AG ‘appalled’ how houses allocated

Dr Frank McField, former Minister of Housing	Dan Duguay, Auditor General

Friday,  September 2, 2005

In his third report on the National Housing and Community Development Trust (NHCDT), Auditor General, Dan Duguay, says he is appalled at how homes were allocated under the Affordable Housing Initiative (AHI).

Mr Duguay’s first report on the NHCDT was issued in April 2005 and reported on the process of tendering and construction of the (AHI). It covered the period from the inception of the NHCDT until just before Hurricane Ivan in September 2004 (including a post hurricane update).

The second report and the first Forensic report in June 2005 covered all activities from 1 September 2004 until 25 May 2005.

Mr Duguay’s third and final report looks at the remaining issues and he encourages the public to read all three reports in order to obtain a complete understanding of all activities of the NHCDT.

The second and third reports were essentially a two-part Special Forensic Audit that the Governor requested following a special Cabinet meeting and only days after the People’s Progressive Movement, (PPM) Government was sworn in to office.

Dr Frank McField the Former Minister of Housing responsible for the project and in the firing line of the AG’s report, has slammed the audit as the “witch hunt that the Government said it would not do.”

According to Mr Duguay however there are serious grounds for his conclusions. As presently constituted, the AHI has 99 homes compared to the 200 originally planned and he states that the current situation is financially unsustainable.

Even under the best scenario, the NHCDT would require US$400,000 per year from Government to meet its bond obligations, he reports. Under the current collection regime where only 35 percent of mortgages are collected, the annual shortfall could be as high as US$900,000.

It is clear that there are some serious financial discrepancies and Dr McField said the grounds for the AG’s accusations concern Staunch, the contractors on the project, and whether they were paid for goods and services not received.

However Dr McField insists although he was Minister for Housing at the time, Roger Bodden was the Manager of the project and in charge of the finances.

“I really don’t know what Staunch was paid,” said Dr McField. “Roger (Bodden) was the one who would work out the invoices with the Manager. If Roger felt they were being overpaid then he should have brought it to my attention. If Staunch was paid more, why point at me, why not Roger?”
Dr McField noted last week that he is facing charges of, “Suspicion of Official Corruption and Conspiracy to Defraud,” as a result of the Auditor’s investigations pointing fingers at him.

Nor is it just the financial issues that Mr Duguay has criticised; he also turned his attention to the process of selecting homeowners. Mr Duguay said in his report that he is, “appalled at how homes were allocated under the Affordable Housing Initiative.”

In particular, he goes on to say, a fair process was not used. Homes were reportedly awarded in a hasty manner, with little regard for the very limited selection criteria or those with the most need.

Dr McField said: “My only regret is that there were not enough homes for the six hundred odd who needed them. Some of the people housed were working on the project. We would still have to find facilities where we could pay less for these people.”

Mr Duguay’s report says however that there was a clear lack of oversight and due diligence on the part of the NHCDT Board. Also, he says, there were clear instances of political interference, and other cases of alleged political interference.

As a result, Mr Duguay concluded that there were successful applicants that did not deserve to get a home, and would not have received one had a fair process been applied.

In his report in June, Mr Duguay noted that 20 homeowners owed CI$13,618 to NHCDT. By 2 August, he says, 50 homeowners owed CI$58,136, which leads him to conclude that non-payment is quickly becoming the norm rather than the exception for those homeowners under the AHI.

The report goes on to say that the NHCDT also continues to rent homes to individuals and companies, with substantial arrears on these accounts.
According to Mr Duguay, a special purpose fund was given to NHCDT to assist individuals who did not have the down-payment for their home. His review indicates that these special purpose funds were used for other purposes and that the NHCDT has breached its fiduciary responsibility to the donor.

Mr Duguay urges the NHCDT to rectify the situation by reversing the allocation of the misused funds.

In addition, the NHCDT has assumed responsibility for the trailers brought to Grand Cayman by the Cayman Islands Recovery Operation and Mr Duguay has also discovered many problems associated with these trailers including:

Still no clearly defined exit strategy despite assurances that such a policy would be developed before the vehicles arrived on island;

Tenants who moved into trailers without a deposit, their first month’s rent or a lease;

Monies owed in excess of $50,000; and Unclear situation on how utilities will be paid.

The full report is available online at www.gov.ky.

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