A DEBT IS A DEBT

BY DAVID WALKER

The current THA Chief Secretary, Farley Augustine has informed the nation that his administration has inherited debts of close to one billion dollars from the outgoing one. Given an annual budget of around two and a half billion dollars, this represents indebtedness of close to 40% of budget. Several issues of grave concern arise from this announcement.

The first is that we had been previously unaware of this enormous debt owed by the administration to various parties. Any proper accounting would have included clear exposure of this figure. Instead, it was kept hidden from us for a long time. This would very likely have continued for many more years had we not had a change of administration. Here is another manifestation of the issues behind the failure to obtain clean audits down the years.

I cannot imagine how the accounts presented by the previous regime could accurately reflect the financial state of affairs without inclusion of the debt. It would not be unreasonable to suggest that the annual accounts were deliberately falsified. With such brazen and deliberate presentation of inaccurate accounts, have there not been repeated breaches of some law or regulation? Chief Secretary, please find a good attorney.

Speaking of attorneys and by extension the law, I have another concern. You may remember that during a recent budget, the Minister of Finance proudly announced that he had authorised borrowing powers to the tune of about two hundred million dollars for the THA. That would suggest that any and all THA borrowing had to be sanctioned by him. This newly disclosed indebtedness is orders of magnitude greater than the amount approved by the Minister.

If this indebtedness counts as borrowing (how could it not?) then surely it should have first been approved by the Minister of Finance. Has it, and if not, what legal or other action shall the Minister now take against the persons who initiated and approved said indebtedness?

The next issue is in relation to the size of the indebtedness, standing at around a billion dollars. If we make the quite modest assumption that this indebtedness arose over a period of say, five years we have an average overspend of two hundred million dollars annually. The nation and Tobagonians in particular have been wondering for years where the annual budget of two and a half billion went. We must be even more perplexed now. On what has this annual two hundred million been spent?

I want both this and the previous regime to understand that this is not about political payback. This is first and foremost about accountability. We cannot accept deliberately misstated accounts that hide all manner of financial misdeeds. The public must demand, and the current regime must deliver, a comprehensive report of how this expenditure was approved, who approved it, and what it was spent on. We also need to know under what powers, legal and/or regulatory, the expenditure was incurred.

And that's just the start my friends. Having failed to observe this abuse of the public purse, and unsurprisingly therefore failed to rein it in, is the Minister of Finance absolved of all blame? He, not the new administration, had the duty and the authority to ensure that this did not occur. Given his unforgivable failure to keep the previous regime in check, is he to be allowed to wash his hands and leave the entire burden on this new THA administration?

I cannot say what position this regime will take in the matter. I believe that they have said that over the next few years they will find ways to eliminate the debt. I commend them for their desire to right the wrong that was committed by others. I feel very strongly also that those who had oversight at the Ministry of Finance and Cabinet are culpable in every aspect of this fiasco. I don't know how but they should pay a price for failing the nation. The burden should not fall solely on the current THA administration.

If I were in a position to advise the Chief Secretary, I would suggest that he consult with an attorney versed in the THA Act, particularly with reference to the ability or otherwise of the THA to borrow. They would also need to examine the definition, both stated and assumed, of borrowing and credit. Is it that credit from a financial institution requires approval while indebtedness to contractors, employees, vendors etc. do not? What a ridiculous position that would be!

This is now a pressing question that merits urgent attention. Having assumed control of the coffers of the THA, what is the new regime's legal position vis a vis these outstanding monies? Might they now be treated as holding a debt that is ultra vires (outside of their legal powers)?

When the announcement was made about the indebtedness that was discovered I do not believe that the implications I have described above were understood. I should add that there are even more implications, not least for the national budget and debt management that I may address later. Massive unreported indebtedness is not the sole preserve of PNM in Tobago. This revelation should also ring alarm bells for the national budget and the way we calculate debt.

I implore other commentators to share their expert opinions on the matter. By all means criticize me if you believe that this matter is not as grave as I am stating. The one thing we should not do is to ignore it. We simply cannot afford that luxury.