BROADCAST ADDRESS
TO THE NATION
BY
PRIME MINISTER LESTER B. BIRD
ON
THE IMPLEMENTATION OF THE RECOMMENDATIONS
OF
THE COMMISSION OF INQUIRY
INTO THE MEDICAL BENEFITS SCHEME
WEDNESDAY, 7TH AUGUST 2002

Fellow Citizens

As you are aware the Report of the Commission set up to inquire into the Medical Benefits Scheme (MBS) was submitted to the Governor-General last Wednesday. In turn, the Governor-General transmitted it to the Cabinet.

At the time the Governor-General sent the report to the Cabinet, he indicated that he had been informed that “a corrigendum will follow”.

The following day, I issued a statement in which I advised the public that neither the Cabinet nor I could comment on the Report since we had not been able to study the document, and, in any event, since we had been informed that a corrigendum would follow, it seemed prudent to await the corrections before making the Report public.

REPORT TO BE RELEASED IMMEDIATELY

However, having now read the document and conscious of the interest in its contents, I have decided that copies without the corrigendum should be made today and distributed to the Leader of the Opposition, Mr Baldwin Spencer, and the media. This will allow the media to publicise the findings of the Report and give the Leader of the Opposition full knowledge of its contents.

The Report is almost 200 pages in length.

A copy will be sent to the Government Printery so that at least 1,000 copies can be printed, in the first instance, for sale to interested parties and the general public at no more than cost price. Hopefully, the corrections that the Commission would like to issue will be submitted to the Governor-General in time to be included in the printing of the initial thousand copies.

COMMISISON’S WORK IMPORTANT

You will recall that when I advised the Governor-General on June 1st last year to proceed with the establishment of the Commission of Inquiry, I did so on the basis “of maintaining public confidence in the integrity and effectiveness of the Medical Benefits Scheme which is so important to our community”.

As I had anticipated, the Commission of Inquiry turned out to be very costly in circumstances where the Treasury of Antigua and Barbuda, like many others in countries of the Caribbean, is faced with a difficult fiscal situation. But, this is a cost we have to be prepared to absorb in the interest of good governance.

I would like to thank the Commissioners, led by Sir Alister McIntyre, for the considerable time and effort they have put into the Inquiry and their Report.

I consider this Report, in the 21st year of our status as an independent country, to be a most important contribution to the reform and development of the Medical Benefits Scheme which is a national institution. As the Commissioners themselves have said in the Report:

“Health Services are part of the national bedrock affecting the welfare of citizens of all ages and of differing economic and social circumstances”.

This is a view that I strongly share. And, I remind that it was I, who twenty four years ago - on 17th September 1978 – proposed at a Convention of the Antigua Labour Party that we should establish a national insurance scheme. I said then such a scheme would “improve our existing Social Security Scheme and subsidised medicine programme. It will be of benefit not only to the aged and the unemployed, but to every working person in Antigua and Barbuda”. That was how the Medical Benefits Scheme was conceived and established.

It is crucially important, therefore, that it be sustained in the interest of all and with the support of all. The Recommendations of the Commission are an important contribution to this process.

EVENTS THAT PRECEDED REPORT

Before I turn to Report’s findings, let me recapitulate some relevant developments that preceded them.

The final Report of the Forensic Audit by the firm of Allan Joseph and Associates, which I received in May last year, had indicated clearly that there were instances of wrong doing by officers of the Scheme, dereliction of duty by the Board and ignoring of established procedures by two Ministers in relation to the payment of legal fees to Dr Errol Cort.

PM’S DECISION SUPPORTED BY COMMISISON

On that basis, I took the immediate steps of relieving Mr Bernard Percival and Dr Errol Cort of their Ministerial portfolios, and I caused the new Minister of Health to dismiss the Board as well as the Superintendent and Accountant of the Scheme, both of whom were specifically identified by the forensic auditors for improper conduct. At that time, I wanted to send the entire matter to the Director of Public Prosecutions for such action as he, in his own judgement, considered appropriate.

I am pleased to see that at page 61 of the Report, the Commission agreed with my decision to relieve Mr Bernard Percival and Dr Errol Cort of their Ministerial portfolios. In relation to the payment of legal fees to Dr Cort, the Commissioners said:

“Mr Percival displayed poor judgement and a misappreciation of his role as Minister. This was also the case with Dr Errol Cort who did not convince us during his testimony that he removed himself sufficiently from the process of submitting the invoice of Cort and Associates to Mr Percival”.

