June 2, 2010
Pastor Derek Bignall
West Indies Union Conference
Dear Pastor Bignall
Because of your refusal to allow me to address the full board and the smaller committee that was convened later during the day at the recently held NCU Board meeting on May 31, 2010, I have no choice but to write you and share my concerns with the other members of the board before I forward a similar letter to the executive committee of the General Conference and its Legal Department.
When one considers that US$1.5 million was removed from the WIU bank account for investment in risky financial schemes without the approval of the full membership of the WIU Administrative Committee, then one has to conclude that the leadership of the Union lacks the capacity to adequately address issues of impropriety and fraud that may arise within its institutions.
The Audited Financial Statement of Northern Caribbean University that was sent to the executive officers of the board for release to all members, as per policy, cited a number of irregularities that rise to the level of fraud, corruption and blatant violation of the University, Union and Division working policies.
The General Conference Auditing Services (GCAS) Management Letter highlighted the following egregious acts:
1. Construction Material – Nursing School
According to the Auditors, and I quote, “we observed that construction materials bought for the Nursing School were sold to some employees. These materials were tax exempt by the Government. As a result, this poses serious implications for the school and its tax exempt status. An interview was conducted with the project manager and he stated that he was not aware of these transactions. We also stated that he was aware of the tax implications”
It is important that the Board be informed as to who the individuals are that purchased these materials and received tax benefits for which they were not entitled. Note that the University and these three employees are complicit in deliberately defrauding the government by evading paying taxes on the materials. Secondly, they defrauded the major donor, Mr. Michael Lee Chin of materials that he paid for to be used toward the construction of the nursing school. Whoever these employees are they and the officer(s) who approved the transactions are in violation of university policy and the government tax laws and should resign immediately because they have stolen material in their homes.
2. Motor Vehicle Upkeep
According to the auditors, and I quote, “the institution received approval from the Jamaican Government to pay a specified amount as motor vehicle upkeep for employees who own a motor vehicle. We noticed that some administrators receive upkeep while driving a vehicle owned by the institution. All expenses related to these vehicles are paid by the institution…this creates a tax implication for the institution.”
Mr. Chair, those administrators who had been claiming upkeep for university owned and maintained vehicles were cheating the government and the university and are to be terminated. If you were to calculate their monthly upkeep for the past few years I am sure the total amount they have cheated would be near the $10 million that was stolen by the three accountants a few years ago. Do not forget that those men were terminated and criminal charges were brought against them. As a board member I know that the Prado motor vehicle that was bought by the institution for use by the president is used on a 24 hrs basis by Mr. Murray and that he is claiming upkeep for that vehicle. If he did not know he was in violation of the Jamaica Government tax code then he should not be occupying the position of Vice President for Finance. He is enjoying a benefit that was not accorded to him or any other vice president by the Board. This is a clear abuse and misuse of the university’s assets by this officer and he should resign.
3. 2008 Mitsubishi Pajero
According to the auditors, and I quote, “the documents in our possession indicate that 80% duty concession was given by the Ministry of Finance on a 2008 Mitsubishi Pajero for the purpose of transporting SENIOR ADMINISTRATORS of the institution….we recommend that management review the purpose for which this vehicle is currently being used.”
Mr. Chair, what this means is that the vehicle is not to be assigned to any one individual or officer but for use to transport senior officers on official duties. Currently, this vehicle is being used solely by the president. It seems evident that the University Administrators were aware of the purpose for which this vehicle was purchased and should have applied for the applicable duty concession of 20%. When consulted, a tax officer in the TAAD of the Jamaican government informed me that if the government knew it was intended for use for and by one individual, they would have granted a 20% duty concession which is convention for individual concession. The auditors instructed the University to address this matter and the university continues to ignore this request. This is yet another example of deliberate intent to defraud the local tax authorities. The president cannot deny knowledge of this issue.
