The Tribune

By TANEKA THOMPSON

Tribune News Editor

tmthompson@tribunemedida.net

A FORENSIC report into the Public Hospitals Authority suggested frequent reshuffling of the executive team in an effort to reduce the appearance of corruption.

The report, of which The Tribune has obtained a copy, recommends three to five year contracts for executive management.

“The position of managing director in a public entity with hundreds of millions of dollars of cash per year is susceptible to the perception of dishonesty,” the report notes.

“For the benefit of all the parties involved, the executive team needs reshuffling frequently. This was an effective policy to reduce corruption on the police force by moving Family Island police chiefs to avoid an over-familiarisation with criminal elements during the 1980s.”

The report also suggests that the PHA should adopt a policy of turning all matters of suspected fraud or malfeasance over to authorities.

“Furthermore, when ethical codes and standards are violated after being written to facilitate security and integrity, penalties should be of such magnitude that it deters the majority of people from noncompliance. This should apply to both vendors and employees of the Authority. The PHA should show by example that the slightest hint of impropriety would have the most serious consequences, including involving the Commercial Crime Unit of the Royal Bahamas Police Force.”

The report adds that the same group of managers has controlled the PHA since its creation.

“While there is no direct evidence of complicity or fraudulent occurrences, the management of the PHA must accept responsibility for allowing controls to be circumvented, while not holding the persons responsible accountable for their actions. This bred a ‘culture of slackness and corruption.’”

The report, which was completed on March 31, has highlighted instances of “possible fraud and wastage” and “defective systems” at the government entity. The lax practices led to $10 million in pharmaceuticals being unaccounted for and allowed drugs bought for “emergencies” to expire on shelves.

‘Bid rigging’

The audit found that the PHA’s management “knowingly refused” to enforce best practices to its inventory process that expended approximately $30 million per year.

“The computer systems that control the process were inadequate, lacked proper design, and its use is ineffective. The management also failed to train its key personnel to use the systems, thereby allowing for possible fraud and corruption by employees and officers of the PHA.”

The report added that the current inventory process “enables possible fraud, theft of PHA’s assets and encourages corruption.”

The report also says that the PHA is “plagued with drug shortages” even though it spent more than $30 million on pharmaceuticals and other supplies over the “past year.”

The report also cites an earlier PHA internal audit, which found that “75 per cent of the unused drugs that were purchased for an emergency dating two years ago have expired to date.”

The report found that at one point, the PHA ordered 300 vials of a drug although its annual usage is 30. This means the PHA “ordered 10 times the amount of usage, on an emergency basis, thereby circumventing the tender process, paying a higher unit price, and still allowing the drug to expire on the shelf is considered negligence.”

The report says this indicated “bid rigging”, a conspiracy between the buyer and the contractor where an employee of the buyer receives something of value and in return recognizes a need for a particular product or service.

The audit also says that there is reason to suspect counterfeit drugs may be in the public health system.

“We were given information and asked to assess the extent of counterfeit drugs coming through the PHA’s procurement system. We were unable to substantiate the claims, however, as we came across no empirical evidence to substantiate the rumours. Because the overall risk assessment for other types of healthcare fraud is so high, we do not discount the possibility that counterfeit drugs that have been placed in similar packaging to look like brand name drugs are probably in the public healthcare system.

The report has also found that staff at PHA “request and accept gifts from vendors” which is a conflict of interest.

The 92-page report was prepared by John Bain, of UHY Bain & Associates.

It was commissioned on July 13, 2013. It covers the period of July 1, 2006 to June 30, 2013, with some references to earlier periods.

According to published reports, PHA Chairman Frank Smith has said the claims in the report are being investigated.