The Commission has also taken the view that I held at the time that the conduct of the Superintendent Mrs Cavelle John, and the Accountant Mr Elmeade Jarvis, and others should be a matter for attention by the Director of Public Prosecutions.

With regard to Mr Hilroy Humphreys, it will be recalled that in the context of what, at the very least, could be described as extremely poor judgement and disregard for procedures by a Minister, I accepted his resignation immediately after this was demonstrated during the Inquiry. I made the point then that, as Prime Minister, I have a duty to preserve and protect the institutions that my Party has built in this country over the many years that it has served the people of this nation. I made it clear then, as I had done before, that I expect a certain standard of conduct by Ministers, and I will act when these standards are breached. The Commission’s findings support my decision.

NO FINDINGS AGAINT PRIME MINISTER OR CABINET

And now as to the Report in general:

There was no finding by the Commission that the Prime Minister or the Cabinet acted in bad faith, fraudulently or corruptly. There are findings against two former Ministers of Health and the former Minister of Justice and Attorney-General, but it is clear that these former Ministers acted on their own and without Cabinet’s knowledge.

There are also findings against former officers and employees of the Medical Benefits Scheme. Again, the Report of the Commission indicates that the actions of these individuals were executed in a manner calculated to conceal them not only from public scrutiny but also from the Cabinet.

While the Commission’s Report discusses the terms of the construction loan for the new Mount St John’s Medical Centre, at no time does it question the importance and necessity of the new facility.

ALL RECOMMENDATIONS TO BE IMPLEMENTED EXCEPT TWO WITH FINANCIAL CONSEQUENCES

I intend to propose to the Cabinet that the Government should agree to implement the recommendations of the Commission in so far as it is financially possible to do so.

It is no secret that the Treasury is confronting difficulties. These difficulties arise mainly from two sources: the first is a very large public service whose salaries, wages and other benefits now absorb more than two-thirds of government revenue, and the second is the non-payment of taxes and duties owed to the State. Until these two major problems are resolved, it will be difficult for any government to satisfy in full the financial obligations of some of the recommendations of the Commission. Nonetheless, I am resolved that government must make every effort possible to comply as best it can with the recommendations that have a financial obligation, and I shall so recommend to Cabinet.

In respect of the others that do not have a financial implication, I intend to see them fully implemented.

GOVERNMENT HAS ALREADY ACTED

Indeed, even as the Inquiry was in session and certain matters involving the Government came to light, action was taken to correct them. I am surprised that the Commission did not take account of these corrective measures, and I can only surmise that they were not brought to its attention.

For instance, the Commission expresses the view in the Report, as the Chairman did during the Inquiry, that the loan from Bank of Antigua for the construction of the Mount St John Medical Centre was over collateralised.

The Government has, in fact, amended the terms of the loan agreement addressing this over-collateralisation by removing the 2% medical benefits levy as part of the security of the loan. This was done by an Act of Parliament signed into the law of the land on 5th February this year.

It is also important for all of us to remember that the original loan agreement for the construction of the Mount St John’s Medical Centre was taken to Parliament and was debated and passed by both the Government and the Opposition. In other words, whatever technical arguments may be raised by the forensic consultants to the Commission of Inquiry about the advantages and disadvantages of the loan, the nation’s elected representatives from both sides of the House voted for the terms of the loan.

DIFFERENCE OF OPINION NO OBSTACLE TO IMPLEMENTATION

There is a difference of opinion between the Government and the Commission’s Report in respect of four matters. I want to emphasise that this difference of opinion does not affect the implementation of the recommendations of the Commission’s Report.

The first of these matters is the sum of money owed to the Medical Benefits Scheme by the Government. The Commission looked at the financial statements of the MBS which showed that Government has never paid its contributions to the scheme and these total EC$120 million.

The Commission does acknowledge that the Government has contested the figure for its arrears on the basis that the MBS owes the Government a considerable sum of money since 1998 when, by Act of Parliament, the MBS was obliged to pay all the costs of the Holberton Hospital and related medical costs but has not done so. These costs have been met by the Treasury. Outside experts commissioned by the Government to analyse the monies due on both sides have concluded that when a reconciliation is done, the Government will not owe the MBS EC$120 million. This full reconciliation is something that I wish to have addressed swiftly so that there is no doubt whatsoever about this issue.

I propose that the details of the Reconciliation Statement should be submitted to Parliament for its information and debate.

The second matter on which there is a difference in perspective between the Government and the Commission concerns an advance of EC$2 million by the Medical Benefits Scheme to pay three obligations. One of which was a debt to Amalgamated Security System which was manning the Prison at the time.

