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Audit: U.S. Virgin Islands mismanged $6M

SAN JUAN, Puerto Rico - A federal audit has found that the U.S. Virgin Islands government mismanaged more than $6 million in public funds at a time it is struggling with financial problems.

The report released this week by the federal and local Office of the Inspector General accuses the government of exposing public funds to possible fraud, waste and mismanagement.

"The unregulated administration of public funds has led to a culture of almost no accountability or transparency," said the auditors, who focused on financial transactions from 2005 to 2010 on the U.S. Caribbean territory of about 100,000 people. A previous audit performed in December 2000 found similar problems.

The auditors said several unidentified senators received thousands of dollars in cash advances for travel without ever submitting receipts or expense reports. One senator received nearly $100,000 to pay the Danish National Archives for a research project, but a portion of the money later appeared in an offshore bank account he owns, the audit found.

Auditors also found that the government awarded $1.5 million in bonuses that were not based on performance or any other criteria. They also said the government regularly overpaid contractors, who were often chosen without competitive bidding.

It is unclear if the report will lead to criminal investigations of any officials it mentions. Government spokesman Jean Greaux said Saturday that Gov. John de Jongh had no comment on the audit.

The report has caused an angry response on local radio talk shows. It comes after Gov. John de Jongh threatened to lay off 600 state employees due to a budget crisis and then imposed an 8 percent salary cut that unions are challenging in court.

Joseph Gumbs, a retired police lieutenant and former president of a law enforcement union said the audit would only help the union's fight against the 8 percent wage cut.

"It goes to show that it's not that we don't have money in this government, it's that it's being mismanaged," he said. "It is especially disheartening when you take into account that these are the people who are supposed to be safeguarding your funds."

Senate President Ronald Russell, who requested the audit, said earlier that the legislature would comply with all recommendations.