By AVA TURNQUEST

Tribune Staff Reporter

aturnquest@tribunemedia.net

FORENSIC accountants have accused the Managing Director of the Public Hospitals Authority (PHA), Herbert Brown, of several policy breaches in its critical assessment of the regulatory body’s “lax system”.

In a report conducted by chartered accounting firm HLB Galanis & Co “the Managing Director” was said to have “approved gratuity payments unilaterally in contravention of policy and interfered with hiring and promotions.”

However, documents obtained by The Tribune indicate that changes to gratuity policy received the approval of the PHA board in December 2011 under the chairmanship of Tanya McCartney.

The accounting firm was engaged by the PHA Board of directors, according to the report addressed to PHA Chairman Senator Frank Smith and obtained by The Tribune dated February 10, 2014.

In a letter also obtained by The Tribune dated October 22, 2012, Mr Smith directs Mr Brown to ensure the promotion and increments of two individuals, with salaries to be paid with effect from July 1, 2012.

HLB’s report does not include the director’s name. However, Mr Brown served as Managing Director during the assessment’s scope for the period of July 1, 2012 to June 30, 2013.

Among other deficiencies listed in the assessment were “19 employees deployed to other Ministries who remained on PHA’s pay sheet at an annual amount of $625,999”.

It read: “We found a total of 30 employee records with outdated or missing contract information the system. We further noted deviations from policies regarding contract extensions, In-Service Awards and additionally we noted qualifications of some employees.”

After an assessment of consultants’ contracts the team found that gratuity payments were inconsistently applied.

The report concluded that it could not be determined whether or not the authority was receiving value for money and that it was “strongly believed that in many cases it is not”.

The report underscores that it did not include a complete evaluation of the operating effectiveness of PHA’s internal controls. It added that its engagement was not designed and cannot be relied upon to disclose errors, fraud or illegal acts that might exist.

The scope of the assessment of established policies and procedures of the administrative and financial controls in the Human Resources and Payroll Departments for the period of July 1, 2012 to June 30, 2013.

The firm was hired to conduct a review of the Authority’s operating entities and routines at its seven facilities; conduct a review of the employees engaged by the authority such as contractual employees, consultants, month-to-month employees, permanent and pensionable employees; determine whether the Authority is in compliance with guidelines and policies, with focus on the human resources and payroll functions, including an assessment of overtime and promotions of persons reviewed through that period.

The report also noted there were multiple areas where strong internal controls were documented and maintained.

However, it stated: “In previous years and during the review period, certain actions identified indicated that controls were continuously to management overrides at the highest level of authority, particularly with respect to established promotions policy and gratuity payments.”

The report stated: “These actions were determined to be contrary to the PHA’s established policies and procedures. Additionally, various incidents were uncovered by the Internal Audit Unit.”

The report also stated that there were no written HR department policies for “data capture and recording and that written Payroll Department policies and procedures were not documented”.

Mr Brown was re-instated as head of the PHA – after he had been placed on two weeks administrative leave pending a Board investigation – by order of the Supreme Court in January.

Senior Justice Jon Isaacs ordered that Mr Brown had permission to submit his application and that the decision to place him on unpaid leave was “unlawful” and beyond the powers of the Public Hospitals Authority Act.

The judge further issued an injunction “restraining the chairman and the Board of Directors of the PHA” from placing Mr Brown on leave again, pending the determination of the judicial review.

Last night both Mr Smith and Mr Brown declined to comment when invited by The Tribune.