The unanswered questions
Question over Govt credibility OBA
Government's credibility has been called into question, and the Island's reputation threatened, by the misuse of public money exposed in the latest report by Auditor General Heather Jacobs.
This is the contention of Opposition Leader Craig Cannonier, who said the behaviour exposed in a critical January 28 report presented a danger to jobs in Bermuda.
“Bermuda's good reputation is essential if we are to remain attractive to local and overseas investors, whose plans and activities generate jobs,” Mr Cannonier said.
“If people perceive the Government of Bermuda to be untrustworthy, they will not start a business, they will not build a hotel, they will not participate in the redevelopment of Hamilton's waterfront all things that create jobs and career opportunities for the people of this Country.”
The One Bermuda Alliance leader said Bermuda's “attractiveness to job-creating investment” had been damaged, and the Island's future endangered.
In her latest report, Heather Jacobs Matthews accused Government of using of public funds more than $30,000 to take on a Canadian law firm in 2010, on behalf of then-Premier Ewart Brown and former Public Works Minister Derrick Burgess.
The report said that the pursuit of a private defamation claim amounted to a personal expense.
In addition, Mrs Matthews uncovered payments of consultancy fees by the publicly-funded Bermuda Land Development Company (BLDC) to two members of its own board.
The report also exposed communications from Premier and Finance Minister Paula Cox to Deputy Premier Derrick Burgess, supporting the Auditor General's recommendation that the fees be repaid and suggesting also that BLDC board Chairman Edward Saunders and deputy Pastor Leroy Bean step down.
Mrs Matthews said the two had refused to vacate their positions, and that Mr Burgess “took no action in that regard”.
Mr Cannonier responded: “The Auditor General's report on misuses of public money reflects poorly on Bermuda.
“It highlights two instances in which the system was manipulated to move public money into private hands, and reports the Deputy Premier ignoring the Premier's directives to straighten things out at the BLDC.”
He added that Government's reaction to the report had deepened concerns within the OBA.
Mr Cannonier said Ms Cox and Mr Burgess had openly disagreed over conduct at the BLDC, and accused Government of a “shoot-the-messengers attack on the Auditor General and anyone who voices concerns”.
“These reactions call into question the credibility and the unity of the Government,” he said.
Premier Paula Cox refuses to answer queries on the Auditor General's Special Report
By Sam Strangeways, –Ayo Johnson –and Tim Smith
Premier Paula Cox is not answering questions on the Auditor General's Special Report on the Misuse of Public Funds “at this time”, according to her spokesman.
The Royal Gazette has sent a raft of questions to Finance Minister Ms Cox, along with other politicians and officials, since the damning report came out last week.
The majority of our queries have gone unanswered and when we asked again for responses yesterday, Ms Cox's spokesman Scott Simmons said: “There will be no further reply from the Premier at this time.”
The report from Auditor General Heather Jacobs Matthews highlighted two instances where taxpayer dollars were inappropriately spent.
In one case, more than $30,000 was used for the private legal fees of former Premier Ewart Brown and Deputy Premier Derrick Burgess.
The pair were named as plaintiffs in a civil suit for defamation and conspiracy which sought $4 million in damages from Canadian architect Sam Spagnulo and Bermuda Government's Chief Architect Lawrence Brady, the brother-in-law of Royal Gazette editor Bill Zuill.
The case arose after two cheques purporting to be payments to Dr Brown and Mr Burgess, in relation to the new police and court building, were discovered in the files of the Works Ministry.
The Attorney General's Chambers entered into an agreement with a Canadian law firm to pay the legal fees but Government ended the contract after complaints from Mrs Matthews.
The Auditor said in her report that information about the legal case was withheld from her, in breach of the Audit Act 1990. Government insisted she “received all information to which she is entitled”.
The other matter involved the payment by the Bermuda Land Development Company (BLDC) of more than $160,000 in consultancy fees to the chairman and deputy chairman of its own board.
Premier Paula Cox was alerted to the payments in December 2010 and recommended to then Works Minister Mr Burgess, who was responsible for the BLDC, that the two directors resign and repay the money.
They refused to step down and Mr Burgess “took no action” to remove them, according to the Auditor's report.
Ms Cox dissolved the BLDC board in May 2011.
We asked the Premier on Friday:
n Who would have benefited from the $4 million damages being sought in the false cheques legal case;
n If there was any agreement with the two Ministers that any damages received would go to Government, as it was paying the legal expenses.
Ms Cox did not respond. We also asked whether the Attorney General's Chambers had been instructed to draw up the contract with Mr Burgess and Dr Brown named as plaintiffs.
