Transparency International highlights ‘eye-popping’ audit issues as Government defends record

Anti-corruption watchdog Transparency International UK has put a spotlight on what it described as “eye-popping concerns” raised by former Principal Auditor Anthony Sacramento in his 2018/19 report.

In an article published on the organisation’s website, Steve Goodrich, its Head of Research and Investigations, highlighted key issues raised by Mr Sacramento, ranging from ex gratia payments to claims of “unconstitutional interference” by Chief Minister Fabian Picardo in the auditor’s work.

Responding to the article, No.6 Convent Place said Transparency International was echoing “partisan positions” and repeating “unfounded allegations”.

It again questioned the audit report’s impartiality.

One of the issues underlined by Mr Goodrich in the article was the former auditor’s observations on the transfer of 38 police officers into other areas of the public service, many of which he concluded related to the McGrail Inquiry.

The article was later shared on social media by Adam Wagner, KC, one of the lawyers representing former police Commissioner Ian McGrail in the public inquiry examining the circumstances of his early retirement.

Transparency International also noted that the audit report highlighted safeguards against future maladministration and misconduct that were “eminently reasonable”.

They included the call for a Public Accounts Committee in the Gibraltar Parliament, something that even smaller Overseas Territories have in place.

It also asked why the Gibraltar Government had yet to update the Rock’s audit legislation, which dates back to the 1970s, and questioned on what grounds the Principal Auditor could be denied oversight of publicly owned companies.

Transparency International said it was the job of auditors to speak truth, including to those in power, and that the Government had sought to discredit Mr Sacramento for doing so, dismissing him and his recommendations as “politically biased and out of line”.

“This is a career civil servant, who spent five decades in public office, 37 years of which was spent in the Gibraltar Audit Office with eight as Principal Auditor,” Mr Goodrich wrote.

“If he was a staunch partisan, surely he would have been figured out by now and prevented from taking senior positions?”

“Though the current furore might pass with the next news cycle, the list of concerns over Gibraltar’s governance grows.”

“Until ministers accept challenge as an essential part of the democratic process, it will likely end up in the press again soon, and for all the wrong reasons.”

In the piece, titled ‘Silencing the auditor: How Gibraltar’s government blocked scrutiny of its public finances’, Transparency International noted the Chief Minister’s “emphatic” rebuttals of the claims in the report.

On Tuesday, No.6 Convent Place reiterated that position, releasing its detailed responses to each of the points raised in the audit report and highlighted by Transparency International.

No.6 said it welcomed accurate and fair scrutiny free from political manipulation, adding Gibraltar’s institutions were robust enough to withstand criticism.

But that criticism should be “neutral and grounded in fact”.

It said claims echoed by Transparency International suggesting an “authoritarian power grab” to resist scrutiny were “not only grossly unfair but stray firmly into the realm of partisan motivated rhetoric”.

Gibraltar’s institutions operated “freely and comprehensively” and were mostly funded by the Government they were criticising.

“While it is easy to point the finger at the Government of Gibraltar for challenging seemingly independent institutions that exist to scrutinise it, it is important to recognise that this is a fundamental tenet of democracy,” No.6 said in a statement.

“Scrutiny must be accompanied by accountability on all sides, and no institution is above question.”

“Democracy is not served by treating any authority as infallible.”

“It is served when every party, whether government, media or watchdog, has the opportunity to put forward its honest position and be judged on the evidence.”

“It is now for the wise electorate of Gibraltar, when presented with the evidence from all sides, to judge for themselves whether their institutions and public representatives are acting in the best interests of the community and upholding its principles.”

“Transparency International has done valuable work worldwide.”

“But here, they have published a narrative that omits key facts, echoes partisan positions, and repeats unfounded allegations from a report whose own impartiality is open to question.”

QUESTIONS AND ANSWERS

In the article, Transparency International highlighted three “stand out’ findings from the audit report.

