Underlining that Cricket West Indies (CWI) has been in a cash flow crisis on a recurring basis, a November 2019 review by financial consultants PKF has also homed in on poor governance by the board and questionable monetary transactions while recommending a series of changes to enable accountability and transparency.
CWI has not said much about the PKF report entitled `Business Situation Assessment and Financial Review – 2019’ outside of a reference to it at its December 5th-6th 2019 meeting in St Maarten.
In a release on that meeting, CWI said that the “high-level review reported in great detail on CWI’s challenging financial landscape, and its endemic cash-flow crisis. Following careful investigation and analysis, it made pragmatic recommendations related to Presidential office accountability and `chain of command’ realignment, Board oversight, procurement system implementation, and the need for improved cash management and cost control. The report also identified concerns related to the current model for compensating member territories”.
The Board added then that it will receive ongoing periodic updates from the CWI executive management on progress with the implementation of the 28 recommendations in the PKF report.
The report seen by Stabroek Sport says 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 is not in the best interests of the overall organisations.
“These issues have contributed, directly or indirectly, to the deteriorating financial position for over a decade. Their impact will continue unabated unless major definitive and orchestrated steps are taken immediately to regularise the situation”, PKF said.
It added that the new board has made a realignment of the organizational hierarchy and has taken significant steps to address the cash situation but that there is a “need to enhance cash/cost management and other operational issues to prevent future transgressions”.
The problems besetting CWI will be further accentuated by the virtual shutdown of cricket in the region because of the COVID-19 pandemic and the likely cancellation of tours and tournaments which bring in much needed revenue for the cash-strapped board.
The PKF report said that there are no easy “fixes” to operational matters when chronic cash flow problems are present. “On a going forward basis, such cash flow challenges must be addressed through a combination of close monitoring, cutbacks, reallocations, and or the pursuit of new of incremental revenue streams”.
Among its recommendations, PKF said that CWI should reaffirm its expectations of management in terms of adhering to the standards of accountability and transparency and prompt reporting to the board of any transgressions to approved policies and practices.
It added that there must be a “conscious recognition that the `excesses’ of the past not continue and that the overarching direction/philosophy must be: prudent conservatism (and) any significant changes from the annual business plan/budget must be brought before the Board on a timely basis….”
Territories
Significantly, the PKF report said that the model used to compensate the various territories for hosting events is not working properly.
“Our recommendation is that a specific sub-committee of the Board of independent directors should hold discussions with the executive managers and representatives of the territories to work toward a more equitable and consistent formula”.
The report added that over the period 2016-18 and thereafter until the new board was elected significant costs and resources had been expended with respect to arranging the flotation of a US$34m bond that ultimately failed.
“This matter should be critically reviewed because so much of the organisation’s funding aspirations were pinned to a questionable endeavour”, it said.
It added that Coolidge Cricket Ground in Antigua appears to represent a unique business opportunity to generate a significant incremental revenue flow that if properly managed could be countercyclical to major cricket matches.
“As such, it should be structured as a standalone entity with its own business plan and operating personnel”, PKF said.
The report also said that major sporting organisations have a whistleblowing protocol as a “cost efficient conduit to identify abuse or waste on a confidenctial basis”.
