An au­dit of the Pub­lic Ser­vices As­so­ci­a­tion’s (PSA) fi­nances, or­dered by the High Court in Jan­u­ary 2020, has re­port­ed over­spend­ing that ex­ceed­ed its in­come by $6.3 mil­lion in the last four years, ques­tion­able pro­cure­ment prac­tices, as well as a pen­sion plan in lim­bo. It al­so flagged an un­usu­al­ly high fre­quen­cy of re­im­burse­ments to PSA Pres­i­dent Wat­son Duke.

The au­dit of the years 2014 and 2015 was done by char­tered ac­coun­tants E Au­gus­tus Alexan­der and Com­pa­ny.

The re­port’s leak comes less than six weeks be­fore To­bag­o­ni­ans re­turn to the polls for the To­ba­go House of As­sem­bly (THA) elec­tions on De­cem­ber 6, where Duke, as po­lit­i­cal leader of the Pro­gres­sive De­mo­c­ra­t­ic Pa­tri­ots (PDP), is lead­ing his par­ty against the Peo­ple's Na­tion­al Move­ment for con­trol of the As­sem­bly. The PNM lost sig­nif­i­cant ground in the THA polls in Jan­u­ary and tied 6-6 with the Duke-led par­ty for con­trol of the THA.

Apart from his role as PSA Pres­i­dent, Duke is al­so the THA Mi­nor­i­ty Leader and the in­cum­bent for the Rox­bor­ough/Ar­gyle seat.

The au­dit from E Au­gus­tus Alexan­der and Com­pa­ny iden­ti­fied "re­portable con­di­tions" un­der in­ter­na­tion­al au­dit­ing stan­dards. “Re­portable con­di­tions in­clude mat­ters com­ing to our at­ten­tion re­lat­ing to de­fi­cien­cies in the de­sign or op­er­a­tion of the in­ter­nal con­trol struc­ture that, in our judge­ment, could ad­verse­ly af­fect the en­ti­ty’s abil­i­ty to record, process, sum­marise and re­port fi­nan­cial da­ta con­sis­tent with the as­ser­tions of man­age­ment,” the au­dit stat­ed.

Re­spond­ing to the au­dit re­port’s find­ings, Duke dis­tanced him­self.

He said, “The PSA is a sov­er­eign or­gan­i­sa­tion that ex­ists with­in the frame­work of its con­sti­tu­tion. This mat­ter, and all fi­nan­cial mat­ters, falls with­in the am­bit of the PSA’s Gen­er­al Coun­cil (fi­nan­cial body) and no one else.”

How­ev­er, for­mer PSA gen­er­al coun­cil mem­bers, who served dur­ing the fi­nan­cial years 2014 and 2015, al­leged that Duke has long been mak­ing fi­nan­cial de­ci­sions with­out month­ly gen­er­al coun­cil meet­ings, fi­nan­cial com­mit­tee meet­ings or the an­nu­al con­fer­ence of del­e­gates–as re­quired in the union’s con­sti­tu­tion.

They claimed the last con­fer­ence of del­e­gates was held in 2012, mean­ing that, since then, all fi­nan­cial trans­ac­tions done by Duke were done with­out the prop­er con­sti­tu­tion­al over­sight and ap­provals. The con­fer­ence of del­e­gates, ac­cord­ing to for­mer gen­er­al coun­cil mem­bers, is de­signed to act as a check and bal­ance of the union’s fi­nan­cial man­age­ment.

Un­der the PSA’s con­sti­tu­tion, spend­ing can on­ly be au­tho­rised by the union’s pres­i­dent or its gen­er­al coun­cil.

In Jan­u­ary 2020, High Court Jus­tice Devin­dra Ram­per­sad or­dered that an au­dit be per­formed by the month’s end af­ter a group, call­ing them­selves con­cerned pub­lic of­fi­cials, filed a le­gal claim against the Wat­son Duke-lead ex­ec­u­tive of the PSA.

The group ac­cused Duke’s ex­ec­u­tive of fail­ing to fol­low prop­er pro­ce­dure in the han­dling of the union’s af­fairs, al­leg­ing, among oth­er things, that there was no fi­nan­cial ac­count­abil­i­ty.

In Jus­tice Devin­dra Ram­per­sad’s rul­ing, he said, “The court is sat­is­fied that there is suf­fi­cient ev­i­dence in re­la­tion to the un­law­ful ex­pen­di­ture.”

Be­fore Jus­tice Ram­per­sad’s or­der, the PSA was last au­dit­ed in 2014.

The PSA has more than 80,000 mem­bers, from more than 100 or­gan­i­sa­tions, with around $26 mil­lion in re­port­ed as­sets.