The Commissioners do not question that there was a Cabinet decision, made on June 2nd, 1999, authorising this payment. It is also acknowledged that it was the Government’s intention that the Medical Benefits Scheme should purchase Treasury bills with the money so that it had an asset due and payable by the Government. This was not done, but the failure to do so was no fault of the Government’s.

The point is that the Commissioners were troubled that while monies were legitimately spent, they were spent in this case on matters other than health services.

The problem was that the Government was faced with a crisis. It will be recalled that the Prison had experienced a series of incidents that threatened to breach its security and place the community at risk. Amalgamated Security had stepped in at a critical period to restore order and maintain safety. They had not been paid for some time and demanded some payment in order to remain on the job.

Because the safety of the nation was a paramount consideration, the Government turned to the Medical Benefits Scheme to advance the necessary money, but always intended that Treasury securities should be bought so as to ensure the Scheme had a callable asset. It is most regrettable that the Treasury Bills were not purchased even though, as the Commissioners say in their report, the files show that a letter to the Accountant-General dated 16th June 1999 evidences the intention that the Treasury securities should be purchased.

I will now instruct the Accountant-General to rectify this situation which I did not know about until I read the Report.

The third matter on which there is a difference of views between the Government and the Commission is the matter of waiver of tender in relation to the Mount St John’s Medical Centre. The Commission expressed the view that Cabinet had no authority to waive the tendering process. However, the Government acted on advice and the law as it was understood. This advice was that since Parliament enacted the loan agreement in the Mount St John’s Medical Centre (Equipping and Constructing) Act, there was no obligation to refer any of the contracts to the Tenders Board.

In any event, the Commissioners did not find that, in waiving the requirement for tenders, the Cabinet acted in bad faith or in any way that could be regarded as fraudulent.

The fourth matter on which there is a difference of opinion between the Government and the Commission is the cost of the Mount St John Medical Centre and the terms of the loan for its construction. The Commission relied solely on the work of its forensic consultants for its conclusions in this matter.

For its part, the Government had the loan independently assessed by CFAS Ltd and SODITIC Ltd, two reputable international financial advisory groups from the United Kingdom, who have done considerable work for governments around the world including several in the Caribbean region.

The Commission’s forensic consultants, based on their own calculations and ignoring some loan documents, concluded that the cost would be excessive at more than EC$500 million, and the interest rate of 9.8% over 30 years was onerous. However, the two independent UK consulting groups found that the interest rate was very attractive and they staked their professional reputation on the argument that the loan was concessionary and developmental in nature and could not be secured commercially on any better terms.

Indeed, they say:

“The Loan is exceedingly long term, being longer than most governmental concessionary loan funding, and, hence its is understandable that the agent Bank and lenders would wish to have as much protection as is practicable in the circumstances of having a risk spreading over a long period”.

Stating quite clearly that they “very much doubt if funding on better terms than this could be obtained”, the two UK firms went on to analyse the size of the Mount St John’s Medical Centre in comparison with four other Caribbean Islands, Aruba, Barbados, Tobago and Grenada.

The analysis showed that with 177 beds, the Mount St John Medical Centre would have 2.60 beds for every thousand people. Even with this increase in beds, we would still lag behind Aruba with 3.29 beds per thousand people and Tobago with 3.16 beds per thousand people.

While the number of beds in Antigua per thousand people will be more than is currently the case in Barbados which has 504 beds working out at 2.06 beds per thousand people, the authorities in Barbados recognise that the number of beds is insufficient. Grenada’s new hospital facility will move that country to 1.93 beds per thousand people, but it also remains small.

The UK firms make two further points that are extremely important. They say that “local populations place great emphasis on improved social conditions of which health care is at the centre”. They also stress that “tourists to the region are becoming increasingly conscious about health care in destinations at which they holiday. The negative publicity of poor facilities is harmful to the quest for upmarket tourism”. They then conclude, “Construction of the Mount St John Medical Centre is justified on those grounds”.

Unfortunately, for reasons that are unclear to me the Commission’s Report did not take account of the authoritative study by the CFAS Ltd and SODITIC LTD, the UK firms that the Government commissioned to study the terms of the loan. But, the point is there is an expert study that disputes the conclusions of the Commission’s forensic consultants in relation to the costs associated with the construction of the Mount St John’s Medical Centre. I intend to submit the Study by the two UK firms to Parliament for its information and debate, particularly as it was Parliament – both the Government and the Opposition – who voted to support the terms of the loan in 1998.

It should be noted that the Commissioners have not suggested in any way whatsoever that there has been any wrong doing in relation to the loan or the way that it has been operating.

