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$4Mil in Potential Mismanagement at Hol Chan Marine Reserve

Minister of Blue Economy and Civil Aviation and Area Representative for Belize Rural South, Andre Perez, held a press conference on Wednesday, February 24, 2021, to share the preliminary finding of the Audit Report commissioned by the Minister on the financial state of affairs at Hol Chan Marine Reserve. Based on the preliminary audit report up to 2020 alone, the key areas of potential loss and cash flows mismanagement amount to a grand total of $1,747,455 in potential loss and an estimated $4Mil in potential mismanagement of the Hol Chan Marine Reserve.

“It became clear to us the the situation at Hol Chan was grave when the realized that the Reserve was unable to weather the challenges of the COVID-19 pandemic,” stated Hon. Andre Perez. “This was a result of possible financial irregularities and mismanagement which warranted an urgent audit.”

No individuals were singled out in the report for mishandling of funds and assets of HCMR as the audit report was on preliminary findings. Hon. Andre Perez indicated that once a full detailed report is handed to his Ministry, these names will be made public, as well as all other findings. The finding will be handed to the proper government departments and authorities in order to proceed with legal action to correct all irregularities.

$4Mil in Potential Mismanagement at Hol Chan Marine Reserve

Based on the preliminary report the Audit team has presented within the timeframe of January 1, 2017 to March 31, 2020, the following can be highlighted:

  1. Major capital expenditure of $2.5Mil showed an increase of $1Mil in one year to the next which appeared not to have been approved by the board and the cost incurred were not monitored to safeguard cash flows and assets of HCMR. There was no urgency placed to ensure that HCMR received value for money and that its assets were safeguarded.
  2. The Hol Chan Marine Reserve is in debt with a $394,000 loan, plus $115,000 overdraft at the Belize Bank and $50,000 overdraft at Atlantic Bank. Total debt exposure is $559,000 and income is below the $200,000 mark. According to the Audit preliminary report, it is evident that the current financial situation could have been avoided if adequate cash management control and procedures were in place pre COVID-19.
  3. There was no formal nor internal approved policies or procedures that management was obliged to follow which made the organization susceptible to fraud and significant financial loss over time. There was no adequate check and balance by the accountant and there were no budgetary controls in place. Evident during the audit period were: a.) returned checks, staff receivables and other asset accounts left on the balance sheet without any support. This has led to loss of $55,000 as these would have to be written off. b.) There are large receivable balances of $79,000 that have not be pursued and potentially lead to write-offs in bad debts. c.) In conducting assessment verification tests, the audit team has been unable to fully verify $854,000 worth of assets which the HCRM purchased over the previous three years.
  4. There are expenses for the former Executive Director and other members of the management team when not authorized by contract nor the board. The total of those expenses amounted to $40,000 over three years.
  5. There was also a part abuse of the staff loan privilege where the auditors saw no system for approvals of loans to executive team and other staff members. As a result there is a staff loan balance of $58,000 due from the executive director alone at the end of March 2020.
  6. During the review of the period 2017 to 2018, the auditors were able to detect a potential fraud in the amount of $636,843. This resulted from the analysis of visitors logs compared to actual amounts recorded in the general ledger after adjustments. Based on knowledge during this time, there was poor checks and balances on the revenues and collections of the HCMR, which left the opportunity for fraud to be committed. The then board of trustees suspected the fraud but never completed the investigation and had terminated the prior accountant’s employment without any legal suit for payment. Based on the preliminary audit report up to 2020 alone, the key areas of potential loss and cash flows mismanagement amount to a grand total of $1,747,455 in potential loss and an estimated $4Mil in potential mismanagement of the Hol Chan Marine Reserve.

“These finding are not the result of a witch hunt,” commented Hon. Andre Perez. “They are the indications of years of financial abuse and mismanagement of managers and staff carefully selected to be there by the previous UDP administration. It is the pillaging of one of the most sacred and beloved treasures here in San Pedro and the country on a whole. My presentation here is a sum of war against corruption, abuse and downright robbery. Hol Chan is the first example; there are many more to come. This includes the auditing of the San Pedro Town Council. I can assure you that we will not rest until every single person responsible answers for their wrongdoings and that every cent is returned to our people’s purse.”

The Minister has indicated that he stands firm on his commitment to transparency and accountability, but most importantly to his stance on zero tolerance for corruption and abuse of public funds.

$4Mil in Potential Mismanagement at Hol Chan Marine Reserve

Plan for the third floor at the Hol Chan Marine Reserve building was to make it a conference center, but today it stands incomplete with no more funds to finish the project. This included the conversion of the the first floor into a visitor center/museum that also remains unfinished. The only complete part of the project is the second floor that houses the HCMR offices.

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