A regular Source feature, Undercurrents slips below the surface of Virgin Islands daily routines and assumptions to explore in greater depth the beauty, the mystery, the murky and the disregarded familiar. It is our bid to get to know the community more deeply.
The news last week that the U.S. Interior Department will close its Inspector General’s Office in the Virgin Islands within the year was no shock to those who have watched the federal government scaling back such operations throughout the territories in recent years, but it was disturbing nonetheless.
The official word from Interior is that it will continue to conduct audits from afar, but both the man who headed the office for 15 years and his V.I. government counterpart are questioning how practical that will be.
Before the V.I. Government created its own IG office in 1989, the federal office was the only real watchdog in the territory, keeping the lid on local government fraud, waste, mismanagement and public corruption and frequently touching off law enforcement investigations that resulted in trials for white collar crimes.
While members of the press who might attempt to play a similar role were equipped basically with good intentions and moral outrage, Interior was heavily armed with legal authority and control over federal grants that allowed auditors to investigate books and records. And they were well trained to know where to look and how to interpret what they found.
Beginning in the 1960s, Interior’s Office of Insular Affairs saw the need for a physical presence in the territory. It maintained a Comptroller’s Office, with the dual purpose of giving technical assistance to local government agencies and auditing government records.
St. Thomas native Arnold van Beverhoudt, who would eventually head the office, joined it in June of 1971 and ended up working there for 35 years until his retirement in 2006.
In the early years, he said, about 25 people staffed the office, most of them auditors. It was a mix of experienced Interior employees who had come down from Washington, D.C., or other parts of the states and Virgin Islands residents who took a federal job.
He said staff would spend months at a time working in the V.I. Finance Department. “We were hands-on with current year’s transactions.”
Eventually the federal government decided there was a potential built-in conflict in auditing agencies to which it had provided technical assistance and so the two functions were split. The Interior Department’s Office of the Inspector General was created and its St. Thomas office opened in 1982.
“I became head (of the St. Thomas office) in 1991,” van Beverhoudt said. His title was Regional Audit Manager for the Caribbean Region. While most of the work involved the Virgin Islands, his staff conducted some audits of Interior programs in Puerto Rico as well.
Meanwhile, the Virgin Islands established its own Inspector General’s Office with Arnold’s younger brother, Steven van Beverhoudt, at its helm. The working relationship was as close as the family tie, and the two offices have issued numerous joint audit reports over the years, as well as both continuing to work independently. The collaboration has continued under Arnold van Beverhoudt’s successor, Hannibal M. (Mike) Ware.
“Both of us have limited resources,” said Steve van Beverhoudt. “So by us combining resources we were able to accomplish more.”
Two of the most highly publicized recent audits were joint reports – one on the Roy L. Schneider Hospital and one that uncovered $6.9 million worth of questionable expenditures at the V.I. Legislature.
“I’m sorry to see them go,” said Steve van Beverhoudt. “We don’t have the resources to cover all they were doing. It does create a void. Somehow the local government is going to have to fill it.”
Currently the V.I. Inspector General’s Office conducts four or five audits a year, Steve van Beverhoudt said. He has just three auditors and two investigators.
Interior’s IG Office in the territory has been averaging “about four” audits a year, according to Stephen Hardgrove, chief of staff for Interior’s IG Office in D.C.
Years ago, Arnold van Beverhoudt said, that number was closer to a dozen. “We were doing 10-12 audits a year,” he said. “We always found something.”
Should someone still be conducting 10 to 12 audits a year in the Virgin Islands?
“I would think so, yeah,” he said.
But budget constraints and a shift in emphasis have dictated the change. And it has been coming for some time. Staff reductions were a concern while Arnold van Beverhoudt’s was heading the office.
Ware, the current regional manager, said he “grew up” in the St. Thomas office and has worked with the staff there for 23 years. But the last two years, he has been directing operations from an office in Virginia.
The reality, he said, is that Interior’s Office of Insular Affairs has responsibilities that are far larger than territorial government agencies. For example it controls two billion acres of the outer Continental Shelf and its oil reserves.
In Fiscal Year 2011 it had oversight over $11.2 billion in royalties from U.S. oil companies to the U.S. government. After the Gulf oil spill, “We were there full force,” Ware said. “We were in front of the Senate, in front of the House.”
Interior is concerned with energy, climate change, water programs and a host of other issues.
All that does not mean it is abandoning its oversight for local government agencies, he stressed. When the St. Thomas office closes, he is hopeful that the staff will relocate stateside. While they would not be devoted full time to Virgin Islands projects, they would still be involved in performing V.I. audits.
“Our goal is to at least do two audits a year,” he said.
Interior will continue to maintain its hotline at 800-424-5081, and Ware encouraged residents to use it to report suspected problems and suggestions audits.