Mis­man­age­ment of funds, lack of fi­nan­cial trans­paren­cy, lack of prop­er ten­der­ing process­es, con­flict of in­ter­est and pol­i­cy breach­es have been un­earthed in the 2018 Ernst and Young (EY) fi­nal au­dit on the The Trin­ba­go Uni­fied Ca­lyp­so­ni­ans' Or­gan­i­sa­tion (TU­CO).

The or­gan­i­sa­tion re­ceives mil­lions of tax­pay­ers dol­lars an­nu­al­ly.

The au­dit spanned three years—be­tween 2013-2016—and the fi­nal re­port was com­plet­ed in April 2018 and sub­mit­ted to the Min­istry of Com­mu­ni­ty De­vel­op­ment, Cul­ture and Arts (MCD­CA) and Min­is­ter Dr Nyan Gads­by Dol­ly. Ac­cord­ing to the Hansard of June 22, 2018, the au­dits were not on­ly done for TU­CO but al­so Pan Trin­ba­go and the Na­tion­al Car­ni­val Band­lead­ers As­so­ci­a­tion (NC­BA).

While the min­is­ter out­lined gen­er­al con­cerns raised in re­la­tion to the three spe­cial in­ter­est Car­ni­val groups that the au­dits cov­ered, the specifics of the TU­CO au­dit re­port had not been re­vealed in de­tail.

At the an­nu­al read­ing of the na­tion­al Bud­get in Oc­to­ber, funds are al­lo­cat­ed to the Na­tion­al Car­ni­val Com­mis­sion (NCC) which then dis­burs­es amounts to the spe­cial in­ter­est en­ti­ties in­clud­ing TU­CO.

TU­CO typ­i­cal­ly re­ceives the mon­ey in three tranch­es. The first tranche is usu­al­ly dis­bursed be­tween Oc­to­ber and De­cem­ber, the sec­ond in Jan­u­ary, and the third be­tween Feb­ru­ary and March.

Be­tween the pe­ri­od 2013-2015, TU­CO re­ceived $41.6 m. While TU­CO's bud­get was $7.7 m in 2016, EY stat­ed in its re­port that it did not see the sub­ven­tion re­ceived.

As shown in the ta­ble, over the pe­ri­od 2013-2016, the fund­ing re­quest­ed by TU­CO was ap­prox­i­mate­ly TT$5.2 m to TT $22.1 m high­er than the sub­ven­tions pro­vid­ed by NCC.

Year Bud­get Sub­ven­tion Dif­fer­ence

2013 TT $17.4m TT$12.2m TT $5.2m

2014 TT$38.2m TT$16.1m TT$22.1m

2015 TT $27.7m TT$13.3m TT $14.4m

2016 TT$7.7m Not seen Not seen

•The EY re­port raised is­sues about pres­i­dent of TU­CO Lu­ta­lo Masim­ba pay­ing him­self through a pub­lish­ing com­pa­ny he owns and a ques­tion­able mil­lion-dol­lar pay­ment to a then NCC board mem­ber whose com­pa­ny was con­tract­ed to do the project with­out any prop­er ten­der­ing process.

EY in­di­cat­ed that a sum of $84,000 had been paid to Masim­ba Pub­lish­ing be­tween the pe­ri­od 2013-2014. EY not­ed that the com­pa­ny which pub­lish­es posters, post­cards, mag­a­zines, books, and mu­sic, is owned by the TU­CO pres­i­dent.

The pay­ment, EY not­ed, stat­ed—"Pay­ment on cash com­mis­sions 2013." They added, "That for part pay­ment of TT$20K, Mr Lu­ta­lo Masim­ba ap­proved this pay­ment which is a con­cern re­lat­ed to seg­re­ga­tion of du­ties."

