ADDRESS BY THE PREMIER HONOURABLE RALPH T. O’NEAL, OBE
Wednesday, 19th September, 2007

Greetings to all the people of these blessed Virgin Islands and to the neighbours and friends in the U.S. Virgin Islands, and all those listening on the world-wide web.

I would like to thank God for this wonderful privilege of addressing you, a privilege I regard as God given and to express on behalf of my colleagues our thanks and appreciation for the manner in which you gave us that resounding vote of confidence and that sacred duty to guide the affairs of this the Virgin Islands for the next four years.

Now that the Speaker has been elected and the members of the House of Assembly have been sworn in, we are now all ready to represent you and we do intend to represent all the people and I repeat, all the people of the British Virgin Islands.  In doing this I ask you to please exercise your patience as we try to unravel some of the mysteries that will be unfolded.  

As you know the Peebles Hospital was a project that the Virgin Islands Party Government started and after June 16th, 2003 work came to a full stop.  In reply to a question asked at the 38th Sitting of the Fifteenth Legislative Council, on Tuesday, May 2nd 2006 to the Honourable Minister of Finance, Health and Social Development by the Member for the First District, the Minister was asked to please inform the Honourable House of the names, scope of works and amounts of each contract that was stopped or not allowed to be performed by this Government.  The answer he gave regarding the Peebles Hospital was as follows:

“Madam Speaker, this Government on assumption of Office in June of 2003 promised the people of this Territory prudence and responsibility in achieving the maximum value for their hard earned tax dollars.  I do agree with the Member for the First District in that Government should honour commitments of previous governments.  However, the lines must be drawn in situations where the commitments are not in the best interest of the country.   As a result of this we assessed all projects and wherever it was obvious that the people were not receiving this value, projects were discontinued.
 
“As regards Peebles Hospital project, Madam Speaker the firm BCQS was contracted by the preceding Government in 2001 to provide project management services on the new Peebles Hospital Project.   This project was placed on hold in order to conduct further financial studies with a view to decrease the cost of the project while maximizing functional space.  BCQS contract was signed, Madam Speaker, at a cost of $3.6 million to be dispersed over a three year period.

“At the time when the project was halted, a total sum of one million four hundred and thirty-eight thousand, six hundred and seventy-three dollars and nineteen cents ($1,438,673.19) was already paid.  This figure represents approximately 50% of the amount of the contract, whereas only approximately 20% of the actual works was completed.  

“In addition to the monies expended, there was a closing cost in the amount of one hundred and eighteen thousand one hundred and forty-three dollars ($118,143.00).  Madam Speaker we are proceeding with architectural and other works on the Hospital Project.   These are being performed by a Project Engineer, Mr. Bennet Smith and a Clerk of Works, Mr. Danny Stoutt.  The annual cost for services which includes management for all projects under the Ministry of Health and Welfare is one hundred and fifty-five thousand dollars ($155,000.00) for salaries plus office and utilities expenses”.

The Virgin Islands Party Government negotiated with an architectural firm of Page Southerland and Page to design and produce the working drawings for the new Peebles Hospital.  What the Minister did not say in his answer was that the National Democratic Party Government paid the same Architectural firm some three million dollars to re-design the hospital and boasted to us that it contained more beds than the one the Virgin Islands Party Government had designed for a total of seventy-five million dollars built and furnished.  What we are getting at Peebles Hospital now is a shell.   

The contractor is Carimex and the bid was for $65 million (sixty-five million) dollars.  In a meeting with the Architects two weeks ago they confirmed that the work is four weeks behind schedule and we were promised that the job would be completed in 18 months time.  The cost has escalated and as it is going, it will be nearing ninety or one hundred million dollars for the completed project.   Now also bear in mind that the area called the Annex which is not completed yet and the Tenderer got a contract for four million dollars and there were several millions added due to escalation and various change of plans.

Now I may mention here that all the people working on the Hospital Project are from Santo Domingo and most of them are housed at Prospect Reef Hotel and the Government Hotel receives an average of $20,000.00 a month for their lodge.  They get their meals elsewhere, but it is interesting to know that no payroll tax is paid.  I cannot find anywhere in the Payroll Tax Ordinance where workers on a project like that are exempted from pay roll tax.  But when contacted as to why payroll tax is not paid in the British Virgin Islands, the answer received was that payroll tax is paid in Santo Domingo.  Now what is that?  

Every person working in the B.V.I., with the exception of domestic workers, must pay payroll tax.  How could a Government allow the workers on the biggest government project in the Territory be exempted from payroll tax.  This matter will have to be dealt with so that there will be a level playing field for all the workers.

