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Charlotte Amalie
Tuesday, May 17, 2022
HomeNewsArchivesAudit Finds Legislature Rife With Financial Abuses

Audit Finds Legislature Rife With Financial Abuses

In recent years, the V.I. Legislature gave senators large cash advances without documentation, doled out millions to contractors without bids or even contracts, and left itself open to theft through poor internal controls, according to a joint federal and local audit report released Wednesday.

"The unregulated administration of public funds has led to a culture with almost no accountability and transparency, especially in areas such as the improper use of allotted funds, arbitrary procurement of goods and services, and inadequately secured sensitive equipment," concludes the report issued by the U.S. Department of the Interior Office of the Inspector General and V.I. Office of the Inspector General and signed by V.I. Inspector Steven van Beverhoudt and DOI acting Inspector General Mary Kendall.

Many senators very regularly took cash advances for travel and other purposes, but never provided any evidence for how the money was used, according to the report.

"Our review of 133 cash advances totaling over $607,000 revealed that cash advances were routinely abused," the report says, providing half a dozen examples.

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In one case, a senator received an $8,570 cash advance in December 2009, for a trip scheduled for February 2010.

"We interviewed the senator, who told us that he rescheduled the trip and was keeping the cash advance in an off-island safety deposit box. We later determined that the trip was never taken and the money was never returned. After our repeated inquiries and a meeting with the senate president, the senator returned the money in June 2010."

In several other instances, senators said they would repay cash advances, but never did, according to the report.

In a phone call Wednesday evening, Beverhoudt declined to name specific senators; however, several of the most expensive improperly documented cash advances were to a senator who traveled to Denmark and Italy in 2009 and 2010, purportedly doing historical research in Denmark. Former Sen. Wayne James traveled to those countries during the times in question and issued statements at the time about historical research he said he was doing in Denmark.

According to the report, a senator, presumably James, received 12 cash advance checks totaling $93,914 in 2009 as payment to the Danish National Archives for research, scanning, reproduction, and translation of historic documents. The senator never submitted any receipts or invoices, and never provided copies of the documents: one of the 12 checks was for $27,636.

"We found that he cashed the check and deposited $9,050 into his niece’s bank account to transfer to the Danish National Archives. According to the senator, the balance of $18,586 was placed in an off-island safety deposit box."

As of January, the Legislature could not account for the use of the remaining funds, and still did not have the historic documents, according to the report.

James was hardly alone. Over a 5-year period, another senior senator received nine cash advances totaling over $25,000 and never submitted any expense reports or receipts. And nine senators have yet to pay back travel advances that were in excess of the amount they spent on travel, according to the report.

Procurement practices have also been wildly improper, with the Legislative Executive Director personally picking contractors without competitive bids or even contracts, then approving the work and signing the checks.

Reviewing 152 payments totaling $1.7 million to 35 vendors, the inspectors found 20 vendors received payments totaling $1.1 million for major capital improvements without contracts or any justification for their selection. Sometimes the Legislature was badly ripped off as a result.

During the renovations of the Capitol building, the Legislature paid $18.65 per square foot to install new glazed porcelain and coral stone tiles, but when the auditors sought three quotes from local tiling experts for the installation cost of the same tiles, the highest estimate was $5 per square foot, suggesting the Legislature overpaid by almost $125,000 for the job.

In other cases, gross receipts taxes were not withheld on large contracts, allowing contractors to receive income tax free.

The report also found fault with senators’ practice of issuing bonuses to their staff members without any policies or procedures to decide who is due what sort of a bonus.

In addition, senators and staff members had access to sensitive, expensive equipment, such as laptop computers and other expensive hardware, with poor to nonexistent controls over their use.

Auditors recommend the Legislature adopt much more stringent and detailed internal controls, particularly regarding travel and cash advances.

In his official response to the audit report, Senate President Ronald Russell said cash advances for travel had been replaced by a system of per diem payment, and that several policy and procedure manuals to address internal controls were being finalized at the present.

Reached by phone Wednesday evening, Russell said the Legislature planned to fully comply and implement the audit’s recommendations. "The audit has been a very useful tool for me, coming into the presidency of the Legislature, to change a lot of how things work," Russell said.

