Gaming commission’s annual reports tabled without audited financials
Four-year-old financial statements for the publicly funded Bermuda Gaming Commission were tabled in Parliament by the Premier on Friday — but the past three years’ worth of accounts are still missing.
The Ministry of Finance told The Royal Gazette that the regulator — which has cost taxpayers more than $16 million since its launch a decade ago — was now “current with its submission of annual reports in accordance with the Gaming Act 2014” after it earlier fell well behind.
However, David Burt, the Premier and Minister of Finance, shared BGC financials only for 2019-20 with lawmakers.
He tabled annual reports, for 2021 to 2023, which did not include audited accounts.
Auditor-General Heather Thomas, who must conduct an independent review of the accounts before they can be laid in Parliament, told The Royal Gazette that she completed the audit of the 2019-20 accounts in February, but received the 2020-21 documentation only a few weeks ago, on May 31, and had yet to receive anything for 2021-22 and 2022-23.
That contrasted sharply with a claim by the finance ministry a year ago that the commission had given the Office of the Auditor-General its 2020-21 accounts, and a claim this week that the BGC was working with the office to “finalise the financial statements” for the past three years.
Ms Thomas declined to comment on whether the finance ministry had provided incorrect information to the Gazette.
The finance ministry spokeswoman said: “The responses last year from the Government on this matter are correct. The financials for the year in question were first submitted to the OAG in October 2021.”
She did not respond to a question about whether the financial statements for 2021 to 2023 would be tabled before the House of Assembly rises for the summer.
The gaming commission is led by three executives who earn almost $50,000 a month between them — including a finance director on $15,417 a month ($185,004 a year) — yet its most recent publicly available accounts until Friday were for the financial year 2018-2019.
In subsequent years, the commission continually increased its borrowing from Butterfield Bank, backed by a multimillion-dollar government guarantee, to enable it to continue operating.
The bank withdrew the line of credit last year and the Government used $9.7 million from the Sinking Fund to repay the debt, before Mr Burt allocated the BGC $800,000 in his 2024-25 Budget.
The Gazette has tried for years to obtain the commission’s annual reports and financial statements, including through public access to information, to report on how it has spent those public funds.
Last June, the Ministry of Finance said the 2020-21 financial statements were with the Auditor-General’s office, awaiting audit, and that draft statements for 2021-22 were being compiled with delivery to the OAG “anticipated before the end of month”.
The spokeswoman said then: “We are encouraged at the progress that's been made in addressing matters in this important area.”
Last week, a ministry spokeswoman said: “The commission is current with its submission of annual reports in accordance with the Gaming Act 2014.
“All outstanding reports were submitted on or before the end of quarter one 2024.
“The reports are required to be reviewed and submitted to Cabinet, before tabling.
“The Ministry of Finance expects that the annual reports will be tabled before the House of Assembly rises for the summer.
“The report for the financial year ending 2024 is to be submitted to the ministry by September 30, 2024.”
Ms Thomas said: “This office received the 2020-21 accounts and accompanying documentation [on] May 31, 2024 and the documents are being evaluated for audit readiness.
“We have not received the accounts or accompanying documentation to advance the 2021-22 or the 2022-23 financial statement audits.”
The Bermuda Gaming Commission’s borrowing from Butterfield Bank jumped from $4.3 million to $8.2 million in the space of five months, according to newly released financial statements.
The audited accounts for 2019-20 for the regulator, tabled in Parliament on Friday, include a note on subsequent events.
It shows how borrowing from the bank rose from an initial $1 million in 2018-19 to $3.4 million in the first quarter of 2020-21, and then to $4.3 million on December 11, 2020.
“On May 4, 2021, the facility was increased from $4.3 million to $8.2 million, with the new facility letter date expiring on May 31, 2022,” a note states.
“On March 27, 2023, the facility was increased to $9.8 million, expiring on June 30, 2023.
“In June 2023, the commission’s outstanding bank loan of $9,707,138 was settled in full. The Government and the commission paid $9,675,000 and $33,138, respectively.”
