By AVA TURNQUEST
Tribune Chief Reporter
THE Inter-American Development Bank has sanctioned ten Bahamian entities for fraudulent and collusive practices, barring those companies and individuals from participating in IDB-financed contracts as well as other linked international organisations.
The ineligibility period for those entities span three years to seven years; however, there is no explanation given for the debarment.
The revelation was made during an interview with IDB country representative Maria Florencia Attademo-Hirt, who underscored the bank’s rigorous and independent mechanisms to investigate allegations of fraud and corruption.
Ms Attademo-Hirt was responding to questioned placed by The Tribune related to the monitoring and evaluation of IDB-funded projects as the bank’s current five-year country strategy comes to an end.
It follows criticisms levelled by pundits who, in the wake of recurring fires at the New Providence Landfill, contend that the bank’s $23.5m loan for a solid waste management programme in New Providence was not fruitful.
The debarred firms and individuals are investigated by an independent branch of the IDB called the Office of Institutional Integrity (OII), and cases adjudicated by a sanctions officer and a sanctions committee.
Bahamian firms True Blue Heavy Equipment and Trucking Co; M & R Heavy Equipment Road Builders; Supersea Marine Ltd and Westside Equipment Ltd were sanctioned for alleged fraudulent practices; and Caribbean Asphalt Products was sanctioned for alleged fraudulent and collusive practices.
Individuals sanctioned by the bank include: Dereck Mackey; Eugene Smith Jr; and Robert “Bob” Smith for alleged fraudulent practices; and Trevor Cleare and Steven Rose Jr for alleged fraudulent and collusive practices.
“The OII looks at allegations of fraud and corruption in IDB-funded projects,” Ms Attademo-Hirt said. “This type of independent entity is common in all international organisations. Let’s say we executed a project, and anybody, it could be a Bahamian, foreigner working on the project, an IDB employee, they can pick up a phone send a complaint about implementation, the way money is being used, concerns of fraud and corruption, basically that project funds not being used for the purpose that were intended, or with the efficiency and efficacy that they are supposed to be used.”
She continued: “When there is an allegation of fraud and corruption, this independent unit investigates, and depending on findings they may launch an investigation. It’s a long process because due process is important, but if there is proof, real evidence of fraud and corruption in accordance with the principles of the IDB - sanctions could be imposed.
“The most egregious ones are being made public, we are part of this international community where we recognise sanctions imposed by other organisations. If the Asian Development Bank were to debar an entity or individual, or the African Development Bank, or the World Bank, they will send a formal communication and say under our agreement to respect and recognise mutually our sanctions.
“We recognise that sanction, we follow that, and we have a list of sanctioned entities.”
The IDB’s 2013-2017 Country Strategy targeted transformative initiatives to ensure macroeconomic sustainability; social stability and employment; and increase resilience to the negative impacts of climate change. Priority areas included: public finances and management; citizen security and justice; energy; private sector development; coastal risk management and climate change adaptation.
Nine public sector loans are currently in execution at the moment, Ms Attademo-Hirt confirmed, and of those loans, there are two yet to be approved by Parliament and signed. There is one more that is ready for negotiations, but has not gone to the IDB Board of Directors yet, she said.
“The IDB has several monitoring mechanisms,” she said, “so it starts with planning - important, effective, efficient, planning. Before we disperse (a loan) let’s look at all the conditions prior to the loan being eligible for (disbursement) to ensure that we have a sound structure so even before we start dispersing the time between the signing of the loan contract and the day in which the first dollar goes out to the government account, we look at what we call eligibility conditions.”
Before funds are dispersed, and at each subsequent request for disbursement, Ms Attademo-Hirt advised that officials must present justification of the use of the advance.
“Whether funds are (disbursed) or reimbursed,” she said, “in both cases there is monitoring and a request for accountability that happens on a project by project basis, and on a disbursement by disbursement basis. It depends on each project and the purpose, they have to justify how the purchase will contribute towards the project targets.”
At the project-level, a Project Execution Unit (PEU) is established within the government ministry that has the greatest stake in the project. Led by a project coordinator, the PEUs typically include specialists in finance, procurement, and project monitoring. These positions are identified by a competitive process run by the government, with the IDB to provide a non-objection on the selection of posts funded by the bank.
Ms Attademo-Hirt said: “The IDB provides a non-objection because resources of the loan are used to pay for that service. Another way of populating a PEU is with existing public servants in which case we don’t need to provide non-objection because there are no additional resources from IDB at least, or government may identify these persons and say we want this person to be the project manager or financial specialist or procurement specialist.
“If the IDB doesn’t fund that position with proceeds of an IDB loan we don’t have the non-objection right.”
She added: “Of course we do maintain a dialogue with government saying we still need people who are qualified, because if not the project implementation and execution suffers.”