|Invoices had no VAT registration No. |
Wednesday, July 30 2014
PRIME Minister Kamla Persad-Bissessar last Friday tabled in Parliament the Finance Ministry’s Audit Report into the Operations of the LifeSport Programme. In so doing, she also forwarded the report to the Director of Public Prosecutions (DPP), Acting Commissioner of Police, the Integrity Commission and the Head of the Public Service for further investigations and in the case of the DPP and Police Commissioner, further investigations to see if criminal charges could be brought. The following is the conclusion of the Ministry’s audit report, publication of which began in Newsday’s Saturday edition and continued yesterday.
19.18.3 Ensure strict adherence to the approval and payment process which includes the submission of proper documentation.
19.18.4 Determine the maintenance arrangement with the Borough Corporation to avoid wastage of funds paid to contractors, who would be duplicating the service.
19.18.5 If the contactor with the lowest bid was not selected due to the number of contracts already awarded, then the second lowest bidder should be selected. The rationale for not selecting the lowest bidder must be clearly stated so as to avoid ambiguity in the tender process.
19.18.6 The accounting department should have a proper chart of accounts. In addition, journal entries should be sufficiently reviewed by the Accountant prior to posting to the general ledger. This would allow for consistent classification of accounts and allow for meaningful monthly comparisons.
20.1 Invoice #102 dated February 26, 2013 from HartStone Construction Company Ltd (HSC) (Director, Mr. Sean Hart) for the refurbishment of the Mt Dor Community Centre displayed no VAT registration number although VAT was computed on the invoiced amount (Appendix 13 refers).
Further, the tender amount of $783,929.28 submitted by HSC was interestingly identical to the in-house estimate of the Project Management Unit.
20.2 Contractor Walter Alibey of Agro Aggressive Business Organisation and Maintenance Services Limited (Agro) was awarded the contract to carry out refurbishment and maintenance work on the Valencia Community Centre. The cost of the contract was $832,703.50 (VAT inclusive).
Agro submitted two invoices numbered MCL 0006 for payment. The first invoice for $132,356. (VAT inclusive) was paid on July 5, 2013 by cheque #2453. The second invoice for $253,000 (VAT inclusive) was paid on September 6, 2013 by cheque #3259.
20.3 It was observed that an invoice date was absent from both invoices. Also, even though VAT was being charged the invoices did not contain a VAT registration number that is these were not tax invoices.
A recent visit to this centre revealed that the centre was still incomplete. It is not certain what refurbishment work was actually conducted since the centre was closed on the date of the visit. Central Audit was subsequently informed that both the power and water were disconnected from the centre just the day before for outstanding bills.
20.4 Mr Kieron Edwards was reimbursed $10,493 (cheque #1233) on February 8, 2013. The payment related to the purchase of building materials used in the refurbishment of the Pinto Road Centre, located at the Simple Sounds Pan Tent #42 Pinto Road Arima.
An invoice (#2038) from Bowen’s Lowprice Hardware (BLH), which requested LS to“make cheque payable to Kieron Edwards”, was seen in support of the aforementioned payment (Appendix 14 refers).
However, the invoice did not have a date; was not a tax invoice (which is highly irregular within the hardware industry); did not bear a resemblance to normal cash/charge invoices seen/received from local hardware stores; and was not stamped “PAID”.
20.5 Central Audit tried to ascertain whether or not Kieron Edwards is the owner of BLH. An internet search revealed that one Nigel Bowen is the Managing Director of BLH.
Further, on BLH’s Facebook page the word “Lowprice” as seen on the invoice is actually “Low Price”.
Documents perused showed that Kieron Edwards is a member of the LS Implementation Committee. Mr Ronnell Barclay confirmed that the refurbishment works (casting the floor at the Simple Sounds Pan Tent) conducted at the Pinto Rd. LS Centre was completed.
20.6 The Point Fortin LS Programme operates out of the Fanny Village Community Centre. The Centre was refurbished by Esperanza Construction Co. Ltd. during August/September 2013 at a cost of $485,900.30 (VAT inclusive).
