During a press conference on Wednesday, February 24th, chaired by Honourable Andre Perez, Minister of The Blue Economy and Civil Aviation, it was revealed that an estimated $4 million were misused by the management of the Hol Chan Marine Reserve. The preliminary findings are the result of an ongoing audit to investigate the misappropriation of funds during the period from January 1, 2017 to March 31, 2020, and to hold those responsible accountable for their actions.
Honourable Perez did not mention the names of the individuals being investigated but indicated that such information will be made available at the end of the audit. Perez, along with his Chief Executive Officer Kennedy Carrillo, and Hol Chan Marine Reserve Biologist Kirah Foreman addressed the media and members of the community.
Preliminary report details fund mismanagement and losses
According to the preliminary report, there was an irregular expenditure of $2.5 million showing an increase of a million dollars in expenditure from one year to the next, without setting in place the adequate mechanism to safeguard cash flow and assets of the marine reserve. The report also revealed that Hol Chan Marine Reserve is committed to a $394,000 loan, plus a $115,000 in overdraft with the Belize Bank and a $50,000 overdraft with Atlantic Bank, totaling $559,000. Perez mentioned that the current income of the organization is below $200,000. Perez said that based on the preliminary investigation, this issue could have been avoided if adequate cash management controls and procedures were in place before the COVID-19 pandemic.
Organizational flaws
The alleged mismanagement of funds was due to the fact that there was no formal or approval of internal control policies and procedures that management was obliged to follow. “This made the organization susceptible to fraud and financial loss over time,” Perez said. He added that there was no adequate checks and balance on the accountant, and no budget controls in place. The audit also highlights an amount of $79,000 in receivable balances, which Hol Chan Marine Reserve has not pursued and will potentially have to write off. The audit team is also investigating to fully clarify $854,000 worth of assets Hol Chan Marine Reserve purchased over the previous three years.
The report also revealed that management paid $40,050 in rentals for over three years for an executive director and other members of the management team. The Hol Chan Marine Reserve Board did not authorize these expenses. The findings also revealed another discrepancy/abuse of the staff loan privilege in which there was no system for approvals of these to executive and even staff members leading to a loan balance of over $58,000 due from the former executive director alone by the end of March 2020.
Between 2017 and 2018, an irregular figure of over $636,000 is unaccounted for. It is alleged that the then-board of trustees suspected the irregularities, but never completed an investigation. According to Perez, combining these discoveries, along with the other discrepancies involving the mismanagement of cash flow, the total loss of revenue so far amounts to over $1.7 million and an estimated $4 million in potential mismanagement of the Hol Chan Marine Reserve funds.
Half a million spent, conference room unfinished
On the third floor of the Hol Chan Marine Reserve’s building, a planned conference room is far from completion despite an investment of $500,000. The room is a shell of a facility that was meant to count with bathrooms, an area for refreshments, and space for meetings. The progress of the project does not match the funds allocated to complete the project. The half a million expenditure is a loan that the organization will have to pay back to the bank, and according to Perez, Hol Chan Marine Reserve is already struggling to stay afloat financially and keep their staff. Some of the staff have gone unpaid due to the financial irregularities reported at the institution.
After the audit is complete, the ministry and his team will seek legal advice on what to do with the persons responsible for the misappropriation of the Hol Chan Marine Reserve’s finances. Perez and his team also indicated that a new mechanism would be set in place for the sake of good management and accountability.
The San Pedro Sun tried to contact senior management of the Hol Chan Marine Reserve without success.
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