Water Farm mystery

NOW that Public Utilities Minister Rennie Dumas has explained what WASA's $51 million payout to Water Farm Ltd was all about, we find this whole matter even more mystifying. Our basic question is, if the contract given to Water Farm was illegal, and therefore null and void, why was any money paid to this company at all? If what Minister Dumas told the Senate on Tuesday is true, then this transaction smacks of gross incompetence on the part of WASA and its then Executive Director (ED) and, on the basis of that, we can see no need whatever for the Attorney General to refer this issue to forensic investigator Bob Lindquist. 

This is not the case of a massive construction project scandal such as InnCogen or the Piarco Airport Development, in which a variety of persons are involved and the circumstances are complex. This is the case of WASA's Executive Director issuing contracts to firms to operate certain water well fields even though, according to Minister Dumas, he did not have the authority to make such arrangements. This unauthorised action by the head of WASA is clearly the crux of the matter, the source of the problem, which requires no forensic investigation. It is mystifying that an officer in his position did not know the extent of his executive power. In any case, he did not apparently see the need to consult with the Authority's lawyers to determine whether or not he had the capacity to issue such contracts. As it turned out, the ED did not have the power to bind the Authority to these arrangements and, it seems to us, if anybody should have been held responsible for the faux pas it should have been him, not the Authority.

Equally mystifying is the reaction of WASA to this error. Instead of taking some disciplinary action against the ED for overstepping his bounds, the Authority decided in 2002 to pay a total of $51 million to Water Farm for his mistake! This, in our view, is unbelievable. Taxpayers' money, to the tune of $51 million, was paid out on the basis of an unauthorised, illegal, null and void contract! Now, we can understand WASA commissioners deciding, as a result of pure goodwill, to compensate Water Farm for the work it did before the contract was terminated. We have no idea what was involved here, but an assessment done by the accounting firm of Ernst and Young placed the compensation figure between $11 and $13 million. How then did WASA arrive at the figure of $51 million? This is another great mystery. But, again, if what Minister Dumas told the Senate is true, then this decision is also unbelievable. He said that the new WASA Board sought a new legal team which advised that the contractor would be able to claim for the loss of earnings. But how can this be? Who was on this legal team?

How can the contractor claim for loss of earnings on an illegal contract? Was it not also Water Farm's responsibility to ensure that the contract they obtained from the Authority's Executive Director had followed the necessary process and was legally binding? Are not these contracts vetted first by lawyers before they are signed? It seems to us that Water Farm, in their own interest, also lapsed on this responsibility. So that both parties appear to be delinquent. In these circumstances, and having regard to the fact that the unauthorised contracts did not bind the Authority, how then could the Board pay the firm for loss of earnings? In our view, this matter has resolved itself into a legal dispute and does not require any forensic investigation. Do we have more money to waste? Can WASA now retrieve all or part of the money it has paid to Water Farm on the basis of an illegal and, therefore, non-existent contract? That is the question the AG should be concerned about.