Categorized | National News

Credit Card Abuse At NIB

Suspended National Insurance Board (NIB) Director Algernon Cargill was not the only NIB employee who contributed to a credit card expenditure of over $240,000 in a three-year period, according to the government’s internal audit into the social safety net organisation.

According to the audit, which was obtained by The Bahama Journal yesterday, those credit card charges should have been subject to normal purchasing oversight through NIB’s Purchasing Department.

Grant Thorton – the accounting firm that conducted the audit – found that NIB has no documented credit card policy and NIB’s Chief Internal Auditor Whitney Patton stated that he was not aware that a credit card was issued to Mr. Cargill.

Mr. Patton further said when they looked at the Enterprise Risk Assessment, the credit card was not included in the scope and also he said that in fact, he was not aware that there was a credit card.

“He further discussed that for his business travel, he used his personal credit card and then claimed for reimbursements from NIB. He also said the Board should have prepared a credit card policy and the Financial Controller should have recommended that Internal Audit review of the credit card charges, if she thought it warranted review, but that did not happen,” Grant Thorton said.

It was found that there were two $25,000 corporate credit cards issued during the period 2009 through 2012.

Grant Thorton conducted an interview with Financial Controller Sonia Gill.

The auditor inquired of Mrs. Gill if there was a documentation to issue credit cards to Mr. Cargill or terminated NIB Chairman Gregory Moss.

“However, Mrs. Gill provided us no documentation authorisation to approve the issuance of credit cards to both,” Grant Thorton said.

“However, Mrs. Gill did provided us with documentation on how the credit card of Mr. Moss was processed and collected from Royal Bank of Canada. We were not provided with documentation on how the credit card of Mr. Algernon Cargill was processed and collected as according to Mrs. Gill, she has yet to locate them.”

The auditor reported that on January 2, 2013, Mrs. Cecile Williams-Bethel and Mrs. Gill cancelled the credit cards.

The auditors said that the purchase of supplies, electronic devices such as cell phones, iPads, iPhones, cameras and other IT hardware could have been subject to normal purchasing and not at Mr. Cargill’s discretion.

The credit card charges from January 1, 2009 through October 31, 2012 totalled $273,541.16 of which $272,493.01 was reported as business expenses and $1,048.15 was reported as personal expense which was recorded as a receivable from the employee, according to the audit.

“Purchase of supplies, electronic devices such as cell phones, iPads, iPhones, camera and IT hardware were not made in compliance with the policy on delegated authority to spend budget allocations,” Grant Thorton said.

“Based on our review of the expense summary of Mr. Algernon Cargill and its attached supporting documents and correspondences, we found out that the total charges of $272,493.01 were not solely occurred by him but were also incurred by other NIB employees through the use of his credit card.”

It added, “Mr. Algernon Cargill used his NIB Corporate credit card for meals in addition to the travel and subsistence allowances he received when travelling out of town both locally and overseas.

The expenses were broken down in the categories of trainings, travel, and accommodations, IT software and hardware, cell phones, supplies, meals, bank charges and miscellaneous items.

Over the three years, Mr. Cargill accrued expenses of $79,467.69, Vice President of Information Technology Raymond Wells spent $125,072.44, former NIB Chairman Patrick Ward spent $5,049, Senior Manager of IT Dave Forbes spent $16,555.82, Vice President of Medical Dr. Kevin Bowe spent $8,871.75, Human Resources Director Richenda King spent $2,500.36 and other NIB staff spent $27,422.61.

It was found that $117,425.59 was spent on travel, $71,583.55 was spent on IT software and $56,584.24 on cell phones, accessories and cameras.

“Since there was no specific credit card policy to check if all credit card purchases were made in compliance with said policy, we adopted on delegated authority to spend budget allocation. We did not note any budget verification on all credit card payments. The budget verification indicated the dollar amount of budget that was available as required,” Grant Thorton said.

The Bahamas First Head In Conflict

The auditors also looked into the allegation that Mr. Cargill engaged the services of Bahamas First General Insurance Company as he knew that former NIB Chairman Patrick Ward was president of the insurance company at the time the policy started at NIB.

Mr. Moss put the spotlight on the issue late last year and indicated his concerns in his letter to NIB Minister Shane Gibson.

Mr. Moss also said that Mr. Cargill ignored Cabinet’s instruction to retender the insurance contract without Bahamas First.

The former chairman said Mr. Cargill ill-advised the Board that despite the conflict, the policy could not be cancelled as the entire premium had been paid and cancellation of the policy was not a practical option as the short-rate which would be payable upon cancellation during the term of the policy and would be substantially equivalent to the annual premium.

“The results are that Director Cargill has caused NIB to be saddled with the Bahamas First Policy May 31st, 2013 when such a policy never should have been effected in the first place,” the auditors said was alleged.

It is also alleged that Mr. Cargill told the Board that the policy was for a fixed term of three years which could not be terminated.

The auditors determined that in 2003 Carib Insurance negotiated general insurance for NIB.

However, Bahamas First purchased the company in 2007.

Mr. Ward was appointed as NIB chairman effective July 1, 2007.

“It is important to note that Mr. Ward did not disclose to the Board of Directors any particulars of the Carib purchase, and the fact that the relevant sales purchase agreement was signed on June 22, 2007. Also, absent from the disclosure by Mr. Ward was the fact that Bahamas First had not yet received approval to finalise acquisition of 100 per cent of outstanding shares of Carib Insurance Agency Limited from the government that is the Office of the Registrar of Insurance Companies, which came under the purview of the Ministry of Finance,” the auditor said.

“Approval to purchase Carib was granted by the government effective September 14, 2007 two weeks after August 30, 2007 Board Meeting at which Mr. Ward declared Bahamas First had purchased Carib.”

Bahamas First continued to provide services to NIB.

Grant Thorton added, “What is indeed clear is that Bahamas First did in fact offer the lowest premiums for general insurance cover at NIB each year however, due to the conflict by Chairman Patrick Ward, there is the perception that he had an unfair advantage, particularly if he was in a position to know what other companies would bid.”

Written by Jones Bahamas

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