Part 2
Close to $ 4 million was paid out by Pan Trinbago to FCL Financial Ltd and its CEO Daniel Lambert over a three-year period with barely any paper trail found by auditors to justify these mammoth payments or any semblance of a formal agreement.
An audit report by Ernst and Young raised further questions over Pan Trinbago’s handling of its finances under the former president Keith Diaz and other Central Executive Committee (CEC) members between the period 2013-2016.
During an interview with Ernst and Young in December 2017, Lambert said his company had been engaged to look at the platform in which Pan Trinbago operated and to assist the organisation in moving from an informal to a formal structure.
The company was also engaged as a strategy consultant, to provide a variety of management consultancy services with the aim of commercialising Panorama (and steelpan in general) and generating additional revenue.
What Ernst and Young found was over the 2012-2013 period, Pan Trinbago entered into six management consultancy contracts with FCL—but from the table they drew up, they were only able to locate formal CEC approval for two of the six contracts.
Ernst and Young dug deeper and perused the CEC meeting minutes in which they noticed on November 1, 2012, a proposal from FCL Financial to provide services to Pan Trinbago for the period July 2012 to June 2013 were discussed, “but a decision was not taken.”
The noted that on November 16, 2012 (four months after the actual contract date), two agreements were presented to the CEC to engage FCL as Pan Trinbago’s consultants and “all in the meeting were in agreement.”
No evidence of $m
contractual agreements
What Ernst and Young concluded was, “There was no evidence to suggest that the subsequent four contractual agreements between FCL and Pan Trinbago were discussed and approved by the CEC. We did, however, note, the CEC meeting minutes dated July 11, 2013, stated:
“On the matter of Financial Services offered by FCL Financial Limited, the meeting agreed in principle.”
The Ernst and Young auditors said there was no further discussion about this in the meeting minutes and as such, they were unable to “confirm what service offerings or contractual periods this statement relates to.” There was also no proof provided to also indicate that FCL Financial Limited had been hired to also provide “non-contractual services.”
The total payments paid to FCL between 2013 and 2016 were approximately TT$3,767,157 based on the general ledger information provided according to Ernst and Young.
However, they found that cheque vouchers for TT$280,000 of this amount were not seen.
The Ernst and Young auditors believed “FCL invoices/payments may have been posted into other accounts and not provided to Ernst and Young for review.”
Millions owed to
Panorama players
But Pan Trinbago’s glaring mismanagement of funds or their inability to account for funds given for other ventures did not end there.
The ongoing fiasco by pan players to collect their remittance for more than three years was also the subject of the Ernst and Young audit report.
Under the heading government grant/budgeting Ernst and Young mentioned the allocation of government grants allocated mainly for Panorama to pay assistance fees, appearance fees, transportation, prize money and player’s remittance with 10 per cent appearance fees and prize money being deducted by Pan Trinbago for administration and other operational expenses.
Ernst and Young was of the opinion due to the lack of documentation provided by Pan Trinbago, “we were unable to confirm if all government grant funding was actually used for its intended purpose, as we noted that at the end of 2016, TT$7.8m was accrued for outstanding Panorama Players Remittance 2016 and TT$354,905 for Panorama 2016 appearance fees.”
Further, Ernst and Young discovered that advanced payments were also made by NCC to Pan Trinbago, but realised that the payment intended to address pan players in the Eastern region had not been honoured.
“We noted a letter from the NCC to Pan Trinbago, dated January 3, 2017, for an advance payment of TT$2,405,000. The letter stated that the purpose of the payment was: “Disbursement to Pan Trinbago-Eastern Region pan players outstanding remittance for 2016.”
The letter further advised: “The amount would be deducted from the allocation for 2017 Panorama/Ticket revenue.”
Ernst and Young concluded in their report, “Based on this letter, it appears that the Eastern Region pan players did not receive their player’s remittance on time, ie in September/October 2016. We were unable to verify why the association’s 2016 disbursements were not utilised to pay the Eastern Region, pan players.”
Ernst and Young noticed that Pan Trinbago’s request for funds from the Ministry of Community Development, Culture and the Arts and the National Carnival Commission (NCC) were significantly less than what they had asked for and so they opted to undertake various types of short-term funding in an attempt to cover the shortfall.
Loans without consequences
The idea of short-term funding and loans also left Pan Trinbago in a pickle.
The association deep in debt, accessed loans from First Citizens Bank (FCB) now known as First Citizens, but many of the CEC members either seemed to be in the dark about the loans accessed —or complied on the instructions of someone senior.
