Government will be updating the Criminal Code against theft and fraud during this session of the House of Assembly, the Premier announced last night.

Meanwhile Government's Internal Audit Section has been re-established while the Accountant General's Department is pushing towards Electronic Data Interchange (EDI), cutting down on the risk of cheque fraud.

Responding to concerns raised by Auditor General Larry Dennis in the media, Premier Alex Scott said last night he wanted to hear what Mr. Dennis had to say.

In his Annual Report into Government's accounts for 2003/04, the Auditor highlighted four main concerns: late financial reporting, failure to address audit recommendations, pensions contributions and taxes in arrears, and unusually strong concerns about fraud and misappropriation of funds.

Lax internal controls are creating an environment where fraud can thrive, he said, voicing worry that there may be a “growing culture of opportunism or dishonesty” and noting that the amount of fraud uncovered in recent years is excessive.

Speaking during a VSB interview on Monday night, Mr. Dennis also said that he could never be happy with a Government which took the position that so long as an Act was not illegal, it was “ok”. “I do not accept that position,” he said.

Last night Mr. Scott responded: “If Mr. Dennis has evidence of any criminal activity I would be pleased to meet with him or to receive a letter from him, or for him to report the matter to the Commissioner of Police.” Mr. Dennis has on at least two previous occasions handed over files to the Police, after conducting audits into the Bermuda Housing Corporation and regarding the validity of the $700,000 performance bond issued into the second senior school construction project on Berkeley Road.

Last night the Premier continued: “Similarly, I would be pleased to receive any evidence Mr. Dennis may have to support his assertion that this is a recent phenomenon.” In his report, released to the public on Friday, Mr. Dennis has listed five instances of apparent or alleged fraud which have already been made public knowledge.

“For so many to be detected in such a short period of time is more than occasional. It is excessive,” he writes. “And because it is generally agreed that most misappropriations and frauds are never detected, there may well be others.”

Government is moving to plug the leaks and address “what Mr. Dennis extravagantly describes as the ‘collapse of the internal control system',” Mr. Scott promised last night.

Significantly, those moves include bringing forward amendments to the Criminal Code during this session of the House of Assembly. The amendments will strengthen the Criminal Code's provisions in relation to theft and fraud by criminalising certain fraudulent conduct and creating new offences.

To do so, Government will incorporate the United Kingdom's Theft Act into Bermuda's Criminal Code, including:

obtaining money transfer by deception

obtaining pecuniary advantage by deception

obtaining services by deception

evading a liability by deception

making off without payment

false accounting

suppression of documents (by, for example, concealing, destroying or defacing the document, and with a view to gain for himself or another with intent to cause loss for another)

dishonesty retaining a wrongful credit

Internal controls which are in place were also outlined in Government's press statement last night:

the Internal Audit Section, testing the effectiveness of internal controls in all Government Departments including that of the Accountant General, has been re-established, while EDI is hoped to be in place for payments to local and overseas suppliers by July, 2005.

One detective control which failed in the case of a $1.9 million appropriation highlighted in the Auditor's report was the timely completion of bank account reconciliations. The Accountant General has addressed this by ensuring that all bank statements are sent directly to the Bank Reconciliation section to prevent them being intercepted or altered.

Reconciliations are prepared monthly and outstanding items are investigated. A continuity schedule is maintained which details the status of the reconciliations.

Bank reconciliation clerks also have account inquiry access to the on-line banking system, allowing for more timely completion of the reconciliations.

“The Government is determined to address any matters deemed inappropriate by the Auditor General or identified through our own self-assessments,” the Premier concluded. “We take them seriously and will continue to be resolute in resolving these matters for the good of our country.”

Further questions regarding the proposed legislation, the Auditor's concern that his recommendations are not being implemented by Government, what steps are being taken to ensure that controls are being enforced, and the Auditor's stand against the idea that actions are acceptable so long as they are not illegal were sent to a Government spokeswoman last night.

However a response could not be received by press time and The Royal Gazette was unable to speak directly with the Premier, ensconced in Cabinet, yesterday.