Following the Petrojam Scandal – Stories Unravel

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The Petrojam saga has been described as the “mother of all scandals”, by the Opposition Leader, Dr. Peter Phillips. If you were to follow the messy trail of recklessness, nepotism, and procurement breaches, then you would agree with him. The Petrojam scandal is horrendous!

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Petrojam Scandal includes Nepotism

The Petrojam scandal reads like a sordid tale with inexplicable twists and turns. Allegations include rampant nepotism – the hiring of persons lacking appropriate expertise and experience for critical positions inside the entity. In addition, there are stories of staff victimisation.  Allegedly, staff who choose to stand up for principle are routinely dismissed or relegated to lower positions.  As the Petrojam scandal brewed, revelations emerged that allegedly pointed to mismanagement and corruption.

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How did it all come to this?

The Auditor General Investigates Petrojam saga

While early signals of the Petrojam scandal were visible from as early as 2013, things heated up in early 2018. After a chorus of calls for investigations and probes into the operation of the oil refinery, the Auditor General, Pamela Munroe Ellis, pulled her team together and started her audit. It would be months later, in December 2018 that she released a damning report on the affairs of the government-run entity.

From her report, a clear picture of financial indiscipline and questionable procurement emerged. Allegations include blatant cases of nepotism involving senior management employing their relatives; awarding questionable contracts without board approval and making payments without proof of work done.

Evidently, the absence of oversight or clear inefficiencies led to the refinery losing over 600,000 barrels of oil that cost the taxpayer $5.2 billion. This pattern of inefficiency spanned over five years dating back to 2013.

Petrojam Saga of Financial Indiscipline

  • The Chairman of Petrojam, in February 2018, spent over US$7,000 (J$900,000) toward the cost of an airline ticket for a meeting in the United Kingdom that he did not attend. The chairman’s act was in breach of government policy relating to overseas travel, which requires the booking of airline tickets through a travel agency. Ironically, he repaid the funds days after Opposition spokesperson on energy, Phillip Paulwell, took the issue to Parliament’s Public Administration and Appropriations Committee (PAAC) in June 2018.

Questionable Procurement and Contracts

  • Petrojam engaged and paid a Canada-based consultant a monthly retainer of US$17,000 (J$2.2 million) for a project that could have been handled by local consultants.
  • Furthermore, Petrojam contracted a firm a sum of $96-million to build a wall at the refinery without Cabinet’s approval. Incredibly, the original estimates for the project were approximately $30 million.
  • Allegedly, Petrojam hired a Chinese firm that offered to do the work on the Vacuum Distillation Unit (VDU) project for US$119 million, or US$40 million more than the cost proposed by a US-based firm. This action resulted in a potential cost overrun of approximately J$5 billion.
  • Petrojam retained a firm for public relations and entertainment services at J$13-million.
  • The oil refinery paid its Human Resource Manager a $13.04-million annual salary with allowances.
  • Furthermore, Petrojam’s Human Resource Manager lacked the required Master in Business Administration (MBA) degree when she applied for the position in February 2017. She remains unqualified.
  • Inexplicably, Petrojam rejected a tender offer from Marathon Insurance Brokers (MIB) to provide insurance services for staff, in favour of a contract award to a competitor at a whopping $420 million more than MIB’s offer. However, the Officer of the Contractor General in a subsequent report found no bias by Petrojam in this transaction.

Board Failure to meet

  • Petrojam’s Board failed to meet for over nine months in the wake of the Venezuelan government’s demand for answers. The matter related to the more than US$10m of value that the oil refinery could not account for. Venezuela’s 15-page memo raised questions about pilferage amounting to US$2m and the conversion of US$5m worth of crude oil into products for which revenue flows could not be traced.

Lavish Parties

  • The scandal includes lavish “surprise parties” thrown by the former leadership for then portfolio Minister Andrew Wheatley and former board chairman, Perceval Bahadoo-Singh. The party cost was exorbitant, running into the millions. Most stunning, this cost included the infamous US$1,000 (J$130,000) chocolate covered ‘topsy-turvy’ cake.
  • The Daily Gleaner newspaper reported that the former management of Petrojam spent in excess of J$1.4 million (US$10,500). The purpose?  – to host a ‘staff party’ for 25 guests at Palms at Palmyra in MoBay, St James, on September 19, 2017.
  • Shockingly, less than 24 hours prior, the oil refinery racked up another bill of just under J$5 million (US$37,827) at the Hyatt Ziva Rose Hall. This sum was to accommodate and feed participants at a four-day staff retreat and board of directors meeting.

High-level Casualties

Not surprisingly, there were casualties of the Petrojam scandal. Senior managers and members of the Petrojam board resigned within days of each other. But the biggest casualty was the Minister of Energy, Science, and Technology, Hon. Andrew Wheatley. He was forced to step down to allow the Office of the Prime Minister to take control of the entity and its parent Ministry. He finally resigned his position of a Cabinet Minister in December 2018.  Subsequently, Hon. Fayval Williams, formerly a State Minister within the Finance Ministry, assumed the vacant ministerial post.

Latest twists

The latest twists in the ongoing Petrojam scandal are just as intriguing.

The Parliament’s Public Accounts Committee (PAC) heard that a member of the Board of Directors at PCJ remains active. This revelation sparked outrage as this was the same board that presided over the scandal-plagued Petrojam.

However, a new board is necessary following the GoJ’s move to purchase the 49% shareholding from Venezuela. The Permanent Secretary, Carol Palmer, informed the PAC that the delay in naming a new board for Petrojam arose as the Ministry awaits the recommendation from the Attorney General’s Department on the composition of the new board.

Most recently, allegations of fraud relating to the preparation, cancellation, and reissue of a J$9.0 million cheque from one “citizen’s association” to another also emerged.

The Permanent Secretary promised to launch her own investigation into the matter.

Is there an end in sight? The Petrojam saga continues.

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