Minister wanted officials fired - why did they stay?

FRIDAY, JAN. 27: It was a “fundamental conflict of interest” for a quango’s top two directors to be paid $160,000 in consultancy fees for reviewing their own operation, according to the Auditor General.

In a report published yesterday Heather Jacobs Matthews said the actions of Bermuda Land Development Company’s chairman and deputy chairman represented “a breach of their fiduciary duty”.

But last night Derrick Burgess, the Minister who was responsible for the BLDC at the time, rounded on the Auditor General, accusing her of a “witch-hunt”.

He said the actions of the BLDC were within the bylaws of the company and complied with the Companies Act 1981.

Minister Burgess said: “The Auditor General is also in possession of the legal opinion from Trott and Duncan as well as an opinion from KPMG — both of whom said that the actions taken by the BLDC Board were entirely legal.

“For the Auditor General to think that she is above the law is shameful. It seems as if Ms Matthews is on a personal witch-hunt and to suggest that any wrong doing took place is outrageous and clearly an attempt to malign the integrity of those implicated in her report.”

In the Special Report on the Misuse of Public Funds the Auditor General states that by the end of December 2010, a total of $160,230 had been paid to the Chairman and Deputy Chairman — of which $78,390 was not formally approved by the Board.

Ms Jacobs Matthews said: “The consultancy arrangement put both the Chairman and the Deputy Chairman, who actively participated in overseeing the activities of the Company, in a fundamental conflict of interest.

“The actions of the Chairman and the Deputy Chairman clearly represented a breach of their fiduciary duty.”

According to the Auditor General, concerns were raised about the conflict of interest at two Board meetings.

Her report states: “On December 30, 2010, the Minister of Finance as a shareholder of the Company contacted the Minister of Public Works (formerly Works & Engineering), the Ministry’s Permanent Secretary and the CEO. The Minister of Finance supported the Auditor General’s recommendation that the consultancy fees be repaid to the Company. 

“The Minister of Finance also recommended that the Chairman and Deputy Chairman vacate their positions with immediate effect. The Chairman and the Deputy Chairman refused to vacate their positions and the Minister of Public Works took no action in that regard.

Consultancy roles

“On February 7, 2011, almost a year after commencement of  consultancy services, the Permanent Secretary of the Ministry of Public Works wrote to the CEO to confirm (retroactively) that the Minister of Works & Engineering had authorized the Company to engage the services of the Board’s Chairman and Deputy Chairman:

 a) to carry out a review of the finances and overall management of the Company and to complete and submit such review to the Minister of Public Works by April 2010; and

b) to manage the Company during the period of September 21 to December 5, 2010, during the CEO’s absence.  

“It is interesting to note that this direction, like many others issued by the Minister of Works & Engineering, was not submitted to the Minister of Finance for approval as required by the legislation.”

On April 1, 2011 the Premier changed the responsibility of the BLDC from the Minister of Public Works to the Minister of Environment. And just over a month later at a Special Meeting of the company the Board was disbanded and a new one established.

Ms Jacobs Matthews called on the BLDC to take steps to recover the consultancy fees and said the company’s code of ethics should be updated to make it applicable to its directors.

Mrs Jacobs Mathews said: “The Premier/Minister of Finance is to be commended for taking prompt action in these matters once brought to her attention by the Auditor General.

“However, despite the current Board’s reported action to recover the consultancy fees, at the date of this report the amount remains unpaid. Equally disturbing is the fact that no one has been held accountable for these breaches.”