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Following the Petrojam Scandal – Stories Unravel




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.

Peter Parchment is a highly trained professional with twelve (12) years senior executive experience in Policy Formulation, Monitoring & Evaluation, Strategic Planning in the Public Sector, and Social Research. A strategic thinker with strong problem-solving skills, people and resource management skills and the ability to think outside the box. Equipped with sound technical report writing and consultation facilitation skills and knowledgeable in the workings of Government and the Public Service. Experienced in working with rural and urban communities in a variety of locally and externally funded projects. He is also trained in Media and Communications and writes for online clients and publications. [email protected]

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Bankers Urged to Remain Alert to Electronic Fraud




Bankers, you must remain aware of the different tools that mitigate attempts at electronic fraud. That is essentially the message from Jerome Smalling, Vice President of the Jamaica Bankers Association (JBA). He was speaking at the JBA’s seminar on anti-fraud held recently at the Terra Nova Hotel in Kingston. His warning comes against the background of the increased attempts by criminal elements at defrauding financial services institutions.

100 Seminar Participants Hear About e-Fraud Technologies

Over 100 persons participated in the anti-fraud seminar that was also held in association with the Jamaica Institute of Financial Services (JIFS). International and local experts covered topics including fraud trends, artificial intelligence, data protection, and the use of closed-circuit television images in preventing fraud. Participants got first-hand data and information on the capabilities of existing technology in perpetrating fraud.

Dirk Harrison, the Director of Prosecutions at the Integrity Commission, presented statistics reported by Transparency International that demonstrate the harmful effects of corruption on the progress of governance mechanisms.

Stay Ahead of Fraudsters – Dirk Harrison

Integrity Commission Jamaica

Harrison argued for a solution-oriented rather than a problem-oriented strategy to deal with fraud. “We must stay ahead of the fraudsters, who may ultimately be responsible for programming the same technology and machines on which we are to depend,” he said. Further, the Integrity Commission Director of Prosecutions emphasised how important it is to engage with the youth. He encouraged the seminar participants to reach out to the schools, youth clubs, and the cadet force to reinforce the message of “right and wrong,” and the consequences of choices.

Interestingly, Damian Small, the Director of Corporate Security at Scotiabank, argued that institutions must use a combination of strategies to effectively manage e-fraud. Such an approach, he explained, must be transparent and trustworthy for clients. Strategies must also create awareness on the different social engineering tactics that criminals use to collect data. Furthermore, fraud detection and prevention should also be objectives from an organisational perspective.

Law Enforcement Challenges and Weaknesses

But a report appearing in the media in 2018 highlighted major weaknesses in law-enforcement and the justice system in fighting fraud. Reportedly, in 2017, as electronic fraud spread, banks, and other financial institutions lost $750 million.

Also, the Jamaica Constabulary Force (JCF) data showed that between 2013 and 2018 the police Fraud Squad received reports on almost 3,400 alleged cases of fraud.

Unfortunately, the rate at which fraudsters are convicted in the island’s courts lags the arrest rate. Reportedly, the courts found only 115 persons guilty out of the 1,029 persons held for different rackets.  Even then, more than 50 percent of the convicted persons over the five years received their conviction only in 2017. Also, according to police data, between 2015 and 2016, the police Fraud Squad secured only three convictions for fraud.


Fraud Officers Sometimes Redeployed

Even arrests fall behind reports. During the five years to 2018, the police Fraud Squad received almost 2,000 fraud reports, but only arrested a little over 900 persons. Distressingly, the situation concerning arrests and convictions for electronic fraud is much worse.

The bottom line is that the Duke Street-based police Fraud Squad is woefully understaffed and under-resourced. Up to 2018, the police Fraud Squad had fewer than a dozen investigators assigned to tackle fraud islandwide. Even with this shortfall, the police high command sometimes redeploys these officers to other duties including Zones of Special Operations (ZOSOs) and the State of Emergency (SOE) in Western Jamaica.

Official Ambivalence Regarding e-Fraud

Interestingly, Lloyd Parchment, an anti-fraud expert at the Jamaica Bankers’ Association, suggested that official ambivalence regarding the crime of fraud contributed to the low conviction rate experienced in Jamaica. For one thing, many see fraud, particularly that against institutions like banks, as a victim-less, white-collar crime.

