In December 2015, I announced the Government’s intention to form a Commission of Inquiry to investigate the issues raised in the Report of the Auditor General on the Consolidated Fund of the Government of Bermuda for the Financial Years 2010, 2011 and 2012.
That report had described serious problems of accountability and control in the administration of the public purse – with millions of dollars spent without Cabinet approval, millions of dollars paid without signed contracts, tens of millions of dollars committed to contracts not tendered and millions paid to consultants without prior approval.
The Commission was formed to investigate the issues raised by the Auditor General. Its terms of reference were as follows:
- Identify breaches of Financial Instructions and how they arose
- Consider the adequacy of safeguards and the system of accountability
- Make recommendations to prevent recurrences and to mitigate financial, operational and reputational risks
- Refer any evidence of possible criminal activity, which the Commission may identify, to the Director of Public Prosecutions or the Police
- Draw to the attention of the Minister of Finance and the Attorney General any scope, which the Commission may identify, to secure recompense under the Public Treasury Act, including Financial Instructions, and Civil Asset Recovery.
In February 2016, the Commission members were appointed. They included Chairman Sir Anthony Evans, the Hon. John Barritt, JP, Mr. Kumi Bradshaw, and Ms Fiona Luck.
Over the next year, the Commissioners held public meetings, conducted hearings and received submissions related to the financial years in question.
The Commissioners presented their final report last February. It detailed serious problems of accountability and control in the administration of the public purse – problems that hurt the financial well-being of Bermuda. To address these problems, the report put forward 50 recommendations for the safe and effective management of the public purse.
Those recommendations were organized under 10 headings which I will read out because they are areas we need to strengthen to better protect the public purse. They are:
- Establishing more effective working relationships between Government ministers and senior civil servants
- Improving transparency and safeguards against conflicts of interest
- Improving the effectiveness of Financial Instructions
- Clarifying Accounting Officer responsibility
- Strengthening the offices responsible for safeguarding the public purse
- Enhancing Parliamentary oversight of government spending
- Holding civil servants responsible for responses to Auditor General reports
- Making Government financial reporting more timely
- Reviewing personnel and processes in the Civil Service, and
- Holding Quangos more responsible.
The Commission’s recommendations were welcomed because they set the stage to address the very issues the Commission was set up to achieve, which was, as I said In December 2015, “to break the back of bad habits, to heighten public understanding of the issues and to return the principle of accountability to the centre of government business at every level.”
On receipt of the Commission’s report, I committed the Cabinet to a full review of the report with a view to adopting its recommendations.
Many of the recommendations have required further analysis and consultation because of their impact in other areas, such as the Government’s collective bargaining agreement with the Bermuda Public Service Union and existing legislation.
One particular recommendation that falls within the need for further analysis and consultation is Financial Instructions, which the Commission recommended be given force of law by making them regulations. We will report on that matter in due course.
In the meantime, I want to update Bermuda on the first tranche of recommendations we are moving forward with to build more effective working relationships between Government ministers and senior civil servants, to improve transparency and to safeguard against conflicts of interest.
These recommendations were reviewed by a Cabinet subcommittee and have now been approved by the full Cabinet for adoption as follows:
- We will commit the Government of Bermuda to a public launch of the Ministerial Code of Conduct, signed by its Premier, as a public pledge to proper conduct by his or her Ministers.
- We will provide enhanced training for new Government Ministers on their responsibilities, with particular attention to their relationship with their Permanent Secretary as an Accounting Officer.
- We will strengthen guidelines for Accounting Officers to uphold financial propriety, regularity and transparency in government actions. This will be achieved by inserting into the Ministerial Code of Conduct paragraph 12.3 from the 2002 Code, and revising paragraph 12.2 to indicate that Accounting Officers “can be called before the Public Accounts Committee” to account for the policies, actions and conduct of their Departments.
- The Commission said Ministers should have no role in the movement or placement of Permanent Secretaries. That in fact is the responsibility of the Cabinet Secretary. In exercising that responsibility, the Cabinet Secretary should weigh all factors to bring about working relationships that achieve the best results for the government of the day.
- We will require Ministers to provide full disclosure to Cabinet of Technical Officer recommendations when they support a Minister’s decision and when they’ve recommended an alternative course of action.
- We will require decisions taken by Cabinet or Ministers that are contrary to, or deviate from, the recommendations of Technical Officers, to be documented and signed by the relevant Permanent Secretary and Minister.
- We will introduce restrictions to prevent government officials from profiting from insider information, connections or Ministerial activities after leaving office.
- We will introduce sanctions for non-compliance with the Ministerial Code of Conduct. To this end, we will research the approach taken to sanctions in other jurisdictions to determine the appropriate template for Bermuda.
- Following the Commission’s recommendation, we have already updated the minimum threshold for Cabinet approval of Government projects. Projects costing more than $100,000 will require a Cabinet decision paper and projects costing between $50,000 and $100,000 will require the Minister’s signature and Cabinet to be informed.
- We will review Financial Instructions and the Civil Service Code of Conduct and Conditions of Employment to incorporate, where appropriate, language that is reflective of all the above commitments.
The Cabinet at this time has agreed to not take action on some Commission recommendations because they do not fall solely within the remit of the Premier or the Cabinet.
- The requirement for Parliamentarians to disclose any potential benefit, financial or otherwise, which could influence their actions, and
- Requirements for the identity of all political campaign donors and donations to be reported and open to the public.
In each case, these issues require the input of the Legislature and we therefore welcome its attention on these important matters.
In addition to these items, I want to explain why we are not taking action on one other recommendation in our review of this first tranche of Commission recommendations.
The Commission also recommended that Ministers be provided an ‘aide-de-camp’. We don’t support this recommendation at this time for two reasons: Ministers already have the authority to appoint consultants pursuant to the Ministerial Code of Conduct, with the Premier reviewing any such appointments. Secondly, despite our progress, government remains in a difficult financial position. Since our election four years ago, we have had to exercise the tightest restraints on spending to restore fiscal health, and this recommendation is one more item that falls within those restraints.
Ladies and gentlemen,
With the adoption of these recommendations, we are taking concrete steps toward addressing the problems the Auditor General highlighted in her reports on the 2010-2012 Financial Years, and to learning the lessons the Commission of Inquiry so clearly pointed out. Many of the recommendations outlined today involve adjustments to the administrative mechanisms and relationships within government that do not ordinarily come into the public light.
But taken individually and together, they will strengthen our system of governance by anchoring actions and relationships to the principles of accountability, transparency and responsibility that every citizen has a right to expect from his or her government.
In that regard, I want to again express my appreciation, and the appreciation of my colleagues, to the Commissioners for their hard work and guidance to progress the system of good governance in Bermuda.
In addition, I also wish to extend my sincere thanks and appreciation to the Secretary to the Cabinet for his advice and guidance as we have collaboratively worked through the recommendations of the Inquiry.