How to pull wool over sheeple eyes!

The Star (St. Lucia) - - LOCAL - (My “Con­trary

Em­bar­rass­ing though it may be, I must ad­mit I’d never heard of the Hu­man­i­ties Award win­ner, renowned au­thor and philoso­pher Thomas Sow­ell un­til Sun­day morn­ing when a close friend with whom I share a pro­cliv­ity or two in­tro­duced him via his fol­low­ing wise words: “It is hard to imag­ine a more stupid or more dan­ger­ous way of mak­ing de­ci­sions than by putting those de­ci­sions in the hands of peo­ple who pay no price for be­ing wrong!”

Es­pe­cially ironic was that at time of re­ceipt I was en­thu­si­as­ti­cally en­gaged in some im­por­tant re­search prompted by a lawyer I hold in high re­gard. Dur­ing an ex­change the pre­vi­ous evening that cen­tered on my pub­lished re­view of the last per­for­mance of the Se­nate of the Apes, he had killed me softly with his cur­rent fa­vorite song: “The trou­ble with you guys who are tak­ing is­sue with this be­lat­edguar­an­tees thing is rooted in your mis­in­ter­pre­ta­tion of the word ‘guar­an­tee.’ ”

My own con­tention was that Sec­tion 41 of the Fi­nance (Ad­min­is­tra­tion) Act had sev­eral times in the last few weeks been twisted to serve pur­poses other than in­tended by its framers. In short, our law­mak­ers were with im­punity mak­ing a mock­ery of the law.

Said I to my friend the lawyer: “In­di­cate to me the sec­tion that cov­ers be­lated guar­an­tees.” His ear­lier stated re­ac­tion sent me back to my draw­ing board. But be­fore mov­ing on to fresh meat, dear reader, please per­mit me to share with you what my re­search un­cov­ered.

Ac­cord­ing to Richard Mil­let QC, who by re­li­able ac­count not only has a broad com­mer­cial prac­tice cov­er­ing a va­ri­ety of dif­fer­ent spe­cial­ist ar­eas with an em­pha­sis on ad­vo­cacy in court and in arbitration and other tri­bunals, but also reg­u­larly ap­pears as lead coun­sel in in­ter­na­tional ar­bi­tra­tions of all kinds:

“A con­tract of guar­an­tee is a con­tract whereby the surety (or guar­an­tor) prom­ises the cred­i­tor to be re­spon­si­ble, in ad­di­tion to the prin­ci­pal, for the due per­for­mance by the prin­ci­pal of his ex­ist­ing or fu­ture obli­ga­tions to the cred­i­tor, if the prin­ci­pal fails to per­form those obli­ga­tions.”

It turns out that Mil­lett QC has ap­peared fre­quently in the BVI, An­guilla, the Cay­man Is­lands, Ber­muda and the Isle of Man—by no stretch of the imag­i­na­tion some av­o­cat ti pa­pier! Then there is this, taken from Hals­bury’s Laws: “A guar­an­tee is an ac­ces­sory con­tract by which the promisor un­der­takes to be an­swer­able to the prom­ise for the debt, de­fault or mis­car­riage of another per­son whose pri­mary li­a­bil­ity to the promisee must ex­ist to be con­tem­plated.”

Ac­cord­ing to my own hum­ble lex­i­con, on which I rely for the or­di­nary mean­ing of words:

“A deed of guar­an­tee is usu­ally used when a lender has reser­va­tions about the abil­ity of a bor­rower to re­pay mort­gage in­stall­ments and re­quires another, usu­ally more fi­nan­cially se­cure per­son to guar­an­tee the loan.”

Only a month or so ago the House guar­an­teed a mil­lion­dol­lar loan for UWI’s open cam­pus, ev­i­dently be­cause the bank had reser­va­tions about the in­sti­tu­tion’s abil­ity to re­pay. For sim­i­lar rea­son the RBTT had in 1997 re­fused to fi­nance the con­struc­tion of the now fa­mous ho­tel for­merly known as Hy­att—un­til the de­vel­op­ers had per­suaded the re­cently elected Kenny An­thony gov­ern­ment to guar­an­tee the re­quired mul­ti­mil­lions.

We know that par­tic­u­lar story’s sad end­ing. Or do we? The re­port from the 6 May 2009 Ram­sa­hoye Com­mis­sion of In­quiry is there to re­mind us “there was no di­rect au­thor­ity for money payable un­der the guar­an­tees to be taken out of the Con­sol­i­dated Fund as is con­tem­plated by Sec­tions 41 and 42 of the Fi­nance (Ad­min­is­tra­tion) Act.” We know, too, that politi­cians will al­ways have their way where there are only sheeple!

