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Public Utilities Minister Marvin Gonzales during an interview with Guardian Media.

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A 2009 internal investigation by accounting firm Ernst and Young (EY) into a supply of truck borne water to customers of the Water and Sewerage Authority (WASA) by eight contractors unearthed a web of corruption ranging from invoice padding, falsifying of documents, unauthorised distribution of water, extraction of monies and gifts from customers and procurement fraud.

In january 2009, WASA’s chief corporate officer Dion Abdool hired EY to investigate allegations of improprieties in the contracting and distribution process of eight contractors whose companies were named in the report. Seven of the contractors are based in south Trinidad while one is located in the north.

Guardian Media was reliably informed that EY’s findings led to the suspension of six employees who had worked in collusion with the corrupt contractors. However, in 2010 the suspended workers returned to work at WASA and the report was hidden for 12 years.

It resurfaced recently and was brought to the attention of Public Utilities Minister Marvin Gonzales who expressed disgust at WASA’s decision to reinstate workers who had been accused of wrongdoing.

The decision to reinstate the managers followed negotiations between WASA’s management and one of the unions representing its employees.

According to the 46-page EY report, the “allegations and possible fraud” came out of interviews with key employees involved in the process as well as a review of disbursement records. It identified that “water was being deliberately shut off by WASA personnel to create work for contractors and to victimise regions populated by supporters of the opposition party.”

The detailed report also revealed:

•WASA was being billed for fictitious water trucking trips as a result of collusion between contractors and WASA employees.

•Contractors and WASA employees extracted monies and gifts from customers for water when it was delivered.

•Other vehicles, whether or not they were contracted to the utility, were obtaining water from WASA for sale.

•Tendering and evaluation processes were manipulated to favour certain contractors.

Over the period covered in the report, WASA sold water to contractors at a rate of $20 for 1200 gallons. Purchasers were required to present a WASA authorisation at the designated filling stations where the dispatcher on site would carry out and record the delivery of the water to the purchaser. Each contractor billed WASA for the delivery of water based on the distance and location.

Field work, interviews of WASA employees, examination of documents and observation exercises were done by EY in north and south regions in February 2009. During visits to filling bays, EY recorded 89 trips compared to WASA’s record of 174 trips reflected in its water trucking documentation.

The EY report stated: “Explanation provided to us for this discrepancy were that alternative hydrants are being used, therefore trucks would not have returned to the official filling station. No dispatchers are on-site at these alternative hydrants. However, water trucking documentation reflected that the contracted filling stations were utilised in the delivery process. No one can state conclusively that the trips for which WASA is being billed were actually incurred.”

EY also pointed out that the trucks left the filling bays without distributors who were supposed to validate that water was being delivered to the authorised locations.

In the southern region, EY unearthed six unaccounted trucks filling up at filling stations.

“Alternative hydrants and the official hydrants are not secured at the end of the day. Most dispatchers leave by 4 pm, creating a free for all situation,” the report stated.

EY noted a “flagrant disregard for controls in the process, the ineffective oversight at all tiers in the process (dispatcher, water trucking coordinator, supervisor and South Regional manager) and the number of inconsistencies and violations that have been noted, it is highly probable that the following are taking place”:

•Invoice padding

•Falsifying of documents

•Unauthorised distribution of water

•A network of motivated individuals in collusion to allow this sub-standard process to be in effect.

Documents examined by the accounting firm showed several irregularities in water trucking documentation including monitoring sheets, delivery sheets and cartage receipts, as well as breaches of significant controls within the process. Telephone numbers were not registered at the addresses they were recorded against, EY found.

“Incomplete documentation was approved by the water trucking supervisor, blank WASA cartage receipts were signed by both the distributors and contractors’ drivers.

“Dispatchers and area supervisors were signing the cartage receipts in place of the distributor to certify the trips recorded, water trucking documentation was being altered without any initial from the individual making the change,” the report revealed.

In addition, information recorded on monitoring sheets did not seem reasonable.

EY reported seeing “a time of 20 minutes to deliver to three places, which were themselves 30 minutes apart.” Also, several time inconsistencies were noted in the data recorded between the monitoring sheets and cartage receipts.