Duke has served as PSA Pres­i­dent since 2008.

PSA’s ex­pen­di­ture ex­ceed­ed its in­come

The au­dit found that dur­ing the last four years, PSA’s ex­pen­di­ture ex­ceed­ed its in­come by $6.3 mil­lion.

It found that the PSA was in a state of as­set de­fi­cien­cy, with its year-end cur­rent li­a­bil­i­ties ex­ceed­ing cur­rent as­sets.

As­set de­fi­cien­cy, ac­cord­ing to the fi­nan­cial web­site In­vesto­pe­dia, sug­gests a com­pa­ny is in fi­nan­cial dis­tress and may de­fault on its oblig­a­tions to cred­i­tors and pos­si­bly head to bank­rupt­cy.

Au­di­tors sug­gest­ed the loss­es were a po­ten­tial threat to the PSA’s fu­ture, “Con­tin­ued deficits will ad­verse­ly af­fect the liq­uid­i­ty po­si­tion of the As­so­ci­a­tion, neg­a­tive­ly im­pact­ing its abil­i­ty to dis­charge its oblig­a­tions to cred­i­tors and ul­ti­mate­ly, the on­go­ing op­er­a­tions of the As­so­ci­a­tion.”

Ac­cord­ing to Sec­tion 29 (1) of the Trade Union Act, a gen­er­al state­ment of re­ceipts, funds, ef­fects and ex­pen­di­ture of every trade union reg­is­tered un­der the Act shall be sent to the Reg­is­trar be­fore June 1 every year and shall ful­ly show the as­sets and li­a­bil­i­ties at the date, and the re­ceipts and ex­pen­di­ture dur­ing the year pre­ced­ing the date.

A trade union, or any act­ing trade union of­fi­cer, found in con­tra­ven­tion of the sec­tion is li­able on sum­ma­ry con­vic­tion to a measly fine of $200 per of­fence.

Any per­son who wil­ful­ly makes, or or­ders to make, a false en­try in, or an omis­sion from, the gen­er­al state­ment is li­able on sum­ma­ry con­vic­tion to a fine of $2,000.

Pro­cure­ment is­sues

In sec­tion nine of the au­dit re­port pre­sent­ed to PSA man­age­ment on Au­gust 4, 2020, au­di­tors found that there were fun­da­men­tal break­downs in the pro­cure­ment process, for which no rea­son­able ex­pla­na­tions were pro­vid­ed.

They found that the con­trols de­signed to pro­tect the in­ter­est of the As­so­ci­a­tion were be­ing cir­cum­vent­ed by the ex­ec­u­tive.

“The Au­di­tors not­ed an un­usu­al­ly high fre­quen­cy of re­im­burse­ments to the Pres­i­dent. On en­quiry, we were told these were pur­chas­es made on be­half of the As­so­ci­a­tion. On fur­ther en­quiry by the Au­di­tor, as to why the sourc­ing of these stan­dard items was not ob­tained us­ing the As­so­ci­a­tion’s es­tab­lished pro­cure­ment, the au­di­tors were in­formed that is how it hap­pened based on in­struc­tions at the time,” the re­port stat­ed about the cur­rent sta­tus of pro­cure­ment.

In March 2021, Guardian Me­dia’s Un­spun re­vealed that Duke was un­der in­ves­ti­ga­tion by the TTPS Fraud Squad for al­leged­ly re­ceiv­ing a $521,000 pen­sion pay­ment from the PSA in 2019.

Duke al­leged­ly re­ceived pay­ment, in three tranch­es be­tween Sep­tem­ber and No­vem­ber 2019, af­ter promis­ing to re­sign as the union’s pres­i­dent.

In Sep­tem­ber 2019, Duke de­clared dur­ing a press con­fer­ence that he was step­ping down.

In­stead, Duke con­test­ed and won the PSA pres­i­den­tial elec­tion in De­cem­ber 2020.

As­sets

Sec­tion five of the re­port raised is­sues with the fixed as­set reg­is­ter, in­di­cat­ing that it "does not re­flect the cur­rent val­ues, lo­ca­tions, as­set num­bers and de­scrip­tions of all the as­sets held by the union."

This, they in­di­cat­ed, can lead to two im­pli­ca­tions which in­clude, "that as­sets may be trans­act­ed with­out the knowl­edge or au­thor­i­ty of the union," and "the ab­sence of a com­plete fixed as­set reg­is­ter may re­sult in the val­ue of the union’s as­sets not be­ing ad­e­quate­ly rep­re­sent­ed in the Fi­nan­cial State­ments,”

PSA’s fi­nan­cial state­ment for Feb­ru­ary 2021 re­port­ed as­sets of more than $26 mil­lion.