During the refurbishment exercise the programme operated out of the Fanny Village Recreation Ground Pavilion. However, even though the refurbishment works was completed over nine (9) months ago the Programme continues to operate out of the Fanny Village Recreation Ground Pavilion as the Community Centre does not have electricity.
20.7.1 Companies bidding for contracts should be VAT registered, as the value of all the refurbishment works surpassed the VAT threshold of $360,000.
20.7.2 Companies charging VAT and not remitting it to the Board of Inland Revenue should be reported to the relevant authority.
20.7.3 Persons approving payments based on invoices submitted must ensure that all invoices contain basic information i.e. a date, an invoice number, a VAT registration number and company stamp (where applicable). Also, invoices submitted for a claim of reimbursement must be stamped “PAID” by the supplier.
21.1 A cost benefit analysis was carried out to determine whether it was more economical to purchase or rent tables and chairs for use in the LS Programme. The analysis concluded that purchasing rather than renting was more cost effective. According to the then CEO of SporTT relevant purchases were subsequently made. Further, that some centres were not in receipt of the total number of pieces of furniture allocated and as a result furniture was rented to meet the shortfall.
21.2 A review of rental payments for tables, chairs, tents, portables etc. revealed that these items were being rented from D.C. Tent Rentals (Davoughn Cummings) and Densil Collins. According to Mr Cornelius Price and Mr Theodore Charles there were no formal contracts regarding the engagement of these two suppliers.
21.3 Value for money was not achieved as exorbitant amounts were being paid monthly for the rental of these items when it was abundantly clear buying was the more economical option.
In addition, transparency seemed to be lacking, as verification of the services being paid for was difficult. Weaknesses in the approval and payment processes were also evident.
21.4 Cheque #10272 in the amount of $203,000 was paid to Davoughn Cummings on April 30, 2014.
The sum of $98,000.00 related to invoice #RI001 dated April 30, 2014 (Appendix 15 refers). It related to the reimbursement of the listed items in the table below. Mr Cummings claimed that these items were destroyed in February 2013 during a police raid.
Port a Cool Unit
Port a Hand Sink
21.5 The transparency of the entire reimbursement transaction was questionable. It should be noted that the items purchased by DC Rentals from the funds reimbursed were subsequently rented back from them as noted in invoices dated June 30, 2014 for Evergreen Carapo and Valencia in the sums of $39,000 and $12,000 respectively.
21.6 It should be noted that cheque #9919 for $98,000 was originally prepared on April 24, 2013 which was cancelled and re-issued on April 30, 2014 when the invoice was dated. Mr Price certified it on 30th April 2014.
The question arose as to how a cheque could be prepared for payment prior to the invoice being prepared and submitted. Further inquiry revealed that the assistant accountant Ms Beckles stated the cheque was printed on April 24, 2014 in error; when she observed the invoice was dated on April 30, 2014 the cheque was voided and reissued with the correct date.
How the accountant knew the cheque had to be issued prior to receiving the invoice remained unanswered.
21.7 It should be noted that the reimbursement was not authorised formally. Mr Price was advised by the Minister’s Advisor, Mr Keryl Keller to approve the payment.
He also indicated that there was a police report however no report was presented to Central Audit.
21.8 On November 11, 2013 Mr Cummings was paid $50,000. (cheque #4092) regarding invoice #0641 dated September 5, 2013 (Appendix 16 refers).
The payment relates to the provision of eight (8) twenty-five (25) seater maxi-taxis and two hundred (200) meals (breakfast, lunch and beverages) for a trip from Malabar to Guayaguayare.
It would appear from the number of maxi-taxis and meals provided that several centres were enlisted to make the trip. However, the invoice submitted did not contain any information regarding the centre/s involved nor on what day the trip occurred.
21.9 The invoice showed that Mr Cummings charged $110 per meal.
This differs significantly from the amount currently being paid ($70) by LS for a meal (breakfast and lunch). LS personnel indicated that field trips would normally take place between Monday and Friday.
If this trip took place on a week day then participants would have already been provided a meal from the authorised caterer/s for the centre/s involved.
Therefore, there would be no need for Mr Cummings to supply any meals.
Further, if the trip occurred on a weekend then a contracted caterer/s should have been used to supply the meals.
