Dr. Lawrence who led the UDC, the state entity which owns just under 60 per cent of shares in the Pegasus Hotel Company, for more than 15 years, is concerned about a possible conflict of interest in that the sale of the luxury hotel.
Dr Lawrence’s concern is based on his recollection that Lee Chin, chairman of National Commercial Bank and the AIC Group and brother of current UDC chairman, Wayne Chen put “a lot of pressure” in order to acquire the UDC shares in the Jamaica Pegasus hotel, while he was chairman.
He said Lee Chin even appealed to then Prime Minister Patterson. However, his price was not right as the billionaire offered a share price, which was less than 50 per cent of the value at which the shares were trading.
Dr Lawrence, a former treasurer of the opposition People’s National Party and who was described as “God” by his critics because of his influence, indicated that under his watch there was a willingness to sell the shares but only if the price was right.
Amidst growing concerns in some quarters that the ruling Jamaica Labour Party has continued a trend to sell state assets to friends and supporters, the former UDC chairman argue that family relationship must not be exploited to make the shares available at knockdown prices.
The Jamaica Pegasus is very profitable reporting profits of J$39 million for last year and J$40 for the first six months of this year on revenues.
The 71.8 million shares in the hotel were last traded at J$20 per share.
I’m not aware of any offer from my brother. But if one is made then I would recuse myself from any deliberations relating to that issue, Chen told the Sunday Herald yesterday.
The process,” Chen added, “is being handled by an independent party, Scotia DBG Investment and we will have a reserve price in the document.”
“The public can be assured that under my watch the sale of UDC assets will be transparent. An enterprise team under the chairman of Laurie Ventour assisted Joe M Matalon with representatives from the DBJ. UDC is handling the divestment of UDC assets and any conflict of interest issue will be dealt with transparently,” Chen said.
Financing the UDC
Dr Lawrence also pointed out that the critical question is how the UDC finances itself. He stated that the UDC has been off government budget since 1986 when the IMF conditionality required it to come off the budget. He said that when the PNP administration took office in 1989, UDC had a deficit of J$1.5 billion (in nominal value at that time U$300 million).
Under his watch, he said, the UDC survived on some key institutions and constant development project activities. Dunn’s River, he pointed out, was a key source of UDC cash flow. He also said in the later years, the Jamaica Pegasus that had begun to turn a constant profit was useful to the UDC.
The former chairman who was a key functionary to numerous government initiatives during the Patterson administration including the refurbishment of the National Stadium, the rehabilitation of public hospitals and Sandals White House among other projects, resigned suddenly during the Simpson Miller year-and-a- half in office as Prime Minister. ‘Lawrence pointed out that from his observation, the UDC has done very little over the last year. He opined that the UDC appears to have sold some assets cheaply and acquired new assets at high prices. He suggested that the lifeline of the J$1 billion loan facility from the DBJ is not only unsustainable but it is also against the function and policy of the Development Bank to provide cash flow support.
Paid too much
Lawrence did not believe he was in a position to comment on the sale of any particular piece of UDC asset since he was not privy to the terms of the sale. He was aware of the controversy surrounding pieces of land sold by UDC subsidiary in Freeport Montego Bay. One such transaction led to the resignation of the chairman of the subsidiary, Tony Lindo.
Asked about the controversy surrounding the acquisition of the property, which houses the Hydel Group of Schools owned by JLP senator and former NDM president Hyacinth Bennett, Dr Lawrence “rubbished” the first statement by PM Golding that sought to offer justification for the acquisition.
Dr Lawrence said that property has no bearing whatever on the strategic development of the Caymanas area. He also said that the UDC has built new schools of similar size to the Hydel Group for less than J$168 million. Lawrence believed that the UDC has paid too much for the property.
