By TANEKA THOMPSON

Tribune News Editor

tmthompson@tribunemedia

THE Ernst & Young (EY) audit into operations at Bahamas Power & Light (BPL) has identified instances where former Executive Chairman Leslie Miller allegedly “influenced procurement decisions” for the awarding of contracts “or circumvented the process entirely,” The Tribune can reveal.

According to a copy of the audit obtained by this newspaper, EY found alleged actions taken by Mr Miller regarding the issuance of contracts worth less than $100,000 – below the limit of board/chairman involvement – at the government entity were “highly irregular”.

The audit also flagged numerous “irregularities” in the way contracts were awarded by the former Bahamas Electricity Corporation (BEC) since 2012, including lack of due diligence leading contracts being awarded to companies “owned by public officials or BEC board members”.

The audit also revealed one company said to be owned by the brother of Progressive Liberal Party (PLP) Leader Philip “Brave” Davis received lucrative contracts from BEC even though the business was not the preferred bidder in a tender process.

The company, AL D’s Construction & Roofing, received two contracts for a higher value than the recommended bidder. Despite repeated calls, Mr Davis could not be reached for comment yesterday.

The audit found while two BEC executives wanted to award these contracts to two different companies, Mr Miller wrote to the officials directing them that BEC’s board had requested the contracts be given to AL D’s Construction & Roofing instead.

Investigators also found a company owned by Mr Miller – Mario’s Bowling and Entertainment Palace – received $52,192 from the utility provider since 2012.

When questioned about the audit’s findings yesterday, Mr Miller pushed back on the report saying “every contract” awarded by BEC’s board was given to the lowest bidder. He denied engaging in any irregular practices insisting he led a “top notch” team at BEC and saved the government millions of dollars in overtime pay and other expenses during his brief tenure.

He also denied that Mario’s Bowling had any contract with BEC/BPL. He claimed to be unaware of any contract being given to a relative of Mr Davis.

Politically exposed persons

EY said it found “weaknesses in the vendor due diligence process” and 19 vendors for whom the required due diligence was not performed.

“The requirements for vendor due diligence are not documented in the current procurement policy. From our review of vendor files, we confirmed that there is no requirement for procurement staff to confirm if vendors are politically exposed persons (PEPs) or owned by public officials, have criminal backgrounds, previous negative press coverage or relationships to staff and/or directors of BEC.”

EY found that for 19 out of 35 vendors selected for testing, “no due diligence documentation could be obtained.”

The report added: “No information on ownership could be obtained for these workers, along with no confirmation of valid business licence and or tax registration.”

EY identified three vendors owned by PEPs or public officials who had contracts with BEC/BPL.

It has been previously reported that Bahamas Couriers Limited trading as Bahamas Cargo & Logistics, owned by the father of former Minister of Education Jerome Fitzgerald, and Penta Industrial Services owned by Errington “Minky” Isaacs, PLP chairman emeritus, received contracts with BEC.

However, the contract given to a relative of Mr Davis is a new element to the controversy.

Of this company, EY noted: “Two contracts were awarded to this vendor for a higher value than the recommended bidder. Supporting documentation in connection with these transactions include internal memorandums from Kevin Basden and Lana Mingo requesting Mr Miller’s approval to award the contracts to DN Construction Co and Dudley Smith Construction Company. A handwritten response from Mr Miller is included on the memorandums stating that the board requested for the contracts be awarded to AL D’s Construction & Roofing.”

EY said for one of the contracts, the recommended bidder price was $118,816 but the contract was awarded to AL D’s Construction for $199,000. The investigators also found that for the second contract, the recommended price was $36,400 but was awarded to AL D’s for $41,417.

“There was also another company lower than AL D’s Construction & Roofing at $40,260,” EY noted.

Two vendors who got contracts under $100,000 were identified as being owned by former BEC board members: Nassau Salvage Company, said to be partially owned (11.1 per cent) by Edward Darville, and Mario’s Bowling & Family Entertainment, owned by Mr Miller. The report noted the total spend with Mario’s Bowling by BEC since 2012 was $52,192. Nassau Salvage had a contract worth $22,168, according to the audit.

Former PLP Senator Greg Burrows, owner of The Cleaning Company, received a cleaning contract for $65,200 which was quickly revoked due to poor performance.

“Based on interviews and corporate documentation reviewed, this vendor is owned by former Senator Greg Burrows,” EY noted. “It was alleged that Mr Burrows used players from his baseball academy to perform the cleaning services. The contract was terminated shortly after being awarded due to poor performance.”

Another company, Tinker Enterprises Ltd, was said to have been paid $82,500 by BEC.

“Based on online research, the owner, Kirklin Tinker, was a former business partner of Leslie Miller in Sunburst Paint,” EY noted.

