…as $350M wasted through negligence – Audit report
When it comes to the construction of the property on which the former Guyana Broadcasting Corporation (GBC) once stood at Lot 44 High Street, a forensic audit report found that NICIL’s negligence resulted in some $350M in taxpayers’ money being wasted.
According to a forensic audit report by Chartered Accountant, Anand Goolsarran, the contract for the building was awarded in 2007, but to this day the building remains substantially incomplete.
Goolsarran said that the building was abandoned, and the structure was expected to be torn down because the floors were not constructed to the required specifications.
As the “Project Executing Unit”, the former Auditor General said that NICIL’s role was to ensure that the works were executed according to the agreed specifications, and the entity had again failed to discharge its responsibility for this project, “resulting in some $350 million of taxpayers’ funds being wasted”.
On this basis, he proceeded to document the history of the matter, along with other glaring irregularities. The forensic audit report stated that according to a Cabinet decision dated March 13, 2007, the contract for the construction of Government offices at 44 High Street, for the Ministry of Labour and the Guyana Forestry Commission, was to be awarded to Kishan Bacchus General Contractors.
It noted that negotiations were to be concluded with the contractor to ensure that the price did not go above $300 million. To do this, he was instructed to exclude the cost of electrical and air-conditioning of $190 million.
This was jointly agreed to by the Ministry of Labour and the Guyana Forestry Commission (GFC).
Goolsarran said that the GFC was to meet the cost of the construction, while NICIL was to finance the rest. In addition, the Ministry of Labour was required to countersign all contracts relating to the works, while NICIL was responsible for implementing the construction.
At the same time, he said that the land was to be vested in NICIL.
The Chartered Accountant said that at NICIL’s board meeting of August 16, 2007, the Executive Director, Winston Brassington, informed the Board that the handing over of the site took place earlier in the day. The minutes recorded the former Minister of Finance, Dr. Ashni Singh as having agreed that, “there should be no press release, as this might draw attention to NICIL’s spending when ideally it should have been the expense of central government.”
Goolsarran said that this was quite an extraordinary comment coming from Dr. Singh, and was also a clear acknowledgement of the improper use of NICIL’s funds.
The Chartered Accountant said, “Five years later, there was an amended Cabinet decision dated July 6, 2012 which approved of: the transfer by sale of the property at 44 High Street to the Geology and Mines Commission at a purchase price of $100 million; all moneys received by NICIL from Central Government less relevant expenses paid by NICIL up to September 30, 2012 to be reimbursed to the Consolidated Fund; and NICIL being authorised to do all acts necessary to implement Cabinet’s decision.”
He continued, “According to the schedule of payments provided by NICIL, amounts totaling $346.017 million were expended, leaving a balance of $333.417 million still held in the accounts of NICIL.
Of the amount expended, $224.993 million relates to payments to the contractor, while $27.781 million was paid for engineering supervision.”
Goolsarran added, “The construction of the building has since been aborted. The minutes of NICIL’s board meeting of March 12, 2010, recorded, “In the absence of bonds, KBC (Kishan Bacchus General Contractors) owes $51 million after the 9th valuation. It was set out by (Ashni Singh) that we should identify $51 million of work and have him complete those aspects…”
The Chartered Accountant said that it is evident that the Ministry of Labour and NICIL failed to ensure that the contractor executed a valid performance bond, against which recoveries could been made for any overpayment as well as defective and incomplete work performed.
He said that the Minister’s statement to allocate work to the value of the contractor’s indebtedness appears reckless, considering that the project was aborted because of defective work performed, and any additional work would be a further waste of taxpayers’ funds. Goolsarran said that it is not clear whether such additional works were performed.
He said that NICIL commented that the contractor had presented a CLICO bond. However, on the appointment of a judicial manager during the CLICO downfall, all business and insurance coverage was terminated or suspended.
Goolsarran asserted, “The role of the engineering supervisor also needs to be called into question. According to the minutes of NICIL’s board meeting of April 26, 2007, the Executive Director was requested to provide examples of work done by the consultant, to which he responded that he knew that the consultant had done work before but could not specify.”
“He then stated that the firm was doing some work for Oldendorff Carriers in New Amsterdam and that he had not heard of “any good or bad reviews”. At the said meeting, the HPS (Head of the Presidential Secretariat, Dr. Roger Luncheon) expressed doubts about the ability of the consultant to supervise the work of the contractor considering that “KBC needs strong supervision as even the Minister of Amerindian Affairs seems to have problems with works done”.
“The HPS then indicated that he would discuss the matter with the President.”
The former Auditor General said that at its meeting of May 14, 2007, the Board discussed the progress of the works at 44 High Street. He said that the minutes recorded that the former Head of the Presidential Secretariat undertook to raise the issue with the President again, following the former President’s request to have the Tender Board issue an opinion on the “integrity” of hiring the consultant without tender.
“It is not clear why the consultant was not selected on the basis of competitive tendering and who initiated arrangements for his hiring. Whatever the outcome of the meeting with the President, the consultant was retained to supervise the work of the contractor. The end result is that some $350 million of public resources has been wasted.”
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