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REPORT: VIP handled finances poorly in 2011

Sonia Webster

By Horace Mills, BVI News Online Staff

The Auditor General’s Department has cast a bad light on the former Virgin Islands Party (VIP) government over its handling of the territory’s financial affairs in 2011 – a year that ended with concerns about possible irregularities, revenue shortfall of more than $400,000, and outstanding bills of over $5.6 million.

Details of the concerns are contained in a report prepared by then Auditor General Sonia Webster, and tabled in the House of Assembly a few days ago.

The 2011 report covers a defining moment in the British Virgin Islands’ history – a year that ended with the then VIP government headed by Ralph T O’Neal being voted out of office in the general election on November 7.

The National Democratic Party assumed leadership of the territory’s affairs at the turn of the year and, at the time, accused the VIP of leaving the territory broke.

The VIP repeatedly denied that assertion.

According to the Auditor General, the public debt at the end of 2011 stood at $116,807,696, and the Reserve Fund had a balance of $7,446,751. The Consolidated Fund had a balance of $66,828,117.

Revenue Collection Crisis

The Auditor General, in looking at the recurrent revenue for the year 2011, stated that the amount budgeted was $284,884,000.

The amount actually raked in shows a shortfall of $404,474 or less than one percent of the budget.

The National Democratic Party headed by Premier Dr D Orlando Smith accused the VIP of leaving the territory broke.

What is however telling is the fact that, of the 11 revenue sources categorized, nine recorded shortfalls.

Financial Services and Rental were the only two categories that performed as expected or – in fact – far above expectations.

Those two areas realized total excess revenue of just over $14.2 million – an amount that was used to help offset the shortfall in other areas.

But that excess revenue from Financial Services and Rental was “not sufficient to offset” the total shortfall in the other revenue areas, according to the Auditor General.

As a result, the year ended with recurrent revenue being $404,474 less than budgeted.

Room for irregularities

The Auditor General, in further examining the Government revenues, noted that the collection process was not adequately safeguarded.

“On site inspection of revenue collecting offices revealed cases where internal controls were insufficient to safeguard the collection process. This opened the door to irregularities in collection activity,” the Auditor General said, adding that some departments were ‘tardy’ in reporting revenues to the Treasury.

The Auditor General also noted certain requirements under the Public Finance Management Regulation 2005. Under that regulation, an Accounting Officer responsible for collecting revenue is required to submit to the Accountant General: an annual return of arrears, and a monthly report of arrears of revenue recovered.

According to the Auditor General, that regulation was ‘widely disregarded in the public service”.

Reallocation Warrants

Meanwhile, the Auditor General’s report also raised concern about another important area of finance – Re-allocation Warrants.

Re-allocation Warrants effectively allow departments and ministries to transfer funds from a subhead with savings to another that has insufficient funds in order to allow the latter to meet authorized expenditure.

In the year 2011, the then VIP government approved 240 Reallocation Warrants for transfer of just over $5.7 million.

Under the Finance Management Act 2004, the then Minister of Finance Ralph T O’Neal was required to table the Reallocation Warrants in the House of Assembly within six months after the end of the year to which the Re-allocations relate.

“There is no evidence that this was done in respect of the 2011 Re-allocations,” said the Auditor General.

Outstanding Bills

Furthermore, under the Public Finance Management Regulation, the Financial Secretary is allowed to carry forward bills from one year into another year.

The Auditor General noted that the provision was mainly to cover bills accrued in December.

But, according to her, a bad practice has developed.

Minister of Finance back in 2011 Ralph T O’Neal

The Auditor General explained: “The practice was developed whereby departments and ministries hold over invoices and receipts until the subsequent year, because they have exhausted their expenditure budgets. For some departments, this may run into the hundreds of thousands of dollars.”

“The Ministry of Finance routinely facilitates payment of these wrongfully held over-charges and, in so doing, has embedded a practice of poor financial management which circumvents legalised procedures,” added the Auditor General.

In relation to the year 2011, she stated that a grand total of $5,601,318 was carried forward to the following year.