4. Flow of Information
According to the auditors, and I quote, “we observed that information entering the system may at times, bypass the Chief Accountant. At times vouchers are written and approved without the Chief Accountant’s signature. At times vouchers are approved by senior/general accountant.”
5. Prepaid Accounts
According to the auditors, and I quote, “we observed that some check payments were not supported by documents stating the nature or purpose of payments made.
Mr. Chair, Items #4 and #5 are clear evidence of what is known in the accounting profession as “management over-ride.” The internal system that was established to protect the university’s financial and economic assets is constantly being overridden. Therefore, the environment that has been created is fertile for fraud and embezzlement to occur. This was the climate that existed three years ago when the three men in the Finance Office committed the major fraud. I contend that base on the auditor’s report things have not improved much in the finance office. The emphasis seems to be focused on controlling lower level employees while administrators show scant regard for the required controls and fiduciary responsibilities entrusted to them.
6. Executive Board Voted Itself Honorarium
Sir, on Wednesday, December 17, 2003 members of the University’s Executive Board who were present at the meeting voted themselves an honorarium. According to the minutes, and I quote, “Voted, to pay an honorarium to each member of the Executive Board, to assist with expenses associated with attendance at monthly meetings.”
The members present who voted this act were Dr. Patrick Allen, Pastor Herman Ming, Dr. Herbert Thompson, Mr. Danieto Murray and, Mrs. Georgia Allen.
I ask the following questions: what expenses did these individuals incur that were associated with attending monthly meetings in Mandeville where all 5 of them lived and worked in 2003? The only member who could be excused is Mrs. Georgia Allen, since she was the only one who was not a salaried worker for the church.
Were the payments also made to the other members of the Executive Board who were not present at that meeting? I am referring to individuals such as Dr. Wendell McMillan, Pastor Errol Thomas and Pastor Everett Brown.
Where in the Working Policy of the Board is there provision for the Executive Board to vote itself honorarium? The working policy of the West Indies Union makes it clear that individuals employed to the organization cannot pay themselves honorarium.
7. Conflict of Interest Issues
Mr. Chair, the West Indies Union Working Policy, in alliance with the working policy of the IAD makes it clear that a full time employee cannot have another full time job. The Government of Jamaica website reveals that Dr. Herbert Thompson, who is member of the Electoral Commission (EAC) of Jamaica, is paid a gross salary of $8,048,631.00. The breakdown of the salary is such:
Basic Pay $5,718,914.00
Housing Allowance 2,000,000.00
Upkeep Allowance 243,900.00
Entertainment Allowance 85,817.00
Sir, this is not an honorarium as some of us would like to believe. No organization pays honorarium that includes basic pay, housing allowance, et cetera. This is a full time job and the University Board was never privy to the nature and extent of the president’s obligation to the EAC. Since this is in clear violation of the church’s working policy, which would have led to the immediate dismissal if it were a faculty member or pastor, I am recommending that the president either gives up that position immediately or resigns as president of Northern Caribbean University with immediate effect. It is shameful that this officer collects almost US$10,000 or J$900,000 each month for salary at the University (an issue that the full Board was not given a chance to discuss) which translates to approximately J$10,800,000 per year. How can a Board justify encouraging this level of greed? NCU is a Seventh-day Adventist Christian institution, where the emphasis is on sacrificial service. I have no problem equating the president’s salary to that of his counterparts at other institutions in the division. But do not make the comparison with the secular institutions.
8. Adventist Accrediting Association Visit
We had a major accreditation visit from AAA in November 2009 and the report was submitted to the administration in February 2010, yet the Board has not gotten the full report for review and recommendation. Among the major concerns cited by the AAA are (1) that the Board of Governors fill the position of University Provost, (2) that the Registrar’s Office be placed under Academic Administration, (3) a systematic plan be implemented that results in enhancing faculty morale, and (4) the Board explore ways of increasing the percentage of committed and professionally qualified lay members on the Board, and (5) must implement a structure to evaluate the performance of the board, the President and the other officers of the University.
