Forensic audit flags $184M debt to GPL

Feb 15, 2017 News

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… negligence by management allows Bill Direct to walk away scot-free

An experimentation of the Guyana Power and Light Inc. (GPL) with a collection agency has left the state agency $180M poorer.
The company, Bill Direct, is no longer operating and despite a court judgment,

GPL has not been able to recoup the monies.
The transaction is one of several raised in a forensic audit report conducted by Nigel Hinds Financial Services.
It would continue to raise troubling questions about the management of GPL, under the previous administration of the People’s Progressive Party/Civic (PPP/C).
A new Government is in place now since May 2015 with Nigel Hinds hired to review the period November 1, 2011 to May 31, 2015.
The Bill Direct transaction was significant enough to engage several pages of the audit report.
It was explained that Bill Direct was singled out for special treatment especially as some $184M will most likely never be recovered.
The forensic audit report is one of several to be handed over to the police for investigations and possible charges against executives of state agencies under the previous government.
There is a new Board and almost new management in place at GPL. It was explained that on February 4, 2008, GPL and Bill Direct entered an agreement for the latter to become an authorized collection agent of the power company.
Bill Direct operated in this capacity until September 11, 2013, when a decision was taken to terminate its contract after it was concluded that GPL was owed $184M.
WARNING SIGNS BUT…
It was explained that Bill Direct began breaching the terms of its agreement with GPL from as early as its first year as an authorized collection agent.
With one year, as at January 31, 2009, it failed to remit $21.47M, which represented an average of 21 days of collections. By February 2010, the next year, this had risen to $56.4M.
By October 31, 2010 unremitted collections by Bill Direct were in excess of $124.5M. This had accumulated to over $180M by April 2011.
An email from Matthew Wade, of Bill Direct to Jason Ali of GPL, dated September 16, 2009, saw the collector offering a number of excuses, including that there were delays in the deposits by the sub-agents to deposit payments of customers on time to the banks.
The forensic auditor said that GPL had a number of options when it realized there was a problem but did little.
Aeshwar Deonarine, GPL’s former Deputy Chief Executive Officer (DCEO), had in October 29, 2012, notified the then CEO, Bharat Dindyal, about the issue.
Deonarine has since fled Guyana with fraud charges facing him in the local courts over almost $30M he allegedly paid himself. Dindyal is no longer working at GPL.
The forensic audit report, seen by Kaieteur News, was highly critical that both Dindyal and Deonarine had ample time to address the issue to lessen the risk of increased losses from Bill Direct’s unremitted collections.
The two executives allowed the unremitted collections to rise to over $180M and did nothing to stop Bill Direct from continuing to operate as an authorized agent.
“In fact, Bill Direct collected and failed to remit $8,956,390 subsequent to April 2011, at which time its unremitted collections had exceeded G$184 million.”
Negligence
The audit report made it clear that GPL executives demonstrated negligence in dealing with the unremitted collections of Bill Direct by failing to terminate the contract at an earlier date.
The negligence was also evident at the Revenue Management Division, within the Customer Service Department.
The division, as it relates to Bill Direct, was charged with the responsibility of managing the relationship with Bill Direct and other authorized agents.
There were lapses too with the Finance Department when it came to ensuring proper controls in place.
It also appeared that GPL’s Finance Department improperly recorded its accounts receivable amounts to cover up the problems.
“The treatment of the amounts outstanding as cash in transit helped to conceal the amount in arrears by Bill Direct. This might have been done to deliberately suppress information from management. It is difficult to determine how this situation was bypassed by so many middle and senior managers.”
Even GPL’s Legal Department came in for criticisms. The officials there failed to include some form of collateral or bank guarantee in the agreement between GPL and Bill Direct in an attempt to mitigate the risk of loss in the event that Bill Direct fails to remit collections.
The matter went to court with GPL retaining Timothy Jonas, of de Caires Fitzpatrick & Karran, as its external lawyers to deal with the Bill Direct matter.
It was found that despite the warning signs since 2009, it was only in April 2011 that GPL took actions asking that Dwayne Roach, CEO of Bill Direct, meet with Deonarine. It was requested by Mr. Bharat Dindyal, then CEO of GPL, to meet with Deonarine. Roach in turn hired Mohabir A. Nandlall & Associates as its legal representative for the matter with GPL.
Judgment was granted in favour of GPL on January 11, 2012 against Bill Direct (Guyana) Inc. in the sum of $175.8M with interest at the rate of 15% per annum from September 2, 2011 until fully paid together with cost in the sum of $442,500.
By judgment of court, ordered on July 17, 2013, Republic Bank was ordered to pay over to GPL the balance in the two accounts held there by Bill Direct. This was a paltry $628,519.
Shockingly, the forensic audit said that based on the evidence examined, the garnished amounts were the only collateral that Bill Direct had in Guyana that GPL was able to receive.
“There is no evidence that GPL has recovered any funds towards the unremitted collections from Bill Direct other than the said amount as mentioned above.”
Dindyal, the then CEO paid Timothy Jonas of de Caires Fitzpatrick & Karran over $2M for the legal representation.
The audit report was critical of this transaction also with the lawyer.
“GPL, thus far, has failed to provide the agreement it has with Mr. Timothy. While the abovementioned amount paid to Mr. Jonas represented deposit on legal charges, we are unable to ascertain what the expected or agreed amount for legal services is.”
It was also found that GPL attempted to treat the entire $184M as a Provision for Doubtful Debts in the year 2014, but failed to provide any evidence of authorization.
In 2014, the then Board, chaired by Winston Brassington, recommended that GPL use it resources to collect the monies.
There was little evidence that GPL was inclined to penalize its officials for failing to protect the state owned entity.
A number of recommendations were made by the forensic auditor for GPL to tighten its systems.

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