NHT saga continues
TUESDAY’S RANT critiquing NHT spin doctoring on Non Disclosure agreements and undelivered housing solutions drew a testy online comment from a reader (handle “Mission Up”) with a very different viewpoint.
My opinion also attracted positive feedback but I confess I much prefer negative feedback because it allows me to pause, reflect, adjust my opinion if necessary or, as in this case, try to educate as best I can. The Old Ball and Chain keeps accusing me, with some merit, of being a frustrated teacher.
Mission Up’s comment, broken down in parts but re-produced in full, started:
“Some people live in Utopia while some of us live on EARTH. I live on the latter. In my world commercial contracts exist, some requiring payments in advance. It is therefore kind of silly to suggest that there is something inherently wrong or even imprudent about advance payments.”
Sigh.
All that happened on Tuesday was a rebuttal of NHT’s assertion that
“NHT will not lose any funds.” After listing some of the losses I pointed out that NHT also suffered a double whammy because “the contractor has been enriched by its use of the advance and delayed reimbursement.” Nobody alleged that advance payments were inherently wrong or imprudent.
But, if you insist I look closely at THIS particular advance payment….
On my Earth, in large construction contracts, payment in advance for subsequent deliverables is usually followed by professional oversight of contractors to ensure deliverables’ time frames and quality control standards are met. On my earth, payment in advance is usually for mobilisation (say, 10 per cent) followed by further interim payments based on certification of actual work issued by professional architects and/or quantity surveyors. Professionals issue interim certificates verifying progress in a best endeavours attempt to ensure the “owner” doesn’t end up with nothing but a lawsuit after years of effort. Project supervision (usually by a owner appointed professional Project Manager) also ensures that, if lawsuits are inevitable, they come at a time before more than one quarter of a $2.5 billion contract has been paid and the owner alleges in court that the contractor is trying to sell the units privately.
On my earth, “owners” who sign contracts and make advances seemingly without any or any effective or sufficient due diligence or supervision of works, are usually risking their own money NOT taxpayers’ enforced investments in projects specifically mandated to provide benefit to said investors/contributors but end up elsewhere. In real life, if you are using investors’ money, the investors ride you like a rented mule to get regular updates on what’s happening to their investment.
Back to Mission Up’s contrary opinion:
“Many home owners, importers, manufacturers and other customers are forced to pay in advance before even seeing the goods they have agreed to purchase ... this is even more so when it comes to long term deliverables and items that take months or years to complete. Therefore paying in advance is NOT NEW nor NEWS.”
On my earth, when prospective homeowners decide to buy into a development before it has started, they tend to find out if there are any adverse traces about the developer or its shareholders. They’d never enter into a $2.5 billion contract calling for massive advance payments where, according to The Gleaner (January 14, 2020), regarding one of the contractor’s directors:
“…in July 2016, the Office of the Contractor General (now Integrity Commission) warned the Holness administration against granting a telecoms licence to Symbiote Investments, because of, among other things, ‘adverse traces’ against…a former director.”
On my Earth, The Old Ball and Chain and I paid an advance for our humble abode based on her viewing a model house only. But her investigations disclosed the developer was a leading insurance company and the builder one of Jamaica’s best with a track record of excellence and integrity.
That’s how advance payments are risked on my earth. This isn’t importation of raw materials or racehorses. This is a massive advance of taxpayers’ money made by a statutory Trust resulting in not one single house delivered for contributors to the Trust. THAT is NEWS. And NEW!
Mission Up continued:
“That there are instances when one party fails to honour their part of an agreement ... this happens millions of times per day ... and is not NEW nor NEWS either. This is why many lawyers actually have a job ... because frequently agreements go bad ... or there are disagreements.”
Leaving the “millions of times per day” hyperbole alone for now, this is true in private contracts. It is, however, most definitely NEWS when a public statutory agency, set up as a Trust, using huge amounts of public funds, enters into such a questionable contract with a contractor connected to someone the subject of prior adverse OCG findings and the contract ends up going sideways. That, my friend, is the fundamental definition of NEWS.
Mission Up: “A ‘clause’ in a contract is not the same as a CONTRACT.”
Yes it is. Every clause in every contract is agreed between or among contracting parties. An agreement is a contract. So every clause constitutes a contract. A contract including a non-disclosure clause is itself a Non Disclosure Agreement. Mission Up digs deeper:
“The timing of clauses are also important during the process. There is also the matter of MUTUALITY to consider. One party may not have the unilateral latitude to act as they wish WITHOUT the approval of the OTHER PARTY. That is the LAW.”
And if you are concerned about the opportunity cost of losing money, then don’t buy anything.”
Jeez, why so agitated about it? Whether or not one is concerned about the opportunity cost of losing money the fact is there are opportunity costs to losing money. So when NHT says it hasn’t lost any funds in a very disingenuous looking statement that is not true.
Before we “buy anything” we aren’t concerned with “the opportunity cost of losing money”.
Those of us living on my earth are concerned with the risk associated with likely non-performance of the purchase agreement. So we retain lawyers to investigate things like Title and terms. If we are contracting a development or large construction, we also employ professionals like Architects, Quantity Surveyors and Project Managers to ensure progress along a critical path. If matters shouldn’t work out, as happens, there will be lost opportunity costs which is why we should ensure up front and continuing due diligence to try to avoid this.
Tuesday’s column simply exposed NHT’s incorrect claim that it hadn’t lost any funds on the deal. It wasn’t intended to expose other types of possible breaches of duty as to how these opportunity and other costs were lost.
But, if you insist…
The responsibility for these things becomes stricter when you are spending other people’s money. In that event, when things go tits up, you don’t have the unilateral right to secretly decide how lawsuits should be settled. Yes, the other side has the right to veto open settlement. This is NOT what NHT relied on in its public statements where it claimed non-disclosure was mandated by law.
It. Is. NOT!
NHT went beyond absurdity by asserting it entered into a contract with a non-disclosure clause that was available to the public at the Supreme Court. False again! How dumb are we considered to be that we’d swallow farcical contentions that a secrecy clause permits the agreement to be public? The Supreme Court refused Gleaner’s
request for a copy of the agreement.
So, yes, the other side can veto disclosure. But NHT has a contrary public duty to EVERY Jamaican taxpayer. So, if the other side won’t agree to an open settlement, NHT has no option, in my opinion, but to proceed to trial; seek the full pound of flesh; and let the chips (a.k.a. full disclosure of Contractor’s Defence details) fall where they may. NHT wasn’t bullied into secrecy. NHT agreed to secrecy.
Why?
NHT’s Geraldine Jones inspired assertion “the Law made me do it” is transparently false. This falsity is compounded by NHT’s failure to honour its public duty to disclose details of every transaction including methods of contracting; reasons they go belly up resulting in expensive lawsuits; why taxpayers’ money goes down the drain; and contributors don’t receive promised housing solutions.
I’ve taken altogether too long to say what another reader (handle “Victorious Victor”) responding online to Mission Up, wrote:
“When the bill is paid with taxpayers money, a public explanation is required and as always, if it’s perfectly legitimate, why the secrecy?”
NHT: stop pretending all is copasetic when you left the barn door open and several herds bolted.
Peace and Love.