The Tribune

HERBERT Brown has been re-instated as head of the Public Hospitals Authority by order of the Supreme Court.

The decision comes after Mr Brown, the PHA’s managing director, asked leave to apply for a judicial review of the decision to place him on two weeks administrative leave pending a board investigation.

Yesterday, Senior Justice Jon Isaacs ordered that Mr Brown had permission to submit his application and that the decision to place him on unpaid leave was “unlawful” and beyond the powers of the Public Hospitals Authority Act.

“...there is no procedure in the Act for placing the managing director of the Public Hospitals Authority on administrative leave and to do so without a hearing is a breach of the rules of natural justice,” Senior Justice Isaacs said.

The judge further issued an injunction “restraining the chairman and the Board of Directors of the PHA” from placing Mr Brown on leave again, pending the determination of the judicial review.

On Monday, The Tribune reported that the rift between the PHA board and Mr Brown has cost the Bahamian people several hundred thousand dollars – with its $48.3 million bond issue left sitting unclaimed in a bank account for over two months.

Sources familiar with the situation said the PHA’s failure to take the money, and apply it to the purposes for which it was raised, had resulted in the loss-making authority incurring unanticipated interest payment costs.

The $45 million private placement proceeds were intended to part repay the Royal Bank of Canada (RBC) construction loan, which financed the new Princess Margaret Hospital’s Critical Care Block, plus take out of another $10 million National Insurance Board (NIB) loan.

With the bond proceeds sitting idle, these loans have not been repaid and are still active, hence the additional interest payments that the PHA has incurred to service them.

Frank Smith, the PLP Senator and PHA board chairman, declined to comment when posed a series of questions on the situation over the weekend.

However, he did not deny the accuracy of any of the information detailed above, which was included in the questions.

It has been suggested that the board’s allegation is that Mr Brown exceeded his powers in signing-off on the PHA bond.

A copy of the bond offering document, though, contains a space for Mr Smith, in his capacity as chairman, to sign off on the bond’s issuance.

Among the documents available for investors to review when making their investment decision was a “Board resolution approving the Private Placement Memorandum” and another one approving the bond notes themselves.

The $45 million issue was also backed by a Letter of Support from the Government, which was approved by the Ministry of Finance and Cabinet-level policymakers, all of which raises questions about how Mr Brown could have exceeded his authority.