Clinton says audit opinion on public accounts ‘not clean’ and accuses Govt of ‘shooting’ watchdog 

 GSD MP Roy Clinton on Thursday challenged the Government’s claim that Gibraltar’s public accounts for 2018/19 had received a “clean bill of health”, arguing in Parliament that the former Principal Auditor’s opinion was in fact qualified and that ministers were trying to “shoot the watchdog” for doing his job. 

Speaking during the debate on the Government’s motion on the Principal Auditor’s 2018/19 report, Mr Clinton drew on his professional 30-year background as an auditor to dispute the Government’s interpretation of the findings and to criticise its handling of the Gibraltar Savings Bank and wider public finance issues. 

Mr Clinton said an audit was about obtaining assurance on accounts and statements, not about mounting “a witch hunt”.  

He also underlined the distinction between statutory audits at a point in time and value for money reviews of economy, efficiency and effectiveness, which can look across different periods. 

He said there was “no discrepancy” between those two approaches and warned the public should not “confuse or conflate the two”. 

‘ANOMALIES’ 

Mr Clinton focused in detail on a section of the audit report dealing with what he described as “£1.4 million of misallocations and anomalies”. 

Mr Clinton noted that, according to the report, these misallocations were not disputed by the Acting Accountant General. However, he said the Principal Auditor had recorded that she had refused to correct them by journal entry, preferring instead to add explanatory notes to the accounts because of the time elapsed and resource constraints. 

He said this amounted to “a difference of opinion” that had led to the accounts being qualified “by way of disagreements”. 

“The opinion of the [former] Principal Auditor is that the public accounts of Gibraltar [for 2018/19] are therefore not clean,” he told Parliament, inviting the Chief Minister to correct the public record. 

Mr Clinton said it was “entirely wrong” for the Government motion to suggest the former Principal Auditor had given the public accounts for 2018/19 “a clean bill of health”, when in fact he had offered “a qualified opinion”. 

“Let us be clear, the accounts of 2018/19 are not clean. The Government didn't get top marks,” he said, adding Government ministers should ask themselves whether they are comfortable voting in support of a motion that made an assertion “which they know to be false”. 

SAVINGS BANK 

A substantial part of Mr Clinton’s intervention dealt with the “unfortunate saga” of the Gibraltar Savings Bank, noting the audit report raised “distinct issues” around the publication of the bank’s audited accounts and compliance audits. 

He rejected the suggestion that the Savings Bank fell outside the public accounts, pointing to provisions in the Public Finance (Control and Audit) Act that require statements on special funds to be provided to the Principal Auditor, including a “savings bank fund”. 

“So the Savings Bank, by quirk of accident, seems to be covered by two sets of legislation, but is most definitely part of the public accounts of Gibraltar,” he said, adding that the bank also appeared every year in the Estimates Book and that its accounts were reproduced in the audit report itself. 

Mr Clinton traced the obligation to publish the Savings Bank accounts in the Gazette to the original 1935 Act, noting that the reference to doing so “as soon as practicable” had been lost over time but that the spirit of timely publication remained important. 

He said the 2018/19 Savings Bank accounts were only gazetted on July 10 this year and argued there was “no reason why they couldn't have been gazetted sooner”. 

“This is a matter of real public interest, real public interest,” he said.  

“This is people's money. This is no longer about taxpayers’ money. This is people's life savings.” 

He recalled that he had attempted to address this in 2017 through a private members’ bill to amend section 12B of the Savings Bank Act to require publication “not later, on the 30th day of September”. 

Mr Clinton stressed he was not alleging wrongdoing but called for transparency on what he described as a “£2 billion special fund” and criticised the Government for not routinely making the information available to depositors and the wider public. 

COMPLIANCE 

Mr Clinton also addressed the dispute over the Principal Auditor’s wish to carry out a compliance audit of the Savings Bank’s anti-money laundering controls, which the Government’s motion characterises as “ultra vires and constitutionally unfounded and without statutory authority”. 

He argued that, whether under the Public Finance (Control and Audit) Act or the Savings Bank Act, it was “entirely reasonable” for the Principal Auditor to decide how to conduct the audit and what systems and controls to examine. 

“An audit is not just about numbers, it's about looking at systems and controls, because if there is a failure in those systems and controls, it will impact on the numbers,” he said. 

He told Parliament that, according to the report, the Principal Auditor had clarified to the Acting Director of the Savings Bank that he would conduct a compliance audit under the Public Finance (Control and Audit) Act, separate from any independent audit required under the Proceeds of Crime Act, and that the director had been “thankful and appreciative of the clarification provided”. 

Mr Clinton said he would be “very interested” to see a legal opinion arguing that an auditor of a deposit-taking institution should not examine anti-money laundering controls, describing that idea as “ridiculous”. 

He warned that the handling of the issue risked attracting further scrutiny from international bodies that have already assessed Gibraltar’s financial system. 

“This is a very serious matter,” he said. 

“It's about £2 billion of money, which they seem to think cavalierly they cannot disclose information on,” he said, suggesting the situation was “all avoidable” had there been “some common sense on that side of the House”. 

His comments sparked a feisty exchange across the floor, with the Chief Minister asking from a sedentary position whether Mr Clinton was inviting scrutiny of the public sector from international financial watchdogs. 

Mr Picardo said Mr Clinton was “a bigger fool than I thought he was”, a comment he was asked to withdraw as unparliamentary by Speaker Karen Ramagge.  

The Chief Minister withdrew the comment but repeated it in the process. 

“What can I say?” Mr Clinton replied. 

“Just for the record, I'm not inviting anyone. They are, because of their actions.” 

PUBLIC ACCOUNTS COMMITTEE 

Mr Clinton also defended the former Principal Auditor against accusations of bias, saying any similarity between his recommendations on the creation of a Public Accounts Committee and positions long advocated by the Opposition reflected “financial best practice, especially in public finance”, not political alignment. 

“The reason why there is a similarity in approach is because it’s financial best practice, especially in public finance,” he told Parliament. 

“I don't come here to make this stuff up. This is what is normal outside this place.” 

He reminded MPs that one of his first initiatives after being elected was to move a motion on establishing a Public Accounts Committee in 2016, arguing that such bodies were standard in Westminster and across the Commonwealth. 

He said he was “glad” that the current debate was taking place, adding it highlighted how “public finance is not just about bookkeeping as the Chief Minister would have it.” 

“These are important matters.” 

Mr Clinton also picked up on parts of the audit report dealing with housing, noting that audit sampling of 25 allocations had “identified certain anomalies” and that this pointed to a need for “some kind of formality behind the process”. 

'PUBLIC EXECUTION’ 

In closing, Mr Clinton returned to a theme first set out by Opposition Leader Keith Azopardi that the Government’s motion represented an attack on a constitutional officer. 

“What the public have been treated to is the public execution of an officer of this Parliament undertaking his duty under the Constitution,” he said. 

He compared the situation to the historical case of Admiral Byng, but argued that, unlike the admiral who was executed for “failing to do his utmost”, the Principal Auditor was being punished for “doing more than the Government wanted him to do”. 

“That is what watchdogs do. They bark. They bark. And this watchdog has been barking and they don't like it. They don't like it,” he said. 

“We are witnessing the shooting of a public officer for undertaking his public duty in the public interest. 

“Because he said too much. He said too much. And therefore, as an example to the rest, not to encourage them but to discourage them.” 

“An example to the rest. We will shoot this watchdog so that the others will know who is in power, who is in control and who they need to be afraid of.” 

Parliament was adjourned to December 1 at 10am.