The National Insurance Board (NIB) did not properly track the amount of money it was advancing to a company retained to oversee a housing project, resulting in excess payments totaling $800,000, an auditor general’s report said.
The report, dated November 18, 2019, was tabled in the House of Assembly on Wednesday.
It covers an agreement between the Ministry of Environment and Housing (MOEH) and NIB during 2012 to 2017.
The report noted that in 2012, the ministry, via the Bahamas Mortgage Corporation (BMC), sought to borrow $60 million from NIB for the construction of 73 homes in various subdivisions.
In 2013, the auditor general noted, “NIB resolved to advance funding to BMC in four tranches of $2.5 million per quarter not to exceed $10 million within the first year.”
The report noted that later that year, a committee was established to oversee the implementation of a memorandum of understanding and HLB Galanis & Co. was selected as the administrator for the arraignment.
According to the report, HLB would “review and evaluate MOEH project projections and determine the funds required for monthly disbursements”.
It would also “evaluate and advise timing for additional funds required to continue the housing initiative”; track disbursements; ensure compliance with contractual terms of loan and record and monitor expenditure, among other things.
The auditor general report noted that HLB Galanis and Co. prepared reports to outline the use of funds, but a review of the reports “indicated several discrepancies”.
“Homes have been built in locations not previously agreed to and the styles of select homes have changed without formal prior approval of the Housing Programme Management Committee,” the auditor general found.
“NIB did not properly track the status of amounts advanced under the facility resulting in excess payments to the administrator totaling $800,000.
“Our analysis of reports provided by the administrator indicated a number of payments that appeared to be duplicate payments made to contractors.
“HLB Galanis conducted a separate internal investigation and have identified some $140,404.13 as possible duplicate payments and some $283,264.31 as fraudulent payments.
“HLB Galanis referred the fraud matters to the police and a former employee has since pleaded guilty to the fraud charges.
“As part of the fraud investigations at the offices of the administrator, it was discovered that amounts reported in the records of the administrator to have been made to certain contractors were subsequently found to have been made to other individuals.
“Unfortunately, based on the destruction of documents during the fire at the administrator’s offices, we are unable to conclude on the correctness of the total duplicate payments amount.”
The auditor general said the structure that was chosen for administering the arrangement was not the most efficient.
The report recommended that an updated loan agreement be put in place to cover the additional $800,000 that was advanced by NIB, and said “efforts should be made to conclude on the amount of and recover the duplicate payments to contractors”.
It also noted that the loan agreement should be updated to approve changes made to building locations and styles.