The Commission of Inquiry into the Development Finance Corporation (DFC) said it was hit with a major setback today because two key witnesses who were summoned to testify, failed to show up.
At the start of the session this morning, February 14, Commissioner Merlene Bailey-Martinez reported that attorney Dickie Bradley, who is also a ruling People’s United Party (PUP) senator, had just submitted two letters to the Commission. One letter is dated February 13th and says that Bradley was unable to deliver the Commission’s February 8th summons to Glenn D. Godfrey, former DFC chairman, because he has been out of the country and is not due to return until the weekend. The other letter is dated today and claims that former DFC CEO, Troy Gabb, could not appear because he was ill. Attached to Gabb’s letter was a sick leave certificate from Universal Health Services (UHS), the private hospital – and DFC borrower – for which Gabb is now the CEO.
“This is a serious set back for us. We have concerns over this … because these people are key to these hearings and to the information we need to gather in these hearings,” said Commissioner Bailey-Martinez. “We have serious concerns with their inability, or the fact that they are not attending the hearings today. So we will keep you informed once we are able to come to some definitive way forward.”
Gabb’s letter also said that he awaits a new summons with a new date for him to appear before the Commission. On the other hand, Godfrey’s letter said that he would be available to the Commission on Tuesday, February 20.
Commissioner Mrs. Bailey-Martinez said that she has to meet with her co-chair, Herbert Lord, to decide on a new course of action for the Commission, and to determine what their options are as they relate to the new witnesses.
Today’s session lasted just about 40 minutes, as the Commission called forensic auditor, Mark Hulse, CPA, not to testify but to request further clarification of some sections of his preliminary report.
Hulse had submitted a preliminary report to the Commission on February 2, and is due to deliver his final audit report on the evening of Thursday, February 15. However, Commissioner Bailey-Martinez said that there are some areas of the report that need further clarification and elaboration. While the Commission said it would make its request in writing, she read into the record the specifics of what the Commission is requesting of Hulse.
Among the items for which she requested clarification are DFC’s loan disbursement policy and normal lending guidelines. The Commission also wants to know whether these were applied to all the large loans, and whether the loans were closely monitored; whether the projects the loans financed were closely monitored; whether there were regular inspections and status reports on these projects; and whether the loans were made outside DFC’s normal lending guidelines.
The Commission also asked for further information on possible violations of DFC policies and guidelines, such as the persons who were responsible for any violations, and the level of input the board of directors had, either individually or collectively, when funds were improperly disbursed.
Another area where they are seeking more information is the suspension of the management credit committee. Specifically, they want to know who made the decision, and what were the implications of that decision.
It also requested more information on the abolition of prepayment penalties and the capping of loan processing fees at $10,000 per loan, as well as the financial and other implications of those decisions on the DFC. Similarly, the Commission asked Hulse to explain what was the effect of DFC’s decision to lend money at 12% when it cost the DFC more to get the funds it was lending at this rate.
On the topic of the write-off of loans, the Commission noted that the DFC had written off a loan for Dr. Gregorio Garcia, former Corozal South West area representative for the PUP, and they asked Hulse to indicate the reason why DFC wrote off the loan and whether any action was taken on the security Garcia had pledged to DFC for the loan.
Finally, the Commission asked Hulse to give his advice on the legality and propriety of Government’s transferring the Government Printery, valued at $2.4 million to the DFC, as equity in the DFC (in the form of new DFC shares to GOB) when the DFC Act quoted the share capital as $30 million.
CPA Hulse indicated that many of these issues would have already been elaborated in the final report due Thursday, and what was not incorporated he would endeavor to include by the time the report is due Thursday.
The Commission asserted that if Hulse needs an extension beyond the February 15 reporting deadline, it would support a request to the Ministry of Finance for that extension.
We note the allegation David Novelo made last week, that Hulse suffers a conflict of interest in his appointment as forensic auditor, was not mentioned by the Commission today. They have said previously that they do not agree with Novelo’s claim.
Hulse informed the Commission that, according to the terms of his engagement by the Ministry of Finance, his final audit report should go to the GOB, Commission, NTUCB; DFC, DPP, “and any other relevant parties.”