Development agreements have been signed with several companies who would like to carry out development projects, chiefly the construction of five star hotels in the Territory.  In the Virgin Islands Party Manifesto we have pledged to revisit the various agreements.  These have been signed by Dr. the Honourable D. Orlando Smith on behalf of the Government of the Virgin Islands and they are registered in the Registry of the High Court.   When I discovered they were registered in the High Court Registry, I went and bought a copy of the Beef Island Development Agreement.

There are about five of these development agreements and I will be laying a copy of each on the Table of the House of Assembly at the next meeting. I will ensure that copies will be made available to members of the public who would wish to have a copy and they can follow the developments.  They would be available from the Clerk of the House of Assembly.  I have been reliably informed that before the discussions leading up to the signing of these agreements, each prospective investor or developer was required to sign a contract to engage the services of a particular individual for a fee of $7,500.00 a month.  

In addition there is a clause in the agreement which says that successive governments are bound by the Agreement.  I know that Parliaments cannot bind successive Parliaments, so this matter would have to be thoroughly examined.

While it is true that after the dissolution of the Legislative Council there is still a Government but this is termed a caretaker government and by convention it does not undertake new or big projects.  These are left for the next Government.  In our case between 15th June, the date of dissolution and the 20th August, the date of General Elections, there was a frenzy of contract signing including no bid contracts (many of which were not provided for in the Budget).  

The petty contract limit was $60,000.00 and we were told that it was raised to $75,000.00 and then it was raised to $100,000.00.   A petty contract could be for civil works, like building a small piece of road, painting a building, etc. and for supplying goods like stationery, furniture and services such as architectural, project management and so on.  Bear in mind the National Democratic Party adversely criticized the Petty Contract System and said it would be stopped but then when it was discovered that it could be used to their advantage and their supporters advantage, petty contracts became the order of the day for supplying services, goods or carrying out civil works.   

The practice, I was reliably informed, was that people would be asked to supply some goods; the cost would be shown to another contractor.  Then the prices would be shown to a third contractor who would supply those goods at a lower cost.   There was even a case I was informed that the sealed bids would be opened at such and such an hour and usually when there are sealed bids, when they are opened up, they are opened up in the presence of all the bidders.   But this time that was not so, they were opened behind closed doors.  

This is contrary to the provisions of the Public Finance Management Act which was introduced into the Legislative Council by the National Democratic Party Government and passed.  One of the things the Minister of Finance said on the second reading of the Bill was that there was going to be more transparency and openness in Government.  Contracts were also awarded on a no bid basis for up to several million dollars, for example, the bid for the installation of the new Incinerator.  I have decided that the list of petty contracts given between June 15th the day of dissolution and August 20, the day of election will be made public so that every one can see what I am talking about.

The British Virgin Islands Tourist Board, which has the very important function of advertising and promoting these islands as a tourist paradise, in the year 2006 was instructed to spend one million, six hundred and ninety-six thousand, eight hundred and ninety-one dollars from their operating budget in capital works, such as the Queen Elizabeth Park, Gun Creek Project phase one, Architectural and management fees.

In 2007 up to June a total of seven hundred and thirty thousand, two hundred and twenty-two dollars was spent.  These amounts I understand were to be refunded by the Central Government and I wonder if they were.  Be that as it may, on the 5th September a worker employed by the Tourist Board visited my home early that morning saying he could not get his cheque.  I immediately called the Tourist Office and explained the situation with the worker and I was told that there was no difficulty in writing the cheque but that it might well bounce when taken to the Bank.  I met the gentleman a few days later and he told me that he did receive the cheque and was able to cash it.

There is no doubt, my dear people, that the financial situation with the Tourist Board is grim and in order to prevent the situation becoming worse I had to put a ban on travelling of the employees until I could get a clear picture of the whole situation.   I am aware that some things are already paid for especially in the American and European markets and once proper representation is made I am prepared to allow that.

The whole financial situation of the territory is being looked into.  At my first meeting with the Financial Secretary after I took office, he informed me that the accounts at that time show a surplus of twelve million but there was a supplementary expenditure of twenty-five million, which if approved would leave a deficit of thirteen million.  This is for 2007.  Already we know that there is a deficit for 2006.   

There are projects which have been started, for example at the Francis Lettsome School, one building has been demolished and has to be replaced.   There has been expenditure on the proposed new high school and serious consideration must be given to the completion of the sewerage scheme at the eastern end of the island and also in Road Town, Sea Cows Bay and Virgin Gorda.

So my dear people, while I have to admit that this is not a rosy picture at this time it will not deter us from doing our work to make the situation better.  What I will promise is that we will cut down on the volume of travel that took place in the last four years and also the unnecessary purchase of expensive vehicles and the abuse of the vehicles.
It is my intention to have a detailed report of the finances of the Territory.  My Ministers and I will report to you as information becomes available.

I thank you for listening and may God continue to bless you and our beloved British Virgin Islands.