The Commission’s Report did raise the question of a possible conflict of interest by Mr Allen Stanford in relation to the loan for the construction of the Mount St John Medical Centre. The Report says that Mr Stanford is both the head of the lending institution, Bank of Antigua, and Chairman of the Board of Directors for the medical centre. While there has been no evidence suggesting that Mr Stanford abused this dual role, I have asked him to resign from the Board of the medical centre and he has agreed. There will now be no representation of the lender on the Board of the Medical Centre.

33 RECOMMENDATIONS BY COMMISISON

The Commissioners have made 33 Recommendations altogether. Of the 33 only two recommendations pose a problem to the Government and this is simply because of their grave financial implications.

The two difficult recommendations are:

First, it is suggested that the Medical Benefits Scheme be converted solely into a scheme for health insurance and should not fund the health requirements of the nation. Agreement with this recommendation, even if it were desirable, would place an enormous burden on any government. No government could afford it without either increasing taxation significantly to pay for health services or dismissing thousands of public servants. With the best will in the world, therefore, this recommendation has such serious financial implications that it could not be reasonably contemplated at this time.

In any event, note should be taken that virtually every country in the world, which has a national health insurance scheme, is moving away from the system in which the Scheme pays for all health costs. Britain is perhaps the best example of a country with a national health scheme. It was introduced in the 1940’s but by 1951 it had to remove free dental and optician care from its list of benefits. Over the years, Britain has found it impossible to sustain a system in which the government pays for all health costs. Hundreds of thousands of patients wait for vital surgical procedures for more than a year, and there is an increasing shortage of doctors and nurses because the government does not have the money to pay for them.

The Medical Benefits Scheme in Antigua and Barbuda was conceived as a means of providing medical care for all by a system of contributions that met the costs involved. A departure from this system requires a national debate with a full understanding of all the implications including the fact that any government that changes the system will also have to increase taxes to pay for the costs. It should be recalled that neither the United States nor Canada, our two largest developed neighbouring countries, do not have a system in which Government pays for the health costs of the nation. Neither, for that matter does it exist in any of our sister-states in CARICOM. It seems unreasonable to expect a small country like ours to be so burdened.

The second difficult recommendation requires the Government to settle with the Medical Benefits Scheme for its contributions and pay immediately 50% of its contributions in cash.

As I said earlier, and as the Commissioners acknowledge in their report, the Government disputes that there is any significant sum owed to the Medical Benefits Scheme because, since 1998 the Government has been meeting costs that are the obligation of the MBS. I have already said that I intend that a reconciliation should be done swiftly and presented to Parliament so that it can be debated and resolved. I do agree that once the reconciliation is completed, the Government should keep its contributions current, and I will instruct my officers in the Ministry of Finance to advise me, as Minister of Finance, on how this could be best achieved in the present difficult fiscal situation.

CABINET TO ENDORSE ALL BUT TWO RECOMMENDATIONS

As I said, I propose that Cabinet should adopt the remaining 31 recommendations as they relate to actions required by the Government.

The Commissioners have made 10 recommendations about the operations of the Medical Benefits Scheme, one of which is its conversion to a National Health Insurance Service. I have just explained why this would pose a serious practical financial problem to any government.

However, with regard to the other 9 recommendations, I intend to propose to Cabinet that they all be accepted. They would include:

- limiting the exercise of Ministerial power;
- a stronger role for Parliament in the supervision of the Scheme though the Public Accounts Committee;
- the appointment of the Board by the Governor-General after consultation with the Prime Minister, Leader of the Opposition and NGO’s that have competence in health services;
- new external auditors for the Scheme; and
- a requirement that expenditures over $50,000 require Board authority.

In specific regard to the Mount St John Medical Centre, the Commissioners have made three recommendations, all of which I propose should be endorsed by Cabinet. Briefly these are:

- the Medical Benefits Scheme should be identified as the prime owner of the medical centre;
- reopening of negotiations by the Government with Bank of Antigua to soften the terms of the loan. I have no hesitation in accepting that negotiations be re-opened, but I would point out that two independent UK firms have already described the terms of the loan as “developmental and concessionary”. Reopening negotiations on a closed deal that took months to settle also poses the danger that the lender may use the chance to change terms that were reluctantly accepted at the time of the first negotiation. Consideration will also have to be given to the damage the government may do to its credibility with any future lenders if it reopens a settled loan arrangement. This may encourage other lenders not to do business with Antigua and Barbuda because of the likelihood that we may seek to reopen negotiations on the terms of loans after we have got the money;
- the third recommendation in this cluster is that the Government should appoint a team of highly experienced professionals to draw up revised financial projections for the Medical Centre. We have already done this by commissioning the two UK financial advisory firms, CFAS Ltd and SODITIC Ltd. Their Study is available and will be submitted to Parliament for its information and debate, as I said earlier in this statement.