The Auditor General noted that the Water and Sewerage Department carried forward 56.5 percent of the grand total stated immediately above. “These consisted primarily of electricity bills for the desalination plant – some of which were more than six months old,” she noted.

The BVI International Finance Centre carried forward into 2012, bills totaling $795,471. “This included Consultancy costs of $547,472.07 which would be applied to the 2012 budgeted amount for that subhead of $547,472.07 which would be applied to the 2012 budgeted amount for that subhead of $546,800, thereby immediately depleting that year’s allotment,” said the Auditor General.

She, after outlining the aforementioned figures, declared that they required more than cursory approval.

“The significance of these amounts require more than a cursory approval under a regulation that was not intended for this purpose. These should be addressed through the supplement approval process, which requires that the amounts are reviewed and approved by the House of Assembly, thereby adjusting the budget for the year under review,” added the Auditor General.

VIP wasted public resources on private property

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28 Comments

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  1. reply says:

    Well-loved. Like or Dislike: Thumb up 29 Thumb down 3

    We want the reports now under the ndp we will see the real deal and the thiefing

  2. voter says:

    Well-loved. Like or Dislike: Thumb up 23 Thumb down 4

    We will not be fooled we still voting out the ndp

  3. 2017 says:

    Well-loved. Like or Dislike: Thumb up 14 Thumb down 2

    Ok,so what is happening currently???

  4. Political Observer (PO) says:

    Well-loved. Like or Dislike: Thumb up 20 Thumb down 1

    Ok. It makes sense to roll out audits in sequential order. Clearly, the Auditor General giged the VIP in 2011 for less than stellar financial management performance.

    Since VIP was defeated at the polls in 2011, were the noted deficiencies in 2011 corrected and did NDP learn anything? And if no why not?

    It is 2017 so why is 2011 Audit just coming out? Was the Auditor General office slow in putting out the report or the report’s delay was a tactical move by government ? When is 2012 coming out? Further, we also need 2013, 2014, 2015, and 2016.

  5. ndp heckler says:

    Well-loved. Like or Dislike: Thumb up 18 Thumb down 3

    That is water under the bridge, we want to hear about what’s happening with our finances now. We don’t want any childish smoke screens or distractions

    • @ ndp heckler says:

      Well-loved. Like or Dislike: Thumb up 8 Thumb down 0

      I disagree. We want to understand the historical significance of everything else but when it comes to poli-tricks then only now matters? No.

      We need the historical reckoning and now she should move forward and provide a similar assessment of the NDP administration. Both are relevant.

  6. strupes says:

    Hot debate. What do you think? Thumb up 5 Thumb down 3

    wasn’t that in the heart of the great recession?

  7. vip says:

    Well-loved. Like or Dislike: Thumb up 10 Thumb down 2

    Okay now let us roll forward 6 years after.

  8. huh says:

    Well-loved. Like or Dislike: Thumb up 8 Thumb down 1

    Well at the least we knew what happened then so what about now?

  9. Inspector Gadget says:

    Well-loved. Like or Dislike: Thumb up 12 Thumb down 2

    Now we got all this off our chest great let’s move on to ndp auditing.

    I have confidence that Ralph did his best. Ralph is not a thief. Let me repeat uncle Ralph is not a thief. He’s a country man of class.

    Our concerns with the ndp administration are corruption and mismanagement and that over priced wall and cost overrun of $30 mil on the cruieship park and the arrogance that comes behind wrongdoing. Bring out the rest.

  10. okay now says:

    Hot debate. What do you think? Thumb up 7 Thumb down 4

    After reading all this i have concluded that the VIP was sabotaged

  11. yes says:

    Like or Dislike: Thumb up 2 Thumb down 1

    whatever was carried over in 2012 was done during the current administration hence they are both responsible

  12. LOL says:

    Poorly-rated. Like or Dislike: Thumb up 4 Thumb down 8

    Hidden due to low comment rating. Click here to see.

  13. WTF says:

    Well-loved. Like or Dislike: Thumb up 8 Thumb down 1

    Now please roll out the audits under the NDP government.