The seg­re­ga­tion of du­ties is the as­sign­ment of var­i­ous steps in a process to dif­fer­ent peo­ple. The in­tent be­hind do­ing so is to elim­i­nate in­stances in which some­one could en­gage in theft or oth­er fraud­u­lent ac­tiv­i­ties by hav­ing an ex­ces­sive amount of con­trol over a process. In essence, the fol­low­ing three gen­er­al func­tions in a process should be split among dif­fer­ent peo­ple.

How­ev­er, in this in­stance, EY stat­ed, that prin­ci­ple was not fol­lowed. Masim­ba re­port­ed­ly signed off on pay­ment for him­self.

EY stat­ed in the au­dit re­port, "On April 4, 2018, we were in­formed by the as­sis­tant trea­sur­er that al­though the pay­ments were made to Masim­ba Pub­lish­ing, they were not re­lat­ed to pub­lish­ing ser­vices. The pay­ments were in re­la­tion to cash spon­sor­ship com­mis­sions (20 per cent of which gen­er­al coun­cil mem­bers were en­ti­tled to claim an in­voice from Masim­ba Pub­lish­ing was al­so pro­vid­ed). The ra­tio­nale for pass­ing these pay­ments through Masim­ba Pub­lish­ing was not dis­closed."

Dur­ing a sit­down in­ter­view at the Queen's Park Sa­van­nah last Mon­day with the TU­CO pres­i­dent, Masim­ba in­sist­ed that he saw noth­ing wrong with the arrange­ment. "I was asked to do so. The mon­ey is mine, that is my com­mis­sion that I worked for."

Asked if he did not see any­thing wrong with sign­ing off on pay­ments for him­self,

Masim­ba shot back, "So how they should pay me for my com­mis­sion? I bought in the mon­ey for spon­sor­ship in­to the or­gan­i­sa­tion."

• Masim­ba washed his hands of an­oth­er arrange­ment that EY point­ed out as a con­flict of in­ter­est—a $1.25 m pay­ment to Wa­ter­wheel Stu­dios Lim­it­ed in 2015. This com­pa­ny was owned by Vaughn Nor­eiga, a for­mer mem­ber of the board of the Na­tion­al Car­ni­val Com­mis­sion (NCC).

Ac­cord­ing to TU­CO's Fi­nance Com­mit­tee meet­ing min­utes on June 26, 2015, Masim­ba stat­ed that then cul­ture min­is­ter Lin­coln Dou­glas had some pro­posed projects and fund­ing for one of the projects based on the his­to­ry of ca­lyp­so and ded­i­cat­ed to Lord Kitch­en­er, which would be chan­nelled through TU­CO's sum­mer camp for the youths. The pres­i­dent stat­ed that Nor­eiga was spear­head­ing this project.

In that same meet­ing, Shirlane Hen­drick­son, the as­sis­tant gen­er­al sec­re­tary, said as an ex­ec­u­tive mem­ber she was dis­ap­point­ed that she was not in­formed about the de­vel­op­ment of the project.

In quotes from the min­utes of the meet­ing con­tained in the au­dit re­port, Hen­drick­son stat­ed that some weeks be­fore, she had been called by Maria Legall, the ac­counts as­sis­tant, to sign some cheques. As one of the sig­na­to­ries, Hen­drick­son said "she was quite sur­prised that she was al­lowed to sign the cheque made out to Wa­ter­works in the amount of $1.25 m. She stat­ed that she had nev­er signed a cheque for this large amount and even asked Ms Legall if she could re­al­ly sign this cheque. And Legall con­firmed that she could, so she pro­ceed­ed to sign the cheque. She in­formed that some days lat­er Mr John­son, the as­sis­tant trea­sur­er in­formed that the cheque was on hold since cor­re­spond­ing in­for­ma­tion was be­ing in­ves­ti­gat­ed."

EY said based on their re­view, "we not­ed that Wa­ter­wheel Stu­dios Lim­it­ed was in­cor­po­rat­ed on 21 April 2015 and the own­er list­ed as Mr Vaugh­an Nor­ie­ga (NCC board mem­ber). Fur­ther­more, a cash pay­ment vouch­er in the amount of $1.25 m was pre­pared and ap­proved by TU­CO eight days lat­er on 29 April 2015.

