The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Auditor General has warned of an “alarming amount of alleged theft” at the Post Office, with at least one of its practices branded “a breeding ground for improprieties”.

The audit of the Government’s 2013-2014 accounts, which was tabled in the House of Assembly yesterday, called for the Post Office to be restructured and “immediate actions” taken where there is evidence of theft by staff.

The flaws and weaknesses identified by Auditor General Terrance Bastian and his staff include:

• The Postmaster’s bank account at Bank of the Bahamas in Freeport “continues to be ‘unreconciled’’.

Funds deposited and disbursed from this account were regularly being sent to Nassau via cheque, regardless of whether it was in surplus or overdrawn.

The Auditor General said this practice required “explanation”, and added: “It is our recommendation that this bank account is suspended until it is properly reconciled; its current state is a breeding ground for improprieties.”

• The report detailed at least two cases where money was either missing or “misappropriated.

• A former Post Office cashier in Ragged Island admitted in an interview with the Auditor General’s staff that “she had misappropriated a ‘large’ amount of funds” when in that position.

This was done by sending Money Orders to other islands in the Bahamas, even though no funds had been received to back these before they were issued.

• The cashier at the Cable Beach Post Office was “short” $1,259 in the imprest (petty cash) fund due to the monies having been ‘borrowed’.

The shortage again related to Money Orders, originating from Abaco, where no funds had been received to back their payment before they were sent.

“The Postmaster General, along with the appropriate staff, should seek to minimise the alarming amount of alleged misappropriations which appear to be occurring within the Post Office,” the Auditor General concluded.

“Where the elements of theft can be proven, these matters should be turned over to the Royal Bahamas Police Force for prosecution.

“The idea of transferring these employees from one department to another should be discontinued. The department must move towards ensuring that Government and the public funds are protected,” Mr Bastian added.

“Based on our findings, it appears that the Post Office Department is in need of restructuring. Where there is evidence of misappropriation by staff members, immediate actions should be taken to remedy the exorbitant loss of revenue.”

Focusing on Ragged Island, the Auditor General and his team were provided with documents to support $159,919 in Money Orders being issued from that island’s Post Office.

This included Money Order changes not paid into the Post Office, but the audit revealed that based on the documents provided, some $63,914 “was not brought to account”.

“During our audit, we interviewed the former Ragged Island cashier, who admitted that while she was in Ragged Island, she had misappropriated a ‘large’ amount of funds from the Post Office,” the Auditor General said.

“This was carried out through the remittance of Money Orders which were sent throughout the islands of the Bahamas without any funds first being collected before issuance. At the time of our review, we were unable to determine the amount misappropriated.”

The Auditor General said that while the Exuma-based district postmaster was responsible for collecting and reconciling funds on Ragged Island, she at times permitted the postal clerk to perform these duties.

“We were informed that when the designated officer visited Ragged Island, a substantial amount of telegraph Money Orders were processed by the officer,” the Auditor General’s report said.

“Additionally, the former cashier at Ragged Island admitted to the processing of Money Orders without following established accounting procedures.”

Mr Bastian continued: “The interview with the former postal office showed that she had received initial instructions from the senior clerk, who relayed certain instructions that Money Orders should be remitted in her name.

“Once these Money Orders were cashed, the amount was to be forwarded to the senior clerk’s persona account at the Royal Bank of Canada or the Bank of the Bahamas.

“During our interview with cashiers from Ragged Island and Nassau, we obtained the names of several persons who received and remitted an exorbitant amount of Money Orders.

“We noted that the total amount of telegraph Money Orders received or remitted by the individual for the period under review amounted to $329,287. We could not verify that the funds were first received before the Money Orders were processed.”

As for the Cable Beach cashier’s $1,259 shortage, the Auditor General said: “As a follow-up, subsequent meetings were held, and the officer concerned was interviewed, where an admission was made that the funds were ‘borrowed’.

“A recommendation was made that the cashier makes the shortage of $1,259 good. During our review, we noted that the shortage was facilitated with telegram Money Orders.”

These Money Orders, Mr Bastian said, originated in Cooper’s Town and Murphy Town in Abaco.

“We were informed that no funds were received before they were remitted and paid to the designated payee,” the Auditor General said, finding that there appeared to be a pattern to such transactions.

“As a result of this, it necessitated a further review of this unusual practice to ensure that this was not a pattern to allegedly defraud the Government. A further review was carried out and, by all indications, it showed that this practice appeared to have occurred before.”

This is not the first time that weak internal processes and controls at the Post Office, which expose it to potential theft, fraud and money laundering, have attracted the Auditor General’s attention.

Mr Bastian, in a report last year, warned “an underlying tone of fraud” at the Post Office Savings Bank, with customers able to deposit and withdraw sums more than 100 times’ greater than legal limits.

In particular, the Auditor General zeroed in on how one account holder was able to withdraw more than $923,000 from the Post Office Savings Bank over the 15-months to April 8, 2015, even though the law and ‘Savings Bank Rules’ stipulate that account balances cannot exceed $6,000 in any one year.

Then there was the “inexplicable” case of another Post Office Savings Bank client who withdrew some $668,553 more than he had deposited over the three years between May 2012 and April 2015, even though the law, again, prohibited credit in excess of $6,000.

Mr Bastian said this particular client had deposited $613,915 with the Post Office Savings Bank over that three-year period, yet had withdrawn a collective $1.282 million from their five separate accounts.