A ‘Culture of Reckless Disregard’ at the Roads and Parks Authority Exposed!!!
STATEMENT TO THE PRESS ON BEHALF OF
THE OFFICE OF THE PRIME MINISTER & THE MINISTRY OF FINANCE
CONCERNING THE FINDINGS OF
AN AUDIT INTO THE
INTERNAL CONTROLS AND OPERATIONAL REVIEW OF
THE BAHAMAS PUBLIC PARKS AND PUBLIC BEACHES AUTHORITY
Friday 17th December, 2021
Ladies and Gentlemen Good Morning.
Thank you for taking time to attend this weekly press conference, which had to be shifted to today because of a scheduling conflict.
Introducing the debate in parliament on the Supplementary Budget, the Prime Minister and Minister of Finance, the Right Honourable Philip Davis, referred to the extraordinary spending record of ‘The Public Parks and Public Beaches Authority’ over the past 2 ½ years.
From July 2019 – June 2020, the Authority’s budget for awarding contracts was $19.1 million. However, the Authority actually spent $25.9 million of the Bahamian people’s money on contracts, an overspend of $6.8 million, slightly more than 35% above amounts approved in the budget.
From July 2020 – June 2021, the Authority’s expenditure skyrocketed. They were granted a budget of $15.2 million, but in fact spent $28.9 million, an overspend of $13.7 million, or an astonishing 90% higher than the budgeted amount.
Their budget for this year, from July 2021 to June 2022 was $15.2 million. By October 31st, just four months into the financial year, the Authority had already spent $9.3 million. Had they continued spending money on contracts at this rate, they will have spent $27.9 million, an overspend of $12.7 million, amounting to more than 83% above the budgeted allocation.
Given the three years of massive over-spend on contracts, our New Day Administration commissioned a leading accounting firm to conduct an Audit of the Authority’s finances, particularly in respect of the Authority’s Internal Controls and Operations.
We received the Auditors’ Report yesterday. Their findings were so jaw-dropping that we decided to immediately release the full report, so that the Bahamian people can see for themselves how their money has been spent by just one single authority during the former administration.
Copies will be made available to the media immediately after this press conference, and the full report published on the website of the [MINISTRY OF FINANCE??]
Other investigations are underway in other ministries and agencies. We do not wish to prejudge any of those exercises, so will comment no further for now.
In the Executive Summary, the Auditors say:
“We did not identify the exact need for extra budgetary allocations and there is speculation that it was fueled more by the demand and requests for economic stimulation than by any real needs on the ground.”
In other words, contracts were awarded not because there was a genuine need for the work to be done, as required under the Act of Parliament which created the Authority in 2014, but for some other reason.
In their Report, the Auditors make a series of observations, some of which I will now highlight.
There were three different sets of signatures on contracts, all of which purport to be that of the Executive Chairman, Shanendon Cartwright, M.P. It is not just a case of someone having a wide range of hand-writing: there are three consistently different sets of signatures on contracts. If they were all written by the same person, how on earth did they remember which signature to use on which contract? Without having had them examined by experts, to the casual observer it appears that the Chairman’s signature was signed by three different people. If this is the case, it raises the question of who were these people, and how did they come to be in a position to sign those contracts?
Some contracts were also signed and dated by the Authority, ahead of the vendor and/or the witness signing it. This is extremely unusal and very poor practice, as anyone could then sign, claiming to be the vendor or witness, with no one having any idea if they indeed were the right person.
Some contracts are missing, even though monies have been paid.
Some contracts were not witnessed, which is a commonly known legal requirement.
The Authority did not require the official ‘Know Your Customer’ (KYC) identification taken from vendors to be placed on file eg. driver’s license, NIB card, and passport, in order to compare a vendor’s signature. These forms of ID are standard information and at a minimum establish that the Authority is dealing with the proper person. This could also raise questions as to compliance with various financial services laws and regulations.
Multiple contracts have been issued to individuals using different company names. These individuals have anywhere from one to ten contracts, some of them totaling hundreds of thousands of dollars.
Some of the contracts awarded also have eye-watering terms.
At the height of the pandemic, when the whole country was locked down, and Bahamians were not allowed to visit parks or beaches, the Authority awarded contracts and increased expenditure on contracts to clean those parks and beaches.
Contracts were awarded to sweep roads at a time when people weren’t allowed to be on the roads, with some people being fined for selling coconuts on the side of the road.
One road sweeper was paid $17,000 to sweep roads just three times a month, using an electric sweeper. This particular contract paid the contractor $775 per mile. Again, given that the country was in full lockdown, it is unclear whether the contractor was allowed out of their home twice a month in order to fulfil the contract. The records show the contracts had 2 additional road sweeping contracts with their combined yearly compensation was $552,000.
This was at a time when the Bahamian people were being told that money was too tight to offer decent support for food or housing.
How Has This Situation Been Allowed To Happen?
The most obvious reason is the complete lack of oversight by the Board. The Board consists of 10 Directors, but during the 15-month period under review from July 2020 to September 2021, the Board only attempted to meet once via zoom, in December 2020. However there are no minutes or any other record of that meeting, so it is unclear whether the meeting was held, or what was discussed or agreed.
There was also no monthly reporting by the Managing Director to the Board on the Authority’s financial performance.
This lack of basic oversight is in direct breach of the Board’s statutory duty to “manage the financial resources and assets of the Authority.”
We note that just after the election in 2017, both the Permanent Secretary and the Financial Officer were transferred out of the Authority, and replaced by people who had never held management posts before, let alone senior posts carrying such weighty financial responsibilities.
As the Auditors note:
“The entire Accounts Department consists of one senior accountant, who while diligent at the post, does not hold professional qualifications. The size and complexity of the Authority’s average annual expenditure require a highly skilled accounting department with expertise in financial control and compliance to ensure proper financial management.”
The staffing decisions ensured that this was not the case.
Given that the Authority spent some $64.1 million on contracts from July 2019 to October 2021 alone, it defies belief that the financial management was so weak, and that the Chairman could issue so many contracts without any challenge from or even mere oversight by the Board.
Some Shocking Conclusions
Ladies and Gentlemen: It is clear that, at the very least, there was a ‘Culture of Reckless Disregard’ at the Authority.
There was no attempt to implement or exercise effective controls. There was no attempt to document why there was a need to engage in such excessive spending.
Instead, a select group of people, operating under different identities, received multiple contracts and paid huge amounts of taxpayer money, to carry out work which was at best unnecessary, at worst, not carried out at all.
The Way Forward
Going forward, from today, the Authority has decided to terminate all current contracts, and to do so in a legal manner.
There is no presumption of guilt or wrong-doing on the part of any contractor.
Every contractor who has a valid legal contract will be paid. I repeat: every contractor will be paid!
However: they will now be paid in a way that fully complies with all existing laws, regulations and best financial and accounting practice.
Given that there is no information on file relating to the ‘Know Your Customer’ requirements, every contractor will be required to attend in person at a venue to be announced shortly and provide the basic KYC documentation for the maintenance of proper internal records of the Authority.
They will have to produce a document or documents to prove their identity (such as a passport, driver’s licence or NIB card), they will have to confirm their bank details, and they will have to be tax and NIB compliant, as the law requires.
In line with our New Day promise to conduct government business transparently, accountably and with integrity, detailed investigations will continue.
We will ensure that the best interests of the Bahamian people are served.
And if there is evidence of wrong-doing, we will not interfere in any matter if criminal or civil action is pursued.
Thank you so much for your attention.