However Mr Miller claimed to The Tribune when Tinker Enterprises was engaged by BEC, Mr Tinker, now said to be deceased, was no longer involved with the company.

Tender process

The audit also outlines several instances when the tender process at BEC was not followed, noting EY identified three contracts with a value in excess of $100,000 for which no formal tender had been performed.

One such case involved a company called Sure Tech CCTV Surveillance which had a contract valued $157,750. According to EY, this business was one of five identified as not being a registered company.

“Four quotations had been obtained but the contract was not put to tender. Quotations were obtained and analysed by the ‘end user’ and not a member of the procurement function. The selected vendor ultimately failed to complete the project and legal action was taken by BEC against the vendor for breach of contract.”

Atcun Security had a contract valued at $870,684, however there was a total vendor spend since 2012 of $3,685,257.

In the case of this company, EY noted: “A memorandum from the chairman to the general manager stated that two other quotations had been requested but no documented evidence of the alternative quotations could be obtained. The contract was not put to tender and the procurement function was not involved. Further, we observed evidence of the former Executive Chairman Leslie Miller authorising a mobilisation payment to this vendor at the inception of their contract. Based on interviews, a mobilisation payment for security services is highly irregular.”

Row Creek Company Ltd had a contract valued $114,036 however total vendor spend since 2012 was $452,161.

“The contract for the supply of furniture was not put to tender and the procurement function was not involved. As noted above, no other quotations were obtained and a purchase order was not created,” EY found.

The firm also identified nine instances where vendors were engaged “with no evidence of procurement analysis or other quotations being obtained.”

E&Y added: “For the following vendors, we found no evidence of any other quotations being obtained prior to award of contract or issue of purchase offer.”

In the case of Atcun Security, the investigators found the company was paid 30 per cent more for security services during a one-year period than the firm which was previously providing BPL with the same services.

Penta Industrial Services received $4,592,041 from BEC, however EY said it was unable to identify any competing bids or alternative quotes being obtained for these services.

“Further we observed evidence of the former Executive Chairman Leslie Miller authorising a mobilsation payment to this vendor at the inception of their contract. Based on interviews, a mobilisation payment for cleaning services is highly irregular,” the audit noted.

On November 7, 2012, Mr Miller instructed Mr Basden to “please prepare a cheque for the amount of $40,000 relative to this request,” referring to the cleaning services contract awarded to Penta, the audit notes.

Referring to Row Creek, the auditors found that in addition to not observing competitive bids related to the four contracts awarded to this vendor, EY observed the following irregularities: “An invoice was sent on the same date as quotation for the work. Both documents were addressed to the chairman not the end user.”

It was also noted: “One specific quote has an email ‘approval’ from the chairman even though it is below the limit required for board/chairman involvement.”

Concern

EY said it found electronic evidence that former executives and board members had concerns about “the manner in which Mr Miller was engaging” with the vendor in question.

An internal memo from Mr Basden to Mr Miller on March 10, 2015 noted issues with a batch of eight invoices from Row Creek which were sent to the former’s office in February of that year.

Mr Basden noted the invoices total $330,000; there was no tender/competitive bidding process; and the recent work carried out by Row Creek “raised concerns from a workmanship perspective.”

On February 24, 2015 Mr Basden sent an email to BEC official Donna Smith which expressed concern about Mr Miller’s intent to give the company lucrative work.

Mr Basden wrote: “The chairman is now attempting to give Row Creek, the company that tiled downstairs, some $330,000 of additional work – tiling of various other areas in the building, painting of the exterior of the building and boundary walls, and painting of public areas in the building. A copy of the various invoices, some of which were reportedly signed on different dates - Feb 3, 2015; Feb 6, 2015; Feb 8, 2015 and Feb 14, 2015 - but submitted to my office today, even though it was dated Feb 20, 2015 by the chairman, are attached.”

Ms Smith wrote back: “This cannot happen. We need to discuss how best to deal with this.”

EY found more issues with Mr Miller’s involvement in operational procurement activity at BEC.

“We identified numerous instances where the chairman was actively involved in low value procurement activity,” EY wrote. “We noted five instances were correspondence form the vendor (invoices, bids, proposals) was addressed directly to the chairman and not the procurement or engineering functions.

“We noted nine instances where handwritten approval was provided by the chairman for amounts below $250,000. We noted 10 instances of written correspondence from the chairman to staff instructing them to engage with or process payments to a given vendor.”

In its executive summary, the audit noted: “EY identified numerous irregularities in the manner in which contracts were awarded by BEC since 2012 including numerous instances where the tender process was not followed; instances where contracts were awarded to vendors who were not selected or did not participate in the tender process; lack of vendor due diligence leading to contracts being awarded to entities owned by public officials or BEC board members; instances where the former Executive Chairman Leslie Miller influenced procurement decisions or circumvented the process entirely and gaps in basic procurement controls.”