Saturday, November 17, 2012

AG Ramlogan's statement to Parliament on OPV matter

When the People’s Partnership was elected with an overwhelming mandate to serve the people, it signalled a desire for radical change by the people. It was a democratic expression of frustration and a resounding rejection of some of the many ill policies of the former administration. 

Far too much was spent on grand projects that were not relevant to the needs and problems of our nation. In many respects, they were based on delusions of grandeur and the oversized political ego of a government that has lost touch with the people. A government which continued to ignore the growing concern about the commitments to massive financial expenditure that would encumber our children’s future.

My government has been committed to readdressing this failed policy but with this it has had to recognise its reponsbilities in accordance with the law and maintain this countries reputation in accepting its liabilities where it was right and appropriate to do so even if it would not have entered in to a particular contract or project.


Among the many mega projects was the purchase of three off shore patrol vessels (OPV). On 5 April 2007, the former administration signed a number of agreements with VT Ship Building (BAE Systems) which at an exchange rate of 10.55 amounted to TT$1.696 billion (or £189.168 MILLION)

These agreements were as follows:
  • a contract in which BAES agreed to sell and GORTT agreed to buy 3 OPVs and related services – maintenance and training; 
  • a contract in which BAES agreed to supply and GORTT agreed to buy 2 interim vessels and related services – maintenance and training; 
The financing for the Project was secured through:

(1) a Commercial Credit Facility with BNP Paribas, London Branch and Lloyd’s TSB Bank to meet 15% of the cost of the contracts for a total amount of TT$299.36 million(£28,375,137); (based on an exchange rate of 10.55)


(2) an Export Credit Facility with BNP Paribas, London Branch and Lloyd’s TSB Bank with a guarantee from the Export Credits Guarantee Department under which the facility provided for a loan of TT$1.696 billion(£160,792,450) to meet 85% of the cost of the contract

A breakdown of the cost of the vessels, maintenance and training is as follows:
1. TT$1,324 billion (£125,569,690)- price of 3 vessels
2. TT$119.93 million(£11,368,027)- price of 2 interim vessels
3. TT$421.20 million (£39,924,795) -maintenance services
4. TT$76.149 million (£7,217,967) - training services
5. TT$189,288.00 (£17,942)- foreign exchange difference
(TT$52.59 million (£4,985,039) –Exposure Fee)
(TT$1.266 million (£120,011) – Forward Exchange Commission)

There were other costs associated with the implementation of this project for infrastructural and logistical support and these were met from the Government Treasury. These costs amounted to approximately TT$164 million dollars, however, wehave retained the benefit of much of this expenditure and would have not have been in a position to recover same.

Of the total financing arranged for this Project in the sum of £189,167,587 or TT$1.995 billion dollars, a total of TT$1.482 billion (£140.5 million) was drawn down up to the time of cancellation of the Project (October 20, 2010). To date, the sum of $TT1.041 billion (£98.764 million) remain outstanding under the loans.

Therefore, when the settlement of TT1.382 billion is applied towards the outstanding balance, the surplus to the Government of Trinidad and Tobago will amount to TT$341 million.

Secondly, the Member for Diego Martin North/East was asked if he had contacted BAE on the current issue, he replied, “I have not contacted them as yet.” What is he waiting for? I would welcome all attempts by the Member to clarify the facts with BAEs.

Why is the member contacting BAE? What is his relationship or link with this company?

When we came into office in 2010 there were serious problems with the OPV project. The first OPV was scheduled to be delivered in May 2009 and was therefore over 1 year late. The second OPV was due in February 2010 and was also overdue.

Apart from the delay, there was a serious problem with the combat system which didn’t conform to the contract specification. This delay, together with the continuing failure on the part of BAE to remedy the deficiency prompted the Government to serve a notice of cancellation on BAE to terminate the contract on September 16 2010.

We were not prepared to accept these vessels in a defective condition. The risks were too many and too great. In response, BAE served a notice of arbitration on the Government, claiming damages in the sum of TT$611,032,000.00 (£57,917,727.00). Trinidad and Tobago filed a counter claim in the sum of TT$1.654 billion (£156, 838,607.70).

This figure represents the maximum amount claimable and would have had to be discounted to take into account first thing first the absence of proper documentation due to poor project management to substantiate millions of dollars worth of expenditure. This lack of proper documentation remains a curious mystery that could have had an adverse impact on the State’s ability to recover its full pound of flesh. The Government has therefore undertaken a review of the systems and procedures for record keeping in the execution and implementation of such large projects.

