Background to the problem
On November 13, 2011, the Nation newspaper published an article captioned “Saga of the Barrack muddle” and written by Bryan Walker. That article stressed the fact that, with interest rates as high as 10% built into the arbitrator’s ruling, pressure was mounting on the Government of Barbados to solve the Al Barrack problem as quickly as possible. However, pressure or not, little or no progress has been effectively made since then.
Today, I am focusing attention on the amount of money owed by the Government of Barbados to Barrack Construction (Barrack) only. Thus, arbitration costs, court costs, and legal fees are not included in my analysis.
It appears that Barrack was “awarded” a contract by the Owen Arthur administration related to the erection of a National Housing Corporation (NHC) office complex at Warrens, St. Michael. A dispute subsequently erupted between Barrack and the Owen Arthur administration and the contentious issue was submitted to arbitration on July 25th, 2002. The issue remained under arbitration until September 6, 2006.
At this point, a few questions are justified:
Did any Barbadian firms get a chance to bid for this project? If not, why not?
Why did it take over four years for the arbitrator to resolve the dispute?
On September 6, 2006, the arbitrator ruled that Barrack had been entitled to a payment of $34.5 million back in July 2002, and since the amount was not paid back then, it should accumulate at an annual interest rate of 10% up to the date of the ruling. After September 6, 2006, any amounts unpaid would attract an annual interest rate of 8%.
The $34.5 million owed to Barrack in July 2002 had accumulated to $50.9 million by the time the arbitrator gave his ruling in September 2006.
The Owen Arthur administration refused to pay the $50.9 million in September 2006, and when a change of government was made on January 15, 2008, the Al Barrack debt had grown to $56.4 million.
Based on information provided in the Nation article, I was able to note that the David Thompson administration paid Barrack $2.5 million in November 2008, but did not formulate any meaningful solution until December 28, 2009 when it made the following proposal to Barrack:
· $15 million in cash by January 31, 2010
·Monthly payments of $1.67 million thereafter for 18 months.
Presumably, at the end of the eighteenth monthly payment, the debt would be considered paid in full.
Using principles from financial mathematics, I have analyzed David Thompson’s proposal and have come up with the following picture:
|Payments & Proposed Payments||Value at January 31, 2010 using 8% interest|
|Actual $2.5 million paid in November 2008||$2.75 million|
|Proposed $15 million to be paid on January 31, 2010||$15 million|
|Proposed 18 monthly payments of $1.67 million payable from February 28, 2010||$28.3 million|
|TOTAL VALUE OF THOMPSON’S PROPOSAL||46.05 million|
At January 31, 2010, the $56.4 million unpaid at the end of Owen Arthur’s term in office had grown to $66.21 million based on the arbitrator’s orders.
This led to the following situation at January 31, 2010:
Gross debt owed to Barrack $66.21million
David Thompson’s offer $46.05 million
Proposed underpayment $20.16 million
If that Nation article is correct, Barrack, as was his right, refused the offer made by PM David Thompson to cheat him out of $20.16 million. According to the newspaper, Barrack’s ‘public snubbing of the offer so disgusted former PM David Thompson that he declared he would make “no further personal intervention” in the matter, but would leave it up to the lawyers.’
The Barrack solution was now outsourced.
By the time David Thompson died in October 2010, the outstanding Barrack debt had grown to $67.2 million.
Reportedly, no further action has been taken, and by the end of December 2013, the outstanding Barrack debt will grow to $85.8 million, with responsibility assigned as follows:
Amount of Barrack debt
Owen Arthur administration $56.4
David Thompson administration $10.8
Freundel Stuart administration $18.6
Total ($ million) $85.8
Solution to the problem
Dear Mr. Barrack,
I have been informed that, as a result of an arbitration ruling made on September 6, 2006 related to the construction of a NHC office complex at Warrens, the amount owed to you by the government of Barbados will reach $85.8 million at December 31, 2013.
From a national perspective, this matter has been allowed to fester for an unacceptable length of time. Since Barbados is not a banana, fig, or plantain republic, the government must play an exemplary role when it comes to obeying and upholding the rule of law.
As you are undoubtedly aware, Barbados is facing some serious economic and financial challenges at this time so we simply cannot afford to pay you the outstanding $85.8 million in a single lump sum.
Consequently, I am proposing the following payment schedule which will eliminate the government’s obligation to you by December 31, 2018:
A lump sum payment to you of $25 million on December 31, 2013
An annual payment of $15.23 million to you for five years, with the first payment starting on December 31, 2014, and the last payment being made on December 31, 2018.
Please note that these payments are mathematically equivalent to the amount of the outstanding debt. You can rest assured that the Government of Barbados is not trying to cheat you out of any money which is legally yours.
Please indicate, in writing, if you agree with the proposal as outlined above.
On behalf of the people of Barbados, I would like to take this opportunity to commend you for the amount of patience and tolerance you have exhibited over the past seven years, and to wish you the very best in the future.
The Prime Minister of Barbados
We can argue that Barrack made what could turn out to be a really bad decision by refusing to accept the $34million (devaluation looming)
but there is no defence of the Government of Barbados behaving like a capitalist corporate thug.
I doan have to read an spell fuh wunna.
Wunna reakly meking laugh fuh real doah……….real dog and bone mentality.
I cannot understand why you have difficulty understanding.
!. Barrack won the arbitration award.
2. the Govt. of the day appealed and lost.
3.Time passed, a new administration took office.
4. The new administration made an offer; the money owed plus some interest to be paid over a period of time.
5. Barrack refused the offer because he wanted ALL the interest, even though he KNEW that the government was in a difficult financial position.