"The cheque for TT$1.25 m to Wa­ter­wheel Stu­dios Lim­it­ed was dat­ed 11 June 2015 and was cashed in the FCB cur­rent ac­count on 18 June 2015. As such, it ap­pears that Wa­ter­wheel Stu­dios Lim­it­ed was cre­at­ed specif­i­cal­ly for this project, by the per­son who was charged with spear­head­ing the youth camp."

EY's re­port stat­ed that "based on the del­e­ga­tion of au­thor­i­ty, Ms Hen­drick­son does not have the au­thor­i­ty to sign cheques of this val­ue. We re­quest­ed the cashed cheque to ver­i­fy the sig­na­to­ries, how­ev­er, this was not pro­vid­ed up to the date of this re­port."

When ques­tioned about this arrange­ment, Masim­ba said, "My mis­sion was not to ex­plore Wa­ter­wheel or any­thing but car­ry out the in­struc­tions of the min­is­ter." Asked if he did not see any­thing wrong with act­ing on a di­rec­tive that would ben­e­fit a then NCC board mem­ber, he in­sist­ed he was fol­low­ing the min­is­ter's in­struc­tions.

The let­ter out­lin­ing this re­quest, and which formed part of the re­port, was signed off by the then min­is­ter, Dou­glas.

Dou­glas: I can see how peo­ple would see it as a con­flict of in­ter­est

When Dou­glas was con­tact­ed by phone last Wednes­day and asked if he felt it was a con­flict of in­ter­est grant­i­ng this job to an NCC mem­ber, he would on­ly say, "I can see how peo­ple would see it as a con­flict of in­ter­est."

Pressed fur­ther, Dou­glas said he would not make any fur­ther com­ment.

To pre­vent this from oc­cur­ing in the fu­ture, EY stat­ed that "all po­ten­tial con­flicts of in­ter­est must be iden­ti­fied and dis­closed."

EY added, "A code of con­duct in­clu­sive of a con­flict of in­ter­est pol­i­cy must be de­vel­oped to guide mem­bers on prop­er dis­clo­sure of con­flicts of in­ter­est and the ap­pro­pri­ate course of ac­tion tak­en."

Nor­eiga: It's dis­heart­en­ing and un­for­tu­nate

When Sun­day Guardian con­tact­ed Nor­eiga about the con­tents of the re­port, he said, "It is dis­heart­en­ing and un­for­tu­nate that a suc­cess­ful project has to have this kind of la­belling. This project was all over the ra­dio and me­dia with these chil­dren. How could some­thing so good be put un­der such scruti­ny? I don't see this as a con­flict of in­ter­est."

Nor­eiga al­so de­fend­ed the in­fer­ence made in the re­port that Wa­ter­wheel Stu­dios was set up specif­i­cal­ly for this par­tic­u­lar project.

"Wa­ter­wheel has been in ex­is­tence for quite some time. We have a web­site and we can be found on Face­book. We do a lot of back end pro­duc­tion for Car­ni­val and oth­er events. The com­pa­ny was not formed sole­ly for that rea­son," said Nor­eiga.

•The EY re­port al­so raised ques­tions about the va­ca­tion leave pay­out grant­ed to Masim­ba.

They ques­tioned a cheque pay­ment made out via a vouch­er on Jan­u­ary 5, 2016, to the pres­i­dent for the sum of $135,750 in lieu of ten years va­ca­tion. The salary memo at­tached to the pay­ment was ap­proved by Trea­sur­er De­nis Cox, which in­di­cat­ed in a doc­u­ment at­tached to the re­port that Masim­ba had not tak­en va­ca­tion from the years 2006-2015.

They not­ed that he was en­ti­tled to six weeks or 45 days va­ca­tion leave per year—mul­ti­plied by ten years, it to­talled 450 days.