    Give us the people a clear picture of how these two governments handle the people’s business. So, we will leave judgement until we see the NDP audits.

  14. Spoil Cheese says:

    Well-loved. Like or Dislike: Thumb up 7 Thumb down 1

    We the people don’t really need an auditor. I think we can audit the country ourselves. Ndp must and will go. All of them.

  15. Who tells the truth anymore? says:

    Well-loved. Like or Dislike: Thumb up 8 Thumb down 2

    “at the end of 2011…The Consolidated Fund had a balance of $66,828,117.”

    During the fall out from a global recession we had 66 mil to work with and a 5 mil short fall but you heard a very different story before the election, we heard VIP left the country broke. Is 66 million broke?

    Stop listening to politicians. Demand facts, tell them to show you proof.

    • Oh says:

      Like or Dislike: Thumb up 1 Thumb down 0

      So why VIP didn’t defend themselves? They were so busy eating each other they didn’t focus on that part. Have a warm seat, politics is what it is, get with it or get out.

  16. NDP Fan says:

    Well-loved. Like or Dislike: Thumb up 6 Thumb down 1

    DR. We know the VIP did some damages but stop play games and tell us what happened under your watch?

    This will help the entire country to get a better understanding of how to go forward.

    Bring out the new reports and put them side by side over a 8 year period.

  17. Need to be in jail says:

    Well-loved. Like or Dislike: Thumb up 8 Thumb down 1

    I do not trust the ndp lets see the books from 2012 until now…get the police and dpp on standby

  18. I FROM HERE says:

    Well-loved. Like or Dislike: Thumb up 9 Thumb down 2

    We knew VIP was stealing our money why we voted them out.

    We know NDP stealing it now so we also voting them out.

    No matter who we put in Government they will thief our money.

    • ** says:

      Like or Dislike: Thumb up 0 Thumb down 0

      Who is ‘THEY’? The very people crying about Government stealing money are the ones facilitating it via over inflated contracts. Further, I would bet my last that if we do a proper tally, the voters of this country has stolen more money than any politician. Any takers?

  19. Wha says:

    Like or Dislike: Thumb up 0 Thumb down 0

    Biases, biases. One government steal to give greedy people who don’t want to learn how to fish and the other overspend on projects. I still rather the latter because what they overspent on is evident and part of the country’s development.

    The truckers complaining because there is no more dirt to transport by the half load (while charging for full loads). I feel your pain. It is difficult to give up easy 💰

  20. ReX FeRaL says:

    Like or Dislike: Thumb up 1 Thumb down 0

    Stop trying to side step the issues. What does the current government owe to stakeholders?

  21. wait wait says:

    Like or Dislike: Thumb up 1 Thumb down 0

    Why the f…. are we talking about 2011 finances. While I understand that certain things must be brought forward, the issue we face now has ntn to do with what VIP did in 2011 whether true or false…

    We’re facing f*** hell in this place due to THE NDP and their F** and all they coin is playing a blame game….

    They have no issues at month end to pay their bills…they have no issues with kids going to school hungry…they have no issues with ntn financial and yet all they do is kill the black man by raising everything on us….F** it man…

  22. so says:

    Like or Dislike: Thumb up 0 Thumb down 0

    Ok, so now fast forward to 2017, people bawling, kids hunger multi-million dollar projects not going to tender, projects the people objecting to still moving forward. Ayuh worse the Deh Donald.

    I understand that the VIP messed up but that’s a drop in the bucket compared to the pile of crap Dr. Smith and his crew are doing.

    We aint forget that damn near 40,000,000 that’s 6 fetching zeros partner. Somebody have to answer for that..

    Don’t try this damn hocus pocus slight of hand nonsense. We aint going fall for it. Try again.

  23. Boo says:

    Like or Dislike: Thumb up 1 Thumb down 0

    A blind man can see that.

    We done eat the soup and the appetizer and waiting for the main course of NDP audits to be served.

    Then we will be waiting on the GOv to serve Ballo for dessert!

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