Public officials violated the rules on the spending of taxpayers’ money so often that it became the “norm for which there are no consequences”, according to the latest report from Auditor-General Heather Jacobs Matthews.

The Island’s independent fiscal watchdog said the Bermuda Government’s own official financial instructions were regularly disregarded between 2009 and 2012.

She uncovered $78.8 million worth of contracts in 2010 and 2011 which were not put out to tender, including $18.1 million in the now-defunct Department of Tourism.

In 2010, she found a failure to comply with financial instructions, mainly involving the Ministry of Public Works, in relation to a number of capital projects worth more than $35 million. There was $5 million worth of spending across the government in 2010 without signed contracts or agreements.

Pointing out that the instructions exist to “ensure that public money is managed effectively for the intended purpose”, Mrs Matthews said those who signed off on spending without following the rules “should be held accountable for breaches of compliance”. She said her office requested documents to support the spending of $35.5 million on capital contracts and purchases but there were no such documents for $5.2 million of the total figure.

“Of the remaining $30.3 million, many failed to comply with the applicable purchasing and approval standards,” Mrs Matthews wrote. “The majority lacked the required approval of Cabinet, did not have agreements or contracts and/or did not follow the basic tendering procedure.”

Her report reveals that millions of dollars were spent without the prior approval of the Cabinet, even though financial instructions require all contracts above $50,000 to get such approval.

“During 2010, approximately $14 million of expenditures tested did not have the required prior Cabinet approval,” Mrs Matthews said. Unapproved spending included:

• $1.8 million on the commercial courts and Ministry of Finance renovations;

• $1.6 million on a maintenance and stores building;

• $1.4 million on sand and rock;

• $950,000 on renovations at the Department of Human Resources; and

• $902,000 on creating a new government laboratory.

The Auditor-General said the tender process for the commercial courts project was compromised, with the contract eventually going to a bidder who had been initially disqualified due to an invalid application.

The permanent secretary (PS) — who is also the accounting officer for capital projects — confirmed to Mrs Matthews that the Public Works Minister approved the bid without senior Works and Engineering staff getting to review any of the bids and without prior Cabinet approval.

Another contract worth some $900,000 — for the new central laboratory — was negotiated “with the knowledge of the PS”, rather than tendered.

Mrs Matthews described numerous cases in 2010 and 2011 which violated the requirement for prior Cabinet approval.

She also detailed how significant contracts were not tendered and millions of dollars were paid out without contracts being signed

She said: “It is evident that the policies, procedures and rules pertaining to capital expenditures are being violated to such an extent that it has now become the norm for which there are no consequences.

“Compliance with the required procedures for the procurement of goods and services reduces the risk of non-performance, fraud and misappropriation.

“Persons with signing authority should be held accountable for breaches of compliance of the relevant financial instructions and rules.”

“Where appropriate, the existing penalties for not complying with these policies, procedures and rules should be enforced.”

Bob Richards, the Minister of Finance, said on Monday that the public had “every right to be upset” about the revelations in Mrs Matthews’s report, which documents the results of audits of the Consolidated Fund for the financial years 2009-10, 2010-11 and 2011-12, when the Progressive Labour Party was in power.