AG drops bombshell

FRIDAY, JAN. 27: Deep fault lines in Government’s handling of taxpayers’ money have been exposed by its own financial watchdog.

Auditor General Heather Jacobs Matthews released a scathing report yesterday on the ‘misuse of public funds’, citing two matters, one of which stretches back to early 2009.

She concludes she can no longer rely on senior Government officials “to do the right thing”.

In response, Premier Cox, who is commended in one part of the report, listed a slew of actions taken to tighten financial procedures.

Deputy Premier Derrick Burgess took a different tack — accusing Ms Matthews of spearheading a witch-hunt.

“To suggest that any wrongdoing took place is outrageous,” he said.

Auditor comes out swinging

“A blatant disregard for the public purse and a lack of transparency and accountability at the most senior levels of Government.”

That is Auditor General Heather Jacobs Matthews’ damning conclusion after a probe into the funding of a civil action for conspiracy and defamation involving ex-Premier Ewart Brown and former Works and Engineering Minister Derrick Burgess. Two cheques purporting to be payments to the two — but which turned out to fabrications — were found in Government files in February, 2009.

Cabinet later approved the hiring of a firm of Canadian lawyers to sue a Canadian architect and a Bermuda Government employee for a total of $4 million in damages in the Ontario Superior Court.

Deplorable

“In my opinion, this entire situation is deplorable,” Ms Matthews writes in a 50-page Special Report on the Misuse of Public Funds, released yesterday. “The question to be asked is who will be held accountable — the answer is likely no one!”

But last night Premier Paula Cox described the legal action as a “legitimate action in the public interest”.

The Canadian firm was retained in the name of the Government, to be instructed by the “Premier or his designate”.

In May, 2011, the Auditor General asked the Ministry of Finance if any public money had been used to fund the action.

It was confirmed that the Solicitor General had signed an agreement with the Canadian lawyers in June, 2010.

Ms Jacobs Matthews was further told that $31,287 had been paid to the Canadian law firm to cover work up to the end of June, 2011.

Three months after Dr Brown stepped down as Premier, legal action began in Canada. The details of the January, 2011 claim list Dr Brown and Mr Burgess as parties to the action.

Ms Jacobs Matthews’ report added that in May last year, the Acting Solicitor General confirmed to the Works and Engineering Permanent Secretary that he had been instructed by the Acting Financial Secretary to “terminate the engagement of the firm”.

Ms Cox said: “The funding of the Ontario action by Government was, in the judgment of the Government, an appropriate course to follow in the interest of the Government, the country and Bermuda’s international reputation and in this regard.

Attack on Government

“We considered the funding of this action to be for a government purpose in that the personal action was the only means by which the government could take action against those responsible for essentially attacking the Government via its Ministers.”

Ms Matthews’ key concern is to what extent the public purse should have been used to pursue the matter in court.

Her report states: “In the absence of a response from the Attorney-General, the Ministry of Finance or the Ministry of Public Works (which authorized payments to the firm to date), it is not clear why Government has funded legal action in which Government itself has not been named.

“It is clear, however, that this personal matter has already consumed significant time and energy at the most senior levels of Government and at significant public expense.

“In my opinion, to cover-up an abuse of public funds behind the cloak of ‘legal privilege’ as opined by the Attorney-General is unacceptable and violates principles of good governance and transparency.

“In this case, where the fundamental financial rules which govern all civil servants have been blatantly disregarded at the highest levels in Government, appropriate sanctions should be applied including appearance before the Public Accounts Committee.

“This brings into question whether I as Auditor General can rely on information emanating out of Chambers and whether I have the confidence that Government officials at the most senior level will do the right thing. At this point, the answer is a resounding no.

“As a result of this denial of access to information, the option of having this matter decided in the courts has been considered.

Public opinion

“However, to avoid a lengthy and costly legal battle at public expense, I believe it best to leave the matter in the court of public opinion and to issue this report to Parliament and to the public.”

In a statement Premier Cox said the Auditor General had been given access to all the information she was entitled to.

She said: “The Attorney General is fully satisfied that the Auditor General has had access to and has received all information to which she is entitled in relation to the funding of this matter.

“These very serious allegations of corruption made against the then serving Premier of Bermuda as well as a present senior Minister, went to the heart of Government.

“Therefore the funding of this action was justified as being for a government purpose.

“Government subsequently took the decision to terminate its retainer agreement with the Canadian law firm Lax O’ Sullivan LLP on or about the 6 September, 2011.”