Last night we showed you how $68 million in public money has been used to secure Glenn Godfrey's private debt. And more urgently, we showed you how government stood to lose a $10 million deposit at the Antigua Overseas Bank because of the default of one of Godfrey's company Northern Data Pro Limited. Well, while government has opted not to comment, tonight, reliable and high level sources in the banking industry have confirmed that government did lose the deposit when it was seized yesterday by the Antigua Overseas Bank. That's $10 million in public funds lost to a private debt; and more importantly, it's money that according to a Central Bank report, had also been pledged as reserves. That's the kind of hard currency woes and reckless management that have continued to plague the government. It's also apparent in an internal audit report from the DFC obtained by 7NEWS. In September, the manager of the Internal Audit Division Robert Belisle submitted the audit report of the DFC headquarters to the CEO Troy Gabb. While there are many notable stories in the report, most alarmingly it discloses that even after Novelo's Bus Line went belly up, publicly guaranteed money continued to be pumped into the company. Here's the story.
Jules Vasquez Reporting,
Novelo's Bus Service: it went into receivership on March 5th of last year, $30 million in debt to the DFC. And that's $30 million that your taxpayer dollar has to cover because government secured the loan. And with $30 million down the hole you might think that would be, would have to be the end of it.
But not so. This Internal Audit Report compiled in September of 2004 showed that the lending to Novelo's Limited and the two principals Antonio and David Novelo continued even after the ruin of the bus line was clear. On March 31st, 26 days after Novelo's was declared insolvent, a loan of $1.3 million was approved from the DFC to cover what is called "working capital" - basically money to keep the company in operation. The report notes that, "this loan is a high-risk loan covered only by a promissory note signed by the receiver." That means basically that the loan is unsecured.
But more than that, the report notes a worrying cover up in the accounting for the loan. It claims, the money managers are using money from one account, called a "subsidiary account" to make it look like the principal account look is paid and up to date. The auditor concludes, "this is tantamount to falsification of the principal account...and also a misrepresentation of the facts." More than that, the loan payments that the account claims were received really only happened on paper. The internal auditor notes: "none of the loan payments shown...were ever received by DFC." He adds that there was no loan application, and no letter of offer on the file. The $1.3 million was just given to the insolvent Novelo's Limited.
And while Novelo's continued to receive millions after going into receivership, the former owners David and Antonio Novelo, received big money from DFC just before the government receivers closed in. The audit notes that a nearly half a million dollar loan was approved for David Novelo on January 29, 2004 - a month before the company was declared insolvent. The auditor notes that the $451,000 loan is again, a high risk loan, covered by only a promissory note. And then one month later, now just 6 days before the receivership was declared by government, that same government run DFC loaned Antonio Novelo another half a million dollars. And again, the auditor notes, "this loan is a high risk loan, covered by only a promissory note."
From the $30 million first loaned to Novelo's - right down to the last $1.4 million dollars, it's a staggering succession of reckless, possibly desperate decisions made by the government controlled DFC with publicly guaranteed funds. It may never be known who made the questionable decisions, but it's almost certain that you'll be the one paying for it.
The report also notes that James Janmohammed who is among the DFC's hard pay stars and owes upwards of $5 million also received another $500,000 between January and June 2004. Again, those loans were only covered by a promissory note. Again, in that case, the loan money was used to falsely foster the illusion that his account at the DFC was being kept current. There are other instances, and in every case, the trend is that instead of trying to recover non performing loans, DFC lends money to the persons or company which is already in default, and thereby increases the liability, just to create the illusion that the loans are current.