The administration fee for the loan was $7,000 and the interest rate was 6 per cent.
Auditor-General Heather Thomas writes in her report on the 2019-20 audit that the commission will remain reliant on taxpayers for financial support until casinos open here.
“There were no applications for casino licences submitted, resulting in no gaming proceeds received,” she states.
“Consequently, the Bermuda Gaming Commission will continue to rely on the Government of Bermuda for financial support to fund its operations and fulfil their obligations as they become due.”
In 2018-19, the commission got a $500,000 interest-free loan from the public purse, taking the amount it owed to the Government to $2.1 million. In the 2024-25 Budget, it received an $800,000 grant.
Its expenses in 2019-20 totalled $3.2 million, including:
•$1.7 million on staff and associated costs (compared with $1.2 million the previous year)
• $428,200 on “other” costs ($158,718 in 2018-19)
•$277,500 on consultants ($171,354 in 2018-19)
•$277,000 on professional fees ($208,613 in 2018-19)
•$266,000 on rent and utilities ($204,346 in 2018-19)
• $165,000 on board member fees and associated costs ($114,443 in 2028-19)
•$117,000 on travel, professional development and associated costs ($22,404 on travel in 2018-19)
The commission told the Gazette earlier this year that it spent $1.74 million in 2020, $1.69 million in 2021 and $2.5 million in 2022.
A breakdown of expenditure was not shared, though the salaries of its three senior executives now account for almost $575,000 annually.
The aim for the BGC, when it launched in 2015, was that it would be mostly funded by casino licence fees, but not a single casino has opened in the past decade, leaving it without any real income.
Taxpayers have absorbed the cost of keeping the quango afloat, spending more than $16 million to date.
Mr Burt is responsible, under the Gaming Act, for laying a report “dealing generally with the activities of the commission during the preceding financial year …” in the House of Assembly and the Senate.
He did not respond to questions about why the BGC was allowed to become delinquent in its financial reporting or whether it was a concern to him.
The ministry spokeswoman said: “The Ministry of Finance tracks the Gaming Commission’s work programme and performance on a regular basis.
“This is supported by the routine meetings with various members of the executive and the board of directors.”
BGC chief executive Charmaine Smith, who earns $225,000 a year, and chairwoman Cheryl-Ann Mapp, who receives $1,833 for each monthly commission board meeting she attends, declined to comment.
• To view the gaming commission’s financial statements for 2019-20 and annual reports for 2021 to 2023, see Related Media
The lack of casinos in Bermuda has been attributed to local banks being unable to get their correspondent banks in the United States to agree to them handling casino transactions.
The Bermuda Gaming Commission has tried to solve the problem, including by hiring a consultant for a $25,000 monthly fee in 2019.
The regulator’s audited financials for 2018-19 showed that the agreement with Rose Investment Ltd, whose chief executive, Everard Barclay Simmons, is a former chairman of Butterfield Bank, was “for seven months to assist with a correspondent banking solution”.
David Burt said in March this year that the commission had been streamlined but was still working to address banking challenges for the industry.
The Gazette asked him this week if the $175,000 fee for Rose Investment was money well spent but he did not respond.
A Ministry of Finance spokeswoman said the commission could enter into contracts as needed to carry out its duties and that Rose Investment was engaged to "facilitate operational pathways between Bermuda financial institutions and proposed gaming operators“.
She added: “In support of the above, Rose Investment was required to engage with key stakeholders (local banks, correspondent banks, and credit card companies) in furtherance of a banking solution for land-based casino gaming.
“Given Rose Investment’s considerable domestic and international expertise in banking operations and banking supervision, the commission and the Government considered that the actions taken, and advice provided by Rose Investment, were relevant and sound.”
Auditor-General Heather Thomas, in her report on the audit of the commission’s financial statements for 2019-20, wrote: “A banking resolution to accept Bermuda’s gaming proceeds and facilitate casino transactions remains open.”
Mr Simmons, a former Goldman Sachs investment banker who is chairman of the Public Funds Investment Committee, could not be reached for comment.
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