This could have resulted in a savings of $8,000 ($40 x 200 meals).
21.10 It is noteworthy that the review of the General Ledger revealed that for the periods 2012 to 2013 and 2013 to 2014, payments of $3,416,900 and $2,173,325 respectfully were paid to Davoughn Cummings of D.C Tent Rentals.
For both periods the payments totalled $5,590,225.
21.11 The second supplier for rental of table and chairs was Densil Collins. The following payments were made to him:
Cheque #6984 in the amount of $132,520 related to the rental of 25 tables and 60 chairs for the period 01/06/2013 – 30/06/2013 to Angostura Centre.
Cheque #830 in the amount of $23,140 related to the rental of 25 tables and 60 chairs for the period 06/08/2012 – 31/08/2012 (26) to Angostura Centre.
Cheque #831 in the amount of $26,700 related to the rental of 25 tables and 65 chairs for the period 01/09/2012 – 30/09/2012 (30) to Angostura Centre. Cheque #832 in the amount of $27,590 related to the rental of 25 tables and 65 chairs for the period 01/10/2012 – 31/10/2012 (31) to Angostura Centre.
21.12 A field visit to this centre revealed, the chairs and tables located there were less than what were invoiced and paid for.
In addition, Densil Collins submitted invoices related to Barataria, Morvant and Mt Dor.
21.13 Cheque #2444 valued $232,760 was received, as part payment, by Tropical Tent Rentals Ltd for the supply (purchase) of tables and chairs for the LS Programme. The invoice submitted totalled $465,520.
The allocation of these items could not be ascertained as a result of incomplete and/or lacking records.
21.14 Cheque #5156 valued $2,379,605.00 was received by Going All Out Event Planners as payments for:
Rental of high tech surveillance equipment for the period May 2013 – September 2013
Rental of Billboards, mini community competition, rental of PA system, for the period August 2013 – October 2013.
21.15 A number of invoices were submitted by Goin All Out Event Planners as listed below:
Professional Consultancy services at
10 centres for May 12th – 23rd, 2014
Professional Consultancy services at
10 centres for May12th – 23rd, 2014
Video production fees
Video production fees
Video production fees
Video production fees
Video production fees
21.16 The invoices neither detailed which centres the services pertained to nor displayed any VAT registration number. Additionally, no documentation relating to the tender and award of the above was seen.
21.17 It should be noted that no documentation relating to the tender and award of the above was seen. Also the invoices displayed no VAT registration number.
21.18 Cheque #5161 valued $820,900 was paid to Interior Concepts Limited for the supply of computers and photocopiers. Perusal of the invoice submitted showed that ninety-seven (97) desk tops computers in the amount of $658,630 were procured.
However, during the site visits no computers were seen at the various centres.
Discussions held with Mr Theodore Charles to ascertain the existence of the deskstops computers, revealed that only three (3) could be accounted for.
21.19 21st Century Computers Inc Limited was paid $998,500 via cheque #5159 for the supply of 200 laptop computers which was invoiced to the Director, LS Programme at Ato Boldon Stadium. No computers and/or equipment were physically located at the centres visited.
21.20 Enquires with Mr Theodore Charles revealed that seventy (70) laptops were accounted for.
The risk of theft and misappropriation of funds in the absence of proper internal controls was again highlighted.
21.21 Lewide Co was paid $986,866.55 via Cheque #5157 for the supply of Computer Repair Kits for 39 Life Sport Centres.
However, the site visit conducted revealed that no such equipment existed at any of the centres visited.
21.22 Cheque #9918 valued $48,500 paid to Rishazz Marketing related to the provision of communication and marketing services for the month ending April 2014.
An invoice for the month ending June 2014 was also submitted valued $48,500.
21.23 The details of the invoices relates to the following:
Collection of Data & Achievements of Life Sport Programme; 10,650
Local Community Advertising; 13,200
Published Positive Achievements of Participants; and 14,450 Site Visit to Various Centres 10,200
21.24 Examination of summary reports submitted on a monthly basis brought to the forefront the question of whether value of money was being achieved as no substantial work was verified. The report was also lacking in detail; it contained photographs which were repeated as representing different centres. However, the photographs were clearly copied and created a false representation.
