The Tribune

• Bahamas ‘cannot afford’ $10.8m NIB loan repeat

• Contractor chiefs: Nothing’s changed in ten years

• Taxpayers ‘burdened with bad oversight wastage’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Bahamas “cannot afford” a repeat of the waste involved in the National Insurance Board’s (NIB) $10.8m housing loan with the country “on its knees”, two ex-Contractors Association chiefs warned.

Stephen Wrinkle and Leonard Sands both told Tribune Business that the BDO accounting firm’s forensic audit report revealed “nothing has changed” in almost a decade when it comes to accountability, and ensuring Bahamian taxpayers get value for money, over government housing.

Mr Sands, who succeeded Mr Wrinkle as president, said the BDO report was almost a mirror image of the one produced by UK-based Crown Agents for the last Ingraham administration around ten years ago, with both recording the same findings of “improper” contractor payments, waste of public monies, and a lack of administrative, oversight and management capabilities in the public sector.

And the latter argued that what happened with the NIB loan to the Ministry of the Environment and Housing was simply the result of lack of accountability among those involved with supervising the scheme, and “no consequences for their actions”.

“It’s amazing,” Mr Wrinkle blasted. “There’s a lot of money there and they don’t know how many houses were completed. This is the way it is. It’s unfortunate but not the first time this has happened. Unless and until the government holds people accountable we’re not going to be able to make the change. There’s no accountability. Simple as that.

“When it’s not their money they don’t want to be held accountable. There are no consequences. It happens every time. Clearly there’s a gap in the administration and disbursement of government funds. Even when they get a report like this nothing seems to happen. It remains to be seen what action is taken this time. If it’s anything like history nothing is going to happen.”

Pointing out that the fall-out from misusing taxpayer monies is not harmless, Mr Wrinkle told this newspaper: “It’s unfortunate the taxpayer keeps getting burdened with bad administration and bad oversight.

“That seems to be the norm here. This country cannot afford it right now. We have people on their knees while others are lining their pockets.... We have a serious problem with the administration of government funds in this country. It runs the gamut; it’s across the board. We’re in a national crisis, and everybody seems to think things are OK.”

Mr Sands, giving his separate take on the BDO report’s findings, said: “The answer to that is really quite simple. Quite simple. It only requires proper oversight. We’ve had this experience with government housing projects in previous administrations....

“It’s disheartening to say the least. It just goes to continue to show the gross inefficiency of the Government of The Bahamas in managing contracts. I say it like that and will not back away from it. The sad thing is that the only person that continues to pay the cost is the public. It’s the public’s money that is wasted on stuff like this. It’s sad.

“We have the potential for success, but don’t achieve it because the system is under-staffed or persons are not trained to manage it, or there are people in the system that abuse the situation that comes before them or the privileges they have.”

Mr Sands said the BDO report showed that successive administrations had failed to learn from their predecessor’s mistakes when it came to managing housing projects. Noting that the issues identified rarely happened in the private sector, he urged the government to outsource its housing initiatives to developers/ contractors to manage on their behalf.

Despite suspicions that the timing of the BDO report’s release was designed to distract from Lanisha Rolle’s resignation as minister of youth, sports and culture, especially since the government had sat on it for 13 months, and that it involved transactions that occurred five to eight years ago, the findings nevertheless provide a further insight into how public funds are wasted.

The report found that NIB “lost control” of its $10.8m loan to the government’s housing scheme, leading to $2.753m in “unauthorised obligations” being incurred.

This resulted in “inappropriate payments” of $1.119m from funds that belonged to the Bahamian people. Of this sum, BDO said $300,693 concerned “unauthorised mobilisation prepayments” for contractors, while a further $417,249 was paid out for work building government homes that was never performed.

Of that latter figure, some $269,690 in such “improper payments” went to contractors in Abaco, while the $147,559 balance related to Grand Bahama. The report also identified $118,025 worth of “duplicate payments” made to contractors.

BDO also disclosed that, given the Ministry of Housing and the Environment entered into housing commitments worth $12.576m when the budget under the MoU with NIB was $9.823m, some $2.753m in “unauthorised contractual obligations” were incurred in “violation” of the agreement between the two sides.

While Troy Smith, NIB’s chairman, has pledged that the full $10.8m will be recovered from the Ministry of the Environment and Housing, the BDO report called for further investigations after implying that their had been collusion between contractors on the project and those charged with supervising them and verifying payments for work performed.

“We suggest that further forensic investigatory steps, such as using handwriting experts, data mining of electronic data and information, relationship checks, audits of contractors and their project records, and interviews of relevant persons be performed,” BDO added.

The accounting firm also noted that construction contracts were not subject to competitive bidding, with the Ministry of the Environment and Housing simply hiring contractors from an “approved vendor list”.

BDO said it was unable to determine if “the selection process was a best procurement practice” because it had not interviewed Kenred Dorsett, minister of the environment and housing, when the NIB loan scheme was in force.

Mr Dorsett had informed the accounting firm he could not assist because he no longer had access to the government’s files, with BDO also lamenting that its probe was “hampered and limited by a lack of a complete and timely provision of pertinent documents and information” by public officials.

Its request for “complete” contract and payment information resulted only in the provision of “limited” documents, while its call for a complete listing of housing inventory also failed to produce a response from public officials.