Former Financial Secretary under the NDP administration Neil Smith, who was the government’s official liaison in the controversial BVI Airways deal, has been accused of acting negligently in his decision-making on a number of instances.
The Office of the Auditor General levelled these accusations in its special report about the former government’s failed $7.2 million deal with the airline.
The report revealed that Smith broke protocol on several occasions and failed to properly ventilate significant matters before making decisions.
The Auditor General’s report further said Smith facilitated for the airline’s operator parties – which included investor Bruce Bradley, Jerry Willoughby of BVI Airways and Scott Weisman of Colchester Aviation – to have ongoing high-level access and support from within the government.
Conflict of interest
According to the report, the decision to have Smith as government’s official liaison while still serving as the Financial Secretary clashed with the necessary checks and balances that were needed in the oversight of the deal.
This, the report said, led to unilateral decisions being made on important matters.
“The assignment of the Financial Secretary to facilitate the venture eliminated an important check that should exist between project execution and project financing. This created a conﬂict whereby the Financial Secretary’ s obligation to ensure the successful launching of the project may have obscured his public duty as the primary custodian of government’s finances,” the report stated.
It added: “The acute level of scrutiny that should have been applied to the financial and other issues of risk presented by the operator parties was replaced with insistent action to accommodate their requests.”
Instances identified with $6.8 million spent prematurely
The Auditor General’s report pointed to some of the decisions made by Smith after the government failed to obtain what is known as a ‘letter of credit’, which was requested by the operator parties.
A letter of credit is a document from a bank that guarantees payment (of the $7.2 million).
“That failure [to get the letter of credit] was followed by early payment of $4.8 million to the operator parties, the release of the escrow payment of $2.0 million without Cabinet authorization in January 2017, and active pursuit of a public loan guarantee and compensation payments requested by the operating parties. These were decisions made by the Financial Secretary as project liaison rather than public custodian,” the report said.
Government’s nominated director left in the dark
Additionally, Ryan Geluk, who was nominated by government to sit on the Board of Directors of the BVI Airways, said besides attending one meeting with the former Financial Secretary, he was not provided with any information regarding the airline’s operations.
“The only set of ﬁnancial statements received were unaudited and for the 15 months pre-operational period from the commencement of the venture to 31 March 2017,” Geluk stated in the report.
After almost three years, a full criminal investigation has been launched into the failed BVI Airways deal which cost taxpayers $7.2 million.