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UDC bleeds! Corporation losing $109m per month
UDC racks up $760m in losses over seven months
BY BALFORD HENRY Senior staff reporter balfordh@jamaicaobserver.com
Thursday, December 13, 2012
THE Government-owned Urban Development Corporation (UDC) is bleeding public funds at an average rate of $109 million per month.
The management team, led by General Manager Desmond Malcolm, provided figures showing Parliament's Public Administration and Appropriations Committee (PAAC) that the corporation lost nearly $273 million in the two-month period September-October 2012.
This was in addition to the net loss of $487 million recorded in the first four months of the financial year, bringing total net losses for the first seven months of financial year 2012/13 to $760 million.
Efforts by the UDC team, which also included Permanent Secretary in the Office of the Prime Minister Onika Miller, failed to convince the bipartisan PAAC, chaired by Opposition Member of Parliament Edmund Bartlett, that the corporation was doing enough to change its fortunes.
Bartlett said his committee was dissatisfied that the UDC team could not provide them with information "which should be at their fingertips".
In the end, he ordered the UDC to return in early January with a more convincing plan to get the corporation on a viable track, including plans for several investments such as the Jamaica Conference Centre, the Montego Bay Civic Centre and the downtown Kingston Transport Centre, as well as timelines for disposals.
"I am concerned about the strength of the executive management, as appeared before the committee, and we are concerned, as a committee, that their marketing plans to drive revenue for the key entities appear weak and ineffectual," an obviously disappointed Bartlett told the Jamaica Observer after the meeting.
Deputy general manager in charge of finance, Donald Hamilton, told the committee that the corporation has brought negotiations on the disposal of several major investments to an advanced stage. These included the Forum Complex in Portmore; the Oceana Complex in downtown Kingston, which currently houses the Ministry of Health; the old Machado building at Victoria Avenue, East Kingston; and the old Cotton Polyester plant in Old Harbour, St Catherine. The corporation thinks these sales can bring in approximately $1 billion in revenues.
Hamilton said that the UDC is also seeking to dispose of its 50 per cent share in the former Grand Lido, which it owns through its Bloody Bay Hotel Development Limited but is trying to dispose of through the Development Bank of Jamaica.
However, he explained that the best the UDC could hope for from these sales was 25 per cent to help meet its increasing operational challenges, as the corporation's board — headed by former cabinet minister Senator KD Knight, is insisting that most of the proceeds go to future developments.
Hamilton said that the corporation is seeking to develop a plan of action to earn its way out of the problem. He admitted that the current financial state will lead to staff cuts, as well as more aggressive efforts to market its empty spaces and improve returns from its businesses like car parks.
Committee member Mikael Phillips suggested that there must have been "frolic" in the minds of the members of the board and management of the corporation when they made investments like purchasing the old JAMINTEL and Machado buildings in Kingston.
The UDC purchased the Machado Building, located on Victoria Avenue, in 2009 for $85 million and found that it would have needed over $1 billion of refurbishing. It paid $111 million to National Housing Trust for the JAMINTEL building, while the Trust paid $38 million, in turn, for its current car park.
Phillips said he failed to see how any due diligence could have informed the purchases.
The JAMINTEL building has been in the news currently, as executive director of Mustard Seed Communities, Father Gregory Ramkisoon, has proposed that it be used to house female juveniles in the care of the State.
Read more: http://www.jamaicaobserver.com/news/...#ixzz2Exf21XCA
UDC racks up $760m in losses over seven months
BY BALFORD HENRY Senior staff reporter balfordh@jamaicaobserver.com
Thursday, December 13, 2012
THE Government-owned Urban Development Corporation (UDC) is bleeding public funds at an average rate of $109 million per month.
The management team, led by General Manager Desmond Malcolm, provided figures showing Parliament's Public Administration and Appropriations Committee (PAAC) that the corporation lost nearly $273 million in the two-month period September-October 2012.
This was in addition to the net loss of $487 million recorded in the first four months of the financial year, bringing total net losses for the first seven months of financial year 2012/13 to $760 million.
Efforts by the UDC team, which also included Permanent Secretary in the Office of the Prime Minister Onika Miller, failed to convince the bipartisan PAAC, chaired by Opposition Member of Parliament Edmund Bartlett, that the corporation was doing enough to change its fortunes.
Bartlett said his committee was dissatisfied that the UDC team could not provide them with information "which should be at their fingertips".
In the end, he ordered the UDC to return in early January with a more convincing plan to get the corporation on a viable track, including plans for several investments such as the Jamaica Conference Centre, the Montego Bay Civic Centre and the downtown Kingston Transport Centre, as well as timelines for disposals.
"I am concerned about the strength of the executive management, as appeared before the committee, and we are concerned, as a committee, that their marketing plans to drive revenue for the key entities appear weak and ineffectual," an obviously disappointed Bartlett told the Jamaica Observer after the meeting.
Deputy general manager in charge of finance, Donald Hamilton, told the committee that the corporation has brought negotiations on the disposal of several major investments to an advanced stage. These included the Forum Complex in Portmore; the Oceana Complex in downtown Kingston, which currently houses the Ministry of Health; the old Machado building at Victoria Avenue, East Kingston; and the old Cotton Polyester plant in Old Harbour, St Catherine. The corporation thinks these sales can bring in approximately $1 billion in revenues.
Hamilton said that the UDC is also seeking to dispose of its 50 per cent share in the former Grand Lido, which it owns through its Bloody Bay Hotel Development Limited but is trying to dispose of through the Development Bank of Jamaica.
However, he explained that the best the UDC could hope for from these sales was 25 per cent to help meet its increasing operational challenges, as the corporation's board — headed by former cabinet minister Senator KD Knight, is insisting that most of the proceeds go to future developments.
Hamilton said that the corporation is seeking to develop a plan of action to earn its way out of the problem. He admitted that the current financial state will lead to staff cuts, as well as more aggressive efforts to market its empty spaces and improve returns from its businesses like car parks.
Committee member Mikael Phillips suggested that there must have been "frolic" in the minds of the members of the board and management of the corporation when they made investments like purchasing the old JAMINTEL and Machado buildings in Kingston.
The UDC purchased the Machado Building, located on Victoria Avenue, in 2009 for $85 million and found that it would have needed over $1 billion of refurbishing. It paid $111 million to National Housing Trust for the JAMINTEL building, while the Trust paid $38 million, in turn, for its current car park.
Phillips said he failed to see how any due diligence could have informed the purchases.
The JAMINTEL building has been in the news currently, as executive director of Mustard Seed Communities, Father Gregory Ramkisoon, has proposed that it be used to house female juveniles in the care of the State.
Read more: http://www.jamaicaobserver.com/news/...#ixzz2Exf21XCA
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