Parchment suggested that:

 “The justice system does not recognise fraud as a very important area of criminal activity; they do not treat it seriously.”

He further explained that the banking sector has urged the justice system to acknowledge fraud as a serious criminal offence. He also noted that the money gained from it is also fuelling more serious illegal activity. According to the JBA anti-fraud expert, banking sector leaders received only a lukewarm response from the justice ministry when they attempted dialogue on the matter of fraud.

Banks Choose Not to Report Fraud

Consequently, financial industry leaders are not so confident that investigations into the reported e-fraud cases will yield serious results. Furthermore, banks, in some cases, chose not to report fraud incidents to the police Fraud Squad as they do not see the point of doing so. Also, the substantial backlog of reported fraud cases investigated by the Fraud Squad is another disincentive for institutional victims of electronic fraud to report or follow up on fraud matters.

Parchment offered an example of what happened in a recent fraud incident:

“We had a guy recently who reaped millions of dollars in fraudulent funds from the banking industry through debit card frauds, and when we managed to engineer his arrest, and he was brought to court, he immediately pleaded guilty. He was slapped with a $200,000 fine. He then went and stole the money from a customer’s account to pay the fine. It didn’t even come out of his pocket, and he is back working the next day and continues to work right now. I have the evidence of that because we have the camera system.”

Optimistic Outlook

Participants in the recently held JBA/JIFS anti-fraud seminar got an earful on the scale of electronic fraud and the kinds of technology criminals use. Not only did presenters offer their experiences on the various ways financial institutions suffer at the hands of unscrupulous fraudsters, but they also got useful tips on how to address this growing problem.

The existing law enforcement weaknesses and challenges in the justice system, however, threaten any success in addressing the e-fraud monster.

But as an adage goes, “where there is life, there is hope”.

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BOJ Clinches Deal with Bloomberg To Allow Local FX Traders on Platform




The Bank of Jamaica (BOJ) has clinched a deal with Bloomberg (USA) to access its advertising and trading platform.  BOJ’s arrangement with the international financial and media services provider will enable FX dealers to place Foreign Exchange rates on the Bloomberg platform in local and US currencies. Other dealers will then see them in real time.

The Deal with Bloomberg for B-Match Platform

John Robinson, BOJ’s Senior Deputy Governor announced the deal. He further disclosed that the deal with Bloomberg is an interim strategy. Dealers will, however, be able to use the Bloomberg trading platform come July 1, 2019. While this arrangement with Bloomberg is temporary, the BOJ expects to launch its own comprehensive trading platform in early 2020.

Robinson, in a media interview, further stated that Bloomberg is currently testing its B-Match model. That model enables dealers to trade among themselves. Bloomberg’s B-Match model is a data-driven service that offers information on clients so advertisers may present targeted opportunities. Bloomberg offers the same service to financial entities, such as FX dealers. They will be able to use specified information to match the FX needs of other Foreign Exchange dealers and entities.

Dealers Signing Up

Reportedly, traders and large buyers have already signed on to the Bloomberg platform. They have the advantage of seeing the rates at which other banks and institutions are selling the US dollars. These traders and buyers can see this information through a special terminal linked to the central clearinghouse system operated by the Bank of Jamaica. The BOJ official noted that it is necessary for dealers to have access to the Bloomberg terminal. This access will effectively allow them to work with their large clients who need foreign exchange from time to time.

As described by BOJ’s Deputy Governor Robinson using an example, “say JPS, which want to buy US$1 million, you can come onto the system and see who is selling and for what price, and you can buy through your dealer who will process the transaction using the Bloomberg B-Match model”.

However, in accordance with the deal with Bloomberg, the BOJ must pay a fee of US$2,000 per month for accessing the platform.

BOJ’s Comprehensive FX Trading Platform in the Works

Responding to a question on whether the BOJ would have a supervisory role in the Bloomberg B-Match system, Robinson indicated that the BOJ will coordinate rather than supervise the use of that platform. Each dealer will have his or her own terminal. The BOJ will, however, “shepherd them into sharing all this information”, Robinson explained.