The Ram­sa­hoye Re­port goes on: “In De­cem­ber 2002 [some six months after the ho­tel for­merly known as Hy­att had been sold by a bank-ap­pointed re­ceiver to its new owner and re­named] the gov­ern­ment of Saint Lu­cia wanted to bor­row US$41 mil­lion from the Royal Mer­chant Bank to meet cap­i­tal ex­pen­di­ture and to pay debts in­curred by Fren­well Limited. A mo­tion to en­able the money to be bor­rowed was put be­fore par­lia­ment. It was ap­proved by the House of Assem­bly on the mo­tion of the prime min­is­ter and min­is­ter of fi­nance Kenny An­thony on 17 De­cem­ber 2002. The mo­tion was passed by the se­nate on 20 De­cem­ber 2002 . . .”

The mo­tion pre­sented to par­lia­ment in­voked as its au­thor­ity the pro­vi­sions of Sec­tion 39 of the Fi­nance (Ad­min­is­tra­tion) Act, which au­tho­rizes the min­is­ter, by res­o­lu­tion of par­lia­ment, to bor­row from any bank for “any pur­poses” in­clud­ing the cap­i­tal or re­cur­rent ex­pen­di­ture of the gov­ern­ment.

“The rea­son for in­vok­ing Sec­tion 39,” the re­port ex­plained, “was be­cause a part of the US$41 mil­lion was in­tended to meet ex­pen­di­ture on cap­i­tal works which the gov­ern­ment had un­der­taken, but it was also in­tended that the other part should be used to re­fi­nance gov­ern­ment’s obli­ga­tions in re­spect of the for­mer Hy­att Ho­tel.” em­pha­sis)

How re­mark­able that the re­port speaks of what the gov­ern­ment had “in­tended.” It seems to me, con­sid­er­ing what fol­lows, that “claimed” might’ve been more ap­pro­pri­ate, but then, un­like the chair­man of the com­mis­sion, I am no QC!

The re­port went on: “The truth was that the obli­ga­tions which the gov­ern­ment of Saint Lu­cia in­tended to meet were the loan monies which Fren­well Limited had bor­rowed and the in­ter­est which the gov­ern­ment was obliged to pay to the Royal Mer­chant Bank un­der the Deed of Guar­an­tee and In­dem­nity and the Put Op­tion Agree­ments.

“It was pre­sumed that the mem­bers of the leg­is­la­ture knew that the loan monies were used to support Pi­geon Point Ho­tel Limited. We con­clude that the na­ture of the pro­ceed­ings by which the res­o­lu­tion was passed were ir­reg­u­lar; but since the mem­bers of par­lia­ment must have known that the gov­ern­ment was bor­row­ing to sat­isfy obli­ga­tions it un­der­took in con­nec­tion with the re­sort, the pay­ment, although done through an ir­reg­u­lar pro­ce­dure, was not un­law­ful.”

Since word in­ter­pre­ta­tion is cru­cial to our un­der­stand­ing of how our par­lia­ment has been op­er­at­ing at least for the last two decades, we may as well con­sider now the or­di­nary mean­ing of pre­sumed and ir­reg­u­lar. In the first in­stance: “To sup­pose some­thing is the case on the ba­sis of prob­a­bil­ity”—syn­ony­mous with “sur­mise, spec­u­late, guess, imag­ine.”

As for ir­reg­u­lar: to the rules or to that which is nor­mal or es­tab­lished”—ac­cord­ing to my dic­tio­nary, syn­ony­mous with “im­proper, il­le­git­i­mate, un­scrupu­lous, un­eth­i­cal, un­pro­fes­sional, un­ac­cept­able.” An ex­am­ple of us­age, again ac­cord­ing to my dic­tio­nary: “Ir­reg­u­lar fi­nan­cial deal­ings.”

It re­mains con­jec­tural what the Ram­sa­hoye Com­mis­sion sought to con­vey to the or­di­nary man on the Gros Islet tran­sit by its con­clu­sion that an “ir­reg­u­lar pro­ce­dure” in­volv­ing multi-mil­lions of dol­lars was “not un­law­ful.” Did the com­mis­sion mean to say the cited “ir­reg­u­lar pro­ce­dure” was law­ful?” The com­mis­sion also re­ported

that “the money paid was lost and that the gov­ern­ment and peo­ple of Saint Lu­cia re­ceived noth­ing in re­turn for the money so paid the Royal Mer­chant Bank, even though it was in­tended by the terms of the de­vel­op­ment and con­ces­sion agree­ment of 17 De­cem­ber 1997— that if the gov­ern­ment was called upon to pay it would re­ceive a cor­re­spond­ing eq­uity in the ho­tel . . . The money paid to set­tle the debt of Fren­well Limited was a loss which the peo­ple of Saint Lu­cia bore with­out com­pen­sa­tion.