In respect of applications for overseas medical treatment, the Commissioners have recommended that no applications should be dealt with by Cabinet. I will urge Cabinet’s full acceptance of this recommendation. I merely note in passing that Cabinet did not seek this role in the first place. In small societies, such as ours, it is usual for persons to approach politicians for assistance and they expect politicians to deliver. Dealing with applications by the full cabinet was, if anything, a safeguard. However, a specific and well-publicised exclusion of Ministers from this process should go some way toward persuading people that the politician has no power to act in this matter.

The Commissioners have suggested that medical referrals should be made to a small technical team that would decide on the amount of assistance. Appeals would be made to the Board of MBS whose decision would be final. I have no hesitation in saying that I will urge the endorsement of this recommendation to my Cabinet.

On the matter of disbursement of funds by the Scheme, the Commissioners have made six recommendations five of which are directed at the Board, and one of which concerns the Government.

Specifically, the Commission has recommended that no advances should be made to the Government unless specifically authorised by Parliament.

In the interest of transparency and good governance, I find this recommendation acceptable and I will propose its endorsement to Cabinet. Government expenditure is in the interest of the people, and I find no problem in the people’s elected representatives having a say in whether or not statutory bodies should advance monies in the people’s interest.

DPP TO INVESTIGATE 11 INCIDENTS

With regard to potential criminal matters, the Commission has recommended that the Director of Public Prosecutions investigate 11 separate incidents to establish whether or not persons should be charged with fraud or other infringements of criminal law. Among these persons are Hilroy Humhreys, Bernard Percival, Cavelle John, Elmeade Jarvis, Norma Jarvis-Southwell, Florence George, Everett Lake, Dave George, Carlton Lewis, Andy Jacobs, Michael Johnson, Ali Challenger, Michael Payne and Esley Ryan.

It has also been recommended that in view of the heavy workload to carry out these investigations, the Director of Public Prosecutions be provided with a highly experienced investigative team and a special prosecutor to assist him. I remind that before the Inquiry began, I had already given the undertaking to ensure that the Director of Public Prosecutions would be provided with such resources as he needed. I stand by that undertaking, and he will be given all the assistance he deems appropriate.

In all fairness to the persons named by the Commission as warranting investigation by the Director of Public Prosecutions, I must point out what the Commissioners have themselves said at page 13 of their Report;

“The Commission is not a Court of Law. Therefore, it cannot determine that anyone is guilty of a criminal offence. It is for the Director of Public prosecutions to decide what steps will be taken after reading our Report”.

The persons named are therefore free citizens who are not charged with any offence or found guilty of any offence. It is for the DPP to determine whether charges are warranted and for a Court of Law to decide upon the hearing of sworn testimony and indisputable evidence whether or not they are guilty of any wrong doing.

I appeal to all in our society to let the law take its course.

CONCLUDING REMARKS

Fellow Citizens, I have commented on those recommendations that directly relate to the Government. They are others that are directed at an initiative that the Governor-General might take, procedures that the Board of the Medical Benefits Scheme might follow in relation to a number of matters including surgical fees, and obligations that the private sector should meet. It is for them to respond to those recommendations.

Suffice for me to say that I will strongly propose to Cabinet that all the recommendations requiring Government action be fully implemented except for the two that I have identified as having grave financial implications rendering them impossible to execute at this time.

Let me end by saying that I am deeply conscious that the matters that were unearthed first by the Allan Joseph Forensic Report and now by the McIntyre Commission of Inquiry gave rise to deep concern across the nation about the integrity of the Medical Benefits Scheme and its operations. People across our land, regardless of political affiliation, were deeply upset and angry. And, rightly so.

The hearings of the Commission of Inquiry were a cleansing process which must culminate in the implementation of those recommendations of the Commissioners that will ensure, as far as possible, that this national institution is not so blighted again. Confidence in the institution, in its management, in its fairness, in its accountability must be restored in the minds of everyone, every member of the public. I am keenly aware of that necessity. That is why I have already acted on matters that came out of the Inquiry’s hearings, and that is why I pledge to see that the recommendations are implemented, and implemented swiftly.

I pray God’s blessings on us all as we now move together to take our country forward.

Thank you all.