Feb. 1, 2003 – A case of amnesia seems to have struck the sitting members of the Water and Power Authority board, according to WAPA general counsel Cathy Smith, who came under a barrage of questions at a special board meeting Friday on St. Croix to probe the "unauthorized" $2.2 million purchase of property adjacent to the utility's Richmond plant in Christiansted.
In January 2000, eight acres formerly used by VI Cement and Building Products was bought from stateside-based Devcon to be used for the expansion of the Richmond plant, but board members say they have no record or recollection of approving the transaction.
"Isn't it mysterious that certain people now have amnesia," Smith said, adding that she felt unduly under fire during questioning. "The records were there; I've seen them. They have now disappeared."
Smith had only been with the utility for a few days when the deal was finalized, and she said she had no reason to question the provisions of the contract because she had not been involved in its negotiation.
"I gave no advice," she said to board members. "The deal had already been negotiated and put before the board. I'm not going to second-guess why the executive director [at that time Raymond George] didn't get me involved."
Board member and Licensing and Consumer Affairs Commissioner Andrew Rutnik said Smith should have recognized that the purchase was not in WAPA's best interests.
"You didn't step up to the plate and say 'Look, this is a bad deal for WAPA.' You didn't speak up, and that's where my problem is," Rutnik said.
Since last summer board members have been raising questions about the Devcon property purchase, which was paid for out of 1998 bond proceeds although the approved uses for the money did not include the acquisition.
WAPA's director of audits and investigations, Leslie Smith, said the search for information about the land deal began the middle of last year and so far several problems with it have been uncovered.
In addition to there being no record of board approval, he said, a $2.2 million check was cut without documentation. Cathy Smith maintained that was not the case and that she had included documented board approval with her check request. Board approval is required for any expenditure above $75,000.
Only one board member at the time professed remembering approval of the purchase, according to Leslie Smith, and that is Cecil George — who is the brother of Raymond George.
Leslie Smith also said that during his investigation of the matter, Raymond George declined to answer questions, and he also declined to go before the board to answer questions. The investigations director said neither WAPA nor its board has subpoena authority.
Another concern about the property is that it could also harbor environmental problems. WAPA's environmental affairs manager, Gregory Rhymer, said a company out of Puerto Rico was contracted to conduct an environmental assessment of the area. "We discovered steel drums filled with unknown contents, several pails with lubricant residue, vinyl floor and acoustic ceiling tiles," Rhymer said. "If the tiles were installed prior to 1978, they possibly contain asbestos," he said.
WAPA's executive director, Alberto Bruno Vega, expressed concern about the potential cost of rehabilitating the site. "The real cost is not $2.5 million," he said. "That's just peanuts compared to the real cost to WAPA."
Bruno said his major concern, however, is something entirely different: an addendum to the sale contract that allows Devcon to purchase 1.5 acres of about 20 that WAPA owns on St. Croix's South Shore. He said the proximity of that land to the Hovensa property makes it particularly valuable to WAPA.
Devcon has indicated which piece it wants, he said, leaving the utility with mostly mangroves.
Board chair Carol Burke said that because the transaction was made without board approval, it will not go forward. "The law prohibits WAPA from selling property without board approval," she said, and a letter has been sent to Devcon outlining the board's position.
Burke asked board counsel Arturo Watlington to prepare an opinion on the issue, making clear the steps to protect the authority that were not taken. Once that opinion is received, she said, the board will explore options for imposing penalties on those found responsible.
She also said the board will later make a determination on what to do with the property, based on the results of the appraisal.
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