By NEIL HARTNELL
Tribune Business Editor
Ministry of Tourism executives felt the company at the centre of a probe into former minister, Vincent Vanderpool-Wallace, was embroiled in “conflicts of interest” because its principals reviewed a bidding process they were also participating in.
Summarising a report into the relationship between the former minister and Tourism Marketing Alliance (TMA), current minister of tourism, Obie Wilchcombe, said three persons tied to the company - Jeffrey Toffler, Thomas Crockett and Michael Stone - also owned Destination Solutions 360, an entity that bid on the Ministry of Tourism’s online booking solution tender.
As a result of its $1.65 million advisory marketing contract with the Ministry of Tourism, Mr Wilchcombe said TMA was included in reviewing the bidding process that its principals’ other entity was participating in.
Outlining the findings of the report, which was done by Kikivarakis & Company and KRyS Global, Mr Wilchcombe told the House of Assembly that senior Ministry of Tourism officials felt “pressured” by Mr Vanderpool-Wallace to sign contracts with both TMA and ICON, companies that were thought to be related parties.
Mr Wilchcombe said the report uncovered “irregularities” when it came to the review and approval of the TMA and ICON contracts, and raised questions about Mr Vanderpool-Wallace’s links to the two companies and their principal executives.
However, Mr Vanderpool-Wallace disputed some of the evidence given by Ministry of Tourism staff, and suggested there was resistance to his efforts to “modernise” the Ministry’s marketing functions.
Justifying why ICON was hired as a media buying agency by the Ministry of Tourism, Mr Vanderpool-Wallace said this helped generate $1 million in cost savings in 2008. The Ministry of Tourism has spent $36 million with ICON over the past 10 years.
And, defending his decision to sign a $15 million media advertising buying contract with ICON on August 18, 2011, Mr Vanderpool-Wallace said the 10 per cent cash rebates allowed under this agreement would be used to subsidise the financially-stricken Grand Lucayan Resort in Grand Bahama.
Mr Wilchcombe’s statement to the House of Assembly, the full report itself not being released, was not as ‘hard hitting’ as some had initially billed it to be.
It did, though, raise questions about the ties and relationships between Mr Vanderpool-Wallace on one hand, and the three companies and their principals on the other. Their relationship appears closer than might normally be the case, and the report found no due diligence was done on Mr Crockett because he came recommended by Mr Vanderpool-Wallace.
Mr Wilchcombe said Mr Vanderpool-Wallace’s involvement with the three companies was “not in line with the manner” in which the Ministry of Tourism handled previous agreements.
He added that due diligence found TMA and Destination Solutions 360 were both found to be newly-established companies with no track record, the former being a “shell company”.
ICON’s 2011 annual report also showed that its chief executive was a president and director of TMA.
The latter countered that his involvement with these contracts was “warranted given the circumstances and his desire to advance the Ministry”.
Yet the ex-minister appears to have had an answer for most questions, but the fall-out from the affair may well cost the Government - and Bahamian taxpayer - more money at a time when they can least afford it.
Mr Wilchcombe said the Ministry of Tourism’s decision to revoke the TMA contract on March 30, 2012, had prompted warnings from the company’s US and Bahamian attorneys that the agreement had been breached.
The latter, Collie & Collie, have demanded that the Ministry of Tourism compensate TMA for “loss and damages suffered for breach of contract in the amount of $687,000”, and further sums.
The Ministry of Tourism is holding to its position and insisting it will defend the case in the courts if necessary.
Meanwhile, $1 million worth of media advertising has to-date been purchased by ICON under the $15 million agreement.
While the Cabinet instructed the Ministry of Tourism to terminate the ICON contract, Mr Wilchcombe said it had not done so due to the potential for this to end up in litigation, too.
Mr Vanderpool-Wallace, though, had said the Ministry of Tourism was not obligated to spend $15 million with ICO, so no “potential liability” exists.
Mr Wilchcombe’s statement, though, detailed the considerable rift that appears to have emerged in the Ministry of Tourism between Mr Vanderpool-Wallace and his officials from mid-201 onwards.
The current minister said senior executives harboured “significant concerns” about the TMA agreement, particularly the absence of an early termination clause and “potential conflict with ICON”, when it was signed on August 3, 2010.
Mr Vanderpool-Wallace denied that he pressured officials to sign and agree terms as soon as possible, Mr Wilchcombe said, and also refuted claims that he told them a pre-job interview with Mr Crockett, the chief marketing officer under the TMA agreement, was unnecessary.
However, Ministry of Tourism staff and Hogan Lovells, their US attorney, found Mr Crockett had made “misrepresentations” about TMA’s corporate set-up, and that it was “unable to perform under the terms of the agreement”.
“Further, they noted that Mr Crockett became enmeshed in a conflict involving an online booking solution the Ministry was looking to source, and it was discovered that TMA and its related parties were directly linked to ICON, an existing vendor of the Ministry,” Mr Wilchcombe said.
Despite these findings being presented to Mr Vanderpool-Wallace, the current minister alleged that he defended Mr Crockett and TMA, and “resisted the termination of the TMA agreement”.
“The Minister stated in his interview that although the Ministry needed to modernise its marketing functions, persons at the Ministry preferred not to do so, and that was part of the reason senior executives were resisting Mr Crockett’s employment,” Mr Wilchcombe said.
When it came to ICON, Mr Wilchcombe said Ministry of Tourism executives said they again felt pressured by Mr Wilchcombe to use the company, even though they had concerns about its higher costs compared to other agencies.
In reply, Mr Vanderpool-Wallace said there was an open bidding process for media buying services, and ICON instead generated cost savings - up to $1 million in 2008.
When it came to the $15 million ICON contract, Mr Wilchcombe said neither David Johnson, the Ministry’s director-general, not its permanent secretary, Hyacinth Wnder-Pratt, knew of the agreement until after it was signed.
“Mr Vanderpool-Wallace stated that he approved and signed this agreement due to its urgency and level of importance,” Mr Wilchcombe said.
“The Minister further stated that the agreement allowed for 10 per cent cash rebated which the Ministry intended to use to subsidise the Grand Lucayan Resort, which was experiencing financial difficulties at the time. He stated that it was a Ministerial decision he took to accelerate the provision of such assistance.”
Mr Vanderpool-Wallace also confirmed that he knew Messrs Toffler, Crockett and Stone prior to the TMA deal, Mr Wilchcombe said.