The BLDC & Conflict of Interest – Part I

I had been hesitant to write about this issue until I had had time to review the Auditor General’s report more fully, and was also hoping that the parties involved would clarify some issues. I have now read over the report properly, and some of the parties involved have spoken in the media about it also. Unfortunately, for me at least, the responses of the parties involved have not clarified much and, if anything, just makes the situation worse.

To begin with I should say that when I first became involved in the PLP I lived in Crawl, and so I am more familiar with some of the parties involved than other members of the Party. I have held many of them in high regard, and their apparent involvement in these issues came as quite a shock, which is why I was particularly hoping that their responses in the media would be sufficient to clear up the issues at hand and absolve them. I am still hopeful that this will be the case, but based on what I’ve seen I can only make the following observations at the moment.

From reading the AG’s report and the comments from some of the parties involved, I am struggling to understand how the Chair and Deputy Chair of the BLDC were not in a conflict of interest, vis a vis personal gain and their involvement in the board. I can understand being tasked to write a report – one would have thought such (reviewing the problems of the BLDC and how to improve it) would indeed have been in their remit. From there, I can see them having two options:

1) Write the report internally. There are pros and cons to this. One would imagine it should have been the cheapest option, with the report writers being only able to claim reimbursements for reasonable cost, essentially material costs (stationery, printing costs, perhaps fuel and basic food expenses) incurred during the writing of the report. The ‘labour’ itself should have been essentially gratis or as part of the same compensation they receive for sitting on the Board and in their Office therein and not more (and if they sit on the board for free, then they should do this work for free). So, that is a pro. A con would be that they would be too ‘close’ to the problems to realistically see the problems; they would have been potentially biased and blind to certain issues. A further con would be the risk of conflicts of interest developing, although this could have been reduced by clear contracts outlining compensation and restricting it to what I suggest immediately above.

2) Sub-contract the report out to an independent party. There are a number of consulting firms in Bermuda that do just this – review the performance of an organisation and make recommendations for their improvement. This would nominally cost more as one is paying for the labour of the consultant, and this is a con. The pros are that one should have a more impartial and professional product; additionally – although this is not guaranteed – one should avoid charges of conflict of interest.

In the end the BLDC Board apparently opted for the first option, although it is not clear why. Did they discuss the merits of sub-contracting it out to a third party? Did they conclude it was best done in house? Nor did they seem to have adequately controlled the issue of compensation. In the end the report would appear to have cost $160k, split between the Chairman and the Deputy Chairman, and it is not clear what these costs were for. That the report itself was only 16 pages makes this an even more incredible figure. This isn’t to say that the length of a report should correlate to the amount of money spent on it, but it does seem surprising that the report took longer to write than anticipated and would seem rather lacking in detail, both in identifying the problems of the BLDC and making suggestions for their correction. One would have thought a 16 page report would make for an introductory section, or perhaps a long executive summary. It just seems rather unbelievable that value for money was realised here.

One also finds it hard to believe that an independent consultant would have cost that much – for the issues involved and the time spent, I wouldn’t expect and independent consultant to have cost more than $10k. Perhaps $20k if one is generous, but $160k? I find that unlikely.

This is only the first part of my writings on this issue. In the follow-up post to this I will address my thoughts on the conflict of interest issue itself as well as the apparent civil war within the Government/PLP which the diverging positions of the Deputy Premier/Deputy Party Leader and the Premier/Party Leader would indicate.

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