The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian digital payments provider yesterday said it had been “100 percent vindicated” by the Auditor General’s findings on the role it played in the Health Travel Visa initiative.

Nicholas Rees, Kanoo’s chairman, told Tribune Business that the report by the Government’s financial watchdog “shows there’s been no malfeasance or misappropriation” of fees paid by travellers complying with The Bahamas’ COVID entry protocols after tourism re-opened on November 1, 2020.

While the company “bore the entire brunt” of attacks on the Health Travel Visa during the Minnis administration’s term in office, he added that these accusations had been “put to bed” by an Auditor General’s Office report that found the $456,993 compensation it received for providing the initiative’s payment gateway over a ten-month period “appears to be within industry norms”.

Describing the findings as “100 percent vindication in my opinion, Mr Rees told this newspaper: “We are very happy that the report is out. We welcome full transparency at all times, and I believe it vindicates us.

“It demonstrates there’s been mo malfeasance, no misappropriation, and that we assisted greatly in the re-opening of the country. It’s unfortunate that, being the smallest component, we bore the entire brunt of the accusations. It’s unfortunate that our detractors will go to great lengths to tear us down, but we are happy the report takes that story and puts it to bed.”

Kanoo was embroiled in a political firestorm after it became caught-up in the then-Opposition Progressive Liberal Party’s (PLP) attack on the Health Travel Visa system during the 2021 general election run-up. Questions surrounding the fees it was earning, and why the money was not being deposited in the Government’s consolidated fund, quickly surfaced.

The digital payments provider’s fees were equivalent to just 1.3 percent of the $34.442m in Health Travel Visa fees collected between November 2020 and August 2021, while also equalling only 1.8 percent of the programme’s $24.858m total costs over the same period. The Auditor General’s findings thus seemingly rebut any concerns over Kanoo’s fees.

However, Mr Rees said the company disputed the Auditor General’s findings that no contract between itself and the Ministry of Tourism was “officially executed” over the Health Travel Visa initiative. And he also questioned the assertion that the Ministry of Tourism violated the Financial Administration and Audit Act 2010 by opening an account “with Kanoo at Bank of The Bahamas”.

Disclosing that Kanoo plans to release a statement dealing with what he termed as “minor inaccuracies” in the Auditor General’s Office’s report, Mr Rees argued: “Our opinion is we did have a legal contract. The business was conducted legally....... There were contractual terms and an agreement that was made, and it was agreed.

“Our position was that we had a legally binding contract. There were negotiated legal terms that the ministry wanted in place, and we had written instructions and notifications to proceed on that basis. We also subsequently notified in writing by the Ministry of Tourism that they wanted an addendum to the contract.

“We were instructed in writing or notified in writing. It was agreed and we were instructed to proceed, and were advised on paper as to use of the account. KYC (Know Your Customer) due diligence was provided in accordance with the law.”

The Auditor General’s Office argued that, under the law, only the minister of finance can open up a bank account on the Government’s behalf. And written permission for its opening must first be obtained from the minister.

It added that the Ministry of Tourism’s instruction for Kanoo to pay other private sector vendors via monthly payments from the former’s account was “inconsistent” or contrary to established practice. It said such payments should be made by the Public Treasury.

However, Mr Rees said further clarity was required around the assertion that the Ministry of Tourism opened a bank account “with Kanoo at the Bank of The Bahamas”. Suggesting that this was not entirely accurate, he said the ministry had opened a digital currency account with Kanoo where it had full control, access and oversight of funds moving in and out of the account.

To facilitate payments to other Health Travel Visa vendors in fiat or physical currency, Mr Rees said Kanoo opened a digital currency merchant processing or settlement account at Bank of the Bahamas. The payments provider had to maintain excess liquidity that exceeded the sums generated by the VIsa scheme, while the account was also non-interest bearing.

“We were contracted by a private entity within five days of the launch,” Mr Rees said of the Health Travel Visa. “It was in the national interest; something that had to happen.” However, the initial effort to develop the Health Travel Visa initiative was led internally by the Government’s own Department of Transformation and Digitisation.

“We were informed that this initial plan with the Department of Transformation and Digitisation involvement did not work due to insufficient manpower; one programmer; the system was only updated once per week and issues with the system were not resolved in a timely fashion,” the Auditor General’s Office found.

“We were informed that the decision was made that, during the second phase of closing the country [due to COVID], before re-opening the Government had eight weeks to put a better plan in place. Since the capacity and manpower did not exist, private sector providers were sought to meet this need.”

The Auditor General’s Office said it was told that both Think Simple, the Health Travel Visa’s programmer, and Alpha Tango Media, which was responsible for administering the COVID tests, “were introduced by the former minister of tourism, Dionisio D’Aguilar.

However, both he and the Ministry of Tourism argued that they were legally justified in doing this as well as opening the bank accounts. They asserted that the Promotion of Tourism Act’s section 3 (e) gave the minister the ability to enter into any contact he/she deems necessary, while it has always operated accounts that have received and paid out money.

However, Alpha Tango, which received $524,980 for its services, did not register as a VAT taxpayer until March 12, 2021 - more than four months into the Health Travel Visa - despite likely already having passed the $100,000 registration threshold. The Auditor General’s Office said its VAT payments were not current, placing it into non-compliance.

“There were no written contracts, only verbal contracts,” it added. “We iterate that there were no documented agreements in place for the services to be provided on behalf of the Government of The Bahamas. Negotiations of contracts did not begin until February/March 2021.”

This, though, was disputed by the Ministry of Tourism, which said it had supplied the Auditor General’s Office with evidence that it had executed “preliminary agreements” with Think Simple and Alpha Tango Media that were effective from October 1, 2020. The ministry’s signature came later on October 26, 2020.