“WASA personnel signatures appeared to be forged as we observed many cases where WASA personnel signatures on the documentation were visibly different. In several instances, the information recorded for receipts of water by customers appeared to be fictitious or inaccurate as individuals with the same name and addresses signed differently on separate occasions,” EY said.

As a result of the nature of the findings, EY said “it is highly probable that the information recorded can be deliberately falsified with the intention to manipulate the process and pad invoices.”

The firm also found that valves and hydrants were left open to allow filling of water to take place.

“There is collusion of person to perpetrate alleged fraudulent invoicing,” the report said.

In south Trinidad, falsifying of trip logs was found to be prevalent. Following weeks of observation, EY reported that one contractor had an arrangement with WASA to independently—without the presence of any WASA personnel—deliver water to communal tanks and private individuals. Other vehicles contracted to WASA had been getting water from the utility for subsequent sale.

The report also raised concerns about the “award of water trucking contracts (WTC 18/2006)” which were not transparent and allowed for subjectivity in the decision-making process. EY found that “specific tank capacity is not stated in the tendering package yet awards are based on different gallon requirements.”

Two contractors (names identified) were awarded contracts to supply 27 of the 45 trucks for the southern region.

“These contractors did not present any 1200 gallon tanks/trucks for inspection and, as such, were awarded 1600 and 2400 gallon. All other contractors were awarded contracts for 1200 gallons. We do not know what WASA’s needs are (upfront) and therefore if the evaluation process was carried out with the requisite level of objectivity,” EY stated.

The two contractors submitted bids ranging from $124, $140, $142 and $150 for the delivery of 1600 gallons of water in the San Fernando/Naparima, Penal and Couva areas. Other contractors submitted bids between $168 to $199.

However, following their investigations, EY discovered that “both contractors are closely related, as they shared the same address, have at least one common director, submitted bids close to each other and were collectively able to win 27 of 45 trucks awarded contracts.” The price submitted by these two contractors were much lower than other contractors in areas where alternative hydrants were being used.

“These two instances are tantamount to contract and procurement fraud,” the report stated.

EY also found that one contractor had submitted 97 delivery notes for a total of 543 trips between May 1 and June 5, 2009. However, WASA’s delivery sheets only accounted for 14 per cent of those trips.

There were indications that several alternative filling bays were not used.

“This was not declared in the tender package. This information (which is not distributed to tenderers) will affect the prices that contractors submit. This is because the costs incurred in shorter trips are less, and also shorter distances can accommodate more trips (ceteris paribus) thereby generating more revenue, creating a more advantageous pricing structure,” the report noted

EY said WASA’s process for delivery of truck borne water was longwinded and inefficient which allowed for easy manipulation by motivated individuals.

“Accountability in the process is almost non-existent and this is exacerbated by the bulkiness of the process design. Given the fact that correlation of the water trucking information is centred around one key individual (the dispatcher) and there is very little monitoring at the supervisory level, it is difficult to place much emphasis on the documentation being produced,” the report stated.

EY described the practice of WASA’s trucking supervisor calling the contractor to confirm the number of trips made a month as absurd.

“This emphasises that WASA’s internal process is unreliable and creates the opportunity for the contractor to misrepresent the work carried out,” the company said.

The report found that operations in the northern region allowed one contractor to operate autonomously.

In summary, EY highlighted many irregularities fuelled by poor monitoring and oversight at the supervisory level and a lack of documented policies and procedures to drive the process.

“The inability of empowered individuals involved in the process, to question the established norm and lack of monitoring and proper oversight has lead to a breakdown in controls within the system. This has resulted in the submission of incomplete documentation, incorrect documentation and misplacement of key documentation which affected the completeness of our review.”

EY also stated that water trucking operations in the northern region were different from the southern operations,

Among the accounting firm’s recommendation was that delivery of truck borne water to customers be governed by established policies and procedures, WASA establish a water trucking division primarily responsible for water delivery and the selection and monitoring of contracted water truckers, that GPS trackers installed on water tankers and handheld devices be used to log deliveries to customers.