Eighteen years into the 21st century, and almost $800 billion spent in annual budgeting, Trinidad and Tobago still finds itself at the mercy of global economic shocks and price fluctuations in oil and gas.
The economy is not diversified and issues such as employment and foreign exchange continue to strangle our nation’s progress.
A great deal of debate exists today about the economy, but centres on who spent money, corruption allegations and wastage.
Since the year 2000, the PNM has governed for over 11 years, and the UNC has governed for six years; yet the debate from the PNM side places Trinidad and Tobago’s underdevelopment squarely on the shoulders of political opponents.
The TTWhistleblower today begins a multi-part analysis of how almost $800 billion came and went, leaving Trinidad and Tobago facing serious economic challenges in 2018.
Changing politics and the gift of office
Following six years of incremental budgetary increases between 1995 and 2001, mostly measured by the rate of economic growth being generated by the Basdeo Panday Administration, the budget saw a sudden spike with the coming to office of former Prime Minister the late Patrick Manning.
Then President, the late Arthur NR Robinson, gifted Manning with office on Christmas Eve in 2001. Following an unprecedented electoral tie, 18-18, a constitutional crisis emerged with no clear winner in the early general election.
Both Panday and Manning met, together with their closest political allies and President Robinson was asked the make his determination on who would be called to form a Government based on significant constitutional advice.
Saying they were finally on the same page again, President Robinson chose to appoint Patrick Manning who governed for months without being able to constitute the Parliament, leading to another general election in 2002, which he won
Between 2001 and 2002, the Panday Administration’s final budget increased from $13.4 billion to $14.4 billion.
By Manning’s first budget, the fiscal package ballooned from the $14.4 billion package by former Finance Minister Gerald Yetming, to over $20 billion for fiscal 2003 – an approximately 50% increase.
However, this was not the first signal of vast spending increases. Shortly after President Robinson’s appointment of the new Manning Administration, clear signals of a spending spree emerged.
What was later found was that over $1.5 billion was spent on CEPEP, which was engineered and implemented by the PNM, with Auditor-General findings pointing to questionable appropriations of hundreds of millions to persons closely associated with the party. CEPEP began at a time when Parliament was not functioning and could not approve the variations of budgetary allocations.
By the end of 2002 more substantial increases in Government spending came to light, with attendant increases in spending on PNM-created make-work, social programmes.
The PNM also embarked on a mega-project programme, in response to oil prices that reached higher than US$120 per barrel. The claim was the mega projects would become key to making Trinidad and Tobago a first world nation.
Rising oil prices triggered continued spikes in the annual budget to $22.3 billion in 2004; $27.9 billion in 2005; $34.1 billion in 2006; $38 billion in 2007; $42.2 billion in 2008; $44.2 billion in 2009 and $44.3 billion in 2010.
Increases tapered at the 2008 Global Financial Crisis, which severely shook the local economy and saw the collapse of the Hindu Credit Union and CL Financial, leaving the Manning Administration little room for vast increases between 2008 and 2010.
Despite high energy prices and increased energy revenue and spending, however, Manning Administration policies failed to energise exploration and production in oil.
The oil sector of Trinidad & Tobago suffered, with poor management and uncompetitive fiscal arrangements causing a decline in oil production by 33 percent between 2005 and 2010.
Bigger spending and wild corruption
Vast allocations and spending were not the only increases recorded by the Manning Administration, with mega-projects came widespread allegations of wild wastage and rampant corruption.
Money flowed so freely through the PNM Administration of 2001 to 2010 that there was little care for value for money and staying within budget.
Project budgets were becoming depleted with projects themselves being nowhere near complete and contractors still awaiting payments.
You may get a clearer idea of the kinds of delays and cost overruns that occurred here, on some of the major projects:
|Project||Original cost||Over-budget cost||Delay|
|Chaguanas Corporation Administrative Complex||$60M||$10M over budget||24+ Months delayed|
|PM’s residence and Diplomatic Centre||Originally $40M later revised to $148M||$96M over budget|
|Beverly Hills Housing Project||$35M||$106M over budget||over five years delayed|
|NAPA (Port of Spain)||$441M||$234M over budget||12 months delayed|
|SAPA (San Fernando)||$189M||$238M over budget|
|Chancery Lane Government Complex||$413M||$300M over budget and incomplete|
|The Government Campus Legal Affairs||$185.8M||$300M over budget and incomplete||24+ months delayed|
|Ministry of Education Tower||$367.8M||$300M over budget and incomplete||20 months delayed|
|Scarborough General Hospital||$125M||$600M over budget and incomplete||9 years delayed|
|Brian Lara Stadium (Tarouba)||$500M||$700M over budget and incomplete|
|International Waterfront Project||$1.6B||$1.8B over budget and incomplete||six months delayed|
In the context of the question of where did the money go, in just 11 mega-project undertakings by the Manning PNM Administration, wastage and corruption generated a cost overrun bill of approximately $4.6 billion to tax-payers.
This was in addition to the $4 billion plus in budgeting that taxpayers carried, without actually receiving benefit for the huge spend. Nevertheless, the excesses and wanton wastage did not stop there.
Bailout locks the economy in
The collapse of the HCU and CL Financial also created avenues for serious miscalculations and harsh realities in terms of the cost that would have to be borne by the people of Trinidad and Tobago.
The CL Financial and HCU collapse brought a response from the Manning Administration of a bailout package which from the beginning appeared misdirected, and eventually, created even greater burden on a struggling economy.
The HCU collapse was taken in hand by the following Persad-Bissessar Administration and under Finance Ministers Winston Dookeran and Larry Howai, the families who lost their life savings were almost completely reimbursed.
CL Financial’s bailout, however, became the subject of tremendous intrigue. CL, which was started as a holding company for CLICO, became one of the largest local conglomerates in the region, encompassing over 65 companies in 32 countries worldwide, with total assets exceeding US$100 billion.
At a meeting on 23 January 2009, former Finance Minister Karen Nunez-Tesheira told former CL Financial (CLF) chief financial officer Michael Carballo that she knew about the liquidity troubles at CLF, even before their first meeting.
Nunez-Tesheira’s attorney Frederick Gilkes during cross-examination of former group financial director of CL Financial, Michael Carballo on 22 September 2011, said it was the former Central Bank Governor, Ewart Williams, who told her about the crisis before the debacle happened.
As the issue was unfolding, the cost of the bailout to the people of Trinidad and Tobago kept increasing:
- The Manning Administration admitted concurrence with a Central Bank statement of 13 January 2009 estimating Government’s bailout at TT$5.0 Billion.
- On 01 October 2010, the then People’s Partnership Prime Minister Persad-Bissessar told Parliament that TT$7.3 billion had been spent on the bailout, and that a further TT$7.0 billion was needed.
- By 03 April 2012, then Finance Minister, Winston Dookeran stated the bailout cost stood at $12 billion.
- By 01 October 2012, a new Finance Minister, Larry Howai, confirmed that TT$19.7 billion had been spent on the bailout, with an additional TT$7.7 billion required in six months.
- And the Central Bank of Trinidad and Tobago’s Economic Bulletin of July 2013 Volume XV No. 2, stated that the CL bailout eventually cost this country’s taxpayers approximately TT$26 billion.
In Part 2 of this series, the TTWhistleblower looks at the Petrotrin WGTL scandal, the slide of the gas sector, crime and the dubious inheritance left for former Prime Minister Kamla Persad-Bissessar.