The Premier did not answer the question but referred this newspaper to the Auditor's report, which states that the Attorney General was instructed by Government to instruct Canadian attorneys to commence proceedings.
The Premier's spokesman Scott Simmons suggested questions about the legal case be put to Attorney General Kim Wilson.
Sen Wilson said last night: "I have now had the opportunity to review this entire matter and I can confirm that there is no record of an agreement for damages to be paid back to Government by any party. This notwithstanding, I am advised that discussions relative to the matter were ongoing."
Another set of queries was posed to Ms Cox by us on Monday. We asked:
n Why she didn't inform the public of her reasons for disbanding the BLDC board in May last year;
n If she continued to have faith and confidence in her deputy Mr Burgess;
n Why she didn't ask Mr Burgess to resign when he ignored her request to ask the BLDC chairman and deputy to step down;
n If, in hindsight, she would do anything differently in response to the issues raised by the Auditor General regarding the BLDC;
n How she would respond to Opposition leader Craig Cannonier's claim that her failure to report the BLDC matter to taxpayers demonstrates a lack of commitment to transparency.
Another spokesman, Senator David Burt, replied on Monday evening: “The Premier has already addressed this issue. Her statement released on January 26, 2012, is a matter of public record.”
He did not provide any further response when it was pointed out to him that the January 26 statement did not address the specific points raised in the questions.
A further query on whether the Premier had plans to make BLDC more transparent received no answer.
The Premier is not the only Cabinet Minister who has failed to respond to questions from this newspaper about the Special Report.
Mr Burgess issued a brief statement on Thursday accusing Mrs Matthews of being on a witch hunt and insisting that the BLDC board did nothing wrong.
But he did not give answers to a series of questions we posed on Monday. We asked:
n Why he did not remove BLDC chairman Edward Saunders and deputy Leroy Bean from their positions when asked to by the Premier;
n What, in hindsight, he would have done differently with respect to the issues raised by the Auditor General about the BLDC;
n If he supported the recommendation that Mr Saunders and Mr Bean return the consultancy fees;
n If he agreed that the paying of consultancy fees to the two men was wrong because of a conflict of interest and, if not illegal, at least unethical;
n Why he didn't tell the Premier about authorising payments to the BLDC board;
n If there was a rift between him and the Premier;
n If Government would seek to recover the BLDC money.
Transport Minister Mr Burgess refused to speak to The Royal Gazette about the matter when approached at a press conference on Monday.
Instead he launched into an attack against this newspaper, referring to it as the “enemy” and himself as the “victim”.
When told he was being offered the opportunity to tell his side of the story, he said the paper was controlled by a small group of people who were hostile toward him regardless of the reporter's intentions.
Yesterday, we e-mailed Works Minister Michael Weeks to ask if he could confirm that repayment of the consultancy fees to BLDC was being pursued and what action the Ministry had taken to recoup the cash.
We also sought his views, as the Minister responsible for the quango, on whether it should be a more transparent and accountable organisation and how this could be achieved. We heard nothing back by press time.
PLP backbencher and current BLDC chairman Dennis Lister did not respond to similar questions or to our requests for various documents, including:
n BLDC's new financial policies and procedures;
n A list of all current consulting contracts that BLDC has and the tendering process that took place for each;
n BLDC's most recent annual report and information on the budget for 2011/12;
n A copy of the 2010 report which Mr Saunders and Mr Bean were paid to produce into the workings of BLDC;
n A copy of BLDC's bylaws.
n A copy of BLDC's code of ethics and a copy of the newly revised code which is under review by the board.
A Works Ministry spokesman said we could access any documents relating to BLDC that had previously been made public. “Everything else is private to the company,” he added.
The Base Lands Development Act 1996 requires the BLDC to produce an annual report and financial statements each year, which then have to be tabled in the House of Assembly by the responsible Minister.
The clerk to the House said yesterday that an annual report was not tabled between February 13, 2009 and July 2011 or after the House reconvened in November last year.
We asked her to check when the last report was tabled but did not receive an answer by press time.
Government Estates Minister Michael Scott, who was Attorney General during the period when Mrs Matthews tried to obtain information on the legal fees case, declined to comment on his role when contacted last week.
He said: “The formal response of the Ministry of Justice is set out starting at page 37 of [the] report. Any additional or separate response to our official response is not appropriate.”
We asked Government Estates permanent secretary Robert Horton, who was PS at the Works Ministry prior to April 2011, to respond to the Auditor's report.
He said: “The matters relating to the Ministry of Works and Engineering (restyled the Ministry of Public Works in November 2010) raised by the Auditor General in her December 2011 Special Report on the Misuse of Public Funds have been exhaustively addressed by that Ministry.
“I therefore offer no further observations on that subject.”
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