21.25 Epic Sports Plus (ESP) (a little known company) was engaged to supply Football, Basketball and Cricket Kits and Equipment for the LS Programme without going through a tendering process. In August 2013 the following four (4) invoices totalling $2,553,210 were seen:-
Football jerseys, shorts and balls.
Football boots, socks, shin guards, goal posts and goal post nets.
Basketball tops, shorts, nets and balls.
Cricket shirts, pants, wickets, bats and balls.
Central Audit could not verify that these items were delivered and properly distributed
21.26 The invoices seen were not tax invoices that is they did not contain a VAT registration number even though the above sale (singular and in total) was above the VAT threshold of $360,000. Similar invoices were seen from Kadeem & Associates, Hercules Enterprise Caribbean Ltd. and All U Need Ltd. Central Audit also noted that the cost of items purchased appeared to be exorbitant.
21.27 Mr Cornelius Price and Mr Theodore Charles were asked about the criteria used in selecting the aforementioned companies and the exorbitant prices being paid.
However, both individuals were unable to provide adequate answers to the issues raised.
21.28.1 All companies exceeding the VAT threshold ($360,000) have to be registered with the Board of Inland Revenue as law and the number has to be displayed on all invoices submitted for payment.
21.28.2 Invoices submitted should detail the centres, participants names, service provided, and any other support.
21.28.3 All personnel, involved in the requisition to payment stages, who authorised the purchase of these equipment, who signed off as the service being provided satisfactorily, who certified as correct and the receipt and use of the goods and services procured ought to be held answerable, accountable and responsible as they were duty-bound to do such.
22.0 VOCATIONAL TRAINING (TRADE COMPONENT)
22.1 The Vocational Training aspect of the LS Programme was awarded to several companies in 2013 as follows:
Allsnorth General Contractor: Air conditioning, Refrigeration & Electrical Installation.
Re Construction and Repairs Limited: Building Construction and Welding.
Scobex Tech Limited: Aquaculture, Basic gym equipment maintenance, Physical Education, Fundamentals of Catering/Food Preparation, Physiotherapy & Fundamentals of Fabric design.
Kadeem & Associates Ltd: Computer Repairs, Introduction to Photography & Videography, Radio & Television/Disc Jockey presentation & Print Media Layout & Script Writing.
McKain Enterprises Ltd: Basic Bartending, Automobile detailing, Auto mechanics, Landscaping & Barbering.
22.1.1 Cheque stubs, payment vouchers, invoices and letters from the Ministry of Sport related to the Vocational Training were seen (Appendix 17 refers). Details of the cheques are listed below.
Allsnorth General Contractor
Re Construction and Repairs Limited
Scobex Tech Limited
Scobex Tech Limited
Kadeem & Associates Ltd
Mc Kain Enterprises Ltd
NB: Mc Kain Enterprises submitted an invoice dated June 25 2014 in the amount of $70,000 for the provision of videotaping services.
This related to 10 LS Centres during the period May 12th -23rd. This invoice was separate to the vocational training invoice.
22.2 Mr Thedore Charles, Mr Ronnell Barclay and Mr Cyril Berkeley could not clarify to Central Audit anything regarding the award and tender process. It is apparent that transparency and accountability is lacking as $5,619,250 was paid to these companies and no answers could have been furnished.
22.3 Centres visited revealed that the vocational training component was never implemented. It is therefore questionable as to how invoices could have been signed off as “service provided satisfactorily” and “certified correct” and subsequently paid for.
22.4 The LS Programme has two sessions each day. The class session commences at 9 am and ends 12 noon.
The sporting session commences at 3 pm.
It should be noted that invoices for the vocational training covers contact hours for tuition for 60 and 75 contact hours per centre.
22.5 No company submitting invoices had VAT registration numbers displayed.
Based on the value of the said invoices, they have all exceeded the VAT threshold and it is mandatory that they are registered with the Board of Inland Revenue.
22.6 Mr Theodore Charles stated training was implemented at the Larry Gomes Stadium as follows:
22.7 Mr Cyril Berkeley commenced as Assistant Programme Director, Operations in March 2014.
He also could not provide any information regarding the selection and works conducted for the above listed companies.
