The strange case of the 1991-1994 audits SSB, DFC hustling had precedent - PUP 1991-1993 $22.3 million bleeding of national treasury
Posted: 02/03/2007 - 10:14 AM
Author: Adele Ramos
Amandala has come across three shocking special audit documents dating all the way back to the period 1991-1994, which reveal a string of questionable municipal contracts totaling $22.3 million, and mostly controlled by a set of related companies whose front man was well-known businessman Javier Berbey Garcia, now deceased. Nothing ever came out of the audits, except Government having to pay more money to settle lawsuits. Neither the audit report nor the lawsuits were ever made public.
If you think the shocking stories coming out of the Development Finance Corporation (DFC) Commission of Inquiry are unbelievable, wait until you get the gist of what’s inside these audit reports and the responses we’ve received from some of those people we’ve questioned about them to date.
The three-volume series produced in July, August and November 1994 were prepared by former UDP Opposition Senator, Arthur Roches, who served as an internal auditor for the Financial Secretary, doing the work for the Office of the then UDP Prime Minister, Manuel Esquivel.
The United Democratic Party (UDP) had commissioned the internal investigation of how the preceding People’s United Party (PUP) administration had been managing the public purse, but notably, the results of that audit have been secret until recently, with several copies of those supposedly confidential documents now in circulation.
The documents say that the Ministry of Finance entered into 205 works-related contracts, most of which were signed by the then Minister of State in the Ministry of Finance, Hon. Ralph Fonseca, for his own electoral division, Belize Rural Central. A few were signed by the then Chief Procurement Officer, Hon. Maxwell Samuels, incumbent Belize Rural North area representative, who, the audit reports say, often bypassed the tender procedures without the knowledge of key officials in the Ministry of Finance.
“That other officials in the Government [other than the Minister of Finance] approved projects, appears illegal, and this may be a matter for the legal minds to decide bearing in mind that before funds could be made available to begin and complete projects, the Minister of Finance has to seek approval from the Legislature once there is no provision for them in the Annual Estimates,” the audit said.
There were nine big contractors and six small ones. The big contractors were Phoenix Limited, Seramak International, Southern Contractions and Investments Company, Bella Vista Development Company, K.W. Construction Company, Indeco Enterprise, Vista Del Mar Development Company, Belize Aggregates and Metropolitan Development Company. The smaller contractors were Rudolph Gillett, Carter’s Construction Company, Selwyn Gillett, John Henry, Wilhelm Lopez and Roy Quilter.
In only 38 of the cases were proper tender and competitive bidding procedures followed and most of the bidding was done by related companies, with the signature of one person appearing, in one instance, on contracts awarded to four different companies, said the audit report.
“Waivering [sic] of tender procedure appeared to be the order of the day, given the frequency at which it was done and by the Minister of State in the Ministry of Finance,” the report said, adding that under the financial regulations, it is the Minister of Finance alone who has the power to waive—but only in exceptional circumstances.
Instead of placing projects in the hands of the chief engineer of the Ministry of Works, they were overseen by an architect that the Minister of State in the Ministry of Finance contracted – a man identified as Luis “Blas” Mendez. Roches opines that the supervising task was too monumental for Mendez, and because of lack of adequate supervision and assessments of some projects, Government could have been “taken to the cleaners.”
But what is also shocking is Roches’ claim that when he went to investigate the works that were supposed to have been done, there was very little evidence in many cases that Government even got some of the roads, bridges and culverts, and infrastructural repairs that it had paid for. There was one case of alleged fraud. Roads were sometimes found to be shorter and narrower than the contracts made them out to be. In one instance a football field that Government had paid for, could not be located.
According to the audit, $33,000 was paid on vouchers which stated that the funds were “for the chairman” of the Gales Point Village Council but the then chairman, Walter Goff, knew nothing of any money collected on his behalf. In the case of one $15,000 voucher, a Cornelius Andrewin, said to be chairman of Gales Point Manatee, was named as the payee by the Government of Belize when he was, clearly, not even the chairman. Moreover, no such person was even known in the village. The Andrewin case, said Roches, appears to be a case of “forgery/fraud.”
In one instance, a string of vouchers amounting to 60% of the total bill was paid out to a contractor even before the contract document was finalized, and by the time it was paid off totally, the contractor got $20,000 more than the agreed contract sum.
Today, Esquivel told us that he does remember the audits Roches had submitted, and that they were still in the hands of the then Solicitor General, Gian Ghandi, when the UDP left office in 1998.
But when we spoke with Ghandi thereafter, he said that he does not remember seeing any such audits. The man who was in charge of the Attorney General’s Ministry at the time, now Opposition Leader, Hon. Dean Barrow, told us that he also does not recall any such audits - that something that important would have stayed in his memory.
When we asked Esquivel why the issues raised in the audit were never resolved, he told us that the problem was that many of the contracts were in court, because the contract holders sued after the UDP government cancelled their contracts. He recalls the biggest challenge coming from the Berbey group—meaning Javier Berbey Garcia, who was the main man for a string of companies, including Belize Aggregates, which was owned 95% by Barry Bowen and Bowen and Bowen, and 5% by the Government of Belize. Garcia also signed for Bella Vista Development Company and Vista Del Mar Development Company. Al Chanona - brother of former Belmopan City Mayor Anthony Chanona - was also a point man for the Berbey group of companies.
While Barrow told us that he does not recall the Government being sued by Berbey, Ghandi said he does. When the UDP took office, the first thing they did was to unilaterally suspend the existing contracts, said Ghandi, recalling an arbitration over a contract where the arbitrator found in favor of Berbey.
Roches had submitted his documents to the then Financial Secretary, Jaime Alpuche, and the then Cabinet Secretary, Henry Gordon.
While we could not get to speak with Alpuche, we did speak with Gordon, who also recalls the issues raised in the audit, but confirms that nothing ever came out of them.
He said that he is not sure if anyone in his Government pressed the issue of the audits; Esquivel told us the same when we asked him the same question.
Gordon is calling what is being unearthed now with the DFC investigation and the investigation of the Social Security fund, “déjà vu” of what had been discovered in the 1991-1994 audits during the PUP administration.
“The document was alarming… Five companies kept tendering for practically every project,” Gordon said, describing the phenomenon as “gouging” and “feeding at the trough.”
We asked him why he thought the confidential audits are just coming out now? He responded that,
“There has been a cascading of documents” revealing the same bottom line. “It was almost, in my view, the mixing of the cake – what we are seeing happening now is nothing new. It has been going on for years.”
Esquivel told us that the intention behind commissioning the audit was to see if there was any wrongdoing during the previous People’s United Party (PUP) administration that exited office in June 1993.
Our newspaper has yet to get a satisfactory explanation as to why nothing ever came out of the 1994 audits—which, the auditor had asserted, supplies ample indication of financial bleeding of the public purse.
Gordon told us that since these were internal audits, they were never tabled in the National Assembly.
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