Oarrs mess has left taxpayers up the creek without a paddle
In June 2020, Oarrs Inc was hired by the Government’s Office of the Tax Commissioner as a debt collection consultant, providing ongoing liaison between the Government and taxpayers or their authorised agents, with past due land tax accounts. This was a one-year contract expiring on June 30, 2021 and it has been reported that they recovered almost $13 million in overdue taxes. As detailed on the Bermuda Government’s website, Oarrs was to be paid 15 per cent of all land tax arrears recovered. Relationships often go sour, and this one certainly did.
Some history: Royal Gazette investigations editor Sam Strangeways has written on several occasions about this subject and back in April 2021 — upon learning about the existence of this government contract — questions began to arise regarding this company’s debt collector licence and whether this contract was put out to tender. The Royal Gazette was unable to find a record of Oarrs being issued with a debt collection licence nor evidence of a tender process.
During a Senate sitting in July 2021, our senators debated the The Debt Collection Amendment Act 2021, which removes a clause making it a requirement for licensed debt collectors to submit audited financial statements to the Debt Collection Authority for 2020, owing to the Covid-19 pandemic. At this meeting, questions were raised over whether unlicensed entities, including Oarrs, would be included in the exemption to submit its financials. At that time, The Royal Gazette reported that Lindsay Simmons, a government senator, said after a review it had been determined that Oarrs was not a debt collector and would be regulated under the Companies Act rather than the Debt Collectors Act. OK, fair enough. Then Ernest Peets, the Government Senate Leader, in apparent reference to Oarrs, also said: “There might be some confusion, a misunderstanding, that perhaps there is an organisation who is being unfortunately labelled as a debt collector who is actually not a debt collector who perhaps may be working as a consultant for the Government but not as a debt collector — as a licensed debt collector — those types of conditions are different.” ….. Well that is quite the “word salad”, but I think we get his circuitous point.
Fast forward to the present: as Ms Strangeways just reported in this newspaper, the unlicensed (not a debt collector) Oarrs, filed a civil writ against the Office of the Tax Commissioner in July last year, claiming the Government owed it almost $2 million for the tax collection services it provided under the contract. It was also revealed that the OTC’s defence to this lawsuit (wait for it) was that Oarrs committed a crime by collecting the tax debts without the appropriate debt collector’s licence, so its contract could not be enforced and was terminated.
Two government senators have said that Oarrs was not a debt collector and therefore did not need that particular licence, but now the OTC claims it was a debt collector and a licence was required? Then why did the OTC hire Oarrs in the first place? Was there any due diligence performed here?
It has now been revealed that in May of this year, the OTC has settled this lawsuit for an undisclosed amount, which of course, will ultimately be paid by us. Did we get a good deal? We will never know, but it is not unusual in these cases for interest and legal expenses to be added to the settlement amount. There seems to be a level of cognitive dissonance happening to some of our government employees and in this case, they cannot seem to make up their minds as to:
1, Whether the company they hired to collect outstanding taxes was a debt collector or something else
2, Whether said company requires a licence to perform this collection service
3, What the real definition of a debt collector is
4, Did the rules for tendering government contracts apply here
There is one thing that is abundantly clear to anyone who is paying attention, which is that our government administration continues to “leak” our tax dollars and I am quite sure that the eleventh finance minister, David Burt, the Premier, is going to need every red cent of that Travel Authorisation revenue — expected to be $22 million this fiscal year — to cover possible budget “blips” just like this one.
Once again, the wise words of one of my most admired economists, Thomas Sowell, come to mind:
“It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.”