Premier responds to Auditor General's criticisms

THURSDAY, JAN. 26: In taking note of the special report issued by the Auditor General today, Premier and Finance Minister the Hon. Paula Cox, JP, MP stated: “I acknowledge the work of the Office of the Auditor General in addressing items of concern relating to the operations and governance of the Bermuda Land Development Company during 2010.

“It is important to note the changes and corrective steps taken to address apparent deficiencies and to enhance processes since the period in 2010 that was the subject of the Special Report.

“The special report by the Auditor General 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
• 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 former Board was replaced by a new Board of Directors.

“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.

“You will know that one of the cornerstone’s of my administration is a firm commitment to good governance and strict adherence to international standards of best practice. The new Office of Project Management and Procurement has been established and there is new legislation on the books dealing with good governance.

Further, the second phase of the Good Governance legislation will be tabled in the next session of Parliament and will include the following proposed amendments:

•  Extending and expanding on the conflict of interest offence when awarding contracts;
• Creating an offence of collusion by contractors and vendors bidding for contracts attempting to gain an advantage in the tender process by colluding with or obtaining information from public officials;
• Extending “whistle blower protection” to persons that are not included in the Employment Act, including contractors, vendors and part-time or temporary staff and any other person that becomes aware of potential wrong-doing;
• Enhancing the processes to ensure that money paid to vendors, contractors and organisations receiving grants is being used for the purpose for which it was authorised
• Introducing legislation outlawing the provision of inducements whether in the public or private sector.

“The Bill will further enhance good governance and transparency and will further underscore the message that this Government adheres to the high standards of ethical behaviour -  transparency and accountability; fairness and equity; efficiency and effectiveness; respect for the rule of law.

“With respect to the engagement of the Canada law firm to follow up an investigatory action relating to the falsified checks that impugned the integrity of the Government of Bermuda, it was a legitimate action in the public interest.

“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.

“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, 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. 

“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 and 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. ”