CWI audit report raises questions about money laundering, conflict of interest with ex-employee

An audit report on Cricket West Indies (CWI) has raised serious concerns about a financial transaction that could appear to be money laundering and a conflict of interest with a loan pertaining to an employee no longer with CWI.

The report by financial consultants PKF was received by CWI in November 2019 but its findings and recommendations have not been addressed by the board. In a recent interview, commentator and former West Indian fast bowler Michael Holding called the audit “damning” and asked the current board “where is the transparency” in addressing the findings. CWI has adverted to some of the issues in the PKF report but has not advised of what actions have been taken.

In the report, seen by the Sunday Stabroek, PKF said several matters have caused it consternation in relation to whether the former CWI employee was acting in the best interest of CWI.

The PKF report said that CWI received US$134,000 from a betting company via Switzerland on or about the 8th of August 2018 on behalf of the Dominica Cricket Association (DCA) from a third party.

“It appears to be an offshore corporation. It is unclear why the funds did not go directly to DCA. This money was paid over to DCA in three tranches – US$104,100 on 16th November 2018, US$15,700 on 2nd August 2019, and US$14,400 on 21st September 2019”, the report said.

It listed the following underlying concerns about the transaction: What due diligence was performed to ensure that the source of these funds was legitimate and the funds “clean” from an anti-money laundering compliance perspective? What measures were taken to minimize the risk that CWI may have (been touched) by money laundering?

It noted that the auditors were unable to find an executed agreement/bona fides for the transactions, and while the funds were supposedly earmarked for “cricket development” in Dominica, there is no evidence that CWI obtained confirmation from the DCA that the funds were used as directed.

Further, the PKF report said that in 2018, CWI entered into a five-year contract for a series of exhibition matches in Miami to coincide with the visit by an Indian team. The PKF report said “We understand that ICC [International Cricket Council] approved the venue and that this contract necessitated an upfront ICC sanctioning fee of US$200,000 with respect to the particular venue”.

The report said that this initiative was championed by the former CWI employee but that PKF has not seen any substantive analysis tabled before the board indicating the potential benefits and risks for such an “untested financial commitment over a protracted term”.

The PKF report also on homed in on a loan from Digicel to a St Lucian international business company associated with the former CWI employee. The PKF report said that the loan of US$125,000 was made by CWI’s main sponsor Digicel to Resiliere Inc, where the beneficial owner was believed to be the former CWI employee. The loan was made nine months after the reputed beneficial owner was employed by CWI.

PKF said: “At a very minimum, this transaction appears to be a real or perceived conflict of interest situation that may be determined to be (a) breach of (the former employee’s) fiduciary duties”. The PKF report said that the core issues are whether the board was proactively aware of and sanctioned

the transaction, the rationale of the board if it did give approval and any legal exposure that CWI might attract from the transaction.

Underlining that CWI has been in a cash flow crisis on a recurring basis, the PKF report has also focused on poor governance by the board while recommending a series of changes to enable accountability and transparency.

The PKF report said that there are “fundamental problems” in the core accounting system so that information needed to effectively run CWI takes too long to retrieve to be of use in decision-making.

Further, the report said that the Board of Directors did not consistently exercise appropriate governance and follow-up and the former President/Chairman, Dave Cameron took up a dual and inherently conflicting role as both President/Chairman of the board – a governance position – and the de facto CEO/Executive President – an operational role – and this caused a breakdown of key internal control measures. Cameron’s controversial six-year reign as President came to an end in March 2019 when he was defeated in board elections by Ricky Skerritt. The PKF report was commissioned by the Skerritt administration.

The PKF report said that the CWI Finance Department has not been effective in managing cash and controlling costs and that the procurement system is largely non-functional. The chain of command was “misaligned and compromised” and the model for compensating territories is not in the best interests of the overall organisations.