The ill-fated Four Seasons hotel project, as well as Government’s $142 million investment in regional airline LIAT, are among a set of dubious transactions for which this country’s Auditor General Leigh Trotman is seeking answers.
In his 2015 report, Trotman also raised serious questions about a number of loans which Government made to various private entities in which the state happens to be the main shareholder in some instances. The loans included $4.6 million which was issued by the Public Enterprise Fund to Needham’s Point for construction of the Hilton Hotel, $2 million to Southern Golf which operates the Durants golf course, and the sum of $950,000 to Durette & Co Caribbean Limited, a window manufacturer which subsequently went out of operation.
Since the Needham’s Point loan was issued back in financial year 2014/15, the principal has risen to nearly $6 million. However, the Auditor General said no repayments have been made. Furthermore, there have been no efforts by Government to recover the outstanding amount.
He also explained that in the case of the Southern Golf, there was no loan agreement to speak of, while suggesting a write-off of the Durette amount-
Government’s support for the Antigua-based LIAT also came under heavy scrutiny. However, after carefully reviewing Government’s financial statements, the Auditor General said he was still in the dark about its investments in the carrier. He has therefore called for “full disclosure” on the $142,733,148 that has been pumped into the loss-making carrier as at March 31, 2015.
Equally difficult to come by has been information on the stalled Four Seasons hotel project. However, the Auditor General is seeking to get to the bottom of a $120 million debt, which was issued with a Government guarantee by late Prime Minister David Thompson back in 2010 after the project went belly-up.
That guaranteed debt was called during financial year 2013/2014 by the bankers and Government was forced to pay an amount of $124,329,766 which entailed principal plus interest to the lenders. However, while the amount was subsequently recorded by the Treasury as an accounts receivable, the Auditor General says no payments have been received to date.
He therefore wants answers on whether there might be a need for a write down or when or how this amount will be repaid, since it is also not clear what assets this advance is linked to.
Another questionable sum of $141,500,000 was issued in loans to the Barbados Tourism Investment Inc (BTII), with accrued interest of $19,351,206 as at March 31, 2015. Trotman pointed out in his report that no formal contract exists for the amount and to date no repayments have been received.
However, he said in a previous meeting with the management of BTII, the auditors were informed that this amount pertained to work carried out on behalf of Government. “This matter needs to be clarified and resolved by the relevant parties,” the Auditor General advised.
A similar situation exists with the Small Hotel Investment Fund where a loan in the amount of $35,528,362 (including interest) is yet to be repaid.
The report also raised questions about $765,749,759, which has been recorded by the Auditor General as “cumulative advances outstanding” as at March 31, 2015. The monies were not properly authorized but, in some instances, transfers were granted to recipients who simply did not have the money to repay.
The net effect, therefore, is that the official deficit would have been “understated” for the years when these transactions took place, Trotman pointed out.
As has been the trend in recent years, this year’s report contains a number of recurring themes of unauthorized transactions, misplaced funds, and blatant under-reporting by a number of state entities, altogether painting a pathetic picture of this country’s public sector administration.
In this regard, the Auditor General highlighted variances on several accounts, including $118,177,914 for pending lawsuits, which did not match the $116,305,080 submitted by the Solicitor General, resulting in a variance of $1,872,834.
There was also a sinking funds variance of $28 million, as well as incorrect classification of assets, which affected the paymaster’s pension account which ended up with a debit instead of a credit balance of $2.4 million.
The opposite occurred at other Government departments, including the Transport Board, where the accounts receivable ended with a large credit balance of $5.5 million.
One noticeable error and omission which the Auditor General took note of was a First Citizens’ Bank loan in the amount of US$25 million. There were also approved loans, which were not utilized in a timely manner. This affected commitment fees, in the amount of US$888,929 on a loan from the Caribbean Development Bank and US$266 023 on IDB loan funds.
In terms of unrecorded liabilities, Government is yet to bring to book the sum of $195 million owed to the University of the West Indies. There was a further $152 million in unrecorded Treasury Notes and Debentures, as well as $2.7 million in returned pension cheques and over $4 billion in unclaimed employee benefits.
The Accounts receivables were said to be overstated in the amount of $34 million.
Earlier, Barbados TODAY reported on $1.3 million in dishonoured cheques that were written to Government. According to the Auditor General, some Government departments also fell prey to the unsavoury business practice as a total of $32,263 in bounced cheques were issued by unnamed Government departments.