Minister of Blue Economy and Civil Aviation and Area Representative for Belize Rural South, Andre Perez, will be holding press conference tomorrow Wednesday, February 24', 2021 at 9am in San Pedro Town at the Hol Chan Marine Reserve Building.
The purpose of this press conference which will be live on all media houses is to share the preliminary findings of the Audit Report commissioned by the Minister on the financial state of affairs at Hol Chan Marine Reserve. The Minister stands firm on his commitment to transparency and accountability but most importantly to his stance on zero tolerance for corruption and abuse of public funds.
Re: Hol Chan Audit Report Today
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The Ministry of the Blue Economy and Civil Aviation is reporting tonight that there is a major cause for concern at the Hol Chan Marine Reserve. An ongoing audit of the revenues generated by this protected area is indicating that almost 4 million dollars were mismanaged, and an additional 1.7 million may be lost as bad debt.
Located just 4 miles south of San Pedro Town, HOL CHAN was established as the country's first marine protected area back in July 1987. Today, it encompasses 102,400 acres of ecologically linked coral reef, sea-grass meadows, and coastal mangrove swamp habitats. The sustainable management of this important protected area is supposed to be carried out by a Board of Trustees, which was established in 1994. A visitor fee generates revenues, and to ensure that the reserve can pay for its own operational costs in the long-term. A Trust Fund was set up to hold the money generated by those visitor fees.
Upon taking office, Andre Perez, the new minister of the Blue Economy, commissioned an audit to get a true picture of the Reserve's finances. An audit team has since been reviewing, and according to Perez, they have found some worrisome financial irregularities which he is describing as mismanagement by its former management team.
And while the audit isn't finished - elections are coming, and he scheduled an impromptu press conference at the island office of the Hol Chan Marine Reserve. With the help of our colleagues from the San Pedro Sun News Paper, here are a few of the bullet points he made about the audit team's preliminary findings:
Perez says that as soon as the full audit is completed, he will report back to the Belizean public about what exactly was found, and what the legal advisors are recommending as possible redress.
This evening, we contacted the former Executive Director of the Hol Chan Marine Reserve, for comment, and we asked specifically about the assertion from the Minister that he owes just over 58 thousand dollars as part of a staff loan given to him. Up news time, our calls, and our messages to him remained unanswered.
$4Mil In Potential Mismanagement At Hol Chan Marine Reserve
Based on the preliminary report the Audit team has presented within the timeframe of January 1, 2017 to March 31, 2020, the following can be highlighted:
1. Major capital expenditure of $2.5Mil showed an increase of $1Mil in one year to the next which appeared not to have been approved by the board and the cost incurred were not monitored to safeguard cash flows and assets of HCMR. There was no urgency placed to ensure that HCMR received value for money and that its assets were safeguarded.
2. The Hol Chan Marine Reserve is in debt with a $394,000 loan, plus $115,000 overdraft at the Belize Bank and $50,000 overdraft at Atlantic Bank. Total debt exposure is $559,000 and income is below the $200,000 mark. According to the Audit preliminary report, it is evident that the current financial situation could have been avoided if adequate cash management control and procedures were in place pre COVID-19.
3. There was no formal nor internal approved policies or procedures that management was obliged to follow which made the organization susceptible to fraud and significant financial loss over time. There was no adequate check and balance by the accountant and there were no budgetary controls in place. Evident during the audit period were: a.) returned checks, staff receivables and other asset accounts left on the balance sheet without any support. This has led to loss of $55,000 as these would have to be written off. b.) There are large receivable balances of $79,000 that have not be pursued and potentially lead to write-offs in bad debts. c.) In conducting assessment verification tests, the audit team has been unable to fully verify $854,000 worth of assets which the HCRM purchased over the previous three years.
4. There are expenses for the former Executive Director and other members of the management team when not authorized by contract nor the board. The total of those expenses amounted to $40,000 over three years.
5. There was also a part abuse of the staff loan privilege where the auditors saw no system for approvals of loans to executive team and other staff members. As a result there is a staff loan balance of $58,000 due from the executive director alone at the end of March 2020.
6. During the review of the period 2017 to 2018, the auditors were able to detect a potential fraud in the amount of $636,843. This resulted from the analysis of visitors logs compared to actual amounts recorded in the general ledger after adjustments. Based on knowledge during this time, there was poor checks and balances on the revenues and collections of the HCMR, which left the opportunity for fraud to be committed. The then board of trustees suspected the fraud but never completed the investigation and had terminated the prior accountant’s employment without any legal suit for payment. Based on the preliminary audit report up to 2020 alone, the key areas of potential loss and cash flows mismanagement amount to a grand total of $1,747,455 in potential loss and an estimated $4Mil in potential mismanagement of the Hol Chan Marine Reserve.
