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Water Corp Targets Saving 'Millions' Via Governance Reform

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Wide-ranging corporate governance reforms will save the Water & Sewerage Corporation “millions of dollars”, its chairman is asserting, while enabling it to “embrace a business-like” culture.

Adrian Gibson, pictured, told Tribune Business that the Corporation is “implementing” multiple anti-corruption procedures intended to address the numerous deficiencies identified in the recent Ernst & Young (EY) audit, with a focus on overhauling procurement and supplier dealings, plus the conduct of its own staff.

He revealed that all corporation workers, especially management executives, will be required to “make declarations” of any outside business interests - especially company shareholdings and ownerships - in a bid to avoid “conflicts of interest”.

An “employee manual”, setting out a “Code of Conduct” that corporation staff must abide by, is also being readied for distribution, addressing what Mr Gibson described as a decades-long deficiency.

Besides a “whistleblower” policy that is currently in draft form, the corporation’s chairman also promised enhanced scrutiny of all current and potential suppliers/contractors in a bid to eliminate the waste, inefficiency and mismanagement that has forced the state-owned utility to rely on up to $30 million in annual taxpayer subsidies.

Pledging to “limit the risk” in the Corporation’s vendor dealings, Mr Gibson said planned reforms included ‘piercing the corporate veil’ to determine the true beneficial owners of third-party suppliers and contractors.

Companies conducting business with the Corporation will be subjected to regular performance reviews and monitoring, and adhere to a ‘Supplier Code of Conduct’ - including making a similar ‘declaration’ to the utility’s staff when it comes to ‘conflicts of interest’.

Mr Gibson said the new procedures would boost transparency and accountability in the Corporation’s business dealings, and enable its customers and the taxpayer to gain better ‘value for money’ through a fairer, more efficient procurement process.

“I think these reforms will save us millions,” he told Tribune Business, “and foster an environment of greater accountability, while certainly heightening the thrust to embrace a business-like environment at the Water & Sewerage Corporation.

“We are implementing a number of new procedures at the Corporation. These guidelines will establish the governance template. This framework is designed to ensure procurement is consistently in accord with the Corporation’s policies and standards, and at all times must be transparent.”

The EY audit, tabled in the House of Assembly earlier this year, showed how relentless political interference in the Corporation’s internal affairs, combined with mismanagement and poor corporate governance, had resulted in the loss of millions of dollars.

Mr Gibson has made no secret of his ambitions to transform the Corporation’s culture into that of a private sector-driven entity, and views the planned governance and procurement reforms as a first step to combating the weaknesses identified by EY.

“There was much reference to conflicts of interest, so everyone from the Board of Directors down to new employees will have to make a declaration, particularly persons in management,” he revealed. This will require Corporation staff to disclose any and all outside business interests, in a bid to prevent contracts being awarded to companies in which they have an interest.

The EY report found that two senior members of the Corporation’s executive committee had failed to disclose their position as shareholders in a real estate developer, Infinity Enterprises Holdings, which was developing the Southern Dreams housing subdivision in New Providence.

It found that Cyprian Gibson, assistant general manager and head of the Corporation’s Family Island operations division, negotiated on Infinity’s behalf with one of Water & Sewerage’s vendors to perform construction work in that same subdivision.

The accounting firm added that Robert Deal, the Corporation’s deputy general manager and division head for New Providence operations, engineering and planning, eventually did disclose his shareholding in Infinity to former general manager, Glen Laville, in 2013, just before “internal approvals for the works to be completed at Southern Dreams were being discussed”.

However, the EY report found that Cyprian Gibson was also involved with another developer, Navy Lion Investments, which was behind the McAllen Estates subdivision. Cyprian Gibson was alleged to have described himself as the ‘subdivision engineer’, and again negotiated on Navy Lion’s behalf with a different Corporation vendor for the provision of construction services.

Adrian Gibson, meanwhile, added: “We are putting in place anti-corruption policies. The Corporation operates without an employee manual. I’ve had an employee manual drafted and prepared for distribution throughout the staff.

“The Corporation previously relied on its various industrial agreements with the two unions representing its staff, but every institution should have its own employee manual. That’s something that’s being done, and will be distributed to staff in short order.”

Apart from internal reforms, Mr Gibson said the other major focus is a comprehensive overhaul of supplier relationships and procurement. “We have developed a policy with respect to due diligence of vendors, knowing who is the true owner of these entities and companies,” he added.

“We obviously limit the risk by the focused due diligence efforts of the Corporation. Going forward, we’ll be thoroughly vetting and diligently reviewing any person or vendor before we make a decision. It mitigates and reduces our risk.”

Mr Gibson said the Corporation planned to centralise all reports and documents relating to vendor/contractor relationships, in a bid to properly track the progress and performance of their work, and monitor when these contracts were due for renewal.

He added that upgraded procurement processes, and standardised contracts, were also central to how the Corporation plans to conduct business moving forward.

“We’ve developed a supplier registration form. We’ve also developed a supplier ‘conflict of interest’ form, meaning all entities interested in conducting business with Water & Sewerage must provide such a form before supplying goods and services,” Mr Gibson said.

“They must conform with the Corporation’s conflict of interest policies. The Supplier Code of Conduct sets out how companies and persons conduct business with the Corporation in a manner that is consistent with prudent business practices.”

Mr Gibson added that an ‘Appeals Board’ will be established to hear the grievances of companies claiming they have not been treated fairly by the procurement process. The Corporation’s procurement activities will be overseen by three newly-created committees - Contracts and Infrastructure; IT; and Goods and Services.

“The procurement governance guidelines have been drafted and put in place to ensure such activities are conducted in an honest, fair, sustainable, diverse and transparent manner, and delivered through sustainable business decisions,” he told Tribune Business. Vendors will also have to provide proof of insurance, plus VAT, Business Licence and NIB compliance.

Payroll automation and improved document management, both relying on the use of technology, form another part of the proposed reforms.

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