Of that, more than $20 mil­lion was re­port­ed in the fi­nan­cial state­ment to be in prop­er­ty, plants and equip­ment.

A PSA fi­nan­cial state­ment in Feb­ru­ary re­port­ed that the union had $865,078 in hand and at the bank, while it claimed there was an­oth­er $3.6 mil­lion in its pen­sion fund.

Pen­sion plans

Dur­ing en­quiries, au­di­tors said they were told by PSA’s man­age­ment that it was un­aware of the sta­tus of the or­gan­i­sa­tion’s pen­sion plans.

The or­gan­i­sa­tion failed to pro­vide any ev­i­dence of reg­is­tra­tion of its pen­sion plan and was un­able to pro­vide any in­for­ma­tion on the op­er­a­tions and sta­tus of its pen­sion plans, ac­cord­ing to the re­port.

It was found that, as a re­sult of this fail­ure, fu­ture pen­sion ex­pec­ta­tions for em­ploy­ees, as well as the as­so­ci­a­tion’s con­tri­bu­tion oblig­a­tions were sig­nif­i­cant­ly im­pact­ed. There are at least 40 work­ers who have been con­tribut­ing to the pen­sion plan.

Re­la­tion­ship Be­tween PSAM­AS­COL and PSA

While the PSA’s as­sets were found to be val­ued at around $26 mil­lion, the as­sets of PSA Man­age­ment and Ser­vices Com­pa­ny Lim­it­ed are worth more than $100 mil­lion, ac­cord­ing to au­di­tors.

Formed un­der for­mer PSA pres­i­dent Jen­nifer Bap­tiste-Primus, PSAM­AS­COL was cre­at­ed by the PSA to con­duct com­mer­cial re­al es­tate busi­ness on be­half of the union.

A union is barred in the con­sti­tu­tion from con­duct­ing com­mer­cial busi­ness as an en­ti­ty.

In 2013, ac­cord­ing to me­dia re­ports the PSA through PSAM­AS­COL leased 3.1 hectares of land in St James–for­mer­ly called PSA Grounds–to DTL Prop­er­ty De­vel­op­ers.

In the agree­ment, PSA was sup­posed to re­ceive $45 mil­lion up­on the com­ple­tion of a hous­ing de­vel­op­ment.

The project was nev­er com­plet­ed and has been sub­ject to le­gal claims, with clients tak­ing the de­vel­op­ers, DTL Prop­er­ty, to court.

WIth PSAM­AS­COL re­main­ing ac­tive, au­di­tors ex­pressed con­cern that there is no de­fined re­la­tion­ship be­tween PSAM­AS­COL and the PSA.

Au­di­tors found that PSAM­AS­COL en­tered in­to agree­ments with third par­ties, on be­half of PSA, to de­vel­op PSA leased lands and oth­er re­al es­tate ven­tures.

“Cur­rent­ly these re­al es­tate de­vel­op­ments amount to over a hun­dred mil­lion dol­lars, ap­prox­i­mate­ly five times the to­tal as­sets of the PSA; are over bud­get and years late on com­ple­tion/de­liv­ery times; are oc­cur­ring in a pe­ri­od of de­flat­ing re­al es­tate prices, and are sub­ject of le­gal ac­tions by prop­er­ty pur­chasers for breach of con­tract by the prop­er­ty de­vel­op­ers,” sec­tion two of the re­port said. As a re­sult, au­di­tors said it could not con­duct an in­de­pen­dent as­sess­ment of the re­duc­tion in the re­cov­er­able val­ue of fixed as­sets caused by the PSA’s re­la­tion­ship with PSAM­AS­COL.

Mem­ber­ship

The PSA claims to have more than 80,000 mem­bers but ac­cord­ing to the 2020 au­dit by E Au­gus­tus Alexan­der and Com­pa­ny, there is no ac­tive mem­ber list avail­able.

It not­ed there was al­so no com­plete record to de­ter­mine the fi­nan­cial sta­tus of mem­bers con­cern­ing the pay­ment of dues to the as­so­ci­a­tion.

They out­lined the im­pli­ca­tions of this stat­ing, “This leaves crit­i­cal gaps in the ap­pli­ca­tion of gov­er­nance to the As­so­ci­a­tion. Al­so, this rep­re­sents a fail­ure of in­ter­nal con­trols to en­sure its records re­flect the trans­ac­tions of the As­so­ci­a­tion,” the re­port said.

It rec­om­mend­ed that man­age­ment should, with the great­est of ur­gency, de­vel­op and im­ple­ment a mem­ber­ship sys­tem that pro­vides the cur­rent fi­nan­cial sta­tus of mem­bers.

