Public funds row: At a glance - key points of contention

Libel action

The allegation: Public funds were used to fight a private action for libel on behalf of ex-Premier Dr Ewart Brown and then-Public Works Minister Derrick Burgess in Canada.

• Auditor General Heather Jacobs Matthews: “A blatant disregard for the public purse and a lack of transparency and accountability at the highest levels of Government.”

• Premier Paula Cox: “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.”

• Minister Derrick Burgess: “When the documents went to Canada, it was in the name of the Government. In Canada you can’t sue in the name of a Government for defamation, so it was in mine and Dr Brown’s names.”

Who stood to gain from legal action?

• Jacobs Matthews: “The key issue here is that public funds were used to initiate a private legal action which is inappropriate and a direct violation of Financial Instructions… further, Financial Instruction 10.4 places the onus and the responsibility on the Accounting Officer to ‘ensure that Government funds are not used for personal gain or profit’.”

• Burgess: “I responded to inquiries from the Attorney General’s office in August, 2010. As part of that response, I advised him that both the then ex-Premier and the Minister were not proceeding with the action for any personal gain and that they undertook to remit to the Government any proceeds from the legal action.”

At issue: If the Government was satisfied that using public funds to fight the case in court was justified, why was the arrangement with the Canadian law firm terminated?

• Burgess: “That’s something you would have to ask the Premier or the Attorney General about.”

• Cox: “The retainer agreement that was entered into with the law firm was properly authorised by the then-Cabinet in 2010 and indicated that the law firm was representing the Government of Bermuda in providing legal services in connection with certain false cheques that were allegedly payable to Dr. E. Brown and D. Burgess, the then-Premier and a Minister.

“The then-Cabinet approved the engagement of the law firm to pursue on behalf of the Government of Bermuda the unsolved matter of fraudulent cheques.”

BLDC consultancy fees

The allegation: A total of more than $160,000 paid in consultancy fees to the chairman and deputy chairman of the BLDC should not have been made and around $78,000 of the cash had not been properly approved by the board.

• Jacobs Matthews: “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… only $81,840 was formally approved for payment by the board or reportedly approved by its sub-committee. The remaining invoices totalling $78,390 were not formally approved by the board or its sub-committee.”

• Burgess: “The board is in charge of day-to-day operations. The Minister can direct them under the relevant Act, but Ministers don’t get involved in the day-to-day operations. The BLDC got a legal opinion it was legal in the byelaws of the company and in the Companies Act 1981. They got an audit from KMPG and they came back and said there was no wrong-doing on the part of the board.”

• Leroy Bean: “I never viewed this money as consultancy fees.

“The job we were asked to do – investigate the workings of this government company – was done as part of our roles as chairman and deputy chairman. I did not view myself as a consultant at any time.”

At issue: The Minister of Finance (Paula Cox) wanted the chairman and deputy chairman removed. Why did they stay?

• Burgess: “I think that question should be posed to the Premier.”

• Cox:  “Queries directed by the Office of the Auditor General to public authorities or any other department as part of the remit of the Office of the Auditor General whether BLDC or any other Government department are not put in the public domain as a matter of course.

“The notification of a transfer of ministerial responsibility for the public authorities was properly gazetted as is the norm.

“Public authorities operate within the guidelines that may be prescribed by relevant statutes and further requests for information about governance matters should be directed to the Board and the Minister of Public Works for follow-up.”

• Leroy Bean: “I must state categorically that I never refused to leave my position.

“I was asked by the primary minister [Derrick Burgess] to continue the job that I had been put there to do which was investigate the BLDC and bring order to a government company that had been run like an individual’s private company. I did the job that I was asked to do to the best of my ability.”

Reporting by Raymond Hainey & Simon Jones