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Unlicensed debt collector recovers $13m in land tax

An unlicensed debt collection company recovered almost $13 million in unpaid land tax for the Government – and is likely to be paid $1.9 million in return.

Oarrs Inc collected the money after it was hired as a debt collection consultant by the Office of the Tax Commissioner last June, without the usual tendering process.

Tax commissioner Derek Rawlins shared information with The Royal Gazette about Oarrs in response to a public access to information request.

He said $12,717,099 was recovered by the company between September, 2020 and April this year and that the company had so far been paid $99,826.

The contract Oarrs had with the Government stated it would receive 15 per cent of all land tax arrears recovered.

The Government is still owed $70.9 million in land tax, with $57.2 million of that more than 90 days in arrears.

Mr Rawlins said the “catastrophic” Covid-19 pandemic meant the Government expected a “major decrease in tax revenues” at the same time that it was providing a “huge outlay of funds” in the form of unemployment benefits and payroll tax concessions for hotels, restaurants and bars.

He wrote: “Because of the time involved in using the open bidding process, it would have therefore been impractical … there was an urgent need for competitive negotiations for these services.”

He said his office wrote to the Office of Project and Procurement Management asking to engage in competitive negotiations with Oarrs and professional services firm PwC.

The contract with Oarrs then began on July 3, 2020, according to Mr Rawlins, and the company provided monthly reports on its progress.

The Royal Gazetterevealed in April that the company was awarded the deal without applying for or receiving a debt collection licence, despite a law which came into force at the start of 2020 requiring one for anyone “pursuing and collecting a debt” who is not the creditor.

Our articles prompted the Department of Consumer Affairs to launch an inquiry into how Oarrs was awarded the contract, as well as a review of the agreement by the Ministry of Finance.

The outcome of those inquiries has not been made public and there was no response to a request for comment from Government yesterday.

Consumer Affairs confirmed yesterday that Oarrs was not one of the four companies licensed to act as a debt collector.

The licensed companies are JSM, Bermuda Credit Association, Amicus and Bermuda Debt Collection.

MPs approved legislation on Friday which appeared to exempt licensed debt collectors from having to submit audited financial statements to the Government for 2020.

Home affairs minister Walter Roban said they would only be required to produce financials for 2021 and subsequent years under the Debt Collection Amendment Act 2021.

Opposition MP Scott Pearman queried the need for the exemption during debate on the bill.

He argued that the original legislation in 2018 envisaged it was “best practice” for financials to be submitted so “why waive the need to comply with best practice?”

Mr Pearman did not name Oarrs but referred to an entity “which was for a period, unlicensed, despite being required to be licensed”.

He said: “So there is a bit of a track record here with at least one red flag and so therefore when something is being done which denies proper oversight and scrutiny … that doesn’t seem like the best approach …”

Mr Pearman added: “I am not suggesting anything untoward.”

Mr Roban insisted that though the word “exempt” was used it did not mean that collectors licensed in 2020 would never have to file their financials for last year.

Mr Roban said auditors would still review debt collector’s books for 2020 “in any event” when the statements were filed this year.

The Deputy Premier added that collectors licensed last year would simply “be given more time” to get their books in order.

The bill may go before senators tomorrow.

Mr Pearman said yesterday: “It is certainly curious that the Government has decided to exempt the debt collection companies from the legal obligation to produce their 2020 accounts. This is a surprising thing to do.

“Even with the complications from Covid, the sensible thing would have been for the Government to allow the debt collection companies more time to disclose their 2020 accounts.”

He queried why it had instead gone to “all this trouble” to waive the collection companies’ disclosure obligations for last year.

The shadow minister for legal affairs accused the Government of having a “disregard of proper due diligence” which gave the public a bad impression and was “all very strange really”.

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Published July 06, 2021 at 8:00 am (Updated July 06, 2021 at 11:05 am)

Unlicensed debt collector recovers $13m in land tax

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