PHARMAGATE SCANDAL: Cabinet Sub-Committee finds $12.5M rental too high – Source
… says re-negotiate ‘drugs bond deal’ or terminate contract
The lease entered between the Ministry of Public Health and Linden Holding Inc for the storage of drugs and medical supplies “should be revised and strengthened” and further, Government should seek to renegotiate rental for a lesser sum, since a similar facility could be obtained at a lower rate.
These are the potent findings of the Cabinet Sub-Committee set up by Head of State David Granger to investigate the controversial deal that had been entered with Linden Holding Inc—majority owned by Larry Singh, a known APNU/AFC coalition financier.
The Guyana Times newspaper, in a report today, said it has managed to garner more in depth information – from a reliable source – of the Confidential Cabinet Report that was handed to President David Granger last week, for his Executive action.
In the report, the Cabinet Sub-Committee found that—contrary to earlier pronouncements by government spokespersons—the value of the lease with Linden Holding Inc should be reassessed, as it is likely that a similar facility could be obtained at a lower rate.
The Cabinet Sub-Committee, which was chaired by Natural Resources Minister Raphael Trotman has also recommended that should Linden Holding Inc refuse to renegotiate a lower rate for its 29 Sussex Street, Albouystown, facility, then the lease arrangement should be terminated and Government should build its own storage facility, the source outlined.
According to the reliable source, the Sub-Committee recommended to the President that should Singh’s Linden Holding Inc refuse to renegotiate a cheaper rate with Government, that the company be given one year’s notice within which time government would seek to build its own bond. In addition to the promised public apology that was announced as part of the recommendations, the source outlined, that the Cabinet Sub-Committee recommended that government release all relevant documents, including the correspondences it would have received from the NEW GPC.
The Cabinet Sub-Committee team, which included Prime Minister Moses Nagamootoo and Minister of State Joseph Harmon—both Attorneys—had found too, that in their “considered opinion”, while the lease agreement with Linden Holding Inc is not altogether unfavourable to government, this should be revised to take into account matters related to ‘insurance and maintenance’ of the facility.
MINISTER NORTON’S ROLE
There has been public outcry for the President to sanction Minister of Public Health Dr George Norton but the report, the source highlighted, found that Dr Norton as “Minister of Health was acting in accordance with a Cabinet directive, when he tasked the Ministry’s staff to find and secure a suitable bond in the earliest possible time.”
As it relates to the misleading statements Dr Norton would have made in the National Assembly when the matter was first raised on August 8, 2016, the Cabinet Sub-Committee found that the minister might have himself been misled by the ministry officials assisting him at the time.
It was during the consideration of advances made from the Contingencies Fund, when the matter was first disclosed to the public.
At the time, Minister Dr Norton was being grilled over a $25 million provision which was found to be a Security Deposit paid to Linden Holding Inc.
Dr Norton at the time told the National Assembly that the building was in fact already being used by the Ministry of Public Health to store its drugs and medical supplies.
This publication was told that under examination by the Cabinet Sub-Committee, Minister Norton said his statement was based on the reliance of the information provided to him by the ministry officials “to the effect that the bond was ready and in use.”
Dr Norton has since reportedly accepted that this statement was erroneous.
Another of the erroneous statements made by Dr Norton was that NEW GPC was being paid in excess of $19 million monthly.
Dr Norton reportedly told the Cabinet Sub Committee that he was under the mistaken belief that payment had been effected as he is not involved in the financial business of the ministry.
Among the terms of reference handed to the Sub Committee in effecting its investigation into the entire fiasco was to determine whether Dr Norton caused the Government to enter an unnecessary lease agreement.
The newspaper reported that, according to its source, the Cabinet Sub-Committee in its findings have since documented that at the July 12, 2016 meeting of the Cabinet Council of Ministers, Chaired by the President, “a Cabinet Memo was brought to the Cabinet for approval to be given for the leasing of a building at Lot 29 Sussex Street, Albouystown.”
Cabinet gave its No Objection for the lease of the facility and among the considerations was the fact that though the arrangement with the Ministry of Public Health and NEW GPC was deemed “rent free,” it did not escape the attention of Cabinet that “NEW GPC was also the primary single source supplier of drugs and pharmaceuticals to the Government of Guyana and there was a ‘comfortable convenience’ in providing warehouse space for the drugs and pharmaceuticals that were being supplied.”
The Ministry of Public Health in 2016 instituted a new procurement model that sought to put in place regular public tendering as against what obtained in the form of pre-qualification—a status that was secured by NEW GPC.
The aim of the change of the procurement tactics on the part of the Government was to remove NEW GPC as the main supplier of drugs and pharmaceuticals.
NEW GPC responded by requesting payment for the use of its facility and that it had in fact already waived two month’s rent—January and February—and was only requesting rental fees for March to July.
Dr Norton subsequently made a petition to Cabinet and advised that, the use of the warehouse space from NEW GPC was undesirable for two reasons, namely that in an open bidding process, maintaining warehouse space at NEW GPC Inc could lead to allegations of conflict of interest levelled by other suppliers and that the sum requested by NEW GPC was excessive.
NEW GPC had in fact submitted an invoice to the Government of Guyana that works out to $237 per square foot for the use of its state-of-the-art storage bond, while the ministry subsequently opted to pay in excess of $1200 per square foot to Linden Holding Inc.
The Sub-Committee in its report, the source said, has suggested that Cabinet approved the leasing of the Sussex Street property, based on Minister Norton’s representation, and taking into account the essential and perishable nature of the products being stocked, that the need for a replacement warehouse was urgent.
According to the reliable source, it was the Permanent Secretary Trevor Thomas and staff of the Ministry of Public Health that commenced a search for alternative space suitable for the storage of pharmaceuticals or could be easily converted for that purpose, after which the bond at Sussex Street was secured at a monthly rental of $12.5 million.