22.8 He indicated, in April 2014 vocational training was implemented at Larry Gomes Stadium, however, he was not involved in the selection of service providers but only in the implementation.
The three areas selected are listed below:
Cable and security camera installation was currently being conducted at Larry Gomes Stadium with thirty (30) participants in attendance.
Air condition and refrigeration was currently being conducted at Barataria with twenty five (25) participants in attendance.
The welding aspect was awaiting commencement at the Neal and Massy Industrial Centre.
22.9 Mr Berkeley was requested to provide details of service providers, names of the participants, course outline with attendance register and any relevant reports related to the training at Larry Gomes Stadium. However, to date no documentation has been received.
22.10.1 The award and tender process used to select the companies should be re-examined. This needs to be adhered to by all persons involved in the process to ensure accountability and transparency is observed.
22.10.2 The companies should be VAT registered.
22.10.3 Listing of centres to show which centres the trade components relates to and the participants in attendance to be accompanied with invoices submitted.
22.10.4 Course outlines with monthly reports to be submitted.
23.0 E-BEAM INTERACT LIMITED
23.1 The Agreement
23.1.1 On December 6, 2012, by signed agreement, the Sports Company of Trinidad and Tobago Limited (SporTT) retained the services of E-Beam Interact Limited (EBeam) to provide, by way of integrated interactive technology, the Numeracy and Literacy Component (N&LC) to the participants of the LS Programme.
The contract amount was agreed at TT $34,000,000 with a planned commencement date of December 6, 2012 and a projected completion date of September 30, 2014. To date however that component of the programme has not started
23.1.2 Central Audit was informed that E-Beam was sole selected mainly because of the company’s President/CEO, Mr Adolphus Daniell’s track record as an educator with respect to individuals who have struggled academically.
23.1.3 The justification, dated November 23, 2012, (Appendix 18 refers) stated that the sole selection method was used due to the sensitive nature of the LS Programme.
An overview of the crime situation in Trinidad and Tobago, the objective of the LS Programme, the criteria for the selection of prospective participants and a brief description of the Programme’s main components were also included as support for the justification for sole selection.
As a result of the above together with the fact that the recommendation came from the Permanent Secretary, MOS to the CEO SporTT, the Board of SporTT at a meeting held on March 8, 2013 ratified the decision made on December 6, 2012 to award the contract for the N&LC of the LS Programme to EBeam Interact Limited. (Appendix 18A refers).
23.1.4 Ms Dawn Mohan Corporate Secretary SporTT claimed that following the decision to award the contract she reviewed the draft, which was prepared by MOS Legal Unit, and pointed out to MOS numerous shortcomings, (Appendix 19 refers).
However, Central Audit saw the faxed response dated January 21, 2013, some six (6) weeks after the date of the contract, (Appendix 20 refers) sent by a Ms Judith Joseph from MOS to Ms Mohan.
She further claimed that against advice from his Legal Unit and with no change to the MOS draft, the CEO SporTT signed the agreement.
It appeared from the faxed response the advice came after the contract was signed.
23.1.5 Mr John Mollenthiel, ex CEO SporTT at a meeting on July 9, 2014, informed Central Audit that he signed the contract mainly to avoid any undue delays in the implementation of the N&LC of the Programme. He said he did not consider the suggested changes to the shortcomings of the contract identified by SporTT Legal since he was told that the contract should be “loose”, a word he coined as he could not recall the actual word used.
He denied that prior knowledge of Mr Daniell’s track record as an educator influenced his decision to sign a “loose” contract.
He said another reason for signing was that he always believed Mr Daniell would deliver since he felt that he had an international image to maintain. In hindsight however he believes that he may have been set up and regretted signing the contract. He said he is also astonished at Mr Daniell’s current “nit-picking” behaviour.
23.2 EBeam’s Position
23.2.1 Central Audit was informed that Mr Adolphus Daniell, President/CEO of EBeam Interact Limited has always maintained that he would start the N&LC of the programme only when all the centres are ready according to the conditions stated in the contract. Inspections of eighteen (18) centres with EBeam officials and LS representatives were conducted between March 26 and 27 and April 9 and 10, 2014 to assess the readiness to conduct the N&LC.
