WAPA’s Woes Mount With New Revelations

In addressing those operations, WAPA would naturally have to answer concerns regarding the long-standing consumer discontent of its services and rates. Perhaps even more damning, WAPA would also have to respond to allegations of widespread mismanagement, misjudgement and borderline malfeasance dating back to around 2010-2011, according to the widely discussed report by the Virgin Islands Inspector General from November 2021.

That report derided WAPA’s now infamous agreement with Vitol to expand the use of liquefied natural gas (LNG) in the Territory as a method to alleviate the rising cost of oil. In spite of the seemingly forward thinking intentions at the time, the VI General Inspector, Steven van Beverhoudt, concluded in his analysis of the deal that:

“WAPA’s Board and management, in choosing to expedite the Project to mitigate the high cost of energy in the Virgin Islands, prioritized time over the Project’s cost. Specifically, they agreed to forgo detailed engineering plans, which would have delayed the Project by two years.”

In 2013, WAPA had entered into an agreement worth $87 million to build, own, operate and transfer the LNG sites–a BOOT agreement. According to the report from the Virgin Islands IG, that project has exceeded the cost of $200 million as of its publication in November of last year.

In April of this year, the St. Thomas Source reported that WAPA had not paid its matching employer contributions to the Government Employee Retirement System (GERS) since about a year prior. According to reports, WAPA owed $2.65 million in employee contributions, which included interest and fees; $4.9 million in employer contributions; and outstanding loan balance of $361,000 from the suspended GERS loan program.

During the May 16th session of the 34th Legislature’s Committee of the Whole, lawmakers delved deeper into WAPA’s questionable financial tactics and ultimately unearthed even further wrongdoing.

Adding to WAPA’s woes with the VITOL agreement, lawmakers uncovered even more unsettling information when it was learned that WAPA had misspent money it had collected from standard paycheck deductions of its employees. While WAPA collected those deductions with the duty to pay off debts and other loans taken out by its employees, it had not remitted those deductions since June 2021.

In response to a series of questions posed by Senator Alma Francis Heyliger, WAPA CEO Andrew Smith, who began his tenure at the head of WAPA this past January, stated that WAPA had used that money to pay its other bills.

“If this was a private institution, and you were deducting employees' monies and not paying it where it was supposed to go, what would that be called? What would that be called? Are you aware?” she asked. “It's called embezzlement.”

Sen. Francis Heyliger would go on to explain the Virgin Islands Code:

“So based on our Virgin Islands code, whoever being a trustee, banker, merchant, broker, attorney, agent, assignee in trust, executor, administrator or collector or person otherwise entrusted with having, in his or her control, property for the use of another person, fraudulently appropriates it to any other use or purpose not in the due and lawful execution of his trust of securities with fraudulent intent to appropriate it to such use, or purposely, is guilty of embezzlement.”

Senate President Donna Frett-Gregory seemed shocked by the revelation:

“I was under the impression that the employer contribution was the amount that was not being paid,” said Sen. Frett-Gregory. “Are you saying that the employees contribution was also not being paid?”

“That’s correct,” said WAPA CEO Smith.

“This is a very, very se­ri­ous mat­ter. I un­der­stand the em­ployer con­tri­bu­tions in­abil­ity to pay, but you are de­duct­ing money out of peo­ple’s checks… this is very con­cern­ing.”

After further pressure from the Senate President of the 34th Legislature, Senator Kenneth L. Gittens called for a full investigation in an immediate point of information.

“I want to state that this matter is serious and it is criminal,” said Sen. Gittens. “Hence, my request for a special investigator to investigate what's taking place at the Authority. This matter before us or this discussion, as we speak right now is considered credit criminal.”

Meanwhile consumers continue to endure higher than average costs. According to the Energy Information Administration:

“The average price of electricity paid by U.S. Virgin Island residents was about 43 cents per kilowatt/hour in mid-2021, which was more than three times higher than the U.S. average power price of 14 cents,” according to the EIA.