It al­so rec­om­mend­ed that there should be a con­sis­tent rec­on­cil­i­a­tion (min­i­mum month­ly) be­tween the fi­nan­cial records and the mem­ber­ship data­base of dues re­ceived and mem­bers ac­counts cred­it­ed. Ac­cord­ing to PSA fi­nan­cial re­ports in ear­ly 2021, month­ly in­come from mem­ber­ship fees av­er­aged be­tween $1.3 mil­lion to $1.5 mil­lion.

In com­par­i­son, ex­ec­u­tive ex­pen­di­ture av­er­aged a lit­tle more than $273,000 per month, with $149,062 of that be­ing ex­ec­u­tive salaries, ac­cord­ing to the state­ment.

An­oth­er $37,900 went to­wards month­ly al­lowances for the likes of trav­el­ling and cell phones.

In March 2021, when the PSA re­port­ed more than $1.4 mil­lion in rev­enue, per­son­nel ex­pen­di­ture ac­count­ed for $767,000-$276,116 was for ex­ec­u­tive ex­pen­di­ture; $279,913 for salaries for gen­er­al staff; $116,440 in Oth­er Staff Cost.

Pro­fes­sion­al fees ac­count­ed for $121,992, while le­gal fees ac­count­ed for $102,000.

There was a $39,000 bill for sta­tionery and of­fice sup­plies and $29,000 bill for tele­phone, in­ter­net and ca­ble.

The PSA re­port­ed a $240,000 net in­come that month.

Poli­cies and pro­ce­dures

The au­dit found that there were no cur­rent poli­cies, pro­ce­dures or doc­u­ments to guide the op­er­a­tions of the or­gan­i­sa­tion.

“There is a de­pen­dence on ver­bal in­struc­tions based on pre­vi­ous prac­tice, which is spe­cif­ic to the per­son per­form­ing the func­tion...this will cre­ate gaps in the abil­i­ty of the or­gan­i­sa­tion to func­tion in the ab­sence of said per­son­nel,” sec­tion sev­en of the re­port read.

Be­cause of the ab­sence of doc­u­ment­ed guide­lines, au­di­tors said there will be a chal­lenge to hold peo­ple ac­count­able for ac­tions.

It was rec­om­mend­ed that all ex­ist­ing poli­cies, pro­ce­dures and prac­tices be re­viewed, doc­u­ment­ed and ap­proved by man­age­ment.

Oral Saunders.

KERWIN PIERRE

Oral Saun­ders: I told you so. You were warned

Ac­cord­ing to for­mer PSA gen­er­al sec­re­tary Oral Saun­ders, who was elect­ed in 2009 as part of Duke’s Team Pi­o­neers team, he warned PSA mem­bers about Duke years ago.

He said that mere weeks af­ter Duke’s team was elect­ed in 2009, he ex­pressed con­cern about cer­tain se­ri­ous fi­nan­cial trans­ac­tions.

Saun­ders be­lieved the au­dit re­port was grounds for mem­bers to call for Duke’s res­ig­na­tion.

“As it was in the be­gin­ning, so it re­mains. This re­port once made pub­lic has the ca­pa­bil­i­ty to force the res­ig­na­tion (of PSA Pres­i­dent Duke) and a sin­cere apol­o­gy to our union, the PSA, and my fel­low mem­bers.

“This re­port in­di­cates that ab­solute­ly noth­ing has changed in terms of ac­count­abil­i­ty, pru­den­tial man­age­ment, trans­paren­cy or even eth­i­cal be­hav­iour that shows re­spect for the fi­nan­cial sac­ri­fices of every grass­roots mem­ber.”

Saun­ders said the find­ings of the re­port were a clear in­di­ca­tion that the union is failed, with a lost ex­ec­u­tive.

He claimed that a par­lour sell­ing snacks or a bar like­ly had had bet­ter fi­nan­cial ac­count­abil­i­ty than the PSA.

“To think that its leader is de­sirous of con­trol­ling the purse of the THA or worse, be­com­ing the Prime Min­is­ter of this coun­try is mind-bog­gling,” the for­mer PSA gen­er­al sec­re­tary said.

“The most dis­taste­ful as­pect of this re­port speaks about the pen­sions of the em­ploy­ees of this or­gan­i­sa­tion. It is un­con­scionable for the staff to be placed in such a pre­car­i­ous po­si­tion, which re­flects the soul of the PSA ex­ec­u­tive.” Saun­ders called on the Reg­is­trar of Trade Unions to in­ves­ti­gate pos­si­ble vi­o­la­tions of the Trade Unions Act.