Letters & Opinion

Due Diligence

‘We Have An Institutional Weakness To It’

Image of John Peters
By John Peters

THE term Due Diligence has become a buzz word over the last few weeks as various government agencies have captured the words within their press releases dealing with the Lambirds Academy matter. However, there is a legal definition which is as follows: “Due diligence is a measure of prudence, activity, or assiduity, as is properly to be expected from, and ordinarily exercised by, a reasonable and prudent person under the particular circumstances; not measured by any absolute standard but depends on the relative facts of the special case.”

The operative words are prudence, a level of activity and assiduity or close attention to details. There is also no absolute standard as the particular circumstances will demand different strategies by the reasonable and prudent individual or entity engaged in the due diligence.

I will invite anyone to go on the Lambirds website and see how easy it is to get a job in Saint Lucia and how easy it is to become a Permanent Resident in two years. I left the website site most flattered, that we are now at zero unemployment and with immigration legislation far superior to any CITIZEN BY INVESTMENT PROGRAMME. However the courts and the Cabinet would look at this matter in further detail and decide whether there was due diligence by all those involved. I am comforted that we have five lawyers in the Cabinet and the above legal definition would guide the final conclusion.

I have concluded that we have a fundamental institutional weakness related to due diligence. About five years ago we were advised by the senior management of SLASPA that they had done the due diligence on a consortium chosen to do the Hewannora International Airport Redevelopment Project. There was a vociferous response from the then Opposition – St Lucia Labour Party, that the process was flawed and there were risks exposing the country to a contingent liability of $ 0.5 Billion. The various Ministers of Government defended the chosen contractor – Delant Construction, professing that they have been very much involved in the Miami International Airport.

Government Officials must always bear in mind the revolution that has taken place in the information technology. We are not in 1815, where it took three days for Castries folk to know what happened in Soufriere. In one hour, I can find the past work done by a company, who are the directors of that company, when last they filed a tax return, the criminal record of their management, and even the names of their wives and children.

So five years ago in one hour I did the research on Delant Construction and realized that their airport related work was as follows:
a. Construction of a section of the Noise Abatement wall around the Miami International airport
b. Drainage works and placement of utilities on the Northside of the same airport
c. A Cargo building within the airport
d. An interim Fuel Farm

I worked as General Manager of C. O. Williams (St Lucia) Ltd for four years, and can say that we back then had done more airport related works than described above.

How can a due diligence in one hour on the internet generate information which says that the proposed contractor that SLASPA is placing $ 0.5 billion, has never built a terminal? I remain baffled and confused.

So when I read that we are pushing ahead in exploring the legal framework for establishing a medical research facility, I would hope that the due diligence allows us not to have a situation where firms are coming to Saint Lucia to experiment on our citizens, or to engage in research solely because they cannot do it in their countries. Let us not sell our souls for a pot of lentil soup. Any legislation must have the same stringent standards for research as found in any modern society.

I still have my concerns on the Citizen By Investment Programme, and I would suggest that as a nation we battle on, we have reached thus far without it; we can continue our journey into our destiny without it. One international criminal act by a new citizen can place our entire economy at risk.

My fellow engineer colleague, Mr. Bernard Theobalds wrote a very good piece entitled Bad Choices that We Make. I have decided to subject some of the bad choices in transportation engineering, to due diligence. One Bad choice is that Gov’t has not proceeded with toll roads. St Lucia has around 600 miles of road network. Of that only four corridors can be subjected to the introduction of tolls – Gros Islet – Castries, Castries – Vieux Fort and Castries to Soufriere and Soufriere to Vieux Fort. Within these areas you have so many linkages, that any toll may capture a maximum of 30% of traffic. I will take Castries to Gros Islet for the analysis. There are on average 25,000 trips either way per day. Assuming 30 % capture, we are at 7,500, if we say $ 1.00 is the toll the income is $ 7,500. The toll cannot generate any significant income.

A Detailed Analysis of the use of Tolls Roads was done as part of the Grand Castries Transportation Study and it showed that the economic benefits of the road improvement are lost due to the delays and increased travel time due to the toll. Due Diligence says stay away from Toll Roads.

The second bad choice as stated in the article was Gov’t non-involvement in the public transportation sector. Every involvement by the State in public transportation involves a subsidy. In an environment of deficits, we cannot engage in further subsidies. No Public Transportation system in the world is self-financing. I think the model of full engagement of the private sector in public transportation is sound, it has to be tweaked, but despite all its shortcomings, is responsible for moving tens of thousands of people every day. Due diligence says to me to allow public transportation to stay in the private sector.

From now own whenever you hear any government official use the word –Due Diligence, ask yourself if that person is reasonable and prudent. It they cross that hurdle then you can hold them accountable to the legal definition of Due Diligence.

