UHWI on the hook

Taxpayers will have to dig deeper into their pockets to cover the Customs fees waived by the University Hospital of the West Indies (UHWI) when it applied its tax-exemption status to import goods on behalf of at least four private companies.

Acting chief executive officer of the UHWI, Eric Hosin, told members of Parliament’s Public Accounts Committee (PAC) on Tuesday that the Jamaica Customs Agency (JCA) had made it clear that it was the hospital that would have to cover the unpaid taxes and penalties as it had no arrangements with the private companies who benefited.

The UHWI’s utilisation of its tax-exempt status to facilitate importing goods on behalf of private companies contributed to losses amounting to $23.1 million.

Hosin also revealed that the Integrity Commission (IC) had joined the police and the JCA to conduct a probe into the hospital’s use of its tax-exempt status to import items for private companies. This was uncovered by Auditor General Pamela Monroe Ellis in a performance audit of the hospital released in January.

The hospital’s acting CEO said the anti-corruption body and the police have the files in relation to the four companies – Supreme Laundry Services, Willman Sales, Scientific Medical Services, and JACDEN Limited.

Hosin stressed that the JCA has declared that it would hold the importer accountable.

He told committee members that the UHWI has already received a report from the JCA in relation to JACDEN. He said the agency said that the amount of duty that should have been paid for the importation of dialysis machines for JACDEN was approximately $10 million, but that there would also be penalties, which start from a minimum of $500,000 to three times the CIF (cost insurance and freight) value.

Giving details on the JCA findings in relation to JACDEN, Hosin said the dialysis machines were imported by the company and also paid for by JACDEN.

“The value of the goods was verified by way of payment records received from the company. Custody of the goods was verified to be that of the company. The company confirmed that the goods were imported for that company by the UHWI,” Hosin added.

He said the other reports from the JCA on the other three companies would be submitted to the management of the UHWI in short order.

When asked why the UHWI was involved in the practice of using its tax-exempt status to benefit private companies, Hosin said he was unable to provide an answer. He said none of the senior staff members at the UHWI were able to provide an explanation.

Hosin was brought in to head the management team following the findings of the auditor general in her report.

PAC member Christopher Brown wanted to know why the hospital had imported items on behalf of these companies and, in at least two instances, turned around and bought back the items at a significantly higher mark-up.

He said that in one instance, the hospital imported items costing $1.4 million for a private company and subsequently bought them back for $6.9 million.

The question of who benefited from this arrangement at the UHWI reverberated in the parliamentary chamber as PAC members kept repeating the query: “Who is benefiting from this?”

“It looks really bad. Perhaps there is some explanation,” committee chairman Julian Robinson said.

In a quick response, Hosin said, “It is extremely bad. I cannot tell you why it was done.”

Pressed as to who had authorised the ‘buy backs’ of the items imported for private companies, Hosin said he was awaiting the findings of the police, the JCA, and the Integrity Commission.

“I don’t want to say reasons I would prefer them with their investigative skills to do the assessment and make the determination through the due process whether it be the courts or otherwise,” the acting CEO added.

Robinson argued that it was clear that this was a deliberate scheme to provide undue profits for particular entities in a case where the hospital could have imported the items and paid for them.

Hosin also revealed that the authentication of the approval was being examined by the police. He explained that in one instance, the approval document appears to bear the signature of the previous CEO, while in another case, it appears to bear the signature of the current head of the hospital. Hosin said the police would have to make a determination on that issue.