Mark Bas­sant

Lead Ed­i­tor In­ves­tiga­tive Desk

Part 1

Fi­nan­cial mis­man­age­ment, an abysmal fi­nan­cial per­for­mance, mis­ap­pro­pri­a­tion of funds, fi­nan­cial ir­reg­u­lar­i­ties, and glar­ing non-com­pli­ance were un­cov­ered in an Ernst and Young (EY) au­dit re­port con­duct­ed by Ernst and Young (EY) on Pan Trin­ba­go’s op­er­a­tions over five years.

The “pri­vate and con­fi­den­tial” re­port was hand­ed over to the Min­istry of Com­mu­ni­ty De­vel­op­ment and the Arts in April 2018 and has been hid­den in plain sight on the Par­lia­ment web­site for al­most a year. It came up for dis­cus­sion at Pan Trin­ba­go’s An­nu­al Gen­er­al Meet­ing on No­vem­ber 3 but ac­cord­ing to sev­er­al mem­bers, but was shot down by pres­i­dent Bev­er­ly Ram­sey-Moore. How­ev­er, she has de­nied that claim.

The au­dit paints a gloomy pic­ture about Pan Trin­ba­go’s fi­nan­cial ac­tiv­i­ties dur­ing the five years, while ex­ter­nal au­di­tors Pan­el Kerr Fos­ter (PKF) said there was “sig­nif­i­cant doubt on the as­so­ci­a­tion’s abil­i­ty to con­tin­ue as a go­ing con­cern.”

The time­frame cov­ered in the EY re­port was 2013 to 2017 dur­ing the tenure of for­mer pres­i­dent Kei­th Di­az. He and key mem­bers of the Pan Trin­ba­go ex­ec­u­tive, which in­clud­ed then Fi­nance Man­ag­er An­tho­ny Mc Quilkin, Man­ag­er of Ad­min­is­tra­tion Richard Forteau, Chief Ad­min­is­tra­tive Of­fi­cer He­len Scant­er­bury-James, Trea­sur­er An­drew Sal­vador, As­sis­tant Of­fice Man­ag­er Melville Bryan, Ac­count­ing As­sis­tant Di­ane De Cu­ruew-Ri­d­ley and Ac­counts Clerk Tasha Je­re­mie, all held dis­cus­sions with EY as they at­tempt­ed to “ob­tain an over­all un­der­stand­ing of Pan Trin­ba­go’s ma­jor op­er­a­tional and ad­min­is­tra­tive process­es.”

EY al­so spoke with of­fi­cials from KPF, Mark Su­perville and Camille Prov­i­dence, as well as from Daniel Lam­bert, CEO of FCL Fi­nan­cial Lim­it­ed, and em­ploy­ee Tam­mie Babb.

EY not­ed that the “as­so­ci­a­tion’s net cur­rent as­sets were neg­a­tive for the en­tire pe­ri­od of re­view, with net cur­rent as­sets falling to neg­a­tive $18.8 m by the end of 2017.”

Those fig­ures did not in­clude ad­di­tion­al li­a­bil­i­ties of $9.1 m owed by In­ter­na­tion­al Con­fer­ence and Panora­ma (ICP), a whol­ly owned sub­sidiary of Pan Trin­ba­go. Had that been in­clud­ed, by the end of 2017 the steel­band body’s debt could have in­creased to $27.9 m.

Key find­ings in the au­dit in­clud­ed un­ex­plained pay­ments to Cen­tral Ex­ec­u­tive Com­mit­tee (CEC) mem­bers. Be­tween 2013 and 2017, 15 of them col­lect­ed $13.4m in emol­u­ments al­though Pan Trin­ba­go was con­sis­tent­ly in the red and dire need of funds.

Di­az col­lect­ed some $2.25m, while Forteau was paid $1.68m, Mc Quilkin $1.54m and for­mer vice pres­i­dent Bry­on Ser­rette $1.44m and trustee Al­lan Au­gus­tus just over $1m. Oth­er CEC mem­bers re­ceived sums in the vicin­i­ty of $210,485- $996,330.

EY’s in­ves­ti­ga­tions found that Pan Trin­ba­go’s con­sti­tu­tion did not pro­vide guid­ance on com­pen­sa­tion pack­age for CEC mem­bers.