Click here to read the rest of the article in the Ambergris Today
Millions of Dollars in Losses at Hol Chan Marine Reserve
It is one of the most popular natural attractions for both Belizeans and visitors, but tonight it appears that the Hol Chan Marine Reserve is in serious financial trouble. Responding to reports of possible financial impropriety, incoming Minister of Civil Aviation, whose portfolio includes the “the Blue Economy,” hired the firm of Moore Magana LLP to conduct an audit of the reserve’s management. During a virtual press conference from San Pedro, Minister Andre Perez said the audit revealed that millions of dollars were mismanaged and revenue lost due to poor oversight, lack of proper budgetary procedures and possibly outright fraud. The disturbing results of the review looked at a three-year period from January 2017 to March 2020. The numbers are not pretty. During the time frame in question, major capital expenditures increased by a million dollars, but according to Perez there is no paper trail to explain what the money was being spent on. The Marine Reserve’s loan obligations now stand at almost four hundred thousand dollars with overdrafts close to six hundred thousand dollars, split between the Belize and Atlantic Banks. The audit indicates some fifty-five thousand dollars in collections will have to be written off and another seventy-nine thousand in collections, which were never pursued, could also be unrecoverable. According to Minister Perez, eight hundred and forty-five thousand dollars in assets purchased over the last three years cannot be verified and expenses declared by the former executive director and other members of the management team were never authorized by the board. These amounted to close to forty thousand dollars. Staff loans were also made totalling fifty-eight thousand dollars. Much of this went to the executive director and was due almost a year ago in March 2020. While visitors believed the entrance fees they paid were going to support the reserve, discrepancies between the visitor logs and the actual amounts recorded in the ledges indicate fraudulent activity to the tune of almost seven hundred thousand dollars in lost visitor fees. An accountant was terminated in relation to this activity, but there was never any legal action taken to attempt to recover this money. In all, the Hol Chan Marine Reserve auditor’s report suggests a grand total of one million, seven hundred thousand dollars in documented losses and an estimated four million in additional mismanaged funds.
Andre Perez, Minister of the Blue Economy
“My friends, fellow residents of San Pedro, Ambergris Caye and Caye Caulker, these findings are not the result of a witch hunt. There are the direct indication of years of financial abuse and mismanagement and managers and staff carefully selected and put there by the previous U.D.P. administration. It is a pillaging of one of our most sacred and beloved treasures here in San Pedro. My presentation here today is a sound of war against corruption and downright robbery. Hol Chan is the first example. There are many more to come.”
Millions allegedly misappropriated at Hol Chan Marine Reserve
According to the preliminary report, there was an irregular expenditure of $2.5 million showing an increase of a million dollars in expenditure from one year to the next, without setting in place the adequate mechanism to safeguard cash flow and assets of the marine reserve. The report also revealed that Hol Chan Marine Reserve is committed to a $394,000 loan, plus a $115,000 in overdraft with the Belize Bank and a $50,000 overdraft with Atlantic Bank, totaling $559,000. Perez mentioned that the current income of the organization is below $200,000. Perez said that based on the preliminary investigation, this issue could have been avoided if adequate cash management controls and procedures were in place before the COVID-19 pandemic.
The alleged mismanagement of funds was due to the fact that there was no formal or approval of internal control policies and procedures that management was obliged to follow. “This made the organization susceptible to fraud and financial loss over time,” Perez said. He added that there was no adequate checks and balance on the accountant, and no budget controls in place. The audit also highlights an amount of $79,000 in receivable balances, which Hol Chan Marine Reserve has not pursued and will potentially have to write off. The audit team is also investigating to fully clarify $854,000 worth of assets Hol Chan Marine Reserve purchased over the previous three years. Between 2017 and 2018, an irregular figure of over $636,000 is unaccounted for. It is alleged that the then-board of trustees suspected the irregularities, but never completed an investigation. According to Perez, combining these discoveries, along with the other discrepancies involving the mismanagement of cash flow, the total loss of revenue so far amounts to over $1.7 million and an estimated $4 million in potential mismanagement of the Hol Chan Marine Reserve funds.
Click here to read the rest of the article in the San Pedro Sun