Arising out of the inspection Mr Daniell submitted a report which summarises the outstanding issues highlighted by EBeam officials as to the un-readiness of the centres.
(Appendix 21 refers). The appendix also lists other issues, which according to Mr Daniell continue to frustrate the start of the N&LC of the programme.
23.3 Justification for Second Payment
23.3.1 According to the contract, it was agreed that SporTT shall pay to EBeam the sum of seventeen million dollars (TT $17,000,000) which represents fifty percent (50%) of the fee, contemporaneously with the signing of the agreement and the remaining fifty percent (50%) on September 2, 2013.
Central Audit confirmed however that the first payment was made by cheque number 2185 dated June 14, 2013. EBeam subsequently submitted an invoice for the payment of the remaining seventeen million dollars as per the contract.
23.3.2 Ms Dawn Mohan, Corporate Secretary of SporTT, stated that since the N&LC, for which EBeam was contracted never got started, legal advice on whether to pay EBeam the second payment as per the terms of the contract was sought. Ms Lisa Solomon, the then Head of Legal of SporTT after examining the contract, by letter dated November 11, 2013 advised that the second payment be made to EBeam.
(Appendix 22 refers). She also advised that a robust reporting mechanism be introduced in order to properly monitor and evaluate EBeam’s performance.
23.3.3 J.D. Sellier & Company from whom a second legal opinion was sought also advised that based on the contract according to Clause 8 of the contract SporTT was obligated to make all payments to EBeam within the specifications and terms of payment under the agreement. However, there appeared to be sufficient grounds to challenge this payment.
This course of action carried inherent risks which could have left SporTT exposed if the matter went to court.
Legal Counsel advised that some degree of arbitration could be entered into to resolve the situation.
SporTT ignored the latter portion of the advice and proceeded to make the payment.
The main reason given was that payment of the remaining fifty percent (50%) was linked to the date September 2, 2013 and not upon certain services being completed within a certain timeframe.
(Appendix 23 refers).
23.3.4 Based on the two legal opinions SporTT made the second payment by cheque number 7997 dated February 11, 2014. Central Audit was informed that SporTT is currently awaiting legal advice from Senior State Counsel, Mr Russel Martineau, on a way forward or what actions, if any, can be taken against EBeam.
23.4 Auditor’s Comments
23.4.1 It is obvious that SporTT was a party to this contract mainly because the contract was above the authorised limit of the Permanent Secretary, MOS.
It is evident that the “mind and management” of this contract has always been and continues to be the MOS. The contract was drafted by MOS Legal, and all the conditions necessary to satisfy the readiness of the centres for the start of the N&LC were always the responsibility of the MOS.
23.4.2 Central Audit noted that most of the centres visited were not in a state of readiness to accommodate the N&LC.
To name a few, Covigne Road, Four Roads, Cocorite, Bagatelle, River Estate, St Paul Street, Morvant, Barataria, Carapo, Pinto Road, Malabar Train Line 1 and 2, etc.
Furthermore, a number of participants have indicated their interest in pursuing vocational training instead of learning Mathematics and English.
These factors together with the significant reduction in attendance, may have further reduced the number participants interested in the N&LC of the programme.
23.5.1 The current position of this contract requires expert legal advice which Central Audit cannot provide. It is therefore recommended that SporTT await the advice of the Senior Counsel, which it has sought, and which hopefully would assist in determining a way forward.
23.5.2 In the meantime it is recommended that MOS move with haste to have the centres ready or alternatively in the short term explore the option of setting up a few centralised centres that already have the necessary facilities and security and have the interested participants attend the centre closest to them.
23.5.3 Central Audit also recommends that a formal request be sent to the Inland Revenue Division (IRD) to examine whether or not E-Beam Interact Limited filed a Corporation Tax Return for the year 2013.
The objective is for IRD to verify that the company declared the seventeen million dollars (TT $17,000,000) it received in 2013 as well as to keep in mind the 2014 Corporation Tax Return due in 2015 for the declaration of the other seventeen million dollars received in 2014.