Ar­ti­cle 7 Part B of the con­sti­tu­tion states: “No elect­ed po­si­tion to the CEC shall be com­pen­sat­ed by way of salary. How­ev­er, the CEC shall have the pow­er to de­ter­mine the sum of a stipend and/or al­lowance to be paid to its mem­bers for the re­im­burse­ment of rea­son­able au­tho­rized fi­nan­cial ex­pen­di­ture in­curred on be­half of the as­so­ciates.”

The EY re­port stat­ed: “Based on our re­view of the CEC meet­ing min­utes pro­vid­ed for the pe­ri­od No­vem­ber 2012- Ju­ly 2016, there was no ev­i­dence to sug­gest that the month­ly stipends/al­lowances for the CEC mem­bers were dis­cussed and agreed.”

The firm said it was un­able to “con­firm if the amounts paid to its mem­bers dur­ing the pe­ri­od of re­view were for­mal­ly ap­proved by the CEC.”

This lack of doc­u­men­ta­tion made it dif­fi­cult to track down par­tic­u­lar pay­ments. A re­view of Gen­er­al Ledger Ac­count #60116 in­di­cat­ed an in­crease in the month­ly al­lowance paid to CEC mem­bers from March 2015 but “no sup­port­ing doc­u­ments were pro­vid­ed for re­view.”

Apart from the stipend, CEC mem­bers were al­so part of the man­age­ment team and re­ceived salaries, con­tract fees, hon­o­raria, em­ploy­ee bonus­es, over­time salaries, sub­sis­tence and trav­el­ling al­lowances, gra­tu­ity and leave en­ti­tle­ment in lieu.

It was found that these perks con­tributed “most to the to­tal ad­min­is­tra­tive and gen­er­al ex­pens­es” of the al­ready cash strapped as­so­ci­a­tion.

“We not­ed that “salaries and staff ben­e­fits” had the high­est con­tri­bu­tion (av­er­age 37 per cent) to the ad­min­is­tra­tive and gen­er­al ex­pens­es each year fol­lowed by “hon­o­raria and bonus”(av­er­age 9 per cent), “stipends, sub­sis­tence and trav­el­ling”(av­er­age 7 per cent) and fi­nal­ly “le­gal and pro­fes­sion­al fees (av­er­age 6 per cent),” the re­port stat­ed.

There was un­cer­tain­ty over salaries and staff ben­e­fits, and EY said”they were un­able to con­firm whether the in­creas­es each year were due to an in­crease in the num­ber of em­ploy­ees or due to an in­crease in wages, as we were not pro­vid­ed with the rel­e­vant em­ploy­ee in­for­ma­tion over the pe­ri­od.”

The au­dit al­so high­light­ed ques­tion­able pay­ments of hon­o­raria to CEC mem­bers amount­ing to over $2.3m. They could find any pa­per trail to prop­er­ly jus­ti­fy these pay­ments and “there was no ev­i­dence to sug­gest that any of the pay­ments were dis­cussed and ap­proved by the CEC.”

Di­az re­ceived some $351,500 in hon­o­rar­i­um pay­ments, Forteau $303,833, Ser­rette $298,833, Mc Quilkin $258,833, Al­lan Au­gus­tus TT$252,000, while the oth­ers re­ceived be­tween $30,000- $236,667.

Statu­to­ry pay­ments not made

Pan Trin­ba­go’s fail­ure to pay more than $1m to rel­e­vant statu­to­ry bod­ies prompt­ly was al­so an­oth­er key find­ing. The out­stand­ing pay­ments were: PAYE $1,055,689, Health Sur­charge $75,310 and NIS $68,392. At the end of 2017 to­tal out­stand­ing amount stood at $1.1m.

EY warned: “Fail­ure to ac­cu­rate­ly deduct and re­mit the cor­rect amount of PAYE, NIS and Health Sur­charge to the rel­e­vant statu­to­ry body can re­sult in sig­nif­i­cant fines and penal­ties to Pan Trin­ba­go for breach­es of the Na­tion­al In­sur­ance and In­come Tax Acts. In ad­di­tion, in the event of an in­ci­dent, per­sons may not be able to claim their ben­e­fits from NIS, since the pay­ments were not re­mit­ted by Pan Trin­ba­go.”

