Dec 01, 2015 News
An audit of the Sports and Arts Development Fund (SADF) during the years of 2012-2014 has revealed troubling disparities and breaches of accounting and asset management procedures.
The Fund, which was launched in 2007, was originally designed to funnel government subventions to non-governmental organizations and projects in the two portfolio areas of Sports and Arts.
Instead, what prevailed was a system in which only three people made decisions on expenditure on projects initiated by the Ministry itself, with Cabinet providing little or no approval oversight on even major projects.
According to the audit report, submitted to the Ministry of Finance on September 16 by forensic auditor Lester Bowen, the fund was administered by an executive committee within the Ministry of Culture, chaired by the Permanent Secretary with the other two members being the Director of Culture and the Director of Sport. During the period under audit, the Permanent Secretary was Alfred King, the Director of Culture was Dr. James Rose, and the Director of Sport was Neil Kumar. While Kumar, an opposition MP is no longer Director of Sport, both King and Rose are still employed in their respective positions under the now Ministry of Education’s Department of Culture, Youth and Sport. Projects proposed by the Committee would then be sent to the Minister of Culture, Dr. Frank Anthony, for approval. Some projects were sent to Cabinet for final approval while most were not.
For all three years under consideration, there was the repeat problem of poor proof of actual expenditure. The report revealed that the approved budgetary estimates for the year 2012 amounted to G$100,000,000 for the Sports and Arts Development Fund, while cabinet approved G$106,414,796. The difference of $94,770,497 was approved by Cabinet to meet local expenditure for the development of Sports and Art. The amount of G$6,414,796 was approved by Cabinet above the budgetary estimates of G$100,000,000 for the same year. The Ministry, prior to the preparation of the draft report dated 10th August, 2015, failed in its effort to present for audit examination, a register in relation to expenditure being met from the fund. “In the absence of the register, the total number of expenditure vouchers which recorded the total expenditure for the year could not be determined,” stated the auditor.
According to the report, the years audited seemed to have a pattern of non-submittal of vouchers. In the year 2012, $100,000,000 was budgeted while total expenditure amounted to $99,706,408. Of this amount, the Ministry could only provide payment vouchers for $53, 509, 731 – the balance of $46, 196, 677 could not be supported by payment vouchers.
According to the report, there also seemed to be a deliberate pattern of misdirection on the submission of vouchers related to SADF expenditure in response to the auditor’s request for documents. For example, the report notes that relative to 2012 expenditure, a total of 249 expenditure vouchers totaling $200,490,625 were presented for the audit. However, only 210 of the vouchers with a value of $76,649,977 were reportedly related to the Fund. The other 39 vouchers totaling $123,840,648 showed no relation to the Fund.
“As such,” notes the report, “The total amount expended from the Fund for the year 2012 could not be accurately ascertained.”
The pattern was repeated the next year. Out of $99M spent in 2013, the Ministry could only account for $27 million in vouchers. The balance of $66 million or 2/3 of the money could not have been verified as spent as is. While 197 expenditure vouchers without registers were presented with a total sum of $155,917,555, only 96 vouchers presented related to the Fund while 101 vouchers totaling $139,943,736 showed no relation. A total of 40 payment vouchers representing a value of $66,798,440 were not presented at the time of audit.
“As such,” the report noted again, “accuracy and validity of amounts paid could not be determined in the absence of those vouchers.”
A register was presented for the year 2014, which recorded expenditure vouchers representing the total expenditure for 2014 in the sum of $99,160,581. The schedule of expenditure for 2014 reported a total expenditure of $96,767,479 while the Register recorded the total expenditure of $99,160,581. No explanation was given for the disparity. A total 105 payment vouchers representing payments amounting to $61,836,338 were not presented for examination.
“As such, accuracy and validity of amounts expended could not be verified,” the audit report noted.
In total, for the three years, out of $300 million spent under the Sports and Arts Development Fund, $167 million, more than half of the total expenditure, could not be verified.
The SADF has come in for its share of criticisms over the years. According to the National Assembly Order paper for the 127th sitting on the National Assembly for the first session, AFC M.P Sheila Holder had requested that Anthony provide audited accounts for the Fund. “Will the Minister name,” she had asked, “the persons under whose authority these funds are managed in the disbursement of the contributions detailed in the budgetary estimates as the local organization receiving these substitutes and contributions from the Government’s treasury?” There is no record of those answers being supplied then. Similar questions were asked of Anthony during the 2014 budget debates during which he had admitted that there was just a three-man committee that was responsible for decision-making.
Accountant Christopher Ram, as part of his budget analysis in 2011, had said with regards to the fund: “For Culture, wages and salaries cost in 2011 are $110M or 25% security $42M or 10%; national and other events $72M or 16% and subsidies and contributions to local organizations $133M. And here is where there is a huge problem. Page 387 of the estimates reveals that $100Mof this $133M goes to a sports and art development fund of which no account is ever given.”
Ram had noted that since 2007, close to half a billion dollars were voted for the fund but no systems and procedures were in place to ensure proper accountability. He had pointed out that another then AFC MP, now Minister of Public Works, David Patterson, had questions raised in the 2010 budget debate.
“The fund appears to have escaped the attention of the audit Office which never seems to have eyes for some really serious spending,” Ram observed.
Despite the questions raised, the Sports and Arts Development Fund enjoyed parliamentary approved both under control of the PPP up to 2011, and then by the opposition controlled parliament ironically in the years which the audit covers. In response to criticisms on the AFC’s decision to abstain from voting on the Fund in 2013, resulting in its passage with the PPP outvoting APNU’s vote to cut, AFC executive Khemraj Ramjattan had stated the answers Anthony had provided to questions submitted on the Fund were satisfactory. In 2014, then APNU MP, now Director of Sport, Christopher Jones, had submitted a series of tough questions to Anthony, most of which were unanswered. APNU’s Carl Greenidge had advised that the Fund’s decision mechanism was too restrictive while then Speaker Raphael Trotman had questioned the poor level of public information on the SADF.
“In 2012,” Greenidge had noted, “we had a long discussion on this item and we asked the Minister to ensure that he is going to change the status of the body…from all the explanations the Minister provides it seems to be an internal body. A body has been established with no statutory powers; no particular framework and it is not only using funds but seems to carry them over from time to time.”
Nevertheless, both parties unanimously approved the allocation.
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