Sir, the next Board meeting is in November and I believe that the Board should be given a copy by email of the full report. Furthermore, it is long overdue for the university to have a Provost and for the Registrar to report to Academic Administration as is the practice across four year colleges and university. This should be done regardless of who occupies the position. Is it too hard to implement these recommendations before the start of the 2010-2011 school year? Why is the university resisting these benign requests from the accrediting body?
These were the issues I wanted the Board to discuss on May 31, 2010 but was denied.. I appreciate the decision of those members who argued for me to share my concerns with a smaller committee. Unfortunately, many of them may not know that you, the chairman of the Board, denied me access to speak at that meeting unless I divulged my source for the auditor’s report. I am a man of principle; therefore, I refused because I do not believe it was necessary to reveal the source. What is important is to verify the veracity of the claims. Furthermore Pastor Bignall, I am deeply concerned that you sat and allowed the president of the university to threaten me with physical harm and you did nothing. Yet you want to remain Chairman of the Board? Sir, I do not think the University president has much respect for you, because if he did, he would not have done it. I am sure he would not have acted like that in the presence of Dr. Patrick Allen.
But the evidence is clear, you did not want me to speak because you were in possession of the auditor’s report and you know it was damming. The auditor’s report was addressed to you, Dr. Patrick Allen and Ms. Carmelita Findley. The president, in his capacity as secretary of the Board and President of the university also has a copy. The Working Policy of the Board states clearly that the University Board, not the Executive Board, be given the financial statements and audited financial statements of the university, and that the Board approves the budget.
I am recommending to you sir, in your capacity as chairman that the following be done:
1. The Vice Presidents for Finance and Industry and University Relations resign with immediate effect for defrauding the government of taxes on construction materials they sold themselves net of relevant taxes. Also, because they misdirected resources that were paid for by a major friend and donor of the university, they lack the moral authority, and the confidence of the Board to remain in their current positions. They are not in a position to effect policies that govern the operations of the institution.
2. The Vice President for Finance and the Treasurer are both in possession of vehicles that were purchased by the University for use by university officers. Instead, they are in possession of these vehicles and have been claiming upkeep which is a fraudulent act. Both men should resign with immediate effect. If we think it is too drastic to remove the two senior officers in the Finance office, then wait until the government tax and assessment department comes in and audit us. The tax liability may be more than the US$1.5 million of God’s money that we cannot and will never collect. If it is deemed that these officers should be provided with University vehicles this should be approved by the full Board, the required taxes paid and the practice of paying them upkeep discontinued.
3. The University Board should purchase a vehicle for the president’s use at the 20% concession, and use the vehicle that was purchased with 80% duty concession as stipulated and or represented to the government. Such an action would immediately resolve that matter that the university administration is incapable of addressing. The Board could give itself a timeline of 2 months to effectuate this action.
4. The University President cannot have two full-time jobs. It is either the University or the EAC. I believe the President is accepting motor vehicle upkeep from the university and the EAC on the same vehicle which he does not own.
5. Since the construction of the Nursing School was a major capital project that cost over J$400 million, and given the prevailing weakness in the internal control system at the university, I am calling for a Forensic Audit to be conducted of that project.
Pastor Bignall, it is instructive to note this week’s Sabbath School Lesson is on Integrity. There is evidence from what is available to the Board that fraud, theft, and deception is prevalent among the leadership of the institution. All of us have a fiduciary responsibility to protect the institution and its stakeholders from abuse. As a Christian, and a professional I am not going to turn a blind eye to the corrupt practices. I am asking you to take the courage and stand up for integrity. If you think the Catholic Church has problems stemming from the abuse of young boys by priests, watch what will happen shortly to our church if we do not act. I am warning you to stand up for the right though the heavens fall.
If I do not hear from you by the end of the week with a respectable response as to how we can address these matters, I am sending this letter to the General Conference Executive and to its Legal Department before the start of the Session later this month.
Yours in His Service,
Witford Reid, MD
Member, NCU Board
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