Saturday, February 21, 2015

Accountant General quizzed over airport plan

Accountant General Curtis Stovell
The Public Accounts Committee (PAC) has agreed to ask the Bermuda Business Development Agency, America’s Cup Bermuda and the Bermuda Tourism Authority for their written financial procedures.

PAC Chairman David Burt said written procedures for the independent, Government-funded organizations should be in place, according to the requirements laid out by Financial Instructions, which provides for financial controls over the activities of Government.

The PAC went into private discussions at the end of their meeting yesterday afternoon after One Bermuda Alliance committee members stated they wished to talk behind closed doors, citing late notice of the issue, which had arrived less than an hour before the beginning of the meeting.

Mr. Burt said it was motivated by discussions in the House of Assembly last week about an interest-free loan from one of the organizations to a private entity.

After the private discussions, Mr. Burt announced that the committee had agreed to send the requests.

The Public Accounts Committee focused on the proposed redevelopment of the Bermuda airport yesterday, questioning Accountant General Curtis Stovell about his reasons for giving Government permission to enter into an agreement with Canadian Commercial Corporation (CCC) to facilitate the project, without a competitive bidding process.

Mr. Stovell, speaking at the PAC meeting in the library at the House of Assembly, said that his position as Accountant General allowed him to waive the need for Government projects required by Financial Instructions to be tendered. He said: “Much of the justification and reasoning (for waiving the requirement) has been described in the ministerial statement,” and added that subsequent Parliamentary statements had also included the rationales.

Finance Minister Bob Richards had told the House of Assembly in a ministerial statement dated November 21, that: “This structure, which is tried and tested in other countries, has a number of reduction advantages:

•reducing the risk and expense of procurement;

•reducing the risk of budget overruns;

•reducing the risk of late delivery;

•reducing the risk to the Bermuda Government treasury and balance sheet; and

•reducing unemployment in our island and validating value for money issues.”

Mr. Richards called it: “... a winning formula on all fronts.”

Mr. Stovell said: “The Government debt is at $2 billion. This would not add to the debt,” and called it: “A persuasive argument.”

Answering PAC Chairman David Burt’s questions, he said: “In my view, we are getting value for money.’

Mr. Stovell said the Memorandum of Agreement signed with the CCC did not involve payment of any Government funds, and described it as an “agreement to enter into an agreement”, adding: “It could lead to further contracts down the road. It’s there I expect to focus on getting value for money.”

Mr. Stovell added later in the meeting: “The current letter of agreement does not contain any financial terms — it is an agreement to make an agreement.”

He did concede that the request to bypass the tendering process was made verbally, and it had come from the Financial Secretary, Arnold Manders.

Mr. Burt, who is a Progressive Labor Party Member of Parliament and the shadow Minister of Finance, had noted that Financial Instructions state that the request should be made in writing.

Mr. Stovell told the committee: “In my estimation, the Financial Instructions that I am responsible for have been followed,” although he said later that “under ideal circumstances, a competitive process would have been preferable”.

One Bermuda Alliance MP Cole Simons, a member of the PAC, asked if there was another organisation that could provide comparable services to CCC.

Mr. Stovell replied: “I am not expressly aware of another organisation that would structure this in the same way.”

However, Mr. Stovell expressed concerns that the redeveloped airport’s income would not sustain the debt incurred to cover the project’s costs.

The money earned by the airport now does not cover its costs, Mr. Stovell told the committee.

“I cannot confirm the ability of the project to sustain the debt.”

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