the ‘letter’ started circulating in 2019, the minister completely dismissed and rejected it as ‘Fake News!’

But two other ‘letters’ have now emerged – January 24, 2019, signed by PAJOAH’s managing director Maximilus Johannes (of Rodney Bay, Gros Islet) appointing one Hasley Wong as PAJOAH’s agent in Trinidad and Tobago; the other, dated February 18, 2020, was supposedly from ANSA Merchant Bank Limited (AMBL) – also in Trinidad and Tobago, addressed to minister Joseph.

The bank’s ‘letter’, with a signature said to be that of managing director Gregory N. Hill, confirmed AMBL’s ‘willingness and ability to assist our client, PAJOAH Limited, with financing to meet its funding needs associated with the LED Street Lighting Project in Saint Lucia.’

It also carefully confirmed that: ‘We are currently undergoing the evaluation process, which is at an advanced stage, with a view to providing a risk approved financing offer.’

It added: ‘Please note that this letter does not constitute a binding offer of financing and is issued in the strictest of confidence for discussions only.’

The ‘letter’ further underlined: ‘A binding commitment to provide financing is subject to the completion of negotiations regarding the terms and conditions of the financing package, as well as due diligence on the project.’

Interestingly, while the November 2018 ‘comfort letter’ authorized PAJOAH to negotiate for both the ‘Street Lighting’ and ‘St Jude hospital’ projects, the bank’s ‘letter’ addressed to the minister only spoke of ‘the LED Street Lighting Project in Saint Lucia.’

It’s uncertain whether this is the same ‘Street Lighting Project’ that some time ago allegedly ran into difficulty after it was discovered that it had been approved without consultation with or the involvement of LUCELEC, the lone private entity empowered by law to provide electricity and owns the poles.

The minister, who the opposition and other critics claim is not legally authorized to enter into financial arrangements with banks on the government’s behalf as he is not the finance minister, has not issued any public clarification on the latest related letters currently circulating on social media.

Nor has prime minister Allen Chastanet (who is the minister of finance).

Besides, PAJOAH’s managing director Johannes hasn’t publicly denied signing the January 2019 comfort letter appointing Wong as company agent. Nor has AMBL commented on what’s still being circulated online as its managing director’s ‘letter’ to the minister acknowledging negotiating with PAJOAH.

But none of this is actually new.

A few years ago, a project involving a Canadian firm invited to convert waste from the Deglos national landfill into electricity also ran into a roadblock – again after it was brought to the attention of the planners and investors that only LUCELEC has the legal authority to produce and sell electricity in Saint Lucia.

And minister Joseph is the common denominator in all these projects.

The economic development minister has however been maintaining a long and deep silence on this issue, instead electing to speak out loudly against his election challenger, a fellow Seventh Day Adventist he claims is too quick-on-the-draw to be voted for.

But – again – the minister is still not alone.

The prime minister actually followed the same path a few years ago, when what was alleged to be a copy of a signed 2016 agreement – between the prime minister and master developer Teo Ah Khing for the $2.8 billion Desert Star Holdings (DSH) and Horse Racing Complex in Vieux, went viral on social media.

Like with the signature on the original PAJOAH comfort letter that the minister dismissed, the document said to be a photocopy of the DSH Agreement also bore what looks exactly like the prime ministers official signature on every page.

And like the economic development minister, the prime minister also categorically dismissed it as Fake News.

Since their original denials and dismissals, the government has maintained deafening silence on related matters; the prime minister and the minister treating them like figments of fertilized imagination.

But like with several other controversial issues coming to the fore in the heat of an election campaign that neither of the two major parties can afford to lose, this issue is not about to run away.

With general elections around an invisible corner, only time will surely tell whether the issues of accountability and transparency being raised by more than just opposition politicians are based on mere imaginative figments of mindless people, or fruitful suppositions worth nurturing.

Since the latest online PAJOAH episode, there have been several other similar allegations, this time related to deals involving compulsory government acquisitions on the eve of the expiry of the government’s five-year term next month.

For example, the government is being challenged on the arrangements relating to the sale of a near-derelict building formerly called the Daher Mall at Bois d’Orange and acquisition of the Anse Jambette (Anse la Raye) property owned by the heirs and successors of the late ‘Chef Harry’, where the government originally intended to locate a controversial dolphin park.

In all the finger-pointing, no one has directly accused anyone of corruption or improper, irregular or illegal behaviour, but the issues and documents revealed by the accusers and complainants raise many questions definitely needing answers.

The alleged comfort letter has obviously brought much discomfort to the government and the ruling United Workers Party (UWP).

So what next?

It’s impossible to predict accurately, but it would certainly be very helpful – even if – only for the government and the UWP’s reputation during what’s left of the election campaign – for the prime minister (as minister of finance) to end the speculation by simply clarifying the issues.

How?

By indicating whether any of the projects described in the alleged ‘comfort letter’ and other circulated pieces of related ‘correspondence’ got off the ground – and indicating what’s their current status.

Now, that shouldn’t be so hard! Should it?

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