The Government was prepared to stand up for its rights- the rights of the people- against the one of the largest military defence companies in the world. We were ridiculed for doing this by those on the other side. They did not stand with us in defence of the rights of the people. Instead, they attacked us and made dire predictions with their usual “doom and gloom” predictions.

After careful consideration, and after receiving sound legal and technical advice, this Government cancelled the OPV Contract. We didn’t just get up one day and decide on a “vaps” to get out of the contract. We acted carefully because we inherited very expensive contract obligations from the PNM. How could a responsible Government ignore such advice? How could we justify to the people that we failed to act on advice, while throwing good money after bad? The Opposition themselves would have been the first to criticise us if we did so!

But you know that for the Opposition, we can do no right! We acted carefully and on advice but from the time the Opposition heard that the Contract was cancelled, they started to attack this Government’s motives.

The abuse started with a motion in the House of Representatives that was heard on Friday October 22, 2010. On that day, and I refer you to the Hansard record of that motion, the Member for Diego Martin West ridiculed me, verbally abused and attacked
me. He labelled me as “incompetent” and “irresponsible” for acting on sound legal and technical advice. When he was wrapping up his contribution in Parliament that day he said: 

“Given what I have put here and what other documents made available, the Prime Minister is irresponsible. She is incompetent and she is under the direct control of persons with whom she is too familiar. Public decision-making is being based not on clear judgment but on sound bytes and on other considerations such as political expediency and possibly worse.”

So without any basis or understanding whatsoever of what was going on in the Project at that time, the Member for Diego Martin West stood up in Parliament and imputed bad faith and improper motives to me and insulted my ability to make decisions.

The Member for Diego Martin West implied said that we should have been scared to challenge BAEs. Imagine that! A man who wants to be the Prime Minister of this country was telling us that we should be afraid to insist that the country gets what it paid for! 

Is that the type of leader a country wants? A man who will be scared to stand up for the rights of this country? On the said Friday October 22 2010, he championed the cause of BAE highlighting the fact that the Sultan of Brunei has recently lost a similar Arbitration against BAE and were forced to pay BAE:

“I will tell you, Mr. Deputy Speaker, we are not the only ones who cancelled contracts at BAE, ‘eh’. The Sultan of Brunei attempted to do the same thing on a €700 contract, and if we think that BAE will give us a pass or give us a bligh, especially since the Prime Minister has made the case for BAE lawyers, I expect that if the Government continues along this path, cancels this contract, that we will, in fact be heading for the courts and we would not have many legs to stand on because we are talking about delays.”

And you know, those words alone showed how little the Member really knew about this project because the Contract expressly allowed for termination for delay.

The Member for Diego Martin West vilified this Government for insisting on its contractual rights. He concluded that the Government would not succeed in getting one red cent out of BAE. He said:

“a refund of monies was not possible because the money was in a trust fund and there is no money to be had.”

In July 19, 2011, the Member for Diego Martin West was still confidently spewing wrong information about this matter. Let me quote from Express dated July 19, 2011:

“Opposition Leader Dr. Keith Rowley has called on Government to clear the air on the arbitration proceedings between Government and the United Kingdom’s shipbuilders BAE over the cancellation of the three Offshore Patrol Vessels.

"At a press conference yesterday at the Opposition Leader’s office, Rowley said Government must explain to the nation what was happening with this broken deal.

"‘Tell the country what is happening with the arbitration. What are the issues that are being arbitrated and whether in fact it is correct to say that the Government in now facing an option of taking the vessels, the very vessels they determined to be lemons,’" said Rowley.

He was calling us out and trying to embarrass us. But you know it was just another example of the same kind of behaviour. No regard for national interest! Grasping on to a rumour, which would have been a bad state of affairs for this nation if it were true! Like one murder!

And he wasn’t the only one in the Opposition who was suffering from foot-in-mouth disease. On June 15 of this year, the Member for Diego Martin North East said that this Government had lost the Arbitration and was liable to pay hundreds of millions of dollars to BAEs. 

Permit me to quote the Honourable member who, at the material time, was ironically responding to allegations about the reckless, wasted expenditure on the purchase of the MV Su. “It is my understanding that the Government has lost the OPV arbitration and the country may be liable to PAYOUT monies to BAE systems in the sum of hundreds of millions of dollars”

But we know why he felt he had to grand-charge that day. The heat was on in Parliament that day for his purchase of the water-taxis…so we know he was “trying a thing.”

The entire Opposition repeatedly predicted that we would have to pay hundreds of millions of dollars to BAE because we were wrong to cancel the contract. Listen to the member for Arouca/Maloney on June 4 2012: “Can the Minister of Finance tell us… how much money we would have to pay in the Arbitration? Can the Minister of Finance tell us that? Because I am sure we would have saved a lot of money by maintaining the contract for the OPVs.”