Ernst and Young noted there was no indication within the CEC meeting minutes provided to suggest that loans that were taken from FCB were discussed and the requisite CEC approvals granted. In fact, there was not an ounce of documented evidence, Ernst and Young said “to confirm when the loan was taken, the interest rate, the repayment period or any other terms and conditions”.
Ernst and Young said that the then treasurer Andrew Salvador and finance manager Anthony Mc Quilkin said the loan in 2016 was required to cover expenditure incurred at Pan is Beautiful XII held in 2015. While another loan taken in 2017 was to cover Panorama expenditure due to reduced funding by the government.
A further injection of cash was sought when according to the CEC meeting minutes then-president Keith Diaz informed the CEC members on July 11, 2013: “The president informed the meeting that the organisation was experiencing some level of financial difficulty; however, he said he met with officials at FCB who promised to extend the overdraft facility so we can meet salaries for July 2013.”
Ernst and Young noted that the limit on the overdraft facility was not documented in those minutes, however, in a subsequent, meeting with the CEC, more than a year later on October 6, 2014, it was stated:
“The meeting was informed that the organisation was able to negotiate an increase in the overdraft facility from the First Citizens Bank from $300,000 to $3 million.”
But Ernst and Young said the minutes did not indicate that “the CEC formally agreed to this increase in the overdraft facility, or were informed of and considered the potential interest charges associated with this facility”.
The borrowing, according to Ernst and Young, didn’t help Pan Trinbago in the lease as the revenue highlights between 2013-2017 were nothing short of jaw-dropping.
Ernst and Young said: “Based on the information, total revenue steadily decreased from 2014-2017, with an overall decrease of approximately 37 per cent over this period.”
Questionable
procurement practices
Procurement issues were also questionable according to Ernst and Young’s audit report.
They noted that there was an issue when it came to signing for receipt of invoices. They identified that invoices were not consistently stamped or signed as received, and a number of invoices were missing dates.
Ernst and Young spoke with the Salvador to understand the process in which he indicated that the invoices were received by him on a daily basis, following which the invoices were then sent to Diaz for his authorised signature and later forwarded to the Finance Department
• Continues on Page A7
• From Page A6
with instructions on how the invoice should be paid and then it is signed off by both the treasurer and Mc Quilkin in this case.
Based on the invoices obtained by Ernst and Young they noticed that there were several instances of non-compliance for several planned Pan Trinbago events.
For Panorama 2013 close to half of the 40 invoices were not stamped or signed in essence, 48 per cent were non-compliant.
In Panorama 2016, 25 of the 48 invoices were not stamped or signed which accounted for a 52 per cent non-compliance rate.
Ernst and Young also found major irregularities with the authorisation of cheque payment vouchers. They noticed that cheque payments were not consistently approved before the actual cheques were paid.
The auditors noticed that for Panorama 2013 “there were five instances where cheques were completed and signed off prior to the cheque payment vouchers being dated and authorised, resulting in unauthorised cheque payments of prize monies totalling TT$3.5m. There were also two instances where no date was seen on the voucher, hence we could not confirm whether these payments were authorised prior to the preparation of the cheque.”
They also noticed a similar trend for Panorama 2016. “There were five instances where the date recorded on the general ledger matched the cheque date, however, the voucher was completed a day after the cheque was prepared. There was another instance where a payment was made to an individual before the voucher was prepared.
Another area that came under the auditor’s scrutiny dealt with the International Conference for Panorama (ICP) that had been earlier identified as one of the events that bled the association some TT$9.1m in losses.
The ICP had an overall expenditure of TT$18.2m over the period 2014-2017.
Based on Ernst and Young analysis of the expenses they noticed there were some shortfalls and questionable bank transactions associated with the ICP.
They noted: “Of the TT$18.297,600 spent, we were only able to validate that TT $11.5m (63 per cent) was directly related to ICP related expenses.
They also discovered that some TT$1.2m was withdrawn from the ICP bank account and placed into Pan Trinbago’s FCB fixed deposit account.
Ernst and Young said Pan Trinbago’s management said that represented a repayment to the association for expenditure incurred in relation to the ICP prior to the creation of the ICP bank accounts and receipt of Government funding. However, Ernst and Young said they were not provided with supporting documentation to validate this.
But the astounding financial irregularities did not end there as Ernst and Young said, “Cheque payment vouchers were not seen for over 50 payments totalling more than TT$4.7m,” and they were unable to confirm if these expenses were directly related to the ICP.
