Ward questioned on Cargill’s pay hikes
Guardian News Editor
Published: May 08, 2013
Former Chairman of the National Insurance Board (NIB) Patrick Ward said he did not approach former Prime Minister Hubert Ingraham directly when Director Algernon Cargill’s contract came up for renewal because he did not think he was required to, according to notes from an interview contained in the final report into certain actions at NIB.
Ingraham was the minister responsible for the nation’s social security agency.
The issue of Cargill’s compensation package has featured prominently in that report.
Grant Thornton, the firm conducting the examination, asked Ward who approved the increase in Cargill’s annual base salary from $140,000 to $171,225.50 from October 20, 2008 to October 19, 2011, according to the report.
“Mr. Ward stated that there was a clause in Cargill’s contract that says that he is entitled to salary increases that other executive management staff receive,” the report said.
“This is stated in their contracts. The HR Committee approves the increase. This was the same for the previous director.”
Grant Thornton asked why the NIB Board was not informed about the increases.
“Mr. Ward stated that he did not discuss details of the executive remuneration at the full board meetings,” the report said.
“The minister does not approve annual increases. The minister approves the initial contract/terms of the contract.
“You cannot run to the minister every time for salary increases. The previous minister didn’t and as far as I am aware, it has never been the case.”
According to the report, the former chairman also stated that the terms of the renewal contract were sent to the Ministry of Finance for approval through the financial secretary as was the case for other such appointments of renewals.
“I didn’t approach the prime minister directly, who was also the minister of finance, as I didn’t think I was required to,” Ward is quoted in the report as saying.
According to the report, instructions from the Board of Directors were to renew Cargill’s contract “on terms that substantially reflect the terms and conditions of the contract currently in place, subject to ministerial approval as required”.
The auditors said the Board of Directors and the HR Committee members appeared to have no knowledge of the salary adjustment, based on all documents provided.
The report said that during interviews with Grant Thornton, some board members stated they interpreted the section of the NIB Act as it relates to the director’s salary to be a matter between the minister responsible for NIB and the director.
“As a result, Father Etienne Bowleg, deputy chairman of NIB and a member of the HR Committee, indicated that he never knew the director’s salary until October 20, 2011 when a new four-year contract was granted at an annual salary of $171,000.”
A legal opinion from Thomas Evans, QC, which was sought by the chartered accountants, determined that the NIB Act requires that overbased increases in salary and bonuses for the director and other members of the executive management require the approval of the minister.
Regarding bonuses paid out to Cargill and other NIB executives, Bowleg said “the bonuses never surfaced at the Human Resources Committee meetings and the Board of Directors meetings”, the report stated.
Executive bonuses totaling $723,333.31 were paid during the period January 1, 2010 through May 2012, according to the report.
NIB files show that Cargill received $194,791.66 in bonuses during that period.
As reported by The Nassau Guardian on Monday, the report said executive bonuses in 2010 were in the range of 15 percent to 71.8 percent of the base salaries of executives.
Cargill received a 71.8 percent bonus on his 2010 base salary of $145,600, the report said.
Grant Thornton was hired by the government on November 30, 2012 to perform a forensic investigation of a November 8, 2012 letter addressed to Minister of Labour and National Insurance Shane Gibson by Gregory Moss, who at the time was chairman of NIB.
The Board has recommended Cargill’s termination.
The director remains on suspension.
In addition to the contents of the letter, the firm was also asked to examine salaries and bonuses of executive management during the years 2008 through 2012.
Grant Thornton took four months to complete the report, which Gibson has promised to table in the House of Assembly.
It is unclear at this time what the government’s next move in relation to this NIB matter will be.