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'Possible Fraud' On $600 -$700k Overpayments

By NEIL HARTNELL Tribune Business Editor "POSSIBLE fraud" and collusion resulted in $600,000-$700,000 overpayments to contractors working on a $33.5 million landfill project part-funded by the Government, the Auditor-General disclosing that he had recommended police investigate the affair. The interim report of the House of Assembly's Public Accounts Committee, tabled yesterday, disclosed how Terrance Bastian, the Auditor-General, had revealed to it that the project to construct 18 landfills in various Family Islands spiralled out of control because the Department of Environmental Health Services (DEHS) suffered "a complete breakdown of internal controls". Detailing the meeting between the committee and Auditor-General on July 5, 2011, the report noted how the DEHS had hired two engineering firms, The Engineering Group and Shepard U Management Engineering Firm, to review the Solid Waste Management project "to determine whether the Government had received value for the public funds expended". The answer, according to the committee's report, appears to have been a resounding 'No'. It said: "The engineering companies had concluded that there had been a large disparity between what should have been paid out and what had, in fact, been paid out. The firms also determined that there had been overpayments to the contractors to the tune of $600,000 to $700,000." The burden resulting from this falls upon all Bahamian taxpayers, as it does every time there is fraud, waste and inefficiency in the spending of government money. "The Auditor-General advised your Committee that after undertaking an audit of the public funds that had been expended, he had concluded that there may have been some level of collusion in the payments to the contractors, and there was also the possibility that fraud had been committed," the Public Accounts Committee report said. "That was the reason he had recommended that the police be called in to conduct an investigation into the matter." It is unclear from the report what the precise nature of the alleged "collusion" is, but it could have been between government officials and the contractors, or among the contractors themselves. The Solid Waste Management project, initiated in October 1999, was largely funded by a $23.5 million Inter-American Development Bank (IDB) loan, with the balance of the $10 million financing coming from the Government (Bahamian taxpayer). The project was designed to construct 18 landfills in 10 Family Islands, with contracts awarded to contractors for their construction. Ultimately, only 14 of these landfills were built. The DEHS had responsibility for overseeing the project, but the hiring of an external consultant to oversee it - a condition contained in the IDB loan agreement - never happened. The Auditor-General, in his interview with the Public Accounts Committee, laid the blame for the project's woes squarely at the DEHS's feet. In common with numerous government agencies, it lacked the staff, training and technical resources to monitor a project of this nature. "The Auditor-General had determined that the Department of Environmental Health Services attempted too many projects at one time, and did not have adequate staff to oversee the projects, and this inadequacy had resulted in a complete breakdown of internal controls," the Public Accounts Committee's report said. Elsewhere, the Auditor-General said the absence of Customs receipt books at Prince George Wharf had been satisfactorily resolved following the intervention of the department's Comptroller, Glenn Gomez. During his meeting with the Public Accounts Committee, which assessed his unit's 2009 audit and report on the Government's financial accounts, the Auditor-General said an audit of Customs' Prince George Wharf operations found the department "could not produce a number of receipt books". The Committee report added: "The Comptroller of Customs was called in, and had caused an exhaustive search to be carried out. The receipt books were eventually found at a different location, and the Auditor-General has assured your committee that he was satisfied with the explanation from the Comptroller." Other issues raised by the Committee from the 2009 report related to the status of the Local Government Recurrent Accounts in Exuma and Spanish Wells. In response, the Auditor-General said these "were examples of officials, who were responsible for the expenditure of public funds, not adhering strictly to standard procedures and an absence of accountability. "His department was continuously emphasising, to local government officials, the importance of following the financial procedures that were in place."

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