8 Comments

  1. Good piece as usual. It is possible that at the time the “due diligence” was done the Lambirds website was not operational or that the claims the inducements it contains were not there. However, if this was not the case then officials either failed to see some clear warning signs or chose to ignore them. Perhaps Micah George might investigate?

    On the efficacy of tolls, I am told that some past studies did recommend its use but that it was not pursued by the Government of the day for some of the reasons you’ve stated. I do believe the costs/disadvantages of a toll system outweigh any of its benefits/advantages.

    In an earlier comment on Eng Theobalds piece I indicated that I did not share his enthusiasm for a public transportation system.

    Still I welcome his piece as I believe all ideas should be allowed to contend .

  2. Many thanks to Mr Peters for this piece. I am glad you have addressed the issue of toll roads as I have always been one of the loudest supporters of it. For what its worth, I do think you have taken a slightly more pessimistic approach to it, but it is nice to see someone give it some thought at least.

    What I will continue to maintain, is that the vehicle owner is yet to make the contribution necessary for the cost of upkeep of the roads. The island is small, the car ownership is much greater than the infrastructure will support and desirable to ensure a good quality of life. They do need to make a greater contribution, and the government needs to drive up standards for buses and taxis to take the slack.

    Furthermore, I think the main emphasis should be on ensuring the highway and main arteries are well designed, tarmaced, and drained. It’s ridiculous to see how poor the roads are as soon as you leave the airport. Improving the flow around the island would have a lot more ancillary benefits.

  3. Eng. Peters, so a four vehicle house hold all work in the Castries basin….do not buy into the car pooling concept, not paying tolls, no parking meters, park in one spot all day, five working days a week and still expect proper up keep of the roads and bridges by just paying the required registration fee once a year and carrying liability insurance. As you know Eng. Peters, the system sooner or later will implode if nothing is done. Lets look into changing operating times for businesses and schools for example. Every body is moving at the time. Construction workers have to wait when M & C open its doors at 8:00 to purchase materials, school kids have move at the same time to get to school for 8:30. The Tourist ships disembarks at the same time workers driving into Castries and it goes on and on…We need Urban planers to clean up the mess. Keep giving ’em Hell

  4. NY I don’t believe urban planners can deliver the solutions to this mess. All they can do is recommend to Cabinet which consists mainly of non-technical people who see things mainly through political lenses.

    The roots of the current problems run deep and wide. They go back several decades when for example, Cabinet ignored planners’ recommendations to zone schools and to establish secondary filter roads to take pressure off the main arterial routes. They date back to a time when road reserves were seen only in terms of their costs and not their functionality; and when planners who recommended that land be set aside for decent bus terminals and car parks were dismissed as “mad men”

    At the same time I don’t think construction workers need urban planners to tell them they can’t do their shopping at the busiest times of the day or week. And you don’t need planners to tell the Chamber of Commerce to recommend an extension of business hours. Perhaps one of the reasons the Chamber has not moved in this is out of fear of the increase in labour costs and having to pay overtime.

    And you may find that it is practically impossible to get the cruise lines to vary their schedules which is driven by the imperative of spending a full day in port. The ships come in early enough ( between 6:00am and 7;00am). Trouble is that the business sector does not come alive before 8:00am.

    But I believe your point is that we have some problems that must be solved and not made worse.

  5. Sherlock : “And you may find that it is practically impossible to get the cruise lines to vary their schedules which is driven by the imperative of spending a full day in port. The ships come in early enough ( between 6:00am and 7;00am). Trouble is that the business sector does not come alive before 8:00am.” That’s why you are a Certify Public Account…Urban Development Planners are trained to deal with that Matrix, stop thinking like these POLITICIANS. The I know it all syndrome.

  6. NY you’ve misread me in many respects including your assumption regarding my profession. But we’ll leave it there.

  7. Sherlock, please do not retreat from the debate. You both make valid points.

    As far as productivity lost from moving around, consider how much time could be saved with ensuring the main road has no potholes. Consider redesigning certain corners to alleviate bottlenecks. There is a lot of low hanging fruit still to be picked up just by ensuring basic road maintenance is carried out.

    Ultimately there is no solution is available for ever increasing car use, it’s better to try and limit it and put a proper cost on it as soon as possible. Some painful action is needed to

    a) get the car owner to pay more
    b) improve bus service and public transport
    c) fix public parking
    d) maintain roads

    They all need doing with each priority impacting the other.

    By reducing car use, that will automatically save on road wear and tear, is one less bit of congestion. Eng Peters, do you have any suggestions as where you seeing the cost should be borne most fairly?

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