And condemnation, criticism and vilification was not confined to the other side. On October 28, 2012, in an Article published in the Sunday Guardian, it was stated as follows:

“Attorney General Anand Ramlogan has gone to Cabinet requesting $1.3 billion for a settlement with respect to the cancellation of the three offshore patrol vessels (OPVs). Meanwhile the arbitration over the OPVs is still ongoing. The Sunday Guardian was informed that on Thursday Ramlogan took a note to Cabinet seeking approval for the money and that the matter was considered.

"When the matter was brought before Cabinet some ministers raised concerns about it, while others openly objected as they questioned why the payment should be approved, since the arbitration was still in progress. At least three ministers were reportedly vocal during the meeting, questioning the haste and timing of the request.

"The meeting got so heated, sources said, that Dookeran walked out, saying he wanted no part of the decision to make the money available. When contacted, some Cabinet ministers confirmed the decision, but refused to go on record when questions were posed to them.

"One irate Cabinet source questioned why the Government would want to pay $1.3 billion in arbitration fees rather than paying $1.5 billion for the three OPVs instead.”

This Article goes into extensive details of an alleged Cabinet Meeting, attributing detailed statements to Ministers thereby placing doubt and mistrust in the minds of the public in relation to the Government’s handling of this matter.

But despite all the blows from the other side, we were determined to stand firm. We listened. We waited while they blustered their way into a position of extreme foot-in-mouth disease. We acted on sound advice. We take our role as the guardian of the taxpayers’ monies seriously. 

The Cabinet was guided by the advice of the Honourable Attorney General and his team of lawyers led by the standing Privy Council agents for the State from the prestigious Charles Russell LLP. The Arbitration was tried in London in May 2012. Evidence was given on behalf of the State by the Honourable Attorney General himself, Commodore Garnett Best and Captain Mark Williams.

Subsequent to the Arbitration hearing, the parties, as a result of a diplomatic initiative, engaged in discussions. BAE Systems and this Government have reached a full and final settlement of the dispute between them in relation to the OPV contract in the sum of TT$1.382 billion (£131 million). We are pleased that the dispute has been settled amicably.

And let me now say, for the benefit of the nation, and the Members opposite who were so sure how this matter would turn out:
  • The settlement amount is TT$1.382 billion (£131 million)
  • After repayment of the monstrous billion dollar loan which the PNM took for this Project, GORTT will end up with a surplus of TT$341 million (£32.236 million). This is money that could build hospitals, roads. Further, after we pay off the loan, money we would have spent on allocated for repayments can be used for other things
  • Because we have paid odd the loans now, we will save TT$57.149 million (£5.417 million) in interest
  • And let us not forget the operational costs for the three OPVs which would have been approximately TT$32 million per year and the annual cost of TT$24 million for salaries and allowances of seamen to operate the Vessels. The Member for Diego Martin West said in Parliament on the 22 October 2010 that the Vessels could have lasted up to 40 years
So based on the very helpful technical advice of the Member for Diego Martin West on the longevity of the Vessels, we can safely say that this country would have spent at least TT$590.8 million dollars to operate the OPVs over their life span. And I say at LEAST, because it is logical to say that as time passed, the upkeep and maintenance costs of the Vessels would increase due to deterioration from wear-and-tear. 

And you would think that my Statement to the nation on Wednesday, which sets out the indisputable, hard, cold facts of this fabulous settlement that I have negotiated for the people of Trinidad and Tobago would be met with joy by the Opposition and the media who were predicting such a disastrous outcome for this arbitration.

So it really makes you wonder about the ability of the Opposition to put country first when you see that even though I have negotiated a stellar settlement for this country, the Member for Diego Martin West and Diego Martin North/East are outright refusing to even believe what I am saying to them in plain English. 

In yesterday’s Express, in an Article entitled “Rowley questions Govt on payback of billion-dollar loan,” the Member for Diego Martin West is quoted as saying that “he was not going to take as fact anything Attorney General Anand Ramlogan says until he gets confirmation from an official document or some credible source.”

The Article goes onto quote the Member for Diego Martin North/East too as saying that “IF BAES sends out a release saying they expected to come out on top, then why is the Attorney General saying that we won the arbitration.” The Article says later that “Imbert said he had to do some research because the AG’s Statement made no sense.”