6. Barrack appliedfor and was given a writ to levy on the chattels (including the same building, as well as goods, chattel, and other lands.
7. The goverrnment appealed against the writ which he had obtained to levy on the goods etc.
8. The court upheld the appeal against the writ; according to the law that gave them the right to do so. The goods and chattel are NOT the property of the NHC, the right party in the suit (not the government), so these are among the special circumstances that prevailed in the suit. The ordinary man will say this is nit-picking, but it is the law.
Governement is not “flouting the law. Even though Barrack has not YET been paid, Barrack still has options and one of these is to
enter NEGOTIATIONS. You will note in the court decisions that the government has paid out money to Barrack for legal expenses and certain interest. However, a lot of people sympathetic to Barrack , like you, will continue to ignore the law that gives rights to the government, because you don’t like this particular government, but I will keep pointing out that if the then government had done the right thing from the beginning this would not have happened.
He who seeks equity must come with clean hands. This is One of the major ;if not THE major, tenets of the law of EQUITY.
By the way David, Am I right in thinking that integrity legislation was promised; actually drafted a long time ago, before this present government assumed office?
I agree they promised to bring it back to the fore, but If I am not mistaken they still have another four years in which to bring it. Of course you are all thinking; believing? hoping? that it will collapse before than. We shall see.
Walter Blackman@ Until you do your home work you just talking JUNK ,
1 . Where did they get the land to build?
2. Who did they pay for the land?
3. Who’s land was it before the Crook BLP took it?
4. How much was paid and to who?
5. Where any deeds produced ?
6.Who is the lawyer that handle the movement of the land?
7. Who is the lawyer that stole or misused the land?
8. Who is the lawyer that, in court to help Barrack ?
9. Why Barrack has not been paid as yet and his lawyer not move again to make sure he is paid? There is still more law and action that can be done.
Sir Richard L Cheltenham Phd, QC , same crook, liar and scumbag that took Violet Beckles deeds, Same Crook that is leasing the land to the high Court .
Same dam crook in all the mess in Barbados. All in the same RAT nest with MIA and Owen , and CLICO.
Barrack if you are reading , look at your lawyer. He will not move against himself , We hope you see better NOW
Yes Barrack we also have that Plantation Deed.
Barack should have accepted the proposal as he would have come out smelling like a rose, he was getting more than he put in, but he was ill advised and now he is in this predicament and the govt has no money. if i were the govt, i would give him the barack building and ask nis to build us one for the people. when u start wrong u end up wrong. The veil should be lifted to ascertain who stands to benefit from the payment along with barack.
the money owed to barrack is the taxpayers money and the govt has a right also by law to dispose of it in a fair and equitable way. not nilly willy giving it all to one person .barrack needs to sue his lawyers for giving him bad advice
@Chaucer & Bovell,
Bovell you state:
The free bus rides, is simply state funds being used as “political-hush-money” – to buy political support but to also implicate people into being accomplice to the DLP fatted calf doctrine.
Chaucer, you suggested that there should be outsourcing of 1. School transportation.2. District Hospitals,3. Drug Services,4.Maintenance of Govt. Buildings and Vehicles.5.School Meals. My question was to whom, and under what conditions.
If you outsource the School Transportation, to whom are you going to give it? The SR owners? The Minibus owners?
The purpose of introducing free transportation of school children were to achieve two results. 1. to remove the school children from the influence of the Minibus and ZR culture.. All attempts to get the owners drivers, and conductors of this sector of the transportation industry to exercise self control came to naught. The government threatened that if they did not, then school children might have been banned completely from these vehicles. the alternative was to introduce free school transportation on government buses.2. To relieve families of the costs of bus transport for children and thus put “money back in the pockets of families. For example a family with two children taking public transport to school spend an average of $8.00 per
day. The school year thus saves a family approximately &1600.00 per year.Multiply this by the total number of children taking the bus to school show the amount of money put back in the pockets of the disadvantaged. This extra disposable income becomes available to spend on other commodities.
If you outsourced the district Hospitals who is going to undertake this? Obviously they will become “for profit” organizations, and the people who will suffer will be the poor and disadvantaged.
Similarly with the Drug Service. More on these later.
One of the major objectives of this article was to demonstrate how a problem emerged, worked its way past three administrations of government, and still remains unsolved today.
Based on how I think the government of Barbados should perceive the problem, I generated a quick solution that I considered to be fair, transparent, and able to withstand the scrutiny of the international business community. That solution took hours, not years. Taxpayers paid nothing for it.
From a national perspective, this Barrack issue is a costly affair. If left untouched, interest for the month of January 2014 alone will be just over $550,000.
There is a deeper lesson to be learnt from the Barrack issue which gives a hint at the source of some of our economic troubles.
Since the Barrack ‘solution’ had been privatized, lawyers from both political parties would have provided expensive services valued at millions of dollars, aimed at solving the problem. The millions of dollars paid to these lawyers would have been included in our country’s Gross Domestic Product (GDP). Our economy would have “grown” thanks to them. In reality, there was no increase in GDP. Our economy created millionaires but there was no national output to show for it. The Barrack problem slid from worse to worst and still exists today.
But Walter you have addressed a political incestuousness which has become a core issue for discussion through the years.
And u can be reassured that all and many proposal have been put on the table .however the one solution which seem to be satisfatory to barrack is that of a lump sum of Huge proportions nothing more , nothing less. that is why the issue remains unresolved.
I ear….trouble brewing wid Barrack soon again.
I hope Barrack locks them out PROPER…..this time until he gets his money promised….stupesss