Jun 10, 2010 - Although facing an investigation into the proposed sale of its 45 percent equity in bauxite company, Jamalco, to a Chinese firm, the government of Jamaica is proceeding with negotiations with the ultimate aim of closing the deal.
At the same time, Minister of Energy and Mining James Robertson, who made that position clear in Parliament yesterday, is promising that he will fully cooperate with Contractor General Greg Christie's probe.
Christie had announced last week that he had launched the investigation because the Ministry of Energy and Mining had failed and/or refused to put the divestment of the shares to Zhuhai Hongfan through a "structured, Office of the Contractor General (OCG) monitored competitive process"He noted that he had previously indicated to the government that the circumstances surrounding the deal had raised very serious concerns and questions about transparency, value for money, competition, conflicts of interest, propriety, merit and impartiality.
In response to questions on the matter from Opposition spokesperson on energy Phillip Paulwell on Tuesday, Robertson said that despite the ongoing investigation the talks with Zhuhai Hongfan would not be put on pause.
"The government has entered into a legally binding contract and we will not be halting. We will be cooperating fully with the contractor general. We are not in a position to halt," he said.
Minister says government made right move
Robertson defended the government's approach in the Jamalco matter, although admitting to Christie's concern that there was no advertisement for the sale of the shares.
He said that Clarendon Alumina Partners (CAP), which operates Jamalco, had accumulated massive debt and the government had to step in.
"From 2007 to 2010 the government, through the Ministry of Finance and the Petro Caribe Fund, have had to pump about US$250 million to meet CAP's obligations to Jamalco," he revealed, adding that CAP currently owes just under US$400 million.
The Energy and Mining Minister explained that Zhuhai Hongfan had expressed an interest in acquiring the government's Jamalco shares since 2008 and that interest was maintained through 2009, even when the industry fell to its lowest point and several plants around the world were being shut down. He said the government conducted extensive due diligence on the company.
"Its offers include not only a substantial price, commensurate with independent valuation, but the assumption by Hongfan of the costly supply contracts which are responsible for a substantial part of the accumulated losses and some of which run until 2013. Its offer is also better than that submitted by one of the major global players in the alumina industry," he noted, adding that Zhuhai Hongfan has the support of the China Development Bank.
The agreement for the sale to the Chinese firm was approved by Cabinet. However, under the joint venture agreement between CAP and the majority shareholder in Jamalco Alumina Company of America (ALCOA) , the latter has the right of first refusal, and has until the end of this month to exercise that option.
Meantime, the Contractor General has already indicated who he wants to hear from as he conducts his probe.
He said in a statement on Monday that Prime Minister Bruce Golding, as well as the current and former Permanent Secretaries in the Ministry of Energy and Mining, will be among the first persons who will be required to provide sworn testimony.
In due course, he said, other senior public officials and private individuals will also be served with formal notice, including Minister Robertson and Howard Mitchell, the Chairman of the Jamaica Bauxite Institute, the Jamaica Bauxite Mining Ltd., the Bauxite and Alumina Trading Company and the National Housing Trust.
