Audit on Governance BTP October 2015arsxm
BTP is the telecommunication regulator for Sint Maarten and is also responsible for, among others, the development of policy frameworks, the performance of activities and advising the Minister of Telecommunication, Economic Affairs, Tourism, and Transport (TEATT) regarding telecommunication and postal issues.
The impetus for an audit at BTP was the growth in arrears of the financial transfers from BTP to Government. BTP collects concession and spectrum fees from telecommunication operators and other telecommunication vendors in the local market. During the investigation, governance kept emerging as a concern, and the discoveries support the conduct of a governance audit at BTP.
The General Audit Chamber concludes that the most important, elementary forms of external and internal governance, are absent at BTP. The National Ordinance BTP that governs the institution, for the most part, is not complied with and important documents such as the legally required performance contract, the employment regulation and the regulation governing the operations of the Supervisory Board, are still not viewed as priorities. The General Audit Chamber further concludes that the governance within BTP, or better stated, the lack thereof, impacts the effective functioning of BTP and is, one of the causes for the lower than projected financial transfers to Government.
This is an undesirable situation in an organization with significant financial interests.
In fact, the investigation shows that despite a succession of Ministers, there has been and continues to be, little or no oversight of BTP. The General Audit Chamber concludes that the failure by the Minister(s) to properly and sufficiently exercise legal authority, is a primary cause for the arrears in transfers from BTP to Government. Additionally, the General Audit Chamber was unable to establish that action was taken to comply with the National Ordinance in terms of the regulation of financial transfers. A “temporary arrangement” has existed since 2011 to handle the financial transfers, however, it is not in accordance with the National Ordinance.
The General Audit Chamber was not able to determine whether during the Parliamentary debate related to the Country’s budget and that of the financial statements, questions were posed regarding BTP. In keeping with good governance, it is desirable that members of Parliament are informed and can pose questions to the responsible Minister regarding an organization with an arrears in required contributions.
The situation in terms of oversight exercised by the Supervisory Board is also worrisome. Because of the absence of the legally required procedural regulations, procedures for management, employment regulations and the performance contract for the Director, the Council is not sufficiently equipped to effectively supervise. In addition, the General Audit Chamber discovered instances of actions by the Board, that are not unequivocally legitimate.
BTP does not operate optimally. The efficiency and effectiveness of BTP is hampered by an organizational structure that is not in proportion to the staffing. Specifically, one in four persons at BTP is a high level manager. One would expect an equally high level of expertise from such a structure, yet most project and activities are outsourced. The General Audit Chamber could not find any evidence that outsourcing is conducted on the basis of a public procurement system. In a number of cases, the audit indicates that there are insufficient guarantees in place, and that the perception of possible conflicts of interest is present at BTP. Furthermore, formal job descriptions, a performance evaluation system and other basic organizational tools necessary for proper governance, are not yet in place five years after the start of operations.
Operational costs for BTP’s 2015 budget are approximately half of income. Budgets are U.S. Dollar denominated, while annual accounting documents are drafted using Guilders. Comparative analysis is therefore complicated because the budget must first be restated in Guilders. In terms of effectiveness and efficiency, a U.S. Dollar denominated financial administration carries high banking costs. The General Audit Chamber did not receive a reasonable explanation for the choice of the U.S. Dollar.
The report “Audit on Governance Bureau Telecommunication & Post” is published in both English and Dutch and is available on the website of the General Audit Chamber (www.arsxm.org).