The Tribune

By RASHAD ROLLE

Tribune Staff Reporter

rrolle@tribunemedia.net

IN its analysis of Bahamas Power & Light’s (BPL) accounting data, Ernst & Young found numerous irregularities, including payouts to some companies that were not registered with the Corporate Business Registry and more than $3m in payouts to vendors with tax identification number (TIN) anomalies.

The firm, in some cases, found a “lack of supporting documentation for payments remitted to vendors,” invoice dates months apart although they are sequential, “vendor invoices containing an invalid or no tax identification number,” “inconsistencies across vendor invoices,” and “no evidence of existence of vendors at the Bahamian Corporate Business Registry,” among other issues.

The revelations, gleaned as part of a probe into an alleged fraud scheme at BPL, paints a picture of a company riddled with internal control woes.

EY said it performed analytical procedures on BPL’s vendor payment transactions and selected a sample of about 345 disbursements totaling an approximate $14,524,321 for review of supporting documentation.

During this review, EY found the following irregularities: 40 cheques lacking supporting documentation valued $974,868; 32 vendors with value added tax TIN anomalies valued at $3.2m; and five instances where there was no evidence of vendor as a registered company with payouts valued $422,082.

EY found three instances of inconsistencies across vendor invoices valued at $101,963; three instances of a time lag between date of invoice and date of payment valued at $90,144; two instances of purchase order dates subsequent to invoice issuance date valued at $24,806 and one instance of an internal memo prepared on the same date despite invoices being received on various days for a value of $20,500.

Cheques, according to BPL’s own internal processes, should have supporting appropriate approvals in the form of a purchase order, certificate of payment or internal memo or contract, but, investigators concluded, “a number of the sample cheques...reviewed did not have sufficient documentation to support the payments.”

For 28 of a sample of 306 cheques, investigators could not locate the supporting documentation in the “company’s files or systems”.

Additionally, “nine of the 265 cheques received did not contain any type of supporting documentation to substantiate the payments.”

Nineteen vendors had a potentially invalid TIN, investigators concluded.

They noted that after value added tax (VAT) was introduced in 2015, “any entity conducting business in the Bahamas is required to be VAT registered if the taxable services or goods sold exceed $100,000 over a 12-month period. Once a business is registered for VAT, it is issued with a certificate of registration and tax identification number.

“VAT registrants are required to include their TIN on their invoices or sales receipts. An official report of all Bahamian entities registered for VAT is generated monthly by the Ministry of Finance of the government of the Bahamas. This VAT registrant list also contains the TINs assigned to each business entire and is publicly available information. As part of our procedures, we utilised this official document to validate the TINs included in the invoices during the course of our transaction testing.”

Of the 19 vendors with potentially invalid TIN numbers, investigators “were unable to match any of the TINs found on the supporting documentation (invoices, business licence) submitted by vendors to BPL to the TINs listed within the VAT Registrants List as of the date of the issuance of the invoices.

In fact, investigators found invoices by 12 local vendors which did not even include a TIN. They said: “It should be noted that in 2016, one of these vendors, Hydro Electric Co, provided services to BPL totaling $111,2000. Given the value of the services provided to BPL during 2016, Hydro Electric exceeded the VAT threshold of $100,000 which requires the company to be VAT registrant and obtain a TIN.”

Investigators also found that after receiving information from the Corporate Registry in the Bahamas, six vendors were not even registered. The disbursements those companies received totaled $422,082.