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Weakness Found In MOF Audit

A number of irregularities have been  found in  audit report  of the Ministry of Finance.  There were  lease agreements given to Atillio Holdings Company (AHC)  and it was discovered   that “in August 2017, the Ministry of Finance (MOF) executed at least one residential apartment lease agreement with AHC limited, a Bahamian entity incorporated the month before.”

“Atillio was found to be an affiliate of Bahamas Striping, a well-known Bahamian contractor involved in road work and airfield maintenance, among other businesses,” it added.

The audit prepared by U.S.-based business advisory firm, FTI Consulting, also revealed that at the time the lease was executed, Atillio had no business history or evident qualifications as a real estate broker or leasing agent.

It also found that payment records and documentary evidence indicate that while MOF executed only one lease agreement by signature, it initially made payments to Atillio for up to three apartments.

“Each leased for $5,500 per month. The sole lease executed by signature is for a three-year term, thereby amounting to $198,000 in total contractual value.”

Meantime,  two other unexecuted leases existed for a second property.

However, FTI did not identify any lease for the third property.

“FTI identified no evidence that the housing needs addressed by the Atillio properties were subject to competitive bidding or put before the Government Tenders Board (GTB) for consideration despite a requirement in the financial administration and audit act that contracts of such value be put before the GTB.”

The audit also found that MOF made over $124,000 in rental payments to Airfield Maintenance Services (AMS), another affiliate of Bahamas Striping, in lieu of Atillio.

“Because Atillio had only recently been incorporated and did not yet have bank accounts, it requested that the MOF make initial payments to AMS and MOF did so.”

The report revealed that as of March 13, 2018, MOF had made approximately $160,000 in payments, collectively, to AMS and Atillio.

“Duane Ellis, a former MOF Financial Officer responsible for processing the initial payments to AMS stated that all such payments were approved by his superiors,” the report said. 

However, it said neither Ellis nor MOF produced any documentary evidence of payment approvals. 

“After the leases were executed, Ellis recalled that Atillio submitted an invoice for apartment furnishings, which he rejected because the leases called for the apartments to include furnishings.

“FTI’s own research suggests that the Atillio leases represent a questionable value for money as comparable apartments for rent advertised online are listed for substantially less rent than what Atillio offered.” 

The audit suggested that the origins of the Atillio leases are unclear.

“Due to the lack of documentary evidence and uncertainty surrounding the Atillio leases, FTI’s examination raised significant concerns regarding the potential for conflicts of interest or other improprieties.

“Although the leases with Atillio appear to have been driven by an urgent need to house external consultants, it remained unclear why Atillio was selected as leasing agent rather than other potentially more qualified local agents that may have also had suitable properties available for immediate lease at a lower cost.

“Moreover, FTI identified no evidence that Atillio is licensed as a real estate broker pursuant to the Real Estate (Brokers and Salesmen) Act of 1996.”

The audit’s findings also revealed that “MOF appears to lack internal written policies or procedures that promote awareness of and compliance with key laws and regulations governing procurement, namely the Financial Administration and Audit Act of 1973 and the financial regulations of 1975.”

FTI found no evidence at MOF of any comprehensive internal written policies or procedures concerning permissible exceptions to competitive bidding, vendor due diligence and disclosure requirements or vendor payment processes and approvals.

“While not exempting its personnel from adhering to existing laws and regulations relating to procurement, this appears to represent a significant weakness in MOF’s internal control environment and may expose MOF to an increased risk of procurement malfeasance or equivocation on issues of accountability, ” the report said.

Written by Jones Bahamas

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