By TANEKA THOMPSON

Tribune News Editor

tmthompson@tribunemedia.net

THE Bahamas National Drug Agency has refuted allegations contained in a forensic audit into the Public Hospitals Authority that raises concerns that an official at the drug agency allegedly had ties to a “shell company” established hurriedly only to do business with the PHA.

The audit alleged that this “shell company” defrauded the Public Health Authority (PHA) out of thousands of dollars. However, the Bahamas National Drug Agency (BNDA) argued that the company is a legitimate one with proper documentation and a physical location with no connection to the official in question.

The BNDA also charged that the audit prepared by UHY Bain and Associates at the end of March, which made the allegations, was “flawed in several areas” containing “inflammatory” claims.

The audit prepared by UHY Bain and Associates was submitted to the PHA on March 31. The BNDA’s response, of which The Tribune has obtained a copy, was produced in May.

“The author writes in his conclusions that ‘a senior member of the BNDA may have established a corporate entity solely for the purpose of transacting with the PHA’. . .while describing their status as having ‘non-approval of the company by PHA’. . .but has not provided a single piece of real and irrefutable evidence to this end,” the BNDA said.

“In fact, every document submitted shows that this company was formed by someone other than (the PHA official in question) and not a single credible link has been established that connects this company in any way to any officer in the BNDA.”

The BNDA added: “It is reprehensible that such inflammatory and defamatory statements can be made in the absence of any credible proof.”

The BNDA said that the company in question has licenses from the Pharmacy Council and Business Licence Unit. The agency also refuted claims that the company is a shell, explaining that the wholesaler has a physical location in a popular shopping plaza.

“Several administrators and staff at the BNDA have visited and inspected the facility and it certainly is not fictitious,” said a portion of the report that was written by the official accused of colluding with the company. “In addition, the company would have to have been inspected in 2011 for the company to receive a Pharmacy Council license.”

In his report, auditor John Bain said his company’s investigations uncovered details of “at least one abuse of the tendering process” when an official allegedly “circumvented” the tendering process by ordering “urgent” supplies “that were not in demand.”

The audit added the order “benefitted a supplier (name redacted by The Tribune) who was not at the time the approved supplier for the oncology drugs ordered.”

The UHY Bain audit also said that PHA’s internal auditors found that receiving documents may have been altered from the original invoices of the drugs.

According to UHY Bain’s report, internal auditors said the company was at the time, May 2011, not a listed supplier of the BNDA and received pharmacy registration three days before the “emergency” drugs were ordered.

The audit said the total orders of the drugs were not delivered, “yet no documentation for the back order was prepared” and that PHA allowed a cheque to be issued for $86,557 payable to a vendor not on the approved list.

The audit added in this case, the PHA was “defrauded out of over $11,500.”

The forensic audit also alleged that the company in question may have been a “shell”. A shell company is an entity that exists mainly on paper with no physical presence frequently used to “hide money”, the audit said.

In response the BNDA official accused of colluding with the company in questions said: “PHA received the total value of goods that it ordered, from a legally approved company, and was not defrauded. In addition, the fact that said company may have received its Pharmacy Council license shortly before the order was placed is coincidental and irrelevant as such an application would have had to be submitted at least 30 days prior. . .”

The report said several inspections are required before a supplier receives this license.

“If the internal auditor or the forensic auditor had asked to see the records at BNDA, they would have had any query in this concern answered,” the official said.

The official said the order in question was delivered in separate shipments with three invoices/shipping documents and that a copy of the total invoice was submitted to PHA Finance Department per regulations.

The BNDA’s response also suggests friction between the agency and PHA’s internal auditors. The drug agency, which is a subsidiary of the PHA, said it is concerning that UHY Bain’s audit relied heavily on the PHA’s Internal Audit department for its information.

“The BNDA is concerned that the forensic accountant appears to quote the internal audit (IA) department as his source for many of his allegations,” the BNDA’s director, Vivienne Smith-Lockhart noted in the beginning of the response.

“This is troubling as the IA unit never sought to discuss or clarify this matter with the BNDA. This is rather unsettling and unprofessional for the organization and those who seek to provide the service that the patients need.”