Govt overshoots budget for CARIFTA and Jubilee Games

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

BAHAMIAN taxpayers incurred an extra $7m bill to cover cost overruns for two much-hyped sporting events that were hosted last summer, the Government’s financial watchdog has revealed.

The Auditor General’s Office, in reports tabled in the House of Assembly, revealed that the Government overshot its upgraded $4.9m spending allocation for the 50th CARIFTA track and field championships and Bahamas Jubilee Games through a near-total $12m outlay on the two events.

This $7m overrun occurred despite the Government, in its 2002-2023 supplementary Budget, more than doubling spending on the Bahamas Jubilee Games from the original $1.5m to $3.5m - an increase of $2m. CAR- IFTA expenditure was also increased, albeit by a more modest $400,000, to take it from an initial $1m to $1.4m in the same 2022-2023 fiscal year.

However, even these increases proved woefully insufficient to cover the Government’s ultimate outlays, which came to $5.559m for the Bahamas Jubilee Games and $6.43m for hosting the regional CARIFTA championships.

When the figures are combined, the total $11.989m total exceeds the $4.9m supplementary Budget allocation by more than $7m or 145 percent - meaning the spend is more than double what was predicted. And the Auditor General’s Office, in its CARIFTA report, reveals that the net loss, or deficit, incurred by The Bahamas from hosting the event was almost 20 times’ what was forecast.

The CARIFTA Games Company Ltd, which was incorporated to oversee the event’s planning and host- ing, had predicted a modest $42,060 loss but this, in reality, turned out to be 1,972.9 percent greater at $829,821. This resulted in the deficit being some $787,761 higher than expected.

The report shows that the Government, which had already provided some $5.279m in funding through the Ministry of Finance and Ministry of Youth, Sports and Culture, was forced

to further dip into the taxpayer well and come up with another $1.151m to cover “outstanding bills” due to Bahamian vendors and event staff. This brought its total CARIFTA spend to $6.43m.

“Based on the financial statements of the CARIFTA Games Company, an unfavourable net income (deficit) of $829,821 was reported,” the Auditor General’s Office said. “Upon analysing these statements, it is evident that total income amounted to $6.615m.”

“To ascertain the net income (deficit), the total cost of goods sold ($104,698), the total expense ($4.379m) and total operational expense ($2.961m) was deducted, which resulted in a total of

$7.445m. The net income (deficit) is calculated by subtracting $7.445m from $6.615m.”

Due to the $829,821 loss recorded before the Government’s intervention, the Auditor General’s Office urged: “The Local Organising Committee is strongly advised to ensure that its total expenses do not surpass its total income. It is imperative for the organisation to have established effective control measures in place to ensure that any budget deficits remain within pre-determined limits.”

The 50th CARIFTA’s government funding was drawn down in six tranches between November 2022 and April 2023, ranging in size from $500,000 to a high of $1.5m. Even this $5.278m proved insufficient to ensure that the event minimised its loss, the Auditor General’s Office revealed, as more money was needed.

“We have identified that the Local Organising Committee (LOC) acquired additional funding subsequent to the conclusion of the balance sheet reporting period on April 30, 2023, amounting to $1.152m,” the report said.

“Consequently, a total sum of $6.43m was receive from the Government by the end of August 31, 2023. Funds from the subsequent receipt were used to pay the LOC’s outstanding bills to vendors and outstanding salary payments.”

The Bahamian taxpayer’s total CARIFTA outlay was thus more than six times’ greater than the $1m originally budgeted, and over four times’ higher than the $1.4m allocation contained in the 2022-2023 supplementary Budget. And the Auditor General’s report revealed that some funds were “allocated to expenses unrelated to the Games”, with internal financial controls branded “weak”.

“The Government initially budgeted an amount of $1m for the CARIFTA Games,” the report affirmed. “The sum of $1m was allocated to the initial expenses of the CARIFTA Games. The procedure for acquiring funding involved submitting a drawn-down schedule to the Ministry of Youth, Sports and Culture for authorisation, [which] was not consistently adhered to.

“Funds received had already been allocated to expenses unrelated to the Games. There were weak internal controls in purchasing and procurement procedures established by the chief financial officer.”

The Auditor General’s Office added: “Prior to the disbursement of funds, it is imperative to allocate the budgetary line items and their respective funds.

“Any expenses that deviate from the mutually agreed upon budget should obtain the approval of the chief financial officer prior to the release of funds.” And, while the LOC was found to have “made a substantial contribution” to the Thomas A. Robinson National Stadium through the Legend Walk project, the $248,000 spent on it was not designated for that purpose.

“In addition, the LOC incurred a total expenditure of $2.856m for capital works, with a budget allocation of $1.122m for the respective line item. This resulted in an over-expenditure amounting to $1.735m, which is 255 percent of the allocated budget,” the Auditor General’s Office report said.

Lynden Maycock, the LOC’s chief executive, said in January 2023 that it was aiming to raise $3m from corporate sponsorship of CARIFTA and, at that time, was half-way there at $1.5m. “There are persons in corporate Bahamas who are calling just about every day, and so we expect to meet our goal in respect to the $3m that we targeted in sponsorship for the operations of these games,” he said.

“The $3m will be achieved through sponsorship as well as ticket sales, merchandising, and so we look forward to those funds being accumulated in our $3m target.” However, it appears based on the Auditor General’s Office report that they fell some way short of this target. It revealed that some $1.336m in income was generated, representing 49.5 percent or less than half the $2.7m goal.

As for the Bahamas Jubilee Games, the Auditor General’s Office in a sepArate report disclosed that the Government provided $4.531m in funding prior to and during the event. This was some 29.5 percent, or $1m, higher than the budgeted $3.5m, but the tax- payer’s exposure did not end there.

“The Auditor General’s Office have identified that the secretariat acquired additional funding subsequent to the completion of the games amounting to $1.028m,” the report added. “A total sum of $5.559m was received as at August 31, 2023.” The latter figure is $2m, or 58.8 percent, higher than projected in the 2022- 2023 supplementary Budget.

The reason for the cost overruns was never explained, and it is unclear whether this was partially due to inaccurate forecasting or under-budgeting. It is also uncertain how the Government funded the cost overruns, although it likely repurposed monies already budgeted.

However, the findings show that behind the scenes of these major sporting events, and the medal-winning performances of Bahamian track and field athletes, there are major questions over whether taxpayers are receiving value for money from these events.

The Government will likely retort that no price can be placed on investing in Bahamian youth and their achievements, with sport seen as instilling values such as teamwork, discipline and respect that can help steer persons away from a life of crime.