First Look

Legislation to legalise withdrawal from Capital Development Fund



Jamaica Information Service | 2013-02-21 00:00:00

Legislation to regularise withdrawals from the Capital Development Fund (CDF), which were carried out in contravention of the Bauxite Production Levy Act, was passed yesterday (February 19)  in the House of Representatives.

The Bauxite (Production Levy) (Validation and Indemnity) Act, which was piloted by Minister of Finance and Planning, Dr. the Hon. Peter Phillips, also indemnifies the public servants, who carried out the withdrawals in good faith.

Dr. Phillips explained that in 1999, the then Government sold shares in Caribbean Cement Company for US$29.8 million.  Approximately $US16.1 million of the amount went to the National Investment Bank of Jamaica (NIBJ), which held some of the shares.

 NIBJ declared a capital dividend of $396 million to be paid to the Accountant General. Inclusive of the dividend payments, a total of US$24 million was transferred to the Ministry of Finance, while the remaining US$5 million of the total sale proceeds was retained by NIBJ.

Dr. Phillips informed the House that the Auditor General, in its report for the year ending 2000, indicated that Section 12 of the Bauxite Production Levy Act states that “all sums received as payment of the production levy under this Act and all other income from the asset of the fund shall be paid to the Fund.”  

“Based upon that provision, the Auditor General concluded that failure to pay the proceeds from the sale of Caribbean Cement at the time, into the CDF, appeared to be in breach of that section of the Act,” he stated.

The Finance Minster stated that while the unauthorised withdrawals represented a breach of the Bauxite Production Levy Act, the action was done in good faith as the funds were utilised for the purpose of “satisfying the financial obligations of the Government in financial year ending March 31, 2000.”

Opposition Spokesperson on Finance, Audley Shaw, in his contribution, noted that the move to regularise the actions done, “is quite in order.”

The CDF was established under the Bauxite Production and Levy Act. It was promulgated in 1974 at the time when the Bauxite Production Levy was imposed, and the proceeds of the levy directed to the CDF.  The Bill was passed without amendment.




 




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