The EY re­port stat­ed that "this is 25 days greater than the max­i­mum va­ca­tion al­lowance for TU­CO's em­ploy­ees, how­ev­er va­ca­tion en­ti­tle­ments for the mem­bers of the gen­er­al coun­cil are not for­mal­ly doc­u­ment­ed with­in the con­sti­tu­tion or by-laws. In terms of for­mal ap­provals, we al­so not­ed that the 15 No­vem­ber 2013 Fi­nance Com­mit­tee min­utes stat­ed: 'A com­pen­sa­tion pack­age would al­so be con­sid­ered for Mr Lu­ta­lo Masim­ba in lieu of va­ca­tion leave.' ''

EY not­ed that they "were not pro­vid­ed with any gen­er­al coun­cil min­utes/ap­proval in re­la­tion to the 45-day an­nu­al va­ca­tion al­lowance of the spe­cif­ic $135,750 pay­ment made in Jan­u­ary 2016, and as such can­not con­firm that gen­er­al coun­cil's ap­proval of this en­ti­tle­ment."

When the Sun­day Guardian brought the va­ca­tion leave mat­ter up with Masim­ba, he said "that is mis­in­for­ma­tion."

Masim­ba in­sist­ed that he had sub­mit­ted all doc­u­men­ta­tion to EY and felt that he should have been privy to the fi­nal re­port.

EY, in the in­tro­duc­tion of its au­dit re­port, not­ed they were hired by the MCD­CA to do this au­dit and its con­tents were to be made avail­able to MCD­CA.

"Af­ter what­ev­er they say there, all these points that were raised there, we had doc­u­men­ta­tion be­cause we met with Ernst and Young," Masim­ba said.

Masim­ba chal­lenged the fi­nal au­dit re­port, in­sist­ing that a lot of what was con­tained in the 42-page re­port was "er­ro­neous."

•The EY re­port al­so stat­ed that cer­tain doc­u­ments in­clud­ing fi­nance re­ports and work­ing pa­pers pre­sent­ed in fi­nance com­mit­tee meet­ings could not be lo­cat­ed for re­view.

They not­ed that the in­ter­nal con­trol en­vi­ron­ment at TU­CO was "weak, with lim­it­ed over­sight, mon­i­tor­ing or ac­count­abil­i­ty."

Some of EY's key find­ings were that "ac­counts are not con­sis­tent­ly or ac­cu­rate­ly mon­i­tored, which in­creas­es the po­ten­tial risk of mis­ap­pro­pri­a­tion of funds and sig­nif­i­cant fi­nan­cial loss­es."

An­oth­er key find­ing was that "out­side of an­nu­al au­dits, key ac­counts, and re­ceipt of rev­enue are not prop­er­ly checked and rec­on­ciled. EY was un­able to ver­i­fy all the amounts re­ceived in­to TU­CO's bank ac­counts. There ap­pears to be lim­it­ed doc­u­men­ta­tion to sup­port ex­pen­di­ture."

EY found that there were "bank ac­counts in use, but pay­ments were made in­con­sis­tent­ly from these ac­counts." They ob­served that "the cash re­ceipt process is not be­ing con­sis­tent­ly fol­lowed, 82 per cent of our rev­enue trans­ac­tions sam­ple which to­talled TT $6.7 m, could not be lo­cat­ed with­in the re­ceipt books pro­vid­ed. Ad­di­tion­al­ly, 42 per cent of the to­tal sam­ple, amount­ing to TT $ 2m, had nei­ther re­ceipt nor de­posit book en­tries."

•They al­so found that the ten­der­ing process was want­i­ng and found that "TU­CO en­gaged in in­di­vid­ual pur­chas­es over $100 K, to­talling TT$3.1 m, from ven­dors who ap­peared to be sole­ly se­lect­ed."

The TU­CO pres­i­dent said that the or­gan­i­sa­tion had de­vel­oped re­la­tion­ships with cer­tain key ven­dors and that these ven­dors may be sole-sourced at the coun­cil's dis­cre­tion.

