Rent-Free Tenants, Missing Contracts and $6.7 Million Owed: The Audit That Exposed Jamaica’s Post Office as a Public Asset Liability

A government department responsible for 290 post offices and hundreds of properties across Jamaica had no master inventory of its own assets, allowed tenants to occupy public buildings without paying rent, and held $61.7 million worth of stamps gathering dust for up to thirteen years. The Auditor General’s performance audit of the Post and Telecommunication Department, published in May 2010, documented a catalogue of administrative failures that cost Jamaican taxpayers millions and raised fundamental questions about whether the department was fit to manage public assets at all.

There is a peculiar kind of institutional failure that is harder to see than outright theft but often costs the public just as much. It is the failure of process — the absence of a register, the expired contract nobody renewed, the utility bill paid on behalf of a tenant who was never made to reimburse it. When the Auditor General’s Department completed its performance audit of the Post and Telecommunication Department in May 2010, what Auditor General Pamela Monroe Ellis and her team found was not a single dramatic act of corruption but something arguably more troubling: a government department that had lost administrative control of itself.

The Post and Telecommunication Department, known as PTD, runs the national postal network — 290 post offices and 272 postal agencies spread across every parish on the island. For communities that lack reliable internet access, banking services, or courier infrastructure, the post office is not a relic. It is infrastructure. And infrastructure requires management. What the audit, covering the period April 2006 to February 2009, revealed was that PTD’s management of both its physical properties and its core product — postage stamps — had broken down in ways that were costing taxpayers millions of dollars annually.

Begin with the properties. PTD occupies and manages an extensive portfolio of government-owned buildings and leases dozens of premises from private landlords across Jamaica. Yet at the time of the audit, the department had no master property inventory. None. There was no consolidated record listing the location of each property, its physical size, the title volume and folio number that would allow the government to legally verify its ownership, or who was responsible for its upkeep. Without such a register, effective management is not merely difficult — it is impossible. You cannot enforce lease terms for properties you cannot fully account for. You cannot plan maintenance schedules. You cannot defend government ownership in a dispute.

The consequences of that gap were visible in the audit’s findings on rental arrangements. Of 115 premises that PTD leased from private landlords at a combined annual cost of $8.5 million, ownership documentation was absent for 94 of the payees receiving rent. Rental agreements were missing entirely for 103 of the 115 properties. The department was, in effect, paying millions of dollars every year out of the public purse for buildings it could not formally document it was entitled to occupy. Whether through negligence or institutional disorganisation, the paper trail that would allow any independent party to verify whether the government was getting value for money simply did not exist.

The situation was no better when PTD played the role of landlord rather than tenant. Fifty-six rental agreements covering properties owned by the government were not presented to auditors at all. Of the 24 contracts that were produced, 23 had been signed by the Postmaster General — an arrangement that violated the Crown Properties (Vesting) Act, 1960, which assigns that authority to the Commissioner of Lands. The legal implications are significant: contracts executed without proper authority may not be enforceable, which means the government’s legal standing to collect rent from its own tenants may have been compromised by the very officials managing those arrangements.

Seven of those contracts had expired without being renewed. One had lapsed 84 months — seven years — before auditors arrived. In the meantime, tenants continued to occupy government property under terms that were, at best, legally ambiguous. At the Brown’s Town post office, two tenants were found to be occupying space entirely rent-free, with no documentation authorising that arrangement. No record existed of who had approved it, when, or why.

The rental arrears were substantial. As of September 30, 2009, nineteen tenants collectively owed $6.7 million in unpaid rent to PTD. The single largest debtor was a telecommunications company that had made an initial deposit of $2 million in March 2007 and had paid nothing since, running up an outstanding balance of $5.26 million. The fact that a commercial telecommunications firm — not a struggling small business or a community charity — could occupy government property for years without meeting its financial obligations reflects the absence of any systematic enforcement mechanism. There was no evidence of demand letters, escalating notices, or legal proceedings to recover the debt.

Meanwhile, PTD was subsidising its tenants’ operating costs without recovering those costs in return. Between June and December 2008, the department paid $5.5 million in utility expenses. It recovered $76,500. The gap — more than $5.4 million — represents a direct transfer of public funds to private tenants, with no contractual basis documented for absorbing those costs on their behalf.