I do not know what else I can say except to repeat the facts as I have been setting them out for you since Wednesday. I can also answer the questions of the Member for Diego Martin West and Diego Martin North/East as stated in that article and hope that they will finally accept the facts:

1. How much is owing to the Bank and is that going to result in a net loss or how could we get back $300m
more: The sum of $TT1.041 billion (£98.764 million) is owing to the bank and when the settlement of TT1.382 billion is applied towards the outstanding balance, the surplus to the Government of Trinidad and Tobago will amount to TT$341 million. 

2. How much we claimed and how much we settled at:
We claimed TT$1.654 billion and we settled at TT$1.382 billion. 

3. What were the ancillary charges of the cancellation: No ancillary charges associated with the cancellation have been paid by the Government.

4. Who is paying the substantial legal fees: Our budget was ten million pounds (£10, 000, 000.00) out of which we have spent less than two million pounds (£ 2,000,000.00).

I hope that the Members for Diego Martin West and Diego Martin North/ East will finally accept the truth. I hope also that the media will accept the truth as well.

I have already made reference to another Article published today in the Trinidad Guardian “Anand: OPV arbitration costs T&T $200m.” Again, the Guardian misrepresented the facts by saying that I said that the arbitration cost $200m. Again the Guardian misrepresented the facts by saying, and I quote:  
There is also the lead story in the Guardian today, front page, headline entitled “BAE, Govt in secret deal for more boats.” 

Let me quote from the Article:

“Although the Government is claiming to have won an arbitration battle with British Aerospace Engineering Systems (BAE), one of the world’s largest military defence companies, indications are that a secret deal between the parties is in the works for T&T to acquire several second-hand boats. “Information is there may be a secret deal going on between the Government and BAE for the purchase of second-hand military vessels,” a well-placed source, requesting strict anonymity, told the T&T Guardian yesterday.

“Reports are that BAE leased the vessels to another country and the lease came to an end. If it is true the Government plans to buy these second-hand vessels from BAE, it means there is some deal going on in conjuction with the arbitration,” said the source.

“There may be more to the $1.382 billion settlement the Government got from BAE. There may be far more to the story than we think,” the source said.

So now the Guardian is insinuating that the settlement was simply a part of some shady and sinister cook-up between the Government and BAEs in which BAEs is making a deal in exchange for a future deal of some second-hand boats!

Well let me tell you that nothing can be further from the truth! There is no secret deal and no hidden agenda behind this settlement. The Government insisted on its contractual rights, BAEs engaged us in arbitration and before the award could be handed down by court, BAEs agreed that rather than wait for that decision, they were prepared to pay us the sum of TT$1.382 billion dollars to settle this matter.

I note that there is also scepticism emanating from the Newsday editorial today. Permit me to quote from that editorial:

“Our relief at getting this news stems from the fact that just a few days ago, the government had acknowledged that they had set aside some TT$1.3 Billion to “cover” the outcome of the arbitrator’s findings. 

The opposition and many commentators had a field day with that acknowledgement, as they did for most of Wednesday, claiming without evidence in hand, that the government had lost the arbitration. 

When did this government EVER acknowledge that they had set aside TT$1.3 billion to cover the arbitration? This statement is a blatant untruth. AT NO POINT in time the Government was EVER at risk of paying, nor even contemplated paying ANY MONEY AT ALL to BAEs. A payment to BAEs was never a risk to this Government! And I say that without any fear of contradiction whatsoever! It is ludicrous to even suggest such a thing!

And noting now the scepticism of the Newsday, permit me to quote further from the Article: "However, we wish to be cautious in how we address this arbitration victory, and we need to be assured that there is no sting in the tail, where we are stuck with fees or costs not yet known, which will significantly reduce what we expect from the arbitration."

Let me once more reassure the nation and this Parliament: the facts are as I have set them out here. There is no tack-back, no hidden costs coming around the corner! I have stated the amount of the settlement and I have stated the costs of the project. 

This is a victory for the people of Trinidad and Tobago of which we should be justifiably proud! Instead, it seems that the Opposition are only happy to believe negative outcomes for this Government and I have to convince and beg them to believe that something positive has been achieved! Put country first!

RETRACTION OF EVENING TIMES ARTICLE in November 15, 2012 issue entitled, “Clyde Shipyard bosses win £130M compensation battle.” I would also like to mention that the Evening Times has now retracted its report that was published yesterday. Permit me to quote the correction:

“The Evening Times yesterday reported that shipbuilder BAE Systems had won a 130million compensation battle with the Trinidad and Tobago Government after the Caribbean Republic had cancelled an order for three offshore patrol vessels.

"We published the article after a spokeswoman for the defence contractor claimed it was to receive the cash payment.

