Responding to The Daily News' 20-page special investigative report "Contracts and Cronies" published Friday, V.I. Department of Planning and Natural Resources Commissioner Dean Plaskett acknowledged that his department made mistakes, failed to keep records, failed to exercise due diligence and had "significant lapses in our judgment" in its handling of government contracts with Elite Technical Services Inc. and related companies.

In a three-page statement released Friday afternoon, Plaskett did not take personal responsibility for any of his department's failures and shortcomings. Instead, Plaskett blamed his staff and other government agencies.

Defending his handling of the nearly $1 million total in contracts that DPNR funneled to Elite, Plaskett said in his statement Friday that he wrote an "extensive letter" to Elite raising concerns about many of the problems that The Daily News cited in the investigative report.

The Daily News questioned Plaskett numerous times in recent weeks and informed him that publication of the investigative report was imminent. He did not indicate in any of the interviews that he planned to write that letter.

Plaskett said he wrote the letter on Wednesday, Jan. 12 - that was two days before The Daily News' report and 15 months after Elite's $650,000 contract ended without Elite having delivered the work but having received $324,500.

The letter was not in the DPNR files on Wednesday or Thursday when The Daily News examined the department's files on Elite. Under V.I. law, all public records, including correspondence such as that letter, must be in the files and must be available to the public.

DPNR Business Office Director Diana Richardson assured The Daily News on Thursday that all records relating to Elite, including correspondence, had been turned over to the newspaper.

On Friday, Plaskett told The Daily News that he would fax a copy of the letter to the newspaper, but that fax had not arrived by presstime this morning.

In other parts of Plaskett's statement, he mischaracterized parts of The Daily News' report, and his statement primarily focused on his erroneous representations about the report rather than on the facts newspaper reported.

- Plaskett stated that "plan review does not require an engineer; plan reviewers on staff now are not engineers." Plaskett was referring to The Daily News report that Elite told DPNR that it had engineers ready and able to review HOVENSA's coker plant plans. However, The Daily News' report did not say that engineers were necessary. Instead, The Daily News report focused on Elite's false claims that it had an engineering staff.

- Plaskett complained in his statement that DPNR's former director of building permits, Gerville Larsen, did not recommend Elite and that DPNR did not tell The Daily News that Larsen had done so. Plaskett mischaracterized The Daily News' report, which includes statements from current Director of Building Permits Brent Blyden, who told The Daily News that he chose Elite because Larsen, Blyden's predecessor, told him Elite was qualified.

- Plaskett took issue in his statement with The Daily News' report that DPNR's record of HOVENSA payments to Elite and DPNR were incomplete. However, The Daily News did not find in DPNR files the complete record of those transactions - despite Plaskett's assurances that The Daily News had been given "all the documents" on Elite. Ultimately, HOVENSA - not DPNR - supplied those records to The Daily News.

- Plaskett further complained that The Daily News' report about an employee's termination "should have noted that the Elite matter was an issue brought up after termination." However, The Daily News' report specified that an arbitrator found that the Elite matter occurred "post-discharge."

Plaskett's complete statement is printed below.

DPNR RESPONDS TO SPECIAL INVESTIGATIVE REPORT

Friday, January 14, 2005

In response to The Daily News Special Investigative Report, "Contracts and Cronies," printed in this Friday's, January 14th edition, Commissioner Dean C. Plaskett, Esq., of the Department of Planning and Natural Resources (DPNR) acknowledges that mistakes were made and that additional due diligence and research and verification should have been done prior to utilizing Elite Technical Services. But the Department feels it must correct and clarify some of the inaccuracies contained in the report.

- Commissioner Plaskett mistakenly conveyed that the CZM contract was paid by federal funds; it was not, therefore upon being so informed he indicated that there was no reason for the federal government to be involved in the review.

- DPNR did not receive settlement of the AT&T matter from the federal government. It was strictly a local action and a local settlement. The federal government was not involved. Because some of the claims made therein were violations of the CZM Act, portions of the settlement went to the CZM program income which was subsequently used to fund the contract in question.

- The official written actions taken by DPNR against Elite in the CZM matter was done after the acting director was removed. Prior to the acting directors removal, no one in CZM ever informed Commissioner Plaskett in writing or otherwise of any problems with Elite. However, there were numerous correspondences from CZM to Elite relevant to their nonperformance and poor work product in the CZM matter.

- It should be noted that some statements quoted were from a legal complaint and cannot be considered the full recitation of what transpired.

- This matter is in court therefore commissioner Plaskett's comments will be limited. (Note acting director was removed on 9/10/03, the letter to Elite was dated 9/18/03) also note that all members of DPNR management and legal counsels received the mentioned award.

- DPNR did not give Elite the CZM, energy or environmental protection contracts, all procurement processes were followed, again, DPNR acknowledges a better job should have been done in vetting this entity.

- The employee involved in the other case cited was not discharged because of anything to do with Elite. The Daily News has the full arbitrators decision and should have noted that the Elite matter was an issue brought up after termination and was never a consideration during the entire termination process.

- The plan review project for Hovensa was only for the coke storage domes, conveyor and drum structure and their foundations only, and not the entire coker super structures (which is similar to the previously built catalytic cracker project).

- Plan review does not require an engineer; plan reviewers on staff now are not engineers.

- There is an accurate record of money paid to DPNR from Hovensa.

- Gerville Larsen never recommended Elite nor was anyone at Daily News told that. DPNR advised the Daily News reporter that Hovensa recommended Mr. Larsen.

- It should be noted that Commissioner Plaskett does not authorize payments unless recommended, advised and consented to do so by the pertinent director(s) of a division within DPNR. At no time did the commissioner authorize payment without the recommendation, advice and consent of the appropriate director.

- As reflected in the numerous correspondences from director Somme to Elite contained in the energy file, DPNR was consistently insistent upon proper performance by Elite and made a significant record of its attempt to ensure that Elite performed according to the contract. There was no attempt to allow Elite to be compensated for work it did not accomplish.

Again, we admit that there were significant lapses in our judgment and a failure to properly research and investigate this entity prior to entering into contracts with them. However it should be noted that we relied upon other agencies whose responsibility it is to insure the integrity of the process.

In coker review and hazmat training, proper records were not kept relevant to work accomplished and relevant to efforts to insure that work was done according to contract. Further, it was our understanding that most of the required work was performed except for the CZM matter. We are currently seeking verification of this.

As a result of this investigation, on 1/12/05 Commissioner Plaskett wrote an extensive letter to Elite raising many of the concerns noted in this report. Copies of that letter have been sent to Property and Procurement, the Inspector General and the Attorney General. DPNR has also instituted an internal investigation and will reveal its findings publicly. It has been our understanding over the last year or so that the Inspector General and the U.S. Attorney's Office has been reviewing this matter.

Over the years we have instituted more rigorous reviews during the contracting process and we have attempted to rule out the use of sole sourcing for professional services.

DPNR made mistakes; we have owned up to them and have taken the necessary steps to ensure that they are not repeated.

The Department has been informed that the Legislature intends to hold hearings on this matter in the near future, at that time DPNR will provide more details in this matter.

Dean C. Plaskett, Esq. Commissioner