Ex FS Neil M. Smith under fire; Conflict of interest role- BVI Airways Report
The report shows that after an agreement, whereby Government had promised an investment of $7.0M and the Operator parties to put in their own $6.0 M, taxpayers were left holding the bag after over $7.2M was paid out and there were no flights, no plane, no information of the Operator parties’ $6.0M and no return of taxpayers $7.2M.
In her report, the Auditor General also showed how the former Financial Secretary (FS), Mr Neil M. Smith, allegedly facilitated this scam on the people of the Virgin Islands.
No letter of credit no deal?
The Operator parties had demanded a ‘Letter of Credit’ from the then National Democratic Party (NDP) Government headed by former Premier Dr D. Orlando Smith.
The government was unable to produce the Letter of Credit secured by taxpayers; therefore, the former FS Smith used that as a reason to dole out some $7.2M in less than one year, which was a violation of the payment schedule of three years.
In the Auditor General’s Report, on page 11 No. 45, she noted that Mr Smith stated it was difficult for the Dr Smith regime to secure a Letter of Credit because “stringent regulatory requirements in the banking industry that were resulting in large scale derisking …as a result obtaining a letter of credit would be possible but costly.”
Mr Smith, in his decision to violate Cabinet’s payment schedule, used this argument to dole out some $500,000 some 9 days ahead of the first payment schedule in January 2016, weeks after the Framework Agreement was agreed to by Cabinet.
If that was not enough, less than two months later, again in violation of Cabinet’s Framework Agreement Payment Schedule, Mr Smith paid out another $2.4M two months ahead of schedule.
Treasury was BVI Airways' piggy bank
The BVI Airways Operator parties seemed to have used public funds as their ‘piggy bank’ for the project and by October and November 2016, a full two years ahead, the former FS paid yet again two amounts totaling $2.1M, according to the report on page 11 No. 47.
By November of 2016, BVI Airways had collected $5.0M without a sign of an aircraft and no approval from US Department of Transportation or the local regulator Air Safety Support International (ASSI), according to the report on page 52 No. 55, which stated that these approvals lasted more than a “year and a half.”
The Framework Agreement, signed by both Government and the Operator parties, stipulated that the final $2.0M was to be paid only after the BVI-Miami air service was successfully launched as per page 11 No. 48 of the report.
Former FS Smith gave up all the money with nothing to show
Eager to get the government’s full $7.0M on June 6, 2016; however, both parties executed an addendum that provided for the remaining $2.0M to be placed into an escrow account with a new payment schedule of May 30, 2017, when $1,200,000 was to be paid and November 30, 2017, when $800,000 was to be paid, according to the report on page 11 No. 46.
If that was not enough, the Operator parties demanded, and it was agreed to by the Dr Smith Government, of a new and additional amount of money beyond the Cabinet approved $7.0M.
In the same addendum to the Framework, “an additional $200,000, allegedly to compensate the cost associated with the delays of the Government’s failure to produce the Letter of Credit was agreed to; however, contrary to the rules on Government spending the parties provided no supporting information or evidence to substantiate their claim for the additional funds,” according to page 12 No. 50 of the report.
Outside of the $7M and $200,000 was paid out
The report noted that “the $200,000 was paid to BVI Airways on August 26, 2016, on the faith of their unsupported claim.”
After BVI Airways received the extra $200,000 wired out to them less than a month after the addendum to the Payment Schedule (no one has included the cost to taxpayers of the wire charges), the former FS Smith- as per the report on page 12 No. 53- “terminated the escrow arrangement and authorised release of the funds to the Operator parties on January 11, 2017, way before the new payment date and giving the Operator parties well over $7.2M before they even had approval from the UK and USA regulatory authorities to fly between Beef Island and Miami,” according to the Auditor General on page 12 No. 55.
The Auditor General, Ms Webster, concluded that Mr Smith did this without any binding financial commitment from the Operator parties or penalties for failing to provide financing, therefore the Operator parties relied almost exclusively on the money provided by the government, as stated on page 15 No. 75.
