A report by the Auditor General has scolded Government for purchasing services from companies in arrears with payroll tax.

Former Auditor General Larry Dennis' report for 2007-8 names and shames the employers who, at June 30, 2008, owed more than $40,000 to Government in payroll tax remittances and were more than 90 days in arrears.

Among those listed are Guardwell Security Services Ltd. and Integrated Systems of Bermuda Ltd. Investor in People Bermuda is also listed in the report. Mr. Dennis criticised Government for failing to chase monies owed.

"For the Government and its public pension fund to be owed more than $51 million of taxes and pension contributions that are more than three months in arrears should be, in my view, a major concern for Government," he said.

"In most developed countries, taxation authorities react aggressively when employers fail to remit payroll deductions promptly.

"These amounts should be in Government bank accounts, reducing borrowing costs or providing investment opportunities."

After expressing concern in previous years, Mr. Dennis said the Ministry of Finance set out a policy not to undertake business with companies "persistently in arrears".

In his 2008 report however, he said: "It appears however, that all Government Departments are not adhering to that policy."

Mr. Dennis noted Government was "still doing business" with Guardwell Security Services Ltd., which had arrears of $308,000 in July 2007 and $380,000 in July 2008.

Despite these arrears, he said: "Government purchased more than $637,000 of goods and services from Guardwell."

Likewise, Integrated Systems of Bermuda Ltd. had arrears of $114,000 in July 2007 and $160,000 in July 2008, but between July 2007 and January 2009, Government purchased $139,000 of goods from the company.

As a result, Mr. Dennis recommended in the report that: "The Ministry of Finance should formally remind senior management in all ministries and Government-controlled organisations of their responsibility to comply with section 8.2 of financial instructions which, in effect, prohibits doing Government business with companies that are in arrears with their payroll tax and pension contribution obligations."

Among the other employers listed for payroll tax arrears are:

• Hamiltonian Hotel and Island Club ($596,920);

• C & N Construction ($426,584);

• Fine Touch Construction and Maintenance Ltd. ($410,836);

• Bermuda Accounting and Management Services ($254,270);

• Palmetto Palms Seniors Home ($165,622);

• Carlsen Phillip Barristers & Attorneys ($132,595);

• Somerset Bridge Recreation Club ($93,889);

• Browne, Scott and Associates ($78,891);

• Sunnyvale Nursing Home ($55,730);

• Southampton Rangers Sports Club ($49,063);

• Bermuda Taxi Radio Cabs Ltd. ($45,282);

• Investor in People Bermuda Ltd. ($44,321);

• BIU Industrial Union Taxi Cooperative Society ($42,289).

The total payroll tax remittances in arrears of all employers listed in the report is $10,311,147.

The Auditor General's report also lists those employers with pension contribution remittances in arrears.

The top ten, who at July 31, 2008 owed more than $40,000 to the Contributory Pension Fund in pension contributions and were more than 90 days in arrears were:

• Hamiltonian Hotel and Island Club ($255,879);

• Darrell Contracting Services (184,137);

• C & N Construction ($128,921);

• Guardwell Security Services ($102,415);

• The Village Carpentry Ltd. ($87,558);

• Beeline Transport Ltd. ($83,636);

• Pro-Active Management Systems Ltd. ($65,670);

• Brilliant Solutions ($61,362);

• Marvin Seaman ($59,960);

• Grotto Bay Property Ltd. ($57,916).

In total, $2,247,984 was owed to Government in pension contribution remittances.