Substantial mismanagement and widespread abuse of the system are blamed for an 800 percent overspend on overtime at the Department of Environmental Health in an internal government audit.

Overtime payments, mostly to trash collectors and landfill workers, exceeded the 18-month budget by almost $2 million in 2016/17. The overspending came to light when the department ran out of money to pay staff salaries in late 2017 and had to go to senior ministry officials to ask for more funds.

An investigation by the Internal Audit Service concluded that there had most likely been deliberate abuse of the overtime system. The auditors highlight the potential for a “formal fraud investigation.”

Phase three of the report, completed in September, identified multiple employees with what are described as “implausible” overtime records.

The audit report, released to the Cayman Compass following an open records request, states, “Inadequate management information renders it impossible to quantify, but a significant number of paid overtime hours could have been regular work hours for which no additional expenditure should have been made.”

The Compass was granted access to all three parts of the report but the final recommendation was omitted under a section of the Freedom of Information Law that allows the redaction of information that could “prejudice the conduct of public affairs.” Jennifer Ahearn, chief officer of the Ministry of Health, Environment, Culture and Housing, said she had authorized the redaction because “the matter is still being investigated.”

Ms. Ahearn ordered the audit investigation when the extent of overtime spending was discovered in November 2017.

Shortly after that, in late 2017, Roydell Carter, the director of the Department of Environmental Health, was placed on leave. Government declined to specify the reasons for that at the time but insisted he had not been suspended. Last month, the ministry released a statement saying Mr. Carter had “opted to retire” from government.

Phase One of the three-part audit report, which would have been available to ministry officials in February 2018 but was not made public until it was released to the Compass late last week, highlights “multiple failures and missed opportunities” to report spiraling overtime costs.

That section of the report, which deals with management and monitoring, lays the blame largely at the door of Mr. Carter, as the department’s director, but also highlights failings from senior staff at the ministry level, including Ms. Ahearn.

It states, “Ultimately, the Director of DEH [Mr. Carter] had the responsibility of managing the approved budget, avoiding cost overruns and escalating concerns to the Ministry, all of which he substantially failed to do.”

It goes on to state that the chief officer, Ms. Ahearn, should have been agreeing and authorizing overtime for the department and that senior financial officers should have been monitoring expenditure and budget variances and raising concerns with her. “These responsibilities were not carried out as intended,” the auditors noted.

The second phase of the audit, which looked more closely at the reasons for the overspending on overtime concluded that abuse of the system was likely to be a contributory factor. The report indicates an overspend of $1.22 million in the solid waste collection department and a $430,000 overspend at the landfill.

It acknowledges that vehicle repair issues and staff absenteeism were major factors, but suggests these issues alone could not account for the increase in spending.

“With inadequate management information, malfunctioning internal controls and conflicting evidence, we believe there is a high probability that intentional abuse of the system was another significant factor behind the increased expenditure,” the auditors said.

Following that finding, a third inquiry was authorized to examine anomalies in overtime claimed by individual employees and determine if there had been intentional abuse.

According to the report, auditors examined data on staff members’ overtime records but did not interview individuals with dubious records because of the potential for a “formal fraud investigation.”

The review concludes, “Our review identified multiple employees from the Department of Environmental Health with implausible 2016/17 overtime records, indicative of widespread abuse and substantial mismanagement within the Solid Waste Collections, Landfill, Recycling and Fleet operations. We believe the exploitation of a cultural practice, whereby overtime is routinely accrued before the completion of regular contracted hours, intensified in 2016/17.”

All three phases of the report contain various recommendations.

The first phase report recommends a review of the performance of key personnel in management positions and “corrective” or disciplinary action. Other recommendations include introducing “thresholds” above which overtime spending must be reported to the ministry and creating an action plan to reduce overtime and improve management of overtime.

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