Also, the BOJ’s comprehensive FX platform is still a work in progress. However, it will, in addition to the Bloomberg B-Match system, allow foreign exchange buyers to register and see the FX rates offered by each bank. FX buyers will then get the best price.

Bloomberg, a major provider of round the clock financial information and news, offers a professional analysis of financial data and news, as well as the analytical tools that financial professionals can use. The Bloomberg Terminal is one of its key income streams that is an integrated platform for streaming price data, trading information, news, and financial analysis to more than 300,000 customers globally.

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Sagicor Investments Jamaica Limited to Raise $4 Billion Through IPO




Sagicor Financial

Another IPO is on the horizon. This time, it is the Sagicor Investments Jamaica Limited that is seeking to raise around $4 billion through an initial public offering. Sagicor Investments is offering shares in the Sagicor Select Funds Limited, which is a fund pool consisting of financial stocks that are listed on the Jamaica Stock Exchange. The public offer will open on July 3 and close on July 17, 2019.

Sagicor Investments Jamaica Limited Offers 2.5 billion Stocks

Investors can purchase a total of 2.5 billion stock units at a price of $1.00 per unit. Also, they have the choice to purchase from an additional pool of 1.5 billion stock units should Sagicor Investments Limited choose to upsize the IPO.

The Sagicor IPO consists of shares in two classes – Class A shares offered to Sagicor Investment Limited clients and Class B shares offered to members of the public who subscribe to this initial public offer. The prospectus from Sagicor Investments Limited stated that the company was structured as a passive equity fund with separate classes of shares listed as a Financial Select Fund.

JSE Financial Index Grows 18%

Presently, the Financial Select Fund has invested $1.1 billion in 11 of the 23 financial stocks that constitute the Jamaica Stock Exchange Financial Index. The funds raised from this IPO will go toward acquiring more financial stocks. Sagicor Investments Limited aims to match the financial securities that constitute the JSE Financial Index as closely as possible.

With the Financial Select Fund, investors can track the Index’s value, the net asset value (NAV) of the Fund, and its market value daily. Such information is published on the Jamaica Stock Exchange website and will be published by the Sagicor Investment Jamaica Limited.

On March 1, 2019, the Jamaica Stock Exchange (JSE) launched the JSE Financial Index. This Index consists of insurance companies, financial and microfinancing companies that are trading on the main and junior markets. On Thursday, June 20, 2019, the JSE Financial Index closed at 118 points, which represents an 18.25 percent growth since it was debuted.

While Sagicor leads the unit trust market with its Sigma branded unit trust packages, its Financial Select Fund focuses on a specific sector (financial). So, investors have the choice of specialising in a sector without suffering the accompanying concentration risk.

Why Buy into an IPO?

Investing in shares offered through an initial public offering is like entering an opportunity on the ground floor. Through this strategy, the investor benefits from significant gains once the shares hit the stock exchange. Once the IPO shares are listed on the stock exchange, it’s all systems go as the normal trading takes effect.

A quick look at the performance of some of the investment opportunities offered through IPOs from 2018 to date shows strong gains in price since they were offered to investors.

Look at this table below:

Table 1: Performance of Companies Offered through IPOs from 2018 to Date

Company Symbol Date of IPO IPO Price Closing Price June 20, 2019 % Change
Elite Diagnostic ELITE Feb. 2018 2.00 3.95 98%
Everything Fresh Limited EFRESH May 2018 2.50 1.49 -40%
Fontana Limited FTNA Dec. 2018 1.88 4.43 136%
iCreate Limited Ordinary Shares iCreate Jan / Feb, 2019 1.01 0.8 -21%
Indies Pharma Ordinary Shares INDIES July 2018 1.50 3.21 114%
Mayberry Jamaica Equities MJE July 2018 7.56 11.31 50%
Sygnus Credit Investments Limited JMD Ordinary Shares SCIJMD May 2018 13.72 13.39 -2%
Wigton Windfarm WIG April 2019 0.50 0.84 68%


So, as you consider whether to buy into this latest IPO, read the prospectus and talk with your broker or financial advisor.


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