“We con­sider that the loss which the gov­ern­ment and peo­ple of Saint Lu­cia suf­fered in this mat­ter was the re­sult of mal­ad­min­is­tra­tion and we would rec­om­mend that where the gov­ern­ment en­ters into con­tracts for the pro­cure­ment of goods and ser­vices the law reg­u­lat­ing such agree­ments should be strictly fol­lowed.”

And what does my dic­tio­nary say of mal­ad­min­is­tra­tion? “A sit­u­a­tion where the in­di­vid­ual or group in charge is un­just, dis­hon­est, or in­ef­fec­tive in their lead­er­ship. In many cases, mal­ad­min­is­tra­tion means that a cir­cum­stance is so bad it must be in­ves­ti­gated or rep­ri­manded. Mal­ad­min­is­tra­tion is com­monly used in the med­i­cal field for the sit­u­a­tion where a drug is ei­ther in­cor­rectly or il­le­gally ad­min­is­tered to a pa­tient. Also fre­quently used to de­scribe cor­rupt be­hav­ior by any pub­lic of­fi­cial.”

Back to Ram­sa­hoye: “We also con­sider that where the gov­ern­ment guar­an­tees the debts of other per­sons the res­o­lu­tion un­der the Fi­nance (Ad­min­is­tra­tion) Act should give de­tails of the li­a­bil­ity so that both the mem­bers of par­lia­ment and the na­tional com­mu­nity should un­der­stand the li­a­bil­ity un­der­taken by the tax­payer in or­der that the de­mands of ac­count­abil­ity and trans­parency re­quired by good gov­er­nance will be sat­is­fied.”

How ironic that the cam­paign­ing SLP’s mantra in 1997 had been “trans­parency and ac­count­abil­ity!” To re­turn to my ear­lier-cited lawyer and his de­ter­mi­na­tion that the anti-be­lated-guar­an­tee bri­gade had mis­in­ter­preted Sec­tion 41 of the Fi­nance (Ad­min­is­tra­tion) Act, the word “guar­an­tee” in par­tic­u­lar. The act states: “No guar­an­tee in­volv­ing any fi­nan­cial li­a­bil­ity shall be bind­ing upon the gov­ern­ment un­less that guar­an­tee is given in ac­cor­dance with an en­act­ment or un­less ap­proved by res­o­lu­tion of par­lia­ment.”

“What does that mean?” asked Jus­tice Saun­ders in the ap­pealed Mart­i­nus Fran­cois v The At­tor­ney Gen­eral mat­ter (2004). “The key phrase in the sec­tion is ‘shall be bind­ing.’ The sec­tion is say­ing that guar­an­tees may ex­ist but if those guar­an­tees in­volve any fi­nan­cial li­a­bil­ity they can only bind the gov­ern­ment if one of two con­di­tions is sat­is­fied: they must ei­ther be given in ac­cor­dance with an act of par­lia­ment or they must be ap­proved by a res­o­lu­tion of par­lia­ment. When there­fore the prime min­is­ter gave the guar­an­tee he was do­ing noth­ing wrong or un­law­ful. He was per­fectly en­ti­tled to do so.

“How­ever, be­cause that guar­an­tee in­volved a fi­nan­cial li­a­bil­ity, par­lia­men­tary ap­proval was re­quired be­fore it could be bind­ing.” [Dear reader, please keep in mind that at the time of the guar­an­tee to which Jus­tice Saun­ders refers less than a dozen peo­ple, in­clud­ing the judge, had heard of Fren­well!]

Jus­tice Saun­ders went on to say, apro­pos of Fran­cois v The At­tor­ney Gen­eral: “In a con­sti­tu­tional democ­racy such as ob­tains in Saint Lu­cia the ex­ec­u­tive con­ceives and ex­e­cutes pol­icy but par­lia­ment has con­trol of the purse strings of the state. Rep­re­sen­ta­tives of the ex­ec­u­tive au­thor­ity in­vari­ably en­ter into con­tracts from time to time but no funds can be taken out of the Con­sol­i­dated Fund un­less such funds are ap­proved by par­lia­ment. Such ap­proval may be granted at any time be­fore a charge is made upon the Con­sol­i­dated Fund to sat­isfy any li­a­bil­i­ties thereby in­curred.”

