'Illegal' - Review Committee says UHWI’s tax break abuse violates Customs Act

The Institutional Review Committee tasked with assessing the affairs of the University Hospital of the West Indies (UHWI) says the use of its tax- exemption status to import items for private companies was “illegal”.

“There is absolutely no evidence that those imports were provided by the board, [and] even had they been approved by the board, they would still be illegal,” said Professor Alvin Wint, a member of the Howard Mitchell-chaired committee.

Wint, who was speaking at a press conference held in New Kingston to discuss the findings of the committee, noted that there is an umbrella Customs Act, which supersedes the 1948 UHWI Act under which the exemptions were done.

He said when the UHWI board became aware of the findings of the Auditor General’s Department (AuGD) special report on the hospital, it sent the information to the Jamaica Customs Agency, the Jamaica Constabulary Force, and the Integrity Commission to investigate.

He said the board recognised at the outset that “illegal activities” had taken place in the context of the overall Customs legislation.

“We’re not sure who were engaged in the illegal activity, but what we’re clear about is that those tax exemptions used for private companies is based upon Jamaica Customs legislation that requires tax exemptions to be for the use of the entity [which holds the status] … . We can’t determine who has been responsible for the illegality. There are agencies that are discovering  but we’re… We’re very clear in our mind, as a committee, that process  cannot continue,” said Wint.

He added that the committee is recommending that there beis a harmonisation between the UHWI’s parent act and the Customs Act for any avoidance of doubt.

“But even without the harmonisation, the UHWI could not use that as a defence for what it has done,” he said.

The AuGD special audit into the UHWI revealed a systemic collapse of procurement standards, highlighted by $521 million in undocumented contracts and the misuse of the hospital's tax-exempt status by four private companies. This discovery has triggered a high-level multi-agency investigation and sparked intense political pressure on JACDEN CEO and Member of Parliament Dennis Gordon to resign.

The four companies identified were JACDEN Group of Companies (JACDEN Limited), Supreme Laundry Services, Scientific Medical Services, and Willman Sales Company Limited. The report found that the UHWI used its tax-exempt status to import the goods caused more than $20 million in lost Ccustoms duties .Mitchell, who presented the report, noted that the UHWI Act prescribes that the board of management of the hospital may import items into the island without paying Customs duties with very little restriction.

“It doesn't specify what kind of items; it doesn't specify conditions upon which that importation can be effected. It leaves to the imagination that, presumably, those items would be for the use of the hospital.

“So that is an area that has caused … because when you leave a door open, over time, it becomes a highway. And that is, t what  has happened, and we need to address that urgently,” he said.

In its report, the committee noted a lack of congruence between the University Hospital of the West Indies Act of 1948 and the Customs Act 2020. While the UHWI’s parent act focuses on the entity (the bBoard) being exempt, the Customs Act specifies that exemptions only apply to goods imported for an organisation's own use.

It recommends modifying Section 14 of the UHWI Act to align with the language of the Customs Act. This would ensure that tax exemptions apply strictly to articles required for the direct use of the hospital, it said.