With re­gard to the stag­ing of ma­jor events such as Ca­lyp­so Fi­es­ta, Kaiso Kar­a­van, Ex­tem­po com­pe­ti­tion to name a few, EY found sev­er­al se­ri­ous fi­nan­cial dis­crep­an­cies.

They said "it is un­cer­tain as to whether the cash was used for oth­er im­me­di­ate cash ex­pens­es or if it was de­posit­ed with oth­er sums of cash and there­fore en­tered in­to Quick­Books as a bulk de­posit or po­ten­tial­ly mis­ap­pro­pri­at­ed. We al­so not­ed that large de­posits were di­vid­ed in­to mul­ti­ple batch­es to avoid fill­ing out Source of Funds forms."

When asked about this, an up­set Masim­ba said, "If they say they did not see ev­i­dence and I pro­vide them with ev­i­dence...af­ter I pro­vid­ed them with ev­i­dence and they come back in the doc­u­ment and say they did not see ev­i­dence, then some­thing is wrong with that."

Masim­ba even asked that the in­ter­view be dis­con­tin­ue as he"did not ap­pre­ci­ate the road what we were go­ing down."

•Pressed by the Sun­day Guardian about the $5 m loan fa­cil­i­ty they se­cured from First Line Se­cu­ri­ties, Masim­ba said they used the sum to take care of "Car­ni­val pro­duc­tion and from the re­ceipts of that we put in an in­vest­ment fund."

Ac­cord­ing to the EY re­port, the $5 m loan was paid back by the NCC. In Jan­u­ary 2018 TU­CO said they would re­pay the sum to the NCC over a four-year pe­ri­od.

BOX (Put on A6)

Pe­ters: NCC will con­trol how mon­ey is spent

Chair­man of the NCC Win­ston "Gyp­sy' Pe­ters said on Thurs­day dur­ing an in­ter­view, "We did pay off the fa­cil­i­ty for TU­CO be­cause, as you know, they al­ways find them­selves in prob­lems. We did pay it for them and be­cause we had a short­fall in our sub­ven­tion we gave them a short­fall and al­though they were to start pay­ing us back in 2018, we thought it would be un­con­scionable see­ing that we got a short­fall and they got a short­fall from us. So we are start­ing to take back the mon­ey from this year."

Pe­ters said he had not been privy to the TU­CO re­port, but based on what he knew, the NCC had tak­en a stand in terms of all the spe­cial in­ter­est Car­ni­val groups to en­sure bet­ter fi­nan­cial ac­count­abil­i­ty.

"We have a MOE with all in­ter­est groups, the ones we give mon­ey from the cof­fers of the NCC we have a MOE with them that state we con­trol the fi­nances. We go­ing to give it to you, but we have con­trol over it in terms of how it is spent and we are stick­ing to that," Pe­ters said.

"There is al­ways a strug­gle. There has been a prob­lem for a long time, this sub­ven­tion agree­ment that the Gov­ern­ment had with these groups was for on­ly three years. Af­ter three years the Gov­ern­ment was sup­posed to cut every­thing loose and not do that at all, but over the years it has gone in­to mil­lions and then tens of mil­lions un­til it is where it is to­day. So we now have to take con­trol of this and see how best we can bring it back."

Sun­day Guardian sent mes­sages to Min­is­ter of Com­mu­ni­ty De­vel­op­ment, Cul­ture and the Arts Dr Nyan Gads­by-Dol­ly ask­ing if the min­istry had rec­om­mend­ed any ac­tion based on the 2018 au­dit re­ports for the Car­ni­val spe­cial in­ter­est groups and al­so if she had any con­cerns sur­round­ing the se­ri­ous is­sues raised in the TU­CO au­dit re­port that in­clud­ed mis­man­age­ment of funds,

The min­is­ter did not re­spond to the What­sApp mes­sages, al­though the mes­sages were read.