To ad­dress some of these is­sues, EY rec­om­mend­ed prop­er doc­u­men­ta­tion in the CEC meet­ings, out­lin­ing prop­er con­tracts for mem­bers on com­pen­sa­tion, al­lowance, etc, as well as en­sur­ing all in­come al­lowances earned by em­ploy­ers are ac­cu­rate­ly record­ed and the re­quired statu­to­ry de­duc­tions cal­cu­lat­ed, de­duct­ed and re­mit­ted to the rel­e­vant in­sti­tu­tions.

Con­cerns were al­so raised bout the lack of reg­u­lar fi­nan­cial mon­i­tor­ing. Ac­cord­ing to the re­port, grants re­ceived from the Min­istry of Com­mu­ni­ty De­vel­op­ment and the Arts were “ sig­nif­i­cant­ly less than what was re­quest­ed by Pan Trin­ba­go each year; how­ev­er, there was no ev­i­dence to sug­gest that a re­vised bud­get was pre­pared to ad­just the short­falls re­ceived.”

This cre­at­ed fur­ther prob­lems as “ cash flow fore­casts and oth­er cash flow re­ports are not done to in­form man­age­ment’s de­ci­sion mak­ing and to track and mon­i­tor the us­age of avail­abil­i­ty of funds. This is crit­i­cal giv­en the per­sis­tent and se­vere sol­ven­cy/go­ing con­cern is­sues raised by the au­di­tors.”

Pe­ri­od­ic fi­nan­cial re­ports need­ed to com­pare ac­tu­al to bud­get­ed costs were not pro­duced or re­viewed and events were held with­out con­fir­ma­tion of ad­e­quate fund­ing from Gov­ern­ment or spon­sor­ship from the pri­vate sec­tor. EY said this trig­gered dis­as­trous re­sults for Pan Trin­ba­go as the or­gan­i­sa­tion “in­curred li­a­bil­i­ties which may have con­tributed to their cur­rent fi­nan­cial po­si­tion.”

Three ma­jor loss-mak­ing events werePan is Beau­ti­ful, which in­curred loss­es of $3.5m, Champs in Steel with loss­es of $1.3m and Pan Trin­ba­go Street Fes­ti­val with loss­es of $1.2m, adding up to more than $6m in loss­es.

This was fur­ther com­pound­ed by in­creased ex­pen­di­ture on events such as the Panora­ma “Greens” and the ICP, com­bined with a de­cline in grants and tick­et sales. Pan Trin­ba­go end­ed in a deficit po­si­tion in 2016 and 2017.

The as­so­ci­a­tion’s un­con­sol­i­dat­ed fi­nan­cial po­si­tion be­tween 2013 and 2017 showed a con­sis­tent dip, with li­a­bil­i­ties and mem­ber’s eq­ui­ty in­creas­ing from $12.2m in 2013 to $23.3m in 2016 and $30.3m in 2017.

Ac­cord­ing to EY, the fol­low­ing is­sues may have had a dele­te­ri­ous ef­fect on Pan Trin­ba­go:

° Due to in­creas­es in bank over­drafts, loans, and amounts payable con­cern­ing events held, li­a­bil­i­ties in­creased by $20,232,123 be­tween 2015 and 2016, re­sult­ing in an over­all neg­a­tive mem­bers’ eq­ui­ty po­si­tion of $7,877,757.

° As the as­so­ci­a­tion does not pro­duce un­con­sol­i­dat­ed fi­nan­cial state­ments, the above li­a­bil­i­ties do not in­clude amounts payable of $9.1m to the ICP, which the as­so­ci­a­tion is ul­ti­mate­ly re­spon­si­ble for and may be li­able to pay in the fu­ture.

° The in­crease in fixed as­sets be­tween 2016-2017 of $ 13.6m is large­ly as a re­sult of a land re-val­u­a­tion sur­plus of $13.7m, which has re­sult­ed in mem­bers’ eq­ui­ty fig­ure re­turn­ing to a pos­i­tive bal­ance of $ 1.9m there­by al­low­ing the as­so­ci­a­tion to ap­pear in a favourable po­si­tion.

To­mor­row: Ques­tions over hefty pay­ments to FCL Fi­nan­cial Ltd