Conflict of Interest; no one looking out for taxpayers
The Auditor General raised some serious concerns about Mr Smith’s, the former FS, role in the BVI Airways project. She noted “the assignment of the Financial Secretary to facilitate the venture eliminated an important checklist that should exist between project execution and project financing. This created a conflict whereby the Financial Secretary’s obligation to ensure the successful launching of the project may have obscured his public duty as primary custodian of Government’s finances. The acute level of scrutiny that should have been applied to the financial and other issues of risk presented by the Operator parties was replaced with insistent action to accommodate their requests,” according to page 18 No. 98.
In another scathing rebuke of the former Financial Secretary’s role in the BVI Airways’ scandal, the Auditor General noted in her report on page 18 No. 99 that the project did not undergo the necessary financial scrutiny, “instead it was flawed by early payments without Cabinet authorisation."
She said these were decisions made by Mr Neil M. Smith “as project liaison rather than public custodian.”
Editor’s Note: This is the third of 5 articles breaking down the Auditor General’s Report on the Government's Financing of BVI Airways’ Direct Flights to Miami.
Article 1: A tale of corruption, deception, no regard for Cabinet decisions: BVI Airways Report
Article 2: BVI Airways report: Was the VI Government scammed?
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86 Responses to “Ex FS Neil M. Smith under fire; Conflict of interest role- BVI Airways Report”
And don’t tell me he had a related ‘finance’ degree.
People are people. We are all one.
Need to go jail just like how that George Floyd killer needs to go jail, Sick and tired of supposedly ‘high for looting’ people and their children always getting off but a poor man taking a joint gets locked up.
They all knew what this guy did after he did it but tried to cover it up. What goes on in the dark must come to light.
Nothing wicked under the sun ever gets hidden.
Time alone do tell... A lot more wickedness going to be revealed.
Look he face nah. Find our money or go to JAIL. Plain and simple.
The contract appeared to have been poorly structured, but even with that gross incompetence and weakness, had they followed the payment requirements the BVI would have been in a better position today. This was a contract intended to be a public private partnership, turned out to be masked as a one side. The Operators acted like they were government employees. Neal start singing like a songbird don't take the heat by yourself. Weak political leaders, staff up with even weaker leaders in critical positions....no one to challenge then...so start singing because you didn't do this on your own. I see politicians and government lawyers alike all involved in this one.
Was he following instructions from his Superiors?
So as Financial Secretary , he is ultimately responsible.
Why Ryan Geluk named a director when he is not a belonger. Who was he fronting for?
Where were the lawyers for the Gov...Whst law firm is pursuing these fraudsters-?
If more than 1 person don't get lockup for this sh_t, I will b convince that all politicians are the same, and they have dirt on each other. And if that is the case, not another one will get my vote.
We all need to hear from Marlon on this one. I give him a few days. If he doesn't come 2 the people on this , we need 2 cut his ass off from listening 2 him. This happened under his party. U can't make this sh_t up. Talk that. SMFH
Every contracts have terms and conditions that both parties have to follow unless they bi-laterally amended. These terms and conditions are typically in writing; only the simplest contracts are verbal. The contract terms and condition should have been followed, despite its poor structure and gross one-sidedness.
Ok. Neil Smith, FS at the time, provided poor advice. However, his input was only advisory unless he took action for his personal benefit. The final decision and ultimate responsibility was with the MoF. True, the FS was hired for his experience in public affairs, leadership and management and more importantly for his technical skills in financial management to advise the MoF. Nonetheless, the final call was the MoF with the buck stopping with him.
The trap being set will trap.
The collective Spirits of the ancestors are on it.
Sit tight!
lost 7.2mil bvia...1.2 mil wall...how much at tortola pier park. ??
how can we have a financial secretary in such a position of power to be able to send out wires like this outside of contractural obligations...who doesnt have proper accounting education...it is just plain wrong. NDP should be ashamed...and now UK taring VIP with the same brush...............Neil...you should not shoulder this alone...the biggers must have been the ones pushing the buttons..you couldnt have done this without clear instruction...surely not
Assuming your reading skills goes as far as comprehension, what stated and definitive crime has Neil committed?
Neil and the rest of this outstanding family in the VI,will continue to be at the pinnacle as a result of their sincere contrbutions,monetarily and otherwise, and be protected by the collective Spirits of the ancestors,while others like yourself will remain below. Benet Smith,his descendants and others of this outstanding family of Smiths, will continue,as always,to boost the existence,past and present of these islands as well as abroad. So u go siddung and behave yourself. They got this. You gots n o t h i ng.