Ad­di­tion­ally, and Jus­tice Saun­ders cited Spencer v A.G. of Antigua, dur­ing which he [Jus­tice Saun­ders] had noted: “A gov­ern­ment con­tract is not un­con­sti­tu­tional be­cause it pro­vides for pay­ments to be made at some fu­ture date and at the time the con­tract is en­tered into par­lia­ment has not yet ap­proved the re­quired ex­pen­di­ture.

In­va­lid­ity would only arise if par­lia­men­tary ap­proval had not been ob­tained by the time the monies were due and payable.”

(My em­pha­sis)

Cu­ri­ously, the judge went on to say: “Mr. [Mart­i­nus] Fran­cois seemed to be of the view that the phrase, ‘cap­i­tal or re­cur­rent ex­pen­di­ture of gov­ern­ment’ per­tained only to monies ex­pended on such mat­ters as roads, schools, hos­pi­tals, pay­ment to civil ser­vants. He con­strued the phrase nar­rowly, re­strict­ing its range to ex­pen­di­ture of the state or works en­gaged in or projects con­ceived or owned by the state. He ap­peared not to ap­pre­ci­ate that ex­pen­di­ture on ‘the re­fi­nanc­ing of gov­ern­ment’s obli­ga­tions in re­spect of the for­mer Hy­att ho­tel’ could be em­braced within the scope of cap­i­tal or re­cur­rent ex­pen­di­ture of gov­ern­ment.”

Could be em­braced, yes— but was it?

Five years later, this was how the Ram­sa­hoye Com­mis­sion an­swered the ques­tion:

“The truth was that the obli­ga­tions which the gov­ern­ment of Saint Lu­cia in­tended to meet were the loan monies which Fren­well Limited had bor­rowed and the in­ter­est which the gov­ern­ment was obliged to pay to the Royal Mer­chant Bank . . . We con­clude that the na­ture of the pro­ceed­ings by virtue of which the res­o­lu­tion was passed were ir­reg­u­lar . . .”

As ear­lier stated, Jus­tice Saun­ders had no way of know­ing back in 2004 the above proven “truth” in­volv­ing Fren­well. Nei­ther the fact that at least three MPs had, two or three days after the House had “unan­i­mously voted in fa­vor” of the 2002 res­o­lu­tion, pub­licly ac­knowl­edged they had been mis­led. To this day the gov­ern­ment has not met those “obli­ga­tions to the ho­tel for­merly known as Hy­att.”

But just what does Jus­tice Saun­ders mean when he says par­lia­men­tary ap­proval for money to be taken out of the Con­sol­i­dated Fund “may be granted at any time be­fore a charge is made upon the Con­sol­i­dated Fund to sat­isfy in­curred li­a­bil­i­ties?”

Does he mean to say, by “at any time,” at the gov­ern­ment’s con­ve­nience, re­gard­less of whether par­lia­ment is mis­led? Might this be the rul­ing the gov­ern­ment is re­ly­ing on when it in­vokes Sec­tion 41 of the Fi­nance Act to give “be­lated guar­an­tees” that may well be al­to­gether un­nec­es­sary, ex­cept as some kind of de­coy?

On the other hand a host of other le­gal au­thor­i­ties, in­clud­ing Jus­tice Saun­ders, have in­ter­preted the sec­tion as say­ing no monies can be drawn from the Con­sol­i­dated Fund with­out par­lia­men­tary ap­proval. Con­ceiv­ably, to do so would not only be “ir­reg­u­lar” but may even be down­right un­law­ful. In all events, what about a be­lated ap­proval by par­lia­ment of such ir­reg­u­lar or un­law­ful act?

By all the prime min­is­ter has in re­cent times led the House to be­lieve the so­called be­lated guar­an­tees at is­sue ap­ply to con­tracts al­ready paid for, in full or in part—al­legedly with­out the ap­proval of par­lia­ment. Did the par­tic­u­lar con­tracts re­ceive, as now-op­po­si­tion MPs in­sist, House ap­proval fol­low­ing Prime Min­is­ter Stephen­son King’s pre­sen­ta­tion of the 2011 Es­ti­mates of Ex­pen­di­ture? Will the House have the last word on that?

Let me re­turn to Thomas Sow­ell and the place I started from: “It is hard to imag­ine a more stupid or more dan­ger­ous way of mak­ing de­ci­sions than by putting th­ese de­ci­sions in the hands of peo­ple who pay no price for be­ing wrong!’

By the way, “sheeple are peo­ple com­pared to sheep in be­ing docile, fool­ish, or eas­ily led,” this ac­cord­ing to my Ox­ford Dic­tio­nary.

The 2009 Ram­sa­hoye Com­mis­sion of In­quiry shed light on many

dark cor­ners but many ques­tions re­main unan­swered to this day.

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