SUNDAY, JULY 22: In taking note of the Public Accounts Committee (PAC) report tabled Friday July 20th, 2012 by the Standing Committee on the Public Accounts, the Premier and Finance Minister the Hon. Paula A. Cox, JP, MP stated, “I acknowledge the work of the Public Accounts Committee in addressing items of concern relating to the Department of Tourism (BDOT) and operations and governance of the Bermuda Land Development Company (BLDC) during 2010.

“The Public Accounts Committee provides an important form of external oversight over the financial affairs of the Government. Unfortunately, there is usually a significant time delay between the events reported in PAC Reports, and the actual tabling of these reports.

“While media reporting of the PAC Report conveys that these issues have just occurred, this is not the case. For example, the events being reported on in this particular report, the provision of tourism advertising by the Bermuda Department of Tourism (BDOT) and operations and governance of the Bermuda Land Development Company, occurred in 2008 and 2010 respectively. Accordingly more than four and two years have lapsed since these events actually occurred.

“The reality is that very often Government officials or boards of public sector entities – who have the fiduciary responsibility for their own accounts – have taken action already to address apparent weaknesses or to make enhancements to financial systems and controls. Therefore it is important to note the changes and corrective steps taken to address any deficiencies noted in the recent PAC Report.”

Issues relating to the provision of tourism advertising by the Department of Tourism (BDOT) were reported on in the Auditor General’s Special Report for the fiscal year ending March 31, 2008. Since this time the Department of Tourism has reviewed the initial Report of the Public Accounts Committee on this matter and have submitted their replies to the Ministry of Finance, which were included in the Minister of Finance’s formal response to this PAC Report. This report was tabled in the Legislature in 2010.

Since this time, much has been done to significantly enhance procurement across the Public Sector. The Office of Project Management and Procurement (OPMP) was established in 2011 to act as the Government’s centre of excellence for procurement and project management related matters.  From the appointment of the Interim Director in June 2011, the office has undergone a complete restructure, designed to become the Governments center of excellence for all project and procurement related matters.

To ensure transparency, consistency and objectivity in the tendering process all contract awards must be vetted and signed-off by the OPMP before proceeding to Cabinet. Due to this transformation in procurement I can confirm that the provision of all tourism advertising by the Department of Tourism (BDOT) have been procured in line with the standards required by the OPMP and Financial Instructions.

It should also be noted that the draft Financial Instructions and Procurement Code of Practice regulations which include relevant elements of the Good Governance Act 2012 are nearing completion and will be forwarded to the Attorney General's Chambers for drafting and Gazetting.

Training and briefing of all public authorities and accounting officers will commence once the regulations have gazetted. Interested vendors will also have the opportunity to attend workshops to explain the Procurement Code of Practice and related procedures.

Finally, since the events contained in this PAC Report, the Government has amended the Employment Act 2000 to protect “whistle-blowers.” Accordingly, an employee may now disclose information concerning unlawful activity without the fear of being unfairly dismissal by their employer.

The Government recognises that it is important to remind, Permanent Secretaries and Heads of Departments of their responsibility to exercise the highest standards of financial leadership within the organisation for which they are responsible. To this end in June 2012, the Cabinet Office sent an open letter to all civil servants reminding them that as public servants, they are the gatekeepers for good governance and the protection of public assets and that they may not allow anyone to force them, or to persuade them into an action that is contrary to law or best practice.

Premier Cox noted, “As previously advised, the PAC Report on the operations and governance of the Bermuda Land Development Company during 2010 follows on from actions that I took in my capacity as Minister of Finance when these same matters were brought to my attention in December 2010, more than a year ago.

“I commissioned the public accounting firm KPMG to conduct a review of BLDC governance and related party services and internal controls, and to make recommendations for improvements. The review included an examination of:

• BLDC bye-laws and other governance polices;

• Procurement policy that was in place in 2010 and the testing of 40 procurement files;

• Payments made to Saunders Maintenance Ltd.;

• Whether the payments were in compliance with relevant BLDC policies and leading practice;

• The workings of the Contract and Tender Committee; and

• Internal financial systems and related procedures.

“The findings and recommendations of the KPMG review were accepted by the Ministry of Finance. As a consequence, a Special Meeting of BLDC was convened in May 2011 where the old directors were replaced by a new Board of Directors. Also in May 2011, the responsibility for BLDC was moved from the then Minister of Public Works to the Minister of Environment, Planning and Infrastructure Strategy.

“The outstanding items relating to BLDC were flagged for action an aggressive agenda for action and a new direction was committed to by the new Board.”

In closing Premier Cox said, “I wish to make it abundantly clear that I, as the Minister of Finance take this responsibility very serious and have undertaken a commitment to continually improve Public Financial Management across Government and to enhance our governance framework. I look forward to responding to the latest report of the Parliamentary Standing Committee on the Public Accounts as soon as possible.”