April 18, 2008 — A new initiative is under way in the U.S. Department of Interior Inspector General's Office which federal officials are touting as a way to capitalize on limited local resources while keeping better watch over public spending in the territory.
Inspector General Earl Devaney, in visiting the territory Friday, opened his door for the first time to the local news media and used the opportunity to draw attention to a new division within his department. The division is called Evaluations and Inspections, and it is designed to streamline the auditing of federal funds used by public entities.
Rather than a year to complete an audit, as is typical, said Devaney, the new evaluations protocol enables auditors to complete their investigations in six to nine months. In addition, auditors are now able to investigate a single spending issue using the new inspections protocol, completing reports in less than three months.
"It's just easier and faster and more nimble than an audit," Devaney explained.
Hannibal "Mike" Ware, the field office supervisor of the U.S. Inspector General's Office said the new system will enable his small staff to better monitor whistle-blowing by the public and by government employees.
"You call me from a department and say the last three contracts issued out of here had kickbacks, we come in and do an inspection just on that issue," said Ware.
He's hoping to expand his team from five to six auditors, and he plans to begin implementing the new approach within the next two months. Currently, his department handles about six audits a year. Under the new regime, he hopes to conduct as many as 10 evaluations, in addition to any inspections that are warranted.
January marked the release of the most recent Virgin Islands audit issued by the Inspector General's Office, and it was a scathing indictment of the territory's tax collection system. The report cited a 20-year history of "inefficient and ineffectual" tax collection processes that do not "fully comply with the law." The last 10 years, according to the report, resulted in $250 million in uncollected taxes, courtesy of a "systematic breakdown" in the collection system.
Asked why the problems go unchecked for so many years, Devaney said his agency's purview is to monitor the way federal monies are being spent and to make recommendations. The rest is up to the local authorities.
"The report is not about criminal activity," said Devaney. "The report is about failings of tax collection, and virtually nobody can do anything about that but the V.I. government itself."
Devaney praised the DeJongh administration for its response to the concerns outlined in the January audit, but he was unable to say whether the government has launched investigations into the numerous suggestions of possible criminal activity raised by the report.
Steven Van Beverhoudt, the Virgin Islands Inspector General, said his office is not investigating issues raised in the January audit.
"We're so bogged down with stuff that we've generated on our own that we can't take everything that comes up. I have several large investigations right now and can't take anything else on. Whether the Attorney General's (AG) office is pursuing something, you'd have to talk to them," said Van Beverhoudt.
The AG's office did not return a call. Government House did not reply to a question about whether authorities were looking into audit findings.
One issue raised in the January report did get referred by the auditors to federal investigators for review, but Devaney would not comment on whether an investigation is underway. It had to do with the then director of the Bureau of Internal Revenue issuing a tax clearance letter in 2004 for a St Croix businessman whom auditors claimed owed $1.75 million in back taxes. In exchange for the letter, the auditors claim the businessman made a one-time payment of $25,000.
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