Former Cabinet minister Frank McField disclosed his reasoning behind wanting Staunch Limited to get the contract to redevelop the Affordable Housing Initiative site off Eastern Avenue last week.
Mr. McField’s comments came the day after the release of a preliminary Auditor General Dan Duguay’s report, which was severely critical of Mr. McField and activities of the National Housing and Community Development Trust, of which he was chairman during the period of investigation from 1 September 2004 through 25 May 2005.
The Auditor General criticised Mr. McField’s decision to choose Staunch over Vetromeccaniche to make major repairs to 26 homes and to rebuild seven others.
Vetro was the company that had built the 132 single-family AHI homes that existed at the time of Hurricane Ivan.
‘It is of significant concern that the NHCDT would engage the services of a company from whom they had no proof of prior construction experience in the Cayman Islands or in any other country,’ the Auditor General wrote. ‘In addition, the NHCDT did not perform a detailed evaluation of the quotations submitted by Staunch Limited prior to the contracts being awarded.’
Besides the repair and rebuild contracts, Staunch also was awarded contracts to build 20 temporary homes near Fairbanks prison and laundry and recreational facilities at the same site.
Mr. McField also instructed the NHCDT to award the contract for the AHI redevelopment of the site off Eastern Avenue to Staunch after the election, but the new government has put the entire project on hold.
Staunch Limited is a Cayman Islands company owned by local businessman Reynard Moxam and Norwegian Dag Egeberg, who is now a resident of Cuba.
Although the company has no construction experience, Mr. McField said Mr. Egeberg has rights to bring in a construction system from Cuba that was appropriate for the AHI.
Mr. Egeberg, who said he was a shipbuilder by trade in a recent interview, said Staunch’s system has been used in many other countries, including Cuba, Venezuela, Columbia and Curacao.
Although Mr. Egeberg resigned as a director of Staunch Limited on 17 May, he was still hoping his company would be awarded the AHI Eastern Avenue redevelopment project before he returned to Cuba in early June.
‘Our product is the best value for money,’ Mr. Egeberg said of his concrete block construction system. ‘It can’t be beaten. If someone could beat it, I’m glad for the people who will get these apartments, because our cost per square foot is the lowest.’
Staunch was recommended by NHCDT project consultant Andrew Gibb as one of two preferred bidders for the AHI Eastern Avenue redevelopment.
Mr. Gibb and NHCDT site supervisor Elsmer Range both travelled to Cuba late last year to inspect structures built using the same construction system Staunch offers.
‘I thought that as affordable housing, they were more than satisfactory,’ Mr Gibb said. ‘They were very solidly built. I have no problems with the product.
Mr. Range also said he would recommend the building system.
Mr. Gibb also met with Staunch’s project manager, Eduardo Iragorri, a Mexican national.
‘I found him to be extremely capable, especially in terms of logistics and labour sourcing,’ Mr. Gibb said of Mr. Iragorri. ‘He also had a track record of successful projects.’
Mr. McField said another reason Staunch was brought into the picture was to offer a bid competitor to Vetromeccaniche so prices could be kept down.
The Auditor General’s report noted Vetro lowered its original bid to repair 79 AHI homes with minor hurricane damage.
‘The only reason we were getting them to move backwards in their price was because of Staunch,’ Mr. McField said. ‘They knew Staunch had a relationship with Cometal in Cuba.’
Cometal, Mr. McField said, produces a panelised construction system similar to that of Vetro.
Mr. McField said he and Elsmer Range travelled to Cuba in October 2004 to meet with representatives of Cometal and to inspect the homes it produced.
He said Mr. Range confirmed Cometal’s product was compatible with Vetro’s.
Mr. McField said another key reason to choose Staunch over Vetro for the projects concerned a falling out in the relationship between Vetro and the Cayman Islands Government over insurance of the stocked materials of AHI homes.
The Auditor General said in his report that he was unable to make any substantive comment on that matter because it was in litigation.
However, it has been confirmed that the matter has not yet actually gone to court, although the possibility remains that it might.
Mr. McField explained that the dispute deals with the hurricane loss of the materials for the remaining 68 homes stored at the Fairbanks prison site.
Due to time delays in finishing phase one of the AHI project, Vetro ceased carrying insurance coverage for the materials, Mr. McField said.
As a result, the materials were uninsured and the financial responsibility for the loss has become a major point of contention between Vetro and the Government.
‘I was instructed by the Governor to pursue aggressively the insurance claims and compensation for the loss of materials at Fairbanks,’ Mr. McField said.
Furthermore, Mr. McField said Vetro had been instructed on 16 September 2004 to produce an inventory of the materials that were lost and of those remaining.
Despite subsequent requests, Mr. McField said Vetro did not produce that inventory, further souring the relationship.
‘The Auditor General wants to know why I would choose Staunch and not Vetro,’ Mr. McField said. ‘Why should I give a contract to a company that was delinquent in their duties to insure and secure materials for 68 houses that had not yet been built?’ he said.
The Auditor General criticised Mr. McField for overriding NHCDT management with regard to payments to Staunch for the contract to build the 20 temporary homes near the Fairbanks prison.
Although Staunch has already received 79 per cent of a $217,560 contract price, the Auditor General said the Director of Lands and Survey reported the value of the work done to be only $10,000.
‘In my opinion, this is a misuse of public funds as payments were made for goods and/or services not provided,’ the Auditor General wrote.
Mr. McField said Staunch had to stop work at the site because of a problem with Planning approval.
The Auditor General pointed out that a planning application to erect the 20 temporary homes had been submitted 5 April, one month after Staunch had been awarded the contract.
The Auditor General’s report said a letter dated 27 April from the Chief Building Control Officer to the NHCDT stated ‘that the construction details for the proposed temporary houses had been received by the Building Control Unit and were not in compliance with the Cayman Islands Building Code and/or construction document submittal requirements.’
As of the date of the Auditor General’s report, no Planning permission had been received, yet construction on the houses had begun in breach of Planning codes.
Mr. McField indicated it has been quite common since the hurricane for contractors to begin work without the proper Planning authorisation.
He said he overrode management to pay Staunch because the materials to build the temporary houses had already been delivered.
With regard to an overpayment of $19,038 to Staunch on the contract to repair hurricane damaged AHI houses, Mr. McField said it had nothing to do with him.
‘I have to point to the financial manager of the Trust,’ he said. ‘He should have reconciled the contract.’
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