"However, BAE has in fact agreed to compensate the republic, which had cancelled the 150m order, after it claimed the delivery dates for all three ships were delayed and the combat system on two of them had failed during sea trials. BAE Systems today declined to comment further on the result of the negotiations other than to confirm a "settlement" had been reached with the Trinidad and Tobago Government.

"We are happy to clarify this here."

I commend the Evening Times for exercising responsible and world class journalism in acknowledging its error! It is an example that the local media would do well to emulate! Maritime Security Plan

The detractors of the Government are attempting to undermine the value of the settlement by saying that this Government does not have a maritime security plan. Permit me to remind this Honourable House about the vision for maritime security that was outlined by the Honourable Prime Minister in her speech at the Commissioning of the Helicopters on the 8th of June 2011.

On that day, the Honourable Prime Minister outlined this Government’s intent to establish a Maritime Wall which would address the immediate requirements of securing our borders.

Coupled with the Coastal Surveillance capabilities, air support and Electronic surveillance, this Wall would provide a firm and robust approach to ensuring the territorial waters and borders are secured.

The Maritime Wall would involve the establishment of strategically located bases around TT, manned by the Multi Agency Maritime Task Force ( TTCG, TTPS TTR and Customs) officers.

A team from the Ministry of National Security is actively collaborating with a friendly neighbor (Columbia) to undertake a site visit to view naval assets consistent with an established RFP. It is expected that the outcome of this visit will better position the MNS to forge ahead in the acquisition of additional assets in support of the Maritime Wall initiative.

The CCTV initiative would ensure that key areas of the country would be fully covered by year's end 2012, by the end of the next year the entire country would be under CCTV surveillance. This monitoring and surveillance would be integrated with a response capability from within all Divisions, restoring a sense of hope and security in the citizenry. There is also a plan to obtain scanners for our ports from the United States of America.

The National Security Operations Centre (NSOC) in its concept and layout would be equipped to coordinate and monitor operations involving Security and Defence initiatives.

The NSOC would contribute meaningfully to the opportunity for ensuring that there is a security blanket and no security void exists.

This coordination integrated with support from the TTDF TTPS and other Law Enforcement Agencies brings a zero tolerance approach to ensuring that our borders are secured, closing the existing gaps.

The escalated vigilance would contribute to the holistic approach to Security and Defence for GORTT

Under this new plan, Vessels would now be manned and patrol our borders from the 2 – 12 mile radius around the island, working in tandem with the interceptors, and less costly but just as effective 70 meters vessels which we intend to purchase to secure our east coast.

Our new border protection naval operational plan will involve 12 Coast Guard installations strategically placed around the island, with fast patrol interceptors assigned specifically to each installation, and this will ensure that the country will now be properly secured, which could not have been done by one OPV simply patrolling 100 miles off our East Coast, as this is not where the majority of drug and weapon smuggling is taking place.

This settlement is a significant victory for the people of Trinidad and Tobago. Far from having to PAY BAE any money we have come out of this transaction with TT1.382 billion dollars (£131 million).

Worst case scenario

And it is important for us to consider what would have been the position of this country if we had lost the Arbitration. If BAEs had won on their claim as originally filed, it may even have been possible that:
  • we would have had to pay them the $611 million that they claimed, plus interests and costs that could have taken up that figure to 700 million
  • We would have been stuck with the loan to the banks
  • We may have been forced to take the faulty OPVs, which were not built to specs
  • We would have had to pay $590.8 million over the next 40 years in recurrent costs 
We have saved this country a recurrent expenditure of TT$56 million per annum or a total of TT$590.8 million over the next 40 years that would have been a yoke around the necks of our children in the years to come. 

We have enhanced our rich diplomatic ties and relations with the Embassy and Government of the United Kingdom. Indeed, we are grateful to His Excellency, Arthur Snell for the diplomatic support he has provided to the Attorney General in his efforts to settle this matter.

I also wish to pay tribute to the professionalism, dedication and hard work of my legal team and other public officers who worked diligently together towards an amicable and favourable resolution to this billion-dollar Arbitration to which the Government and people of this country was a party. 

Had we lost this Arbitration, the Government could have been liable to pay BAE hundreds of millions of dollars. Such a result could have impacted negatively on our economy at a most critical time.

Once again we have proven, as a tiny nation that we are capable of great things if we stand together. Once again, we have emerged victorious.

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Jai & Sero

Jai & Sero

Our family at home in Toronto 2008

Our family at home in Toronto 2008
Amit, Heather, Fuzz, Aj, Jiv, Shiva, Rampa, Sero, Jai