Sears: Smith called off CDB $16M loan
Former chairman of The College of The Bahamas (COB) Council Alfred Sears said COB President Rodney Smith recommended that the government should no longer proceed with a loan agreement with the Caribbean Development Bank (CDB) for $16.18 million to support COB’s transition to university status.
Smith’s recommendation was then communicated to the Caribbean Development Bank, Sears said.
Last year, COB announced the launch of a transformation project which is the direct result of the $16.18 million loan that was extended to the government by CDB. The loan was to fund specific capacity-building initiatives at COB as it transitions to university status. Previously, the government affirmed that COB would attain university status by the end of 2015.
The loan was premised on the transition of COB to university status by 2015, according to the CDB loan project document. CDB said the project would “assist COB to fulfil its mission to foster national development through teaching, research and innovation and service to the community”.
CDB added that the project “will support enhanced learning environments, improved governance and management and improved service delivery”.
The project components included enhancement of the learning environment, which included construction of a halls of residence to accommodate 100 students; construction and external works and the provision of equipment and furniture for the proposed F.R. Wilson Business Centre; energy efficiency enhancement of the Keva Bethel Administrative Building and the Culinary and Hospitality Management Institute (CHMI); upgrade of the security system; and design and construction supervision services. Another component was intended to create an improved governance and management system, and included consultancy services for the development of the legislative framework for university status; development of enterprise risk management and quality assurance systems; restructuring of business finance and human resource management systems; establishment of a research and innovation center; preparation of a University of The Bahamas strategic plan; and a strategic marketing framework and training for staff.
The project also included a component on improved service delivery, through enhancing distance education capacity for under-served communities; stakeholder engagement and a review of CHMI. And under technical assistance, the loan would have provided for design services for the proposed arts complex and science complex, and project management services.
The loan was constrained by a detailed and thorough list of conditions. For example, Section 4.27 says as a condition of the loan, COB will be required to submit to CDB an annual report on the performance of the Department of Physical Planning, including details of the maintenance of all COB facilities for the past year and projections for the year ahead. The reports are to present information on the condition of the infrastructure, work program, expenditure and budget allocation. The annual report shall be updated by September 30 of each year and shall include a three-year maintenance plan for the new facilities, which shall first be submitted by June 30, 2017. The plan shall include the resource allocations, frequency, timing and annual cost of identified preventative maintenance activities.
Among the conditions precedent to first disbursement, specifically at condition (h), COB is required to carry out the project at all times with due diligence and efficiency with management personnel whose qualifications and experience are acceptable to CDB, and in accordance with sound technical, environmental, financial and managerial standards and practices; and institute and maintain organizational, administrative, accounting and auditing arrangements for the project acceptable to CDB. Condition (p) is even more explicit: Except as CDB may otherwise agree, COB shall furnish to CDB as soon as is available, but in any case no later than 180 days after the end of its financial year, a certified copy of its audited financial statements for such year prepared by independent auditors acceptable to CDB in accordance with the International Financial Reporting Standards; and a copy of the most recent management letter received from its auditors commenting on the adequacy of COB’s financial control procedures, accounting systems and management information systems; and shall make such arrangements as are satisfactory to CDB for addressing any deficiencies identified in the management letter, and to the intent that standard conditions shall not apply.
Guardian Business understands that COB does not have audited financials beyond 2012, and as such has failed to meet one of the stipulations for accessing the money. This also means, as has been pointed out, that COB is in violation of the College of the Bahamas Act, which says COB’s accounts must be inspected by an auditor appointed by COB’s Council every year.
The delay in accessing the funds has reportedly disturbed the timeline of COB’s transition to a university.
Sears told Guardian Business yesterday, however, that President Smith had consulted with the Ministry of Finance on the matter.
“The government, as I understand it, felt that more alternative and favorable forms of funding could be secured to fund the transition to university status,” said Sears.
He pointed out that the Ministry of Finance was the primary obligor of the loan, because COB could not have qualified for the loan.
After consultation with the Ministry of Finance, Smith went to Barbados to meet with President of the Caribbean Development Bank William Warren Smith.
“When Smith came back, he recommended to the minister of education, Jerome Fitzgerald, and to the Ministry of Finance, that given the terms of the loan, it was his recommendation that the government not proceed with the loan and that was communicated to the CDB,” Sears pointed out.
He said he attended a meeting with President Smith at which the recommendation was made.
He added that CDB was prepared to make certain adjustments, but Smith’s recommendation after reviewing the entirety of the situation was made after meeting with the president of CDB.