Dear Sir,

The following is an edited letter dated March 29, 2023, addressed to Her Excellency the Governor, Rena Lalgie.

I write to you today as a concerned Bermudian who cares deeply about the economic future of our island. I have been following the history of various government administrations over the past 20 years, and have used the annual reports of the auditor-general to gain insight as to the state of the financial management of the public purse. What I have learnt over the past two decades is very worrisome and it is abundantly clear that the administrative side of government has serious problems with management, accountability and record-keeping. This letter is an attempt to summarise what I believe to be a gross failure in the system of administrative management of the public purse.

Bermuda has had three auditors-general, beginning in 1978 with the late Larry Dennis, who faithfully served the position for 31 years. Mr Dennis always stood his ground and took his responsibilities seriously. Despite being arrested for stolen documents and then cleared of all charges, Mr Dennis continued to report and shine the light on the often poor state of the Government’s record-keeping and the lack of accountability for Civil Service senior managers. He retired in 2009 and his successors have tirelessly continued on in their quest for good governance and acting as our “watchdog” of the public purse. All auditor-general annual reports over the past 45 years repeatedly show that the most serious items listed in the category of “Matters of Special Importance” are never resolved and here are some recurring examples:

There are no summary financial statements completed for the whole of government and as a result, Government is not providing the House of Assembly or the public the analytical information which would help them understand the Government’s financial condition as a whole. Simply put, the public are not provided with full disclosure regarding the accumulated deficit or surplus of its government. This particular observation has been included in every auditor-general annual report.

Quite frankly, I find it surprising that our ratings agencies seem to be content with — oblivious to? — being privy only to a partial summary of the Bermuda Government’s finances. Many other auditor-general concerns continued to be raised such as:

• Financial statements in significant arrears

• Incomplete or missing accounting records

• Inadequate controls over bank accounts

• Inadequate procedures over bank reconciliations

• Failure to comply with financial instructions and related rules

• Blatant disregard for the policies, rules and procedures designed to protect the public purse

• Lack of supporting documentation for payments

• Lack of Cabinet approval for contracts valued at more than $50,000

• Many audit opinions for public entities have serious deficiencies in the system of internal controls and accounting records

The list is too long to include all.

Our auditors-general have repeatedly told us that there is a fundamental lack of accountability owing to ineffective leadership. Within the Public Service, there are those who fail to carry out their basic responsibilities and who are not being held to account by disciplinary or other measures. This brings me to mention the Public Service Commission, which I know is the umbrella management body of the Public Service and which is responsible directly to the position of the Governor.

I wish to make it clear that I realise you have inherited this situation and there is certainly no finger-pointing in your direction, but it is obvious to me that the PSC is not efficient in its role as a management body. Why is this? Because there is clearly a breakdown in the chain of accountability for senior public officers, who are not being held to account and/or disciplined accordingly for their poor performance. We know that our regulatory authority — the Bermuda Monetary Authority — holds all private-sector companies to high standards regarding their record-keeping and financial-reporting requirements, with strict penalties applied for noncompliance of the regulations. The same cannot be said for the performance of the PSC as the management body of our Public Service.

The latest special report by our present Auditor-General, Heather Thomas, covers the two-year period of the Government’s financial Covid measures, and it is once again very concerning. In summary, she confirms that there were multiple violations of the law and the Code of Practice for Project Management and Procurement in the awarding, development, implementation and operation of the Electronic Travel Authorisation Portal and the processing and collection of revenues generated by the use of this facility. Ms Thomas noted that there was also the use of a non-government bank account for the receipt and processing of the Government’s revenues, rather than these funds being paid directly into the Consolidated Fund, which was a direct violation of the Bermuda Constitution Order 1968. In her report, Ms Thomas references our now ten-year-old Spending and Government Efficiency report of 2013 and states that the observations contained in that report still hold true to this day.

Governor Lalgie, it is not as if there are no rules/guidelines/controls already in place. We know that they exist. The main issue lies with enforcement or lack thereof. We have had many special auditor-general reports, a Commission of Inquiry, the Sage report, all identifying the breakdowns and lack of accountability in the government administrative system, and outlining recommendations to correct and improve it, but the problems and system failures still exist.

Over the past ten years, I have written numerous letters to The Royal Gazette newspaper, informing the public of the serious deficiencies of our government administration as identified by various auditors-general. I have written to two previous governors, George Fergusson in 2016 and John Rankin in 2017 regarding the status of the proposed government reform as detailed in the 2013 Sage report. I received their replies suggesting that action on reform measures will be forthcoming. It is clear to me that right now, in 2023, that little progress has been made.

On a somewhat related matter, I note that our former governor, John Rankin is overseeing the British Virgin Islands government reform initiative. The BVI Commission of Inquiry report of April 2022 was strongly critical of successive government administrations in the territory. The report indicated that almost everywhere, the principles of good governance, such as openness, transparency and even the rule of law, are ignored. The report described the governance as “appallingly bad” and that it was highly likely that serious dishonesty had taken place. In 2019, David Burt, the Premier of Bermuda, said that there had been “sobering reflection” on a survey of the island's public officers in comparison with other governments and he told the House of Assembly: “We were judged to be underperforming in just about every particular area.”

Governor Lalgie, this is my third attempt in writing to this office to bring attention to the matter with the hope that it will ignite urgent, systematic reform and bring a higher level of accountability to the management of the public purse. This is my plea on behalf of the taxpayer, for the immediate overhaul of the PSC system of management. I know that the bipartisan body of the Public Accounts Committee is an important factor in reviewing the work of the Auditor-General but the problems that office continues to identify need to be tackled long before the production of an annual audit report — ie, at the original source, being at the administrative management levels of government.

Our auditors-general have clearly stated in no uncertain terms that there are matters ongoing that are significant and constitute an actual or potential for loss of public funds, lack of financial control, impairment of accountability and noncompliance with legislative requirements. Given our massive amount of public debt and the Government’s cashflow shortages, causing lack of funding for vital infrastructure maintenance and other important programmes, there is no room for lack of accountability and inefficiency in the administrative accounting systems of our government.

The people of Bermuda need to be assured that their hard-earned tax dollar is being managed prudently and responsibly. We deserve nothing less.

BEVERLEY CONNELL

Pembroke