Questions on that Manning deal in Germany

I am not an economist or government planner. Neither am I a politician or an expert on budgetary matters. So chances are I would be accused of venturing outside my league with what I am about to write.

But common sense tells me that Prime Minister Patrick Manning’s agreement to lease 200 luxury BMW vehicles directly from Germany is a bad deal.

And it’s even worse that he personally negotiated the deal when other government ministers and/or bureaucrats are no doubt capable of doing it. Surely Mr. Manning has more important things to do than go out to haggle with a car salesman.

I have no other information on this matter other than what I have read in the press, which puts me on the same level as the average citizen.

So far one report quotes a top official in the local automotive industry as suggesting the cost of the Manning deal would be about $49 million. That’s not small change, which is why we must look at that deal carefully.

Let’s backtrack a little bit to put the whole matter in perspective.

The government of Trinidad and Tobago needs special luxury vehicles for its VIP guests attending the Summit of the Americas and the Commonwealth Heads of Government Meeting next year.

The Americas summit is in April; Commonwealth leaders meet in November, six months later. Government has budgeted about half a billion dollars for both conferences, of which $100 would be to buy 200 VIP cars, according to media reports.

NIPDEC invited tenders from interested parties to supply the vehicles and dealers responded. That’s when things started to get a little confused. The car dealers made an interesting offer: we’ll lend you the cars - no cost, no obligation - if we get taxes and duties waived.

That sounded cut and dried, a potential saving of $100 million. But the government disagreed, pointing out that the state would lose taxes.

One minister said buying was just one of several options being considered, another said the free deal was a bad idea and a third – Foreign Minister Paul Gopee Scoon – said government was going to buy the vehicles and hand them to various ministries and government departments when the conferences were over. They have to buy cars in any case, she rationalized.

Yes, but do they have to buy such expensive vehicles to deliver the mail? She didn’t have an answer.

Then Manning tossed a monkey wrench in the works when he told a PNM party conference that he never intended to buy ANY vehicle.

So why was NIPDEC inviting tenders? To get an idea of cost, he explained. In other words, Manning was taking the dealers for a ride, which is dishonest, to say the least. Or was he just gathering data to give him clout in negotiating with the Germans?

Then we heard that all the VIP transport would be Sport Utility Vehicles, the shiny black ones that executives and political leaders prefer. And on Thursday we found out that Manning himself cut a deal for the VIP transport by personally visiting a BMW showroom in Germany. Didn't Manning have anything better to do than run off to Germany to negotiate a care deal?

This is certainly going to cost taxpayers money. (It already has cost a lot for the PM's travel). Since the government did not provide a cost, I will use the figure of $49 million that was quoted in the Guardian.

The Manning deal means taxpayers would have to pay $49 million to provide luxurious transport for a few big shots for about a week. That’s it - $49 million gone and no tangible benefit for the people who pay the taxes.

What about the alternative? The local dealers were offering the same service for FREE. That’s it FREE. Sure they wanted their ounce of flesh, but it was not costing the government any upfront money.

What the government was complaining about was the tax and duty exemption. That would have worked out to be a tidy sum and the Manning administration didn’t want to squander the people’s money.

But look at the big picture on this deal.

By going to Germany Manning bypassed the local representative for BMW and deprived local businesses of badly needed revenue. If the government had accepted the dealers’ offer the government would have put out ZERO dollars, while waiving some taxes. On the other hand the Manning deal would likely involve non-refundable deposits, insurance, freight to and from Germany, among other costs.

The dealers offer seemed to be a better one because it would save $49 million. Don't count the "lost" revenue because we are still "losing" that potential revenue through the Manning deal.

But there’s more. The dealers would sell the cars, buyers would have to pay taxes and the big dealers would have to taxes on their profit. Best of all Manning would have demonstrated leadership and shown that he cares about local businesses. A win-win situation and a saving of several million dollars.

Look at it another way. The original cost thrown around to buy the 200 vehicles was $100 million, twice what is expected to be the cost of the BMW lease deal.

Suppose Manning had bought the vehicles? They would be tax exempt in any case, so that puts us right where we would be if he had accepted the dealers' free use offer.

And government could have held an auction or appoint a dealer to sell the vehicles after the summits to recover most if not all the $100 million because the vehicles would be new, high quality and in demand.

Even if the purchase and reselling of the vehicles amounted to $49 million it would still be a better deal because it would have generated commerce and additional taxes. And 200 people would have swanky new vehicles in their garages.

So considering all of this, why did Manning go that route?

Why, if he knew that he never intended to buy any vehicles, did he waste people’s time and money in inviting tenders? Or was he just using it to get competitive data to negotiate his deal in Germany? Sure he didn’t see the tenders, but the media had enough information about it to give him a clear picture for his negotiation in Germany.

And why Germany?

For starters, shipping from Germany would obviously cost more than from Florida. And why BMWs when the North American car market – especially for luxury SUV’s - is in such a slump.

Manning could have done the same with General Motors or Ford, companies that build the world famous Cadillac and Lincoln VIP vehicles. They are the world leaders in VIP vehicles. So why didn’t he negotiate with the American auto sector?

It's puzzling that Manning preferred to do business in Germany. And even more puzzling is that someone of his stature preferred to do it personally. I seem to remember him going personally to Germany some years ago to do a deal a multi-million dollar methanol plant.

Manning seems to like to do business in Germany and to do it one-on-one. Is it because he trusts the Germans more than anyone else or is there some other reason?

And isn’t something wrong about this selective business deal? Why settle for BMWs without giving others a chance to make offers? Perhaps the government could have got a better deal with Ford or GM?

Where is the transparency in this deal? Who, except Manning and the company, really knows what's the deal?

And why is a prime minister of all people holding talks with car dealers, especially this prime minister who values his time so much that he flies on private jets wherever he goes because he's "too busy" to wait at airports to catch commercial flights.

Perhaps I am out of place to ask, but the people who pay taxes in Trinidad and Tobago have every right to ask these questions. They have to demand accountability and transparency in government dealings. And they must insist that their elected representatives get clear answers from Manning on this deal.

I can't wait to hear the answers.