An audit released Monday by the Office of the Virgin Islands Inspector General found that the Virgin Islands Water and Power Authority delayed nearly $450,000 in employee loan deductions — in some cases for almost a year — after management chose to prioritize fuel payments over other financial obligations during the utility’s cash flow crisis.
The report examined whether WAPA properly transmitted employee payroll deductions to financial institutions between 2021 and 2023. Those deductions include payments employees authorize to be withheld from their paychecks for personal loans, mortgages, retirement loans through the Government Employees’ Retirement System, and credit union accounts. Under WAPA’s own general business practices, those deductions are supposed to be wired electronically the same day payroll is processed or delivered by check the next business day.
Instead, auditors found that during calendar years 2021 and 2022, “WAPA was, at times, up to eleven months late in remitting employees’ loan deductions to GERS.” Between April 2021 and April 2022, the authority delayed 29 consecutive pay periods of GERS loan remittances. In total, $447,950 in employee loan deductions was transmitted late. Monthly deductions ranged between roughly $25,000 and $55,000, according to the audit.
The delays were not attributed to clerical error. According to the audit, the utility’s financial crisis led management to make a conscious decision that “other financial obligations, such as fuel costs, took priority over other expenses.” In other words, the authority chose to direct limited cash toward purchasing fuel to keep generators operating rather than immediately forwarding certain payroll deductions to GERS.
For employees, the impact was not immediately visible. GERS does not report its secured loans to credit bureaus, meaning late remittances did not automatically harm workers’ credit scores. Credit unions also worked with WAPA and employees to prevent late charges or negative reporting when delays occurred. But the consequences surfaced at a critical moment — retirement, the audit stated.
Because GERS requires that employer retirement contributions be fully posted before loan balances are processed and retirees are placed on the retirement payroll, delayed remittances meant some employees could not begin receiving retirement benefits on schedule. As the audit states plainly, “Retiring employees could not receive their retirement income until all outstanding funds were paid to GERS.” In effect, money had been deducted from workers’ paychecks, but the delay in transmitting it created a barrier when they attempted to transition out of active employment.
WAPA officials told auditors the decision was framed internally as a delay in GERS contributions generally and did not initially distinguish between retirement contributions and employee loan deductions. Officials said they became aware of the loan-related complications only after employees attempting to retire reported difficulties. The audit notes that management believed individual issues were rectified as they were brought to the agency’s attention.
The report also reviewed deductions transmitted to commercial banks and two local credit unions. Because many of those payments were issued by paper check rather than electronic transfer, auditors could not determine precisely when funds were delivered. Both credit unions reported that remittances were “often late,” sometimes by up to a week and occasionally as long as three weeks. While those institutions collaborated with WAPA to prevent adverse consequences for borrowers, the audit found that the authority lacked a documented audit trail to verify when manual checks were actually delivered.
Auditors concluded that the delays stemmed from management’s handling of the utility’s cash flow crisis. While WAPA’s governing board was informed that the authority faced financial strain, the report indicates that details about delaying GERS contributions were not formally presented for approval. Discussions with the Board’s Finance Committee were characterized as informational rather than requests for authorization.
The audit does reflect corrective action. WAPA began remitting outstanding loan deductions in May 2022, and by April 2023 had cleared all arrears owed to GERS. From May 2022 through December 2023, the utility made 43 consecutive on-time remittances. According to GERS records cited in the report, of 97 employees with loans reviewed, 89 have since paid their loans in full. The remaining seven current employees’ loans were up to date as of September 2025.
The Inspector General issued two recommendations: that WAPA strictly adhere to its policy requiring prompt transmission of employee-elected deductions and that it establish procedures to create a clear audit trail for manual checks delivered to financial institutions. WAPA agreed with both recommendations. One is considered resolved and implemented; the second is resolved but not yet fully implemented pending additional verification, the audit stated.
In its written response included in the audit, WAPA’s governing board stated that retirees and active employees “should never bear the burden” of fiscal challenges and committed to strengthening internal controls and reporting compliance to its Finance and Audit Committee.
The audit was initiated in May 2023 after a senator of the 35th Legislature requested a review following concerns raised by WAPA personnel about whether payroll deductions were being forwarded as required. The Inspector General found no indication that WAPA’s handling of employee loan remittances had previously been audited.
