Auditor General Larry Dennis talks about his latest hard-hitting judgment on Government's financial affairs and reflects on his arrest...

Another year, another damning Auditor General's report.

Larry Dennis's hard-hitting exposures of Government financial mismanagement have become one of the fixtures of the political calendar.

This year was no different as he catalogued a host of concerns including $485 million in public spending unaccounted from a range of Government entities, nearly $50 million in taxes and pension payments from companies uncollected and across-the-board failure among senior officers to provide audited financial statements and information in a timely manner.

Half of 42 audits in 2007 receiving 'qualified' or 'denied' opinions because information deficiencies prevented auditors from rendering an opinion and Mr. Dennis complained about Government continuing to do business with companies guilty of failing to pay taxes and pensions, despite the official policy.

While some in the political world find his reports riveting, he realises nobody in the street is interested in the importance of consolidated financial statements.

But he said ordinary people should take note — Government laxness in ensuring that companies paid over pension contributions they took from employees was a time bomb which would could prove catastrophic down the line.

"People have to wake up," said Mr. Dennis who urged people to go to Social Insurance for a print out to check what deductions had actually reached Government.

Government can then go after the company which has not handed them over.

"If they have been paying for 20 years, they need to make sure they have been acredited for it. And they had better start doing it now.

"That is going to be the big impact on most people. All those unpaid premiums mean someone out there is not being covered."

And Mr. Dennis acknowledges the man on the street won't immediately see the impact on his life of incompetence or corruption within Government.

"It is going to come so gradually that he is not even going to notice it. He is going to notice it when Government needs more money to operate with — licence fees, insurance premiums and payroll tax will go up.

"The landlord will see his land tax going up and the person on the street won't notice until his rent goes up and he was already complaining about rent.

"The problem is everyone sits back and watches others wiggle at the end of the hook. They start screaming when it affects them."

While he might be the object of derision by certain members of the PLP, he says he was equally forthright in his criticisms of the United Bermuda Party in their time in power.

And he wryly notes that Oppositions are champions of Auditor Generals but become decidedly less keen when they become Government.

He's seen it all. Perhaps the only difference in his three decades in the job has been the increasing keenness of politicians to drag him into the fray.

Things reached a head one year ago when he spent the night in jail after a Police raid in the desperate hunt for a missing Police file on the Bermuda Housing Corporation investigation.

Breaking his silence on that for the first time, Mr. Dennis said the swoop on his offices had caught him by surprise.

"Although the Governor did try to warn me I guess. He just said it's a serious situation and he did say the law appears to say you have to give it back as it's an investigation."

Asked if the Governor should have done more to protect the Auditor General, Mr. Dennis said: "I think he should have asked for it to be decided by the courts."

Around half a dozen officers were involved in the daylight raid. "It was extremely upsetting."

However, Mr. Dennis said his chief concern was for his staff.

"Not only wasn't it the fight of my staff it, was not the fight of those who were seconded here — to be part of a lockdown.

"They threatened to keep them here all night — some of them had children at home.

"They said they weren't going to take the documents, they just wanted to see them. But my lawyer did say to me that if they are going to see them they are going to take them."

And so it proved.

Mr. Dennis was interviewed at the Police station and then Police HQ before being taken back to the Police station to be locked up over night.

"They said they had no leeway, they had to do it. I told them it was wrong.

"The interviewers were on the phone with someone in the background giving them instructions what to do, I think it was the Commissioner. I think he was being used.

"I said in my report I thought it was a political process."

"The problem was they had made an assumption I was the distributor of information rather than a receiver and I think they were out to get me for that.

"But no one received information from me. I didn't read much of it myself and nobody else had access to it."

Mr. Dennis, who has been Auditor General for 30 years, has always suffered political barbs but he believes the climate has got worse.

"For 20 years I might have been attacked professionally and the recommendations ignored. But I was never attacked personally."

But when he and his staff were booted out of their office and put into an unrenovated shell of a building he felt things had taken a turn for the worse.

"I am sure that was illegal. I was personally attacked during the election and I think I am still being personally attacked on the radio."

It won't, of course, stop him from saying what he thinks and laying it out in the most direct way possible.

While financial managers within Government might find him a pain he says they would be wise to listen, if only for self preservation.

"People in charge need to ensure their controls systems are adequate and operating because it actually protects them in an environment where there could be accusations of misspending."

Without it they are exposed. "These executives don't appreciate the danger they are exposing themselves to. If someone wants to get rid of you they can throw these accusations at you."

But at the moment he believes top management aren't being held accountable for anything.

"You see some bottom ones getting relieved or whatever but the accountability doesn't go up the chain. We really have to come to grips with that."

He said top accountants were taking the salaries but not living up to the job.

"It is one thing having late accounts but when you don't even have the documents for them four years later, the chance of uncovering any dishonest behaviour is virtually eliminated."

Mr. Dennis conceded Government's workload was increasing, standards were higher.

"And I just don't think the people around and the systems can cope with it.

"Right now I don't think the people in place who have been there for ten or 15 years are the solution right now, because if they were they would have had it solved or reports or recommendations in about how this relationship can be solved.

"I don't like going to service providers, but if that is the only solution to the problem? Often it is not.

"But I don't think right now people within the civil services are the solution."

He has even gone so far as to urge the consideration of the outsourcing of medical and even pension funds.

For politicians taking the heat from Mr. Dennis but wanting to change things it is a tough one.

They cannot get too involved because under civil service protocol Ministers can't micromanage tasks of staff but must delegate the top civil servant — the Permanent Secretary — to fix problems.

Mr. Dennis said Ministers should set measurable output measures for their Permanent Secretary who would then delegate the targets to the managers beneath.

He doesn't believe performance-related pay will improve matters as the Government system wasn't sophisticated enough to collect the information on who should get bonuses.

Indeed his latest report shows how the National Drug Commission, prior to its demise, handed out $81,000 of merit awards in 2004 without performance appraisals for eight staff.

And he said there was no documentation supporting bonuses of $21,000 paid to both the CEO and the Prevention Officer.

He also found a severance payment paid to a former employee was double the maximum required for payments by the Employment Act.

The NDC section is just one of many targets of severe criticism about the financial management in Mr. Dennis's 255-page report.

Despite a somewhat frosty reception to the report from Finance Minister Paula Cox, Mr. Dennis does believe that she is trying to reverse the malaise.

"I think this Minister of Finance has provided a lot of resources throughout the civil service but what has happened is I think these controllers have been recognised by Permanent Secretaries as a great source of information.

"A lot of time is taken up with management analysis. What they were originally hired for was the accounts, to get them all correct but that is on the backburner. I have asked for an analysis but haven't had one."

Ultimately it's the voters who really need to act as a brake on Government gone wrong, said Mr. Dennis.

"This is their country, if they are happy with it, people get the Government they deserve. It is going to affect them at some point.

"I am not going to tell them to get up and start waving placards.

"They need to be more active on pushing on the pensions. If people are not doing their job they should make it known at the polls.

"They really need to make sure we have good Government, honest and fair."