A number of probes at government companies

September 06, 2011 7:32 AM

Investigations on an exceptionally large-scale are currently being conducted within Curaçao's government-owned companies and institutes affiliated with government.

Three investigations are taking place at utilities provider Aqualectra, while an audit team is also active at the local university. Up to five audits were announced at United Telecommunication Services (UTS) while harbour company Curaçao Ports Authority (CPA) is also subject to investigation.

All of these audits are costing society a considerable sum of money.

Former commissioner Nelson Pierre, who as such recruited the Vantage office in the past to conduct an audit at Aqualectra and local fuel provider Curoil, was one of the first to use audits to get an idea of the ins and outs within government companies. However, even he finds so many simultaneous audits too ridiculous for words and thinks the Schotte cabinet is using this to do business.

"Friends are getting orders to conduct the audits but four simultaneous audits with one company are impossible. This will bring the company to a standstill and there is no clear picture of what one wants to accomplish. A main audit is first needed and on that basis one is to decide whether more are necessary."

Pierre also finds it remarkable that no decisions are taken based on the audits. "Only at Aqualectra did they decide that the directors could not sign checks above 50 guilders."

In the meantime, three of the four directors of Aqualectra were told by the Supervisory Board of a request for their dismissal sent to the shareholder.

Below, a list of the most notable audits with relevant costs that were conducted or are still in progress at government companies and institutes affiliated with the government during the first eleven months of the Schotte-cabinet.

The Supervisory Board of Aqualectra has opened three investigations. The total costs exceed 2 million guilders. The most commented probe there regards the operational audit from FTI Consulting that will soon be presented to the shareholder at a cost of 169,000 US dollars.

FTI is currently also auditing the ICT of the utility company and the machines. This audit costs 40,000 US dollars. The total price-tag for the two investigations amounts to 376,200 Antillean guilders.

The third audit is from BOOZ & Co and costs 1.2 million US dollars. This investigation focuses on a so-called turn-around at the utility company. BOOZ & Co is drawing up a new policy for Aqualectra.

The fourth audit focuses on the unregistered water consumption, the so-called leakage loss. This audit was set up by the Bureau Telecommunication & Post (BTP), for which the supervisor of the energy sector consulted the Dutch water company Evident.

Aqualectra has a leakage loss of 26 percent that is to be reduced to a more acceptable level. Until now management of Aqualectra has given its full cooperation.

In previous reports management was always able to show that the utility company was being run in a professional manner. Management has also challenged the conclusions in the FTI draft report on the operational audit, agreeing with only 3 of the 53 comments.

Aqualectra is not the only government company where the board is conducting an assiduous investigation. The Supervisory Council of vocational training institute Feffik has also started two investigations.

The institute is considered a disaster regarding finances. Some of the personnel are also at loggerheads with the director, who recently went on holiday so the auditors could do their work without hindrance for three weeks.

One audit is specifically focussed on management and the other has a rather general character. The council called in two offices, namely Hernandez & Associates and De-Stefano Wernet, whom Feffik will pay 32,000 guilders.

According to chairlady Erica Wever, these audits will be completed soon.

An audit team also examined the books at the University of Curaçao. The investigation led by ACC & Partners was recently completed. The purpose of the audit was a thorough analysis of the current alarming financial situation at the university within the framework of granting government subsidy.

The Supervisory Council also deemed it important to gain clear insight in how the university performs its key tasks, the structure used for such regarding to the coordination and managing of processes within the university as well as possible improvement points.

On top of that, Terry Hernandez conducted an investigation into alleged fraudulent practices within the university. That report was also presented to the council recently and led to the dismissal of Chancellor Miguel Goede.

No less than five investigations at UTS have now been announced. It regards four audits and a second opinion on participation in the data centre project Ctex.

The audits regard the functioning of the former board members and of director De Geus since his appointment in 2006, while a technical and general audit of the entire company and all its subsidiaries including foreign branches is pending.

Up to now only the audit on the general policy at UTS conducted by consultancy bureau Balance in cooperation with government accountant bureau SOAB was completed. The investigation into the functioning of De Gues and former board members conducted by Ernst & Young is almost ready.

The technical audit has not been contracted out yet, while a decision on the second opinion regarding UTS' participation in Ctex was only recently taken. The management of UTS is not making any statements on the costs involved with these investigations.

Within the framework of the investigation into Ctex, a series of investigations were also conducted into the participation of another government company, namely Core NV, in the project to establish a data centre on the island. For example, government accountant bureau SOAB conducted two inquiries into the feasibility of the project, charting possible risks.

A third investigation followed at the request of Minister of Administration, Planning and Service Carlos Monk (PS). Accountant Terry Hernandez audited Ctex and concluded that there were too many risks linked to the project.

However, in his report to Monk, Hernandez stated that the auditors admit "not to have examined all documents thoroughly" and that a more thorough investigation could lead to other conclusions. The costs of these investigation were not published either.

It was also agreed with Hernandez to investigate the following matters with Curaçao Ports Authority (CPA): travel- and accommodation expenses including representation and visits to congresses; the investments in Panama; the agreement with Professional Port Services NV; recruitment and selection of personnel; contracts with third parties on tug boats; donations; contracts with foreign representatives and suppliers; investments and the relationship between the various corporations.

At the beginning of the audit in December Hernandez had indicated that he needed one month for the investigation. With the presentation of this draft report, he remained within the agreed-on term.

He charges an hourly rate of 500 guilders, which amounts to approximately 90,000 guilders for one month's work, excluding the OB sales tax and 12 percent in office expenses.

Based on the final report that was completed only at the end of March, CPA-director Marcelino "Chonky" de Lannoy was dismissed. His court case against CPA is coming up for trial soon, while he lodged a complaint with the Royal Dutch Institute for chartered accountants too.

Hernandez also received another order at CPA to examine the pension schemes of the former co-directors Richard Lopez Ramirez and Augustin Diaz. No official statements were made on the extra costs for the additional work performed by Hernandez.

(Source: The Daily Herald S. Maarten)

6 September 2011

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