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In recent years, the V.I. Legislature gave senators large cash advances without documentation, doled out millions to contractors without bids or even contracts, and left itself open to theft through poor internal controls, according to a joint federal and local audit report released Wednesday.

"The unregulated administration of public funds has led to a culture with almost no accountability and transparency, especially in areas such as the improper use of allotted funds, arbitrary procurement of goods and services, and inadequately secured sensitive equipment," concludes the report issued by the U.S. Department of the Interior Office of the Inspector General and V.I. Office of the Inspector General and signed by V.I. Inspector Steven van Beverhoudt and DOI acting Inspector General Mary Kendall.

Many senators very regularly took cash advances for travel and other purposes, but never provided any evidence for how the money was used, according to the report.

"Our review of 133 cash advances totaling over $607,000 revealed that cash advances were routinely abused," the report says, providing half a dozen examples.

In one case, a senator received an $8,570 cash advance in December 2009, for a trip scheduled for February 2010.

"We interviewed the senator, who told us that he rescheduled the trip and was keeping the cash advance in an off-island safety deposit box. We later determined that the trip was never taken and the money was never returned. After our repeated inquiries and a meeting with the senate president, the senator returned the money in June 2010."

In several other instances, senators said they would repay cash advances, but never did, according to the report.

In a phone call Wednesday evening, Beverhoudt declined to name specific senators; however, several of the most expensive improperly documented cash advances were to a senator who traveled to Denmark and Italy in 2009 and 2010, purportedly doing historical research in Denmark. Former Sen. Wayne James traveled to those countries during the times in question and issued statements at the time about historical research he said he was doing in Denmark.

According to the report, a senator, presumably James, received 12 cash advance checks totaling $93,914 in 2009 as payment to the Danish National Archives for research, scanning, reproduction, and translation of historic documents. The senator never submitted any receipts or invoices, and never provided copies of the documents: one of the 12 checks was for $27,636.

"We found that he cashed the check and deposited $9,050 into his niece’s bank account to transfer to the Danish National Archives. According to the senator, the balance of $18,586 was placed in an off-island safety deposit box."

As of January, the Legislature could not account for the use of the remaining funds, and still did not have the historic documents, according to the report.

James was hardly alone. Over a 5-year period, another senior senator received nine cash advances totaling over $25,000 and never submitted any expense reports or receipts. And nine senators have yet to pay back travel advances that were in excess of the amount they spent on travel, according to the report.

Procurement practices have also been wildly improper, with the Legislative Executive Director personally picking contractors without competitive bids or even contracts, then approving the work and signing the checks.

Reviewing 152 payments totaling $1.7 million to 35 vendors, the inspectors found 20 vendors received payments totaling $1.1 million for major capital improvements without contracts or any justification for their selection. Sometimes the Legislature was badly ripped off as a result.

During the renovations of the Capitol building, the Legislature paid $18.65 per square foot to install new glazed porcelain and coral stone tiles, but when the auditors sought three quotes from local tiling experts for the installation cost of the same tiles, the highest estimate was $5 per square foot, suggesting the Legislature overpaid by almost $125,000 for the job.

In other cases, gross receipts taxes were not withheld on large contracts, allowing contractors to receive income tax free.

The report also found fault with senators' practice of issuing bonuses to their staff members without any policies or procedures to decide who is due what sort of a bonus.

In addition, senators and staff members had access to sensitive, expensive equipment, such as laptop computers and other expensive hardware, with poor to nonexistent controls over their use.

Auditors recommend the Legislature adopt much more stringent and detailed internal controls, particularly regarding travel and cash advances.

In his official response to the audit report, Senate President Ronald Russell said cash advances for travel had been replaced by a system of per diem payment, and that several policy and procedure manuals to address internal controls were being finalized at the present.

Reached by phone Wednesday evening, Russell said the Legislature planned to fully comply and implement the audit's recommendations. "The audit has been a very useful tool for me, coming into the presidency of the Legislature, to change a lot of how things work," Russell said.