Daly Bread: subversion by subsidy; how state-owned enterprises like the NCC make mas

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Our country has been brought to widespread international shame by the Trinidad and Tobago Coast Guard’s fatal shooting of an illegal migrant baby.

The use of the “accident” label, the premature evasion of accountability and due process, and the crude and partisan political exchanges added to the shame.

Pictured: A Trinidad and Tobago Coast Guard vessel cruises through coastal waters.
(Copyright Pridenews.ca)

For now, however, I return to the National Carnival Commission’s (NCC) latest financial debacle. I do so to consider the wide gap between the NCC’s legal position as a debtor and the political understanding by reference to which it and other state entities blithely operate.

The Chairman of the NCC announced that the NCC had a budget of TT$25-30 million to spend on a taste of Carnival for 2022. He did so despite the NCC not having received the government approval for such a sum, but had already spent significant sums. are.

State enterprises and statutory bodies have a recognized legal personality separate from the government. When these organizations incur debt, they become liable for it.

Agencies are not automatically the agent of the government. Their senior officials have the legal authority to enter into the relevant contracts, but not to bind the government.

The political understanding is that the government is going to pay anyway. Without this political understanding, those dealing with state entities that have no funds or are effectively insolvent are at risk.

Photo: NCC President Winston “Gypsy” Peters (left) inspects a Carnival capsule.
(via CNC)

However, the political deal can generally be invoked, particularly if the creditors of these entities are friends, family, financiers, “lots” or simply complicit elements of the private sector.

Usually there are chairpersons, board members and/or directors embedded in the company through whom the political leadership can secretly signal its intentions. On this occasion, the hierarchy of the CCN took the plunge but no one will be financially harmed, except, of course, the performing artists, who will have the crumbs.

Political settlement is costly for the country because it leads to waste, price hikes and worse. Subsidies that are routinely given to enforce the political bargain are subversive of the accountability of public funds. This latest financial misadventure by the NCC is a bold demonstration of the moral hazard of contracting out goods and services without a public procurement process and without funds to meet debts.

Twenty years ago, in a column called Interfere intravenously, I described how the state enterprise system, including statutory powers, could be used to hide the spending of taxpayers’ money.

Pictured: Former Sports Minister Anil Roberts (centre) is flanked by former SPORTT CEO John Mollenthiel (left) and former SPORTT chairman Sebastien Paddington, all three key figures in the controversial fiasco of Life Sport.
(Copyright SPORTT)

Successive governments have evaded the demands of the Central Tenders Board by funding projects, loss-making enterprises and padded payrolls behind the veil of companies incorporated under the Companies Act or by statute.

The core of the analysis was: “The incalculable political value of this state enterprise system is the cover it provides for the wickedness of the politicians in power.

“These state enterprise veins run below the surface of the political skin so that the political face skin can tell one thing about how the veins work while the politician behind the face intravenously interferes with the supply of information, water, natural gas or oil or with the provision of employment or the making of contracts, all with the aim of obtaining undue advantages for the supporters of the ruling party to the exclusion of others.

In defensive mode, the culture minister said the government would only provide TT$15 million in funding for Carnival and was planning an additional TT$5 million from revenue streams and sponsorships. Much of that $15 million TT is likely long gone in erecting the infrastructure and building the modules, both of which have been widely photographed in mainstream and social media.

Photo: Minister of Culture, Tourism and the Arts Randall Mitchell makes a presentation.
(Copyright NCC)

It can be expected that if there is a discrepancy between budget and actual spending, the government will cough up funds through what is euphemistically called a grant. It is the clear political understanding on which statutory bodies and state enterprises operate.

Regardless of which party the political leadership belongs to, it is a comfortable and beneficial understanding.

Additionally, the personal risk to chairmen and board members of liability for breach of fiduciary duty is diluted, because they know the government will obstruct or withdraw lawsuits alleging breach of that duty, à la Malcolm Jones.

And so the rhythm continues.

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