Dr. Nigel Clarke
Finance Minister Dr. Nigel Clarke has disclosed that the Airports Authority of Jamaica (AAJ) breached government policy when it invested millions of dollars in First Rock Capital Holdings.
The AAJ came under scrutiny following a Sunday Gleaner report which said the investment took place during the year in which Fay Hutchinson overlapped as a director and shareholder of First Rock and served as deputy and then board chair of the state-run entity.
Responding to questions in the House of Representatives on Wednesday, Dr. Clarke pointed out that contrary to that report, Fay Hutchinson was not on the board of First Rock at the same time she served as board chair at the AAJ.
As it relates to the breach, Dr. Clarke said his ministry's approval is needed for investments in unlisted private companies, which First Rock was at the time of the initial investment.
However, he said approval was neither sought nor received for the US$1 million investment in the private placement of February 2019.
"AAJ’s board approved an amendment to AAJ's investment policy in March 2019 after the private placements. In March 2019, AAJ sought the non-objection of the Ministry of Finance and the Public Service to the amended policy. The Ministry of Finance provided its non-objection in April 2019 but noted in the correspondence that AAJ should further update the policy to be consistent with the PBMA (Public Bodies Management and Accountability) regulations, which include that the prior approval of the Ministry of Finance is required for investments in unlisted private companies," he explained.
Dr. Clarke said there are also questions about whether the investment was prudent given that First Rock had not been in operation for long.
"As it applies to the 5% cap on equities, AAJ’s investment policy specifies blue chip companies and it's a matter of judgment as to whether this condition was met. It is also a matter of judgment as to whether it was prudent for a single equity investment to absorb as much of the space allocated to equities in AAJ’s investment policy as it did, especially if that investment is an IPO of a company that was in operation for only two years at the time."
The Finance Minister confirmed that the AAJ's shares in First Rock are to be sold.
"It is the ministry’s understanding that the AAJ group is seeking to do so, even though it doesn't intend to have any kind of fire sale, and therefore the idea is not necessarily to say when and how it will do that. But the answer to that question is, yes, it is looking at disposing of its shareholding," he told the House.
Dr. Clarke responding to questions tabled by Opposition Spokesman on Finance Julian Robinson.