They included the former auditor’s concerns around ex gratia payments worth over £13m, made between April 2018 and May 2025 “without adequate explanation” and including payments to police officers who retired as from April 2020.

Replying, No.6 said the payments spanned seven years and included routine settlements made on legal advice, often to avoid “far more costly” litigation.

It said the former Principal Auditor had received confidential information about many of the payments but had presented them as “opaque” without including the context of risk assessments, HR processes or legal opinions, adding his characterisation of them as “unwarranted” was a value judgement and not an evidence-based conclusion.

Transparency International also focused on concerns in the audit report that an unusually high number of police officers had been given jobs elsewhere in the public service on protected pay and conditions and, in most cases, without adequate explanation.

It noted the report’s findings that the reasons for the transfers were not forthcoming from the Government, alongside the former auditor’s conclusion that a significant number of the moves were linked to the McGrail Inquiry.

Replying, No.6 said any suggestion that the transfers aimed to “shield” individuals or obstruct the McGrail Inquiry were “baseless and inflammatory”.

It said the transfers were carried out under standard procedures, with the knowledge and consent of the then Commissioner of Police and sometimes at his request and with relevant notice periods waived.

No.6 said it did not withhold information and had sought the Auditor’s own guidance on certain payment structures.

Transparency International highlighted the audit report’s claim that the Chief Minister had blocked the Principal Auditor from conducting a review of anti-money laundering processes at the Gibraltar Savings Bank.

“Reading the report gives you a sense of Mr Sacramento’s growing frustration as he edges closer to revelation, only to be blocked time and time again by the Chief Minister, his Chief Secretary to the civil service, and other senior officials in government,” Mr Goodrich wrote.

“This alone is enough to give serious pause for thought, let alone the wider context.”

But No.6 said the former Principal Auditor had sought to conduct an anti-money-laundering compliance audit outside his statutory remit, adding the Gibraltar Savings Bank was regularly audited for compliance by PwC, an internationally recognised expert in the field.

It said the refusal to hand over certain documents in this context was grounded in legal advice and in line with longstanding convention on the confidentiality of government legal opinions and minutes.

On the issue of the Public Accounts Committee, No.6 said the audit report mirrored the position stated by the Opposition on this issue, and that it was “outside his statutory remit and a clear overreach” for the former Principal Auditor to have advocated for the creation of a committee.

It said successive governments had won elections and made clear that a Public Accounts Committee was “unsuited to Gibraltar’s small democracy”.

And while Gibraltar’s audit legislation had not been updated yet, the Government remained committed to doing so and had a draft outline.

The work, No.6 added, was “not abandoned” but had been delayed by external pressures such as Brexit, the Covid pandemic and the demands of EU treaty negotiation.

EARLIER CONCERN

In the article, Transparency International recalled that it had previously raised concern after the Government updated legislation governing public inquiries just weeks before the start of the McGrail Inquiry in 2024.

The new legislation was based on UK laws but drew condemnation because it included powers to end or suspend an Inquiry, although the Government at the time insisted it had no intention of doing so, dismissing any suggestion of interference.

The new legislation also allowed the Government to restrict information from the public – though not from the Inquiry chairman, Sir Peter Openshaw, or lawyers for the core participants – if it thought this to be in the wider public interest.

“In our view, this was a clear red flag that all is not well,” Mr Goodrich wrote this week.

“Also, it is only recently that the territory succeeded in getting off an international grey list for places of money laundering concern.”

“With these latest revelations, it leaves one thinking: What else don’t know?”

Responding, the Government said the McGrail Inquiry sat publicly for 19 days as scheduled, even its chairman reconvening hearings in 2025 to address disclosure issues as the process advanced to the Maxwellisation stage.

“This is clear evidence that the independence and timetable of the inquiry were scrupulously maintained,” No.6 said.

“Yet the commentary was seized upon by those seeking to cast Gibraltar in the worst possible light, often without context or balance.”

“This episode demonstrated that even respected watchdogs can be drawn, intentionally or otherwise, into the service of partisan narratives.”