Government says a company hired to claw back millions of dollars of unpaid land tax is not a debt collector and is therefore exempted from regulatory legislation.

Oarrs Inc, which is not licensed as a debt collector and so would not be permitted to operate as such under current laws, recovered almost $13 million in land tax after being hired as a debt collection consultant by the Office of the Tax Commissioner in June.

The claim was made as Senators debated the The Debt Collection Amendment Act 2021 which removes a clause making it a requirement for licensed debt collectors to submit audited financial statements to the Debt Collection Authority for 2020 owing to the Covid-19 pandemic.

During Wednesday’s Senate sitting, questions were raised over whether unlicensed entities, including Oarrs Inc, would be included in the exemption to submit its financials.

Seeking clarification from technical officers, Lindsay Simmons, the government senator who read the bill, said: “The authority sought clarification on Oarrs and it was determined that they are not a debt collector. This subject would come under The Companies Act and not The Debt Collectors Act.”

Ernest Peets, Senate Leader, in apparent reference to Oarrs Inc, added: “There might be some confusion, a misunderstanding, that perhaps there is an organisation who is being unfortunately labelled as a debt collector who is actually not a debt collector who perhaps may be working as a consultant for the government but not as a debt collector – as a licensed debt collector – those types of conditions are different.”

He added that there had been no debt collectors who are unlicensed and that there are no audited financials that are required.

Ben Smith, one of three One Bermuda Alliance senators who voted against the clause in the new act, said after Wednesday’s sitting: “If you have a group that is able to collect large sums of money, that is the specific time that you need audited financials.

”So to say that you have a company that you are going to call something else, it is not a debt collector but it is collecting debt and now it is working outside of the parameters of everything that is sitting in front of us, seems to be a problem.“

John Wight, an independent senator who also voted against the clause, said he was concerned about the discussion in the Senate.

“I don’t understand how an agency that collects funds on behalf of the government cannot be considered a debt collecting agency under the proviso of the act,” he said

In a statement after the sitting he added: “I am a strong believer that governments should lead by example when it comes to strong governance practices both in fact and appearance.

“What concerned me about this 2021 amendment brought to the Senate, was wording exempting debt collection companies licensed under this 2018 act to suddenly not be required to have an audit conducted in respect of 2020.

“It is in my view illogical and raises the question of why … It is my understanding that the debt collection company commissioned by government is unlicensed, as is required in the act, and was selected in the absence of the standard tendering process, which would otherwise have included organisations licensed in accordance with act requirements.

During the debate on the legislation, Marcus Jones, an OBA Senator said of Oarrs Inc: “We don’t need to give them the pass for such large amounts of money. I believe this chamber needs to do its level best to ensure that all checks and balances remain in the legislation. If not, we are setting a precedent.”

An amendment put forward by Mr Jones to remove the clause until clarity prevailed was defeated in a vote of seven to four.

Mr Jones, Mr Smith, Mr Wight and Robin Tucker, an Opposition senator, supported Mr Jones’ amendment. All government senators voted against it.

Senators did not object to another part of the legislation that grants the minister discretion to extend debt collectors’ date of submission of audited annual financial statements by a period not exceeding six months.