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Response to Questions Raised by Mr. Aubyn Hill and Senator Dr. Christopher Tufton on Accummulated Debts of Sugar Company of Jamaica Limited
KINGSTON, February 16, 2012 - On Tuesday, February 14, 2012, I made a Statement in Parliament to update the nation on the status of the divestment of Government’s stake in the sugar industry. In that Statement I clearly pointed out that the issues raised in the Statement were not done “to embarrass anybody or to look back, but in the interest transparency and to set the record straight, as I have been asking these questions in this Parliament without receiving any answers.”
The People’s National Party campaigned on a platform of transparent goverance and telling the truth. Since assuming Government, the Most Honourable Prime Minister has charged us as Ministers to tell the country the true state of affairs when we took over. I am sure that none will question the right of taxpayers of this country to know the details of the sugar divestment, what proceeds were collected, how these proceeds were used and what debts the Government of Jamaica and ultimately the taxpayers, have to absorb.
Whether the deal was a good one, and whether the quantum of payment to Mr. Aubyn Hill is justified, is for the people of Jamaica to judge. I however, take great exception to the insinuation by Mr. Hill, in a page 2 article of the Gleaner of Thursday, February 16, 2012, that the $35 Billion relating to the debt that the Government of Jamaica has to absorb, is incorrect. I do not know what “reliable source” informed Mr. Hill, but it is matter of fact and record that the Sugar Company of Jamaica that operated the five estates until 2009, incurred debts of $35 Billion as at the end of January 2012. This figure represents accummulated debts incurred by the Sugar Company of Jamaica, Trelawny Sugar Company Limited and St. Thomas Sugar Company Limited since 2000. The debts represent various loans from FINSAC, Bank of Nova Scotia, National Commercial Bank, Development Bank of Jamaica, as well as, outstanding statutory liabilities – PAYEE, NIS and NHT, which were absorbed by the Central Government.
These figures cannot be challenged and they are part of the records of the Sugar Company of Jamaica Limited. Nowhere in my Statement did I indicate that “the debt were incurred as a result of divestment”, as attributed to Senator Tufton in the said Article.
I was simply making the point that we have collected just over $1 Billion from the divestment, juxtaposed against a $14.8 Billion valuation of assets and the fact that the Government has to absorbe a $35 Billion debt. Regardless of how we feel about the divestment exercise, these are the realities. In fact, the Government has already absorbed a significant portion of that debt, as the assets could not be transferred to the divestees, as the very assets served as the security for many of the loans contracted by SCJ.
If one reads my Statement carefully, I separated the legacy debt ($35 Billion) of Sugar Company of Jamaica Limited, which operated the estates up to 2009, from the operational support provided by the Central Government to SCJ Holdings Limited, which operated the three remaining estates between 2009 and August 2011. $2.5 Billion was provided to SCJ Holdings during this time, when both Dr. Tufton and Mr. Aubyn Hill assured this country that the entities could be operated without recourse to the public purse. Furthermore, it was asserted that SCJ Holdings Limited, whilst they prepared for divestment would produce sugar at US13 cents per pound. The actual outturn for the 2009/2010 and 2010/2011 crop years were US29.58 cents and US28.43 cents per pound of sugar respectively. I was even kind enough to concede that of the $2.5 Billion given to SCJ Holdings this time, over $600 Million were intended to deal with social services, such as water, electricity, etc.
Again a careful reading of my Statement, shows that nearly one-half of it was dealing with how we go forward with the industry. And I said expressly “I am satisfied that in 2005 the then Government took the right the decision to privatize the sugar industry and that decision was followed through by the previous administration. The Sugar Privatization Exercise is already showing encouraging results”.
If any figure that I gave was inaccurate, it was Mr. Aubyn Hill’s true compensation. It is in fact an unasailable truth that in addition to the $28.25 Million paid to Mr. Hill in Round 2 of the Privatization Exercise by the Ministry, and the $16.18 Million paid to him as fees for the Privatization Exercise in Round 3, Mr. Hill was paid a salary of $7.5 Million per annum, plus travelling allowance for the two years he served as Chief Executive Officer at SCJ Holdings Limited.
Having divested the estates, this Government is not looking back, but will do everything in its power to ensure the success of the industry. We however, have a duty and a responsibility to tell the people the truth about the divestment, however uncomfortable it makes others feel.
Contact: Roger Clarke
Minister of Agriculture and Fisheries
T – 877-7976; 919-4258