A forensic audit of the Public Hospitals Authority's (PHA) supply of pharmaceutical drugs and medical supplies alleges
a "culture of slackness and corruption".
The report reveals that, at the end of 2013, there was a $10 million difference in pharmaceutical inventory between the physical count and what is reflected in the Princess Margaret Hospital's (PMH) computer system.
The auditor quotes a separate report produced by the hospital's Internal Audit (IA) Department.
"Sample results revealed that an excess of $10 million in inventory did not physically exist in the pharmacy during the year, but remained in [the computer system]," the IA's report says.
The forensic report says there has been no satisfactory explanation for this.
The auditor also reports that at least one approved wholesaler took advantage of weaknesses in the materials inventory procurement process to re-use a purchase order number at least 100 times.
"This wholesaler also failed to deliver goods as contracted, was overpaid by PHA and held on to the overpayment until asked to return the funds or provide the goods. This wholesaler is still on the approved listing of PHA," says the report, completed by John Bain.
It adds that the integrity of the procurement process was compromised when internal control measures were circumvented and unauthorized advance payments were made to a wholesaler to provide materials.
The report also speaks of
a "questionable" transaction with a company that does not have a history of being the supplier of pharmaceuticals
"that provided less than adequate results in the due diligence procedure".
"The company was given a pharmaceutical license just three days before entering a lucrative contract with the PHA, circumventing the tendering process," the report says.
It says the company was not able to provide the contracted drugs.
The auditor concluded, "The PHA operates a defective system of procurement that allows for the continued control of the market by a cartel of pharmaceutical suppliers and suppliers of medical and surgical supplies, using a theory called 'selective tendering'.
"The process of selective tendering effectively excludes new entrants into the marketplace and introduces extreme risks of bid rigging, collusion, kickbacks, and corruption."
The report said best practices were not enforced in relation to the management of the inventory process that expended approximately $30 million per year.
"The computer systems that control the process were inadequate, lacked proper design, and its use is ineffective," the audit said.
The report speaks to an alleged lack of accountability at the PHA.
The Authority spent approximately $1.8 billion over the last 14 years, with $334 million going for pharmaceutical drugs and medical supplies.
This audit is one of several ordered by the PHA board, The Nassau Guardian understands.
Last night, PHA Chairman Frank Smith said he had no comment.
For a detailed reporting on the audit see today's National Review section.

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