BLDC was owed $2.4m when review was ordered
The Bermuda Land Development Company was owed close to $2.5 million in arrears by a host of tenants and clients including political leaders, election candidates and prominent business figures as of September 2009, according to the companys former chairman.
Ed Saunders said in a written submission to the Public Accounts Committee that he and his deputy chairman Leroy Bean had to act to protect the publics money and that there was no conflict of interest over the $160,000 they were paid for a report on the BLDC.
The PAC has grilled Mr Saunders and Mr Bean over a consultancy arrangement they had with the company while they were directors. The arrangement was deemed a fundamental conflict of interest by Auditor General Heather Matthews in a special report earlier this year.
Mr Saunders added in his statement that the review uncovered serious lapses in efficiency and accountability and potential abuse of power.
Mr Saunders said the boards overriding concern was the state of the accounts receivables, which was $2,414,332.20 as of September 2009.
He said that in late November 2009, he demanded documentation and information on the companys debts and write-offs from the companys CEO, Andrew Swan.
His statement listed four groups of companies and their combined debts (see inset).
Of the 69 tenants with debts outstanding, three were government departments.
It reveals that just five companies were responsible for almost half of the total receivables. Another 47 clients owed BLDC a combined $355,859.57.
At all times it was the public monies we were concerned about and the further increases which would have incurred if we did nothing about it, Mr Saunders said. I must note that the cross-section of debtors to the BLDC were Ministers of Government, Opposition and Government candidates for parliamentary elections past and present, prominent business personalities and the like.
The statement added that they set up the companys own collections department and Mr Saunders and Mr Bean were directly involved in collections with the biggest debtors.
The statement goes on to say that $600,000 in debt was recovered in the first six months.
A great majority of the remaining clients have committed to a payment schedule, some have given up their tenancy and others were still in negotiations.
Mr Saunders claimed there were precedents for the roles played by himself and his deputy.
In 1996, under Leonard Gibbons, a former Minister with responsibility for the West End Development Corporation, then Wedco chairman Kit Astwood had performed similar duties when that organisation was in a state of disarray, his statement says.
Walter Lister, another former Wedco chairman, did the same in 2005, he added.
This I highlight, Mr Chairman, to show that the precedence has been set where chairpersons have provided services to the companies that has been consistently neglected by consistent Governments and Auditors General.
PAC member Mr Lister was also a BLDC board member and was part of the subcommittee that oversaw the review by Mr Saunders and Mr Bean and is reported to have encouraged the arrangement citing precedence at Wedco (see separate story).
He has recused himself from the PAC hearings.
Mr Saunders statement also contains an addendum of notes he sent to the Auditor General on January 27, 2011 titled, Items that should have been picked up by the Auditor Generals Report for the last three years.
Among those items were $6 million worth of work on the books which, Mr Saunders said, escaped the Auditor Generals attention, even though there is no work of that magnitude being carried out at the BLDC presently and the CEO cannot explain the figure of $6 million of outstanding or unfinished work.
Mr Saunders also said the Auditor General did not mention that the CEO had not presented a business plan or an operating budget for the last three years.
Nor did she note outdated financial policy and procedures for the company. This had not been done for some 13 years.
He added: There was no mention of a contractual arrangement with a company out of Atlanta, Georgia, for the design and redevelopment of the Marginal Wharf.
All through the minutes there is mention of the company entering into an arrangement with the company but there is no mention as to the cost of the contract and final approval by the board.
To date the CEO has spent more than $528,000 on the project and the project is six years behind schedule.
The Royal Gazette left several voicemail messages for BLDC CEO Mr Swan, but he did not return our phone calls. It is understood that he is ill and on indefinite leave.
The addendum notes add: There was no mention in any audit reports of a ten percent discount given to staff for the purchase of two of the refurbished cottages owned by the BLDC. Both staff members were senior members of staff.
One staff member (now resigned) who is the spouse of a Government Minister allowed their water bill to be in (arrears) up to $1,270, is now on a payment plan to reduce their arrears; ironically this person is now renovating their home to the tune of many hundreds of thousand dollars.
The Deputy Speaker of the House was taken to court for rental (arrears) to the tune of thousands of dollars. This person has not paid rent for over three years but continue to operate other business concerns. The courts found in BLDCs favour and now we are serving eviction papers.
Alfred Minors, who is the husband of Economy Minister Patrice Minors, and also known as Stuart Minors, was the BLDCs Director of Finance and Project Finance.
National Security Minister Wayne Perinchief was the Deputy Speaker at the time. He was a director of a company which rented bonded warehouse space at Southside for a Cuban rum import business.
When contacted, Mr Perinchief declined to discuss the matter.
I am not inclined to comment on statements attributed to Mr Saunders about what appear to be vague allegations; directed against individuals, to deflect adverse criticism of his administrative conduct whilst working for the BLDC, said Mr Perinchief.
Mr Minors has denied the allegations (see separate story).
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