The audit also found that annual rental income was being eroded by inconsistent application of rate increases, resulting in an annual underpayment of $598,929. Compounded across the years of the audit period, the cumulative losses from inconsistent rent collection, missed arrears enforcement, and absorbed utility costs reached figures that would have funded meaningful improvements to post office infrastructure across Jamaica.

Physical conditions at post office buildings reinforced how badly the property function had deteriorated. Three of the 27 post offices physically inspected during the audit were found in what the report described as deplorable condition. Inspections themselves were irregular — there was no systematic schedule. The Building Administration Unit operated without a formal policy framework. Risk assessments for fire, vandalism, or natural disasters had never been conducted. Management acknowledged during the audit that less than $30 million had been allocated over six years for property refurbishment, despite the department’s own assessment that approximately 90 percent of its offices required urgent upgrades.

For the Jamaicans who depend on those offices — to send remittances, collect government correspondence, access financial services in communities where banks do not operate — the degraded state of post office buildings is not an administrative abstraction. It is the physical reality they encounter when they walk through the door. Leaking roofs, broken facilities, and overcrowded spaces are the end product of years of deferred maintenance made possible by a funding model that was not recovering what it was owed.

The audit’s findings on stamp administration raised an entirely different set of concerns. PTD’s principal product — postage stamps — was being managed with minimal controls and, in some cases, no controls at all. The department had no formal written contract with CASCO Philatelic Services, its stamp supplier, which had been retained since Jamaica’s independence without any competitive tendering process. The department was unable to provide auditors with total expenditure figures for stamp procurement across the three-year audit period. A supplier relationship of that duration and financial significance, operating outside any formal contractual or competitive framework, falls well short of the procurement standards that government entities are required to observe.

The inventory of stamps in storage told its own story. Slow-moving stamps valued at $61.7 million had been sitting in PTD’s warehouses unissued for periods of up to thirteen years. Stamps valued at $11.6 million that had been issued to post offices across the network were not recorded in the central dispatch register — meaning the department had no reliable way of knowing where those stamps were, or whether they had been sold, lost, or misappropriated. When auditors examined a sample of 29 bags from a consignment of 214 bags designated for destruction, they found $2.23 million worth of stamps still in usable condition. No monthly reconciliation was being conducted to match stamp inventory records against returns from post offices.

A joint venture at the Liguanea Post Mall drew additional scrutiny. PTD contributed land valued at $42 million to a development project with a total cost of $199.98 million. In return, the department was projected to receive a minimum of $7 million in profit share. By the time of the audit, it had received $1 million. Alongside the financial underperformance, the audit identified a conflict of interest: directors of the development company were simultaneously directors of the engineering firm contracted to supervise the construction. That structural conflict should have been identified and managed before work began. It was not.

The broader commercial context made efficient management of PTD’s existing revenue streams all the more urgent. Stamp revenue fell from $242.2 million in 2005/2006 to $197.4 million in 2008/2009 — a decline driven by the migration of communication away from traditional mail toward electronic channels. As the core business contracted, the department’s ability to recover value from its property portfolio and auxiliary revenue sources became proportionally more important. Instead, those streams were leaking.

The Auditor General made eight formal recommendations covering the creation of a property register, enforcement of rental arrears, reform of procurement practices for stamp supply, tightening of inventory controls, and a broader review of whether PTD should retain its property management function at all. Management indicated willingness to implement a number of the recommendations but pointed to capacity constraints and chronic underfunding as limiting factors.

That response, taken at face value, contains a genuine tension that policymakers cannot ignore. A department underfunded for property maintenance cannot maintain its properties. But a department that fails to collect $6.7 million in rental arrears, absorbs $5.4 million in utility costs on behalf of tenants, and holds $61.7 million in idle stamp inventory is not simply a victim of fiscal austerity. It is a department whose internal controls have failed to protect the resources it already has. The audit makes clear that the path to better outcomes begins not with more funding alone but with the basic administrative disciplines — registers, contracts, reconciliations, enforcement — that allow any organisation, public or private, to account for what it owns and collect what it is owed. Until those disciplines are embedded, additional resources risk flowing through the same gaps that this audit exposed.

Jamaica Accountability Watch is an independent editorial series by Jamaica Homes News examining what government audit reports reveal about the management of public money. Source: Auditor General’s Department of Jamaica.

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