Monday, March 12, 2018
By NEIL HARTNELL
Tribune Business Editor
THE Water & Sewerage Corporation’s (WSC) forensic auditors have “no right to question” politically-led decision-making, a former chairman has blasted.
Bradley Roberts, the ex-PLP MP and Cabinet minister, told Tribune Business that Ernst & Young (EY) had no business probing his instructions to cease disconnections of delinquent customers during the run-up to the 2012 North Abaco by-election.
“That was only for a short period. I don’t know why that’s a big deal,” Mr Roberts, who was chairman from 2012-2013, said of the Central Pines disconnection suspension.
“I don’t think that was even a matter for anybody to review. There was nothing hidden about that. That was completely open for everybody. To even waste time on that, my God.”
Mr Roberts, who subsequently became Progressive Liberal Party (PLP) chairman, continued: “It was simply a stop to the disconnections while the election was going on. We resumed immediately afterwards. What’s the big deal?
“Absolute rubbish. You mean to tell me that an audit firm gets involved in that? Even if that was the case, you don’t have auditors to question a political decision. No, you do not, sir. You do not have the right. Nobody elected them [EY].”
Mr Roberts lashed out after EY’s forensic audit of the Water & Sewerage Corporation disclosed the former chairman’s ‘disconnection suspension’ e-mail in the ‘unusual/suspicious communications’ section of its report.
“EY identified an e-mail from October 2012 suggesting that former chairman Bradley Roberts was advised to stop disconnecting customers until after a bye-election,” the forensic audit said.
The e-mail in question, dated October 10, 2012, and copied to former deputy prime minister, Philip Davis, and senior Water & Sewerage Corporation executives, said: “Gentleman, DPM Davis has brought to my attention that he has been advised that water disconnections are being executed in Central Pines, Abaco.
“Doubtless you are aware that there is a bye-election currently underway in that constituency. Kindly direct same be discontinued until after the election, and ensure all disconnected and [are] reconnected. Many thanks.”
The bye-election referred to is the North Abaco bye-election, which was held after the seat became vacant when former prime minister, Hubert Ingraham, resigned immediately following the 2012 general election. The bye-election was won by the PLP’s Renardo Curry with a major vote swing, only for the Free National Movement to regain it last May.
Many observers are likely to view Mr Roberts’s comments as confirmation of both the e-mail’s authenticity and its interpretation by EY.
For the e-mail provides a further insight into how too much politically-motivated interference undermines well-established business practices at both the Water & Sewerage Corporation and other state-owned enterprises (SOEs).
The EY audit report paints a picture of politically-led decision-making overriding standard corporate governance and best business practice, helping to create a culture where protocols and procedures were routinely bypassed.
It also highlights how the system ‘works’ for those with the right ‘connections’ - family, political or otherwise - and how this gives rise to potential ‘conflicts of interest’ and other corporate breakdowns.
Ultimately, as indicated by the EY report, these weaknesses combine to produce significant losses - sometimes reaching to multi-million dollar sums - for Water & Sewerage Corporation customers and the Bahamian taxpayer that provides it with annual subsidies as high as $30 million.
Mr Roberts declined to go into further detail until he received, and read, a full copy of the EY forensic audit.
Yet he branded the report “a waste of time”, and blasted the methodology it used to connect Mr Davis to the company that was awarded the botched Gladstone Road Wastewater Treatment Plant contract, saying he had “never seen such sloppiness in my life”.
“Let me comment with regard to the ownership of the company [Nassau Island Development Company] that won the award to build the facility,” Mr Roberts told Tribune Business.
“That the Deputy Prime Minister’s secretary could be connected to him as the owner of one share, a nominee share, through this newspaper obituary... I’ve never seen such sloppiness in my life.”
EY’s forensic audit revealed that a Merlene Poitier was shown in corporate registry files as holding one share of Nassau Island Development Company, the contractor for the Gladstone Road plant. The remaining 4,999 shares were held by company principal, Anthony ‘Larry’ Ferguson.
EY said it ‘understood’ that Merlene Poitier worked for Davis & Company, the deputy prime minister’s law firm, as a secretary. It also found e-mails referring to ‘Ms Poitier from DPM office’ in relation to a person Mr Davis allegedly wanted the Water & Sewerage Corporation to employ.
To try and pin down Merlene Poitier’s identity down, EY said it conducted “open-source research via Internet search engines”, and found someone with that name listed among ‘Other Relatives and Close Friends’ in an obituary for Mr Davis’s mother.
EY conceded that the results of its inquiries were inconclusive, saying: “It is unclear whether either of these people are the same individual who owns a share in Nassau Island Development Company.”
Mr Davis subsequently admitted, following the forensic audit’s publication in the House of Assembly, that Merlene Poitier was indeed a secretary at Davis & Company, but said he only learned she held a share in Nassau Island Development Company from the report.
“That was something new to me,” Mr Davis told reporters last week. “I spoke with her last night and she indicated that she was a nominee shareholder in the company.
“She said she is a nominee, as the corporate laws require that there be at least two named shareholders on a corporation to maintain the company.
“A nominee shareholder, most law firms in incorporating a company would use persons in the office to hold the shares on behalf of the beneficial owners,” Mr Davis added.
“It does not inure any benefit. No financial benefit. They just hold it as a trustee, as it were, on behalf of the beneficiary and it’s unfortunate.”
It is, as Mr Davis said, fairly common practice for law firm secretaries and employees to be listed as nominee shareholders in the corporate registry, holding the shares on behalf of the true beneficial owners. No mention was made of who Ms Poitier may have been holding the share for.
Mr Roberts, meanwhile, told Tribune Business he “found it rather strange” that the EY report appeared to take credit for “a matter I caused to be investigated”.
The former chairman said it was the Board he headed that hired RosTek Associates in April 2013 to perform a review of the Blue Hills reverse osmosis plant contract with BISX-listed Consolidated Water, following “a high volume of complaints due to red, rusty water”.
“I was shocked to see it being done by this audit team. I was absolutely shocked,” Mr Roberts said. “With regard to the red water, I brought in a specialist team in the water industry and had that done.”
Summing up his verdict on EY’s efforts, he added: “I think it’s a waste of time, to be honest with you. I’d like to know how much that audit cost.”