Criminal charges should be laid against Ministers, agents – auditor
Chartered Accountant Anand Goolsarran has found that eight state agencies illegally transferred
monies to the National Industrial and Commercial Investments Limited (NICIL). He recorded this conclusion in his forensic audit report on the entity.
This information came to the forefront after Goolsarran’s request to the company’s CEO, Winston Brassington, for further information on other sources of funding for NICIL.
Brassington indicated to Goolsarran that during the period 2007 to 2012, amounts totaling $7.320 billion were received from various government agencies to effect payment for works undertaken on behalf of the Government.
The agencies are Guyana Geology and Mines Commission (GGMC), Guyana National Cooperative Bank (GNCB), Guyana Water Authority (GWA), Guyana Forestry Commission (GFC), Ministry of Labour, National Frequency Management Unit (NFMU), Ministry of Public Works and the Ministry of Agriculture.
According to the forensic audit report, GGMC transferred $3.8B for hinterland road works and then another $300M for Carifesta X. GNCB transferred $1B for the Marriott Hotel and $150M for Cricket World Cup. Meanwhile GFC and GWA transferred $300M and $353M respectively towards the construction of the Marriott Hotel.
A total of $170.5M was transferred from the Public Works Ministry to the Berbice River Bridge, while the Labour Ministry transferred $679M to the Lot 44 High Street Building.
GFC also transferred $300M for the Cricket World Cup along with NMFU’s $200M. $110M was also transferred from the account of the Agriculture Ministry for the Hope Canal Project.
Goolsarran noted, “In his (Brassington’s) correspondence to me, the Executive Director stated that in general, NICIL served as an Agent or Project Executing Agency for the Government of Guyana on various projects, and that ‘funds from other agencies were typically transferred by cabinet decision’. These were recorded in NICIL’s books as amounts due.”
The Chartered Accountant said that when disbursements were made, the amounts were correspondingly adjusted until the balances were reduced to zero.
He said that in other words, there was no recording of the transactions as expenditure in the books of NICIL. He said that Brassington also explained that there were cases where NICIL would make payments on behalf of the Government and reimbursements would be received later.
“The Executive Director, however, did not satisfactorily explain the rationale for the choice of NICIL to carry out what is essentially a paymaster function that is typically associated with the operations of the Treasury Department of the Ministry of Finance.
In addition, NICIL’s involvement in relation to these transactions is inconsistent with its core mandate of “subscribing for, taking or otherwise acquiring and holding shares, stocks, debentures or other securities of any company, co-operative society or body corporate”.
NICIL was therefore functioning as a “parallel” Treasury,” Goolsarran said.
The former Auditor General said that NICIL as well as the named agencies ought to have been aware of the requirement for all public expenditure to be sanctioned by Parliament through the National Budget, as provided for by Article 217(3) of the Constitution.
That article states that “No moneys shall be withdrawn from any public fund other than the Consolidated Fund unless the issue of those moneys has been authorized by or under an Act of Parliament.”
He said that the financial resources of the GGMC and GFC constitute public funds. With this in mind, Goolsarran emphasized that neither the GGMC Act, the GFC Act or any other Act permits the transfer of funds to any other entity.
Goolsarran contended that this cross-transfer of funds among State institutions to meet public expenditure undermines authority of Parliament to approve such expenditure.
In addition, since the expenditure was not included in the National Estimates, he said that it was not reflected in the Public Accounts of Guyana, thereby resulting in a significant under-reporting of expenditure.
Goolsarran said that NICIL and the above entities were therefore complicit in the violation of Article 217(3) of the Constitution and cannot escape culpability, notwithstanding that the Cabinet and/or the Prime Minister sanctioned these arrangements.
“Indeed, neither the Cabinet nor the Prime Minister is exempt from liability for the failure to adhere to this fundamental constitutional requirement on public financial management,” added the Chartered Accountant.
As regards central government activities, Goolsarran said that a Ministry/Department can transfer by way of an “inter-departmental warrant” a budgetary allocation to the competent Ministry/Department to undertake the works on its behalf.
“For example, when the Audit Office had to undertake some rehabilitation works to its compound, the related amount allocated was transferred to the Ministry of Public Works to undertake the works on its behalf.
“The transfer was recorded in the books of the Audit Office as expenditure to be substantiated later by the relevant supporting documents from the Ministry of Public Works attesting to the satisfactory completion of the works.
“However, cross-transfers among State agencies to meet public expenditure are not permissible because of accounts,” he said.
Having regard to this, among other findings contained in his report, Goolsarran recommended that moves be made to institute criminal and/or disciplinary actions against all those responsible for the interception of State revenues totaling $26.858 billion in violation of Articles 216 of the Constitution and the related sections of the Fiscal Management and Accountability Act (FMA).
He noted that disciplinary action is provided for under the following sections of the FMA Act: (a) Section 48 — Misuse of public moneys; (b) Section 49 — Liability for loss of public moneys; and (c) Section 85 — Liability of an official.
Goolsarran also called for the institution of criminal and/or disciplinary actions against all those responsible for violating Article 217 of the Constitution by causing expenditure to be incurred out of State resources without parliamentary approval.
He said that charges are in order for all those responsible for ignoring National Assembly Resolution No. 32 of 17 December, 2012, requiring NICIL to pay over to the Consolidated Fund “all revenues and proceeds from the sale of all State properties, except for those necessary administrative costs for maintaining and running its operations annually.”
The Chartered Accountant called for NICIL to be liquidated and for the appointment of a Receiver to oversee the liquidation process. He said, too, that Government should re-activate the Privatisation Unit as a department of the Ministry of Finance to manage the Government’s residual investments after liquidation proceedings have concluded. In this regard, he noted that the existing staff of NICIL could be transferred to the Ministry of Finance.
Goolsarran also recommended for his report to be forwarded to the State Assets Recovery Unit with a view to recovering any State assets/properties that might have been improperly and illegally transferred to third parties.
He believes that there should be a further independent audit to examine in detail transactions over the last six years, given that the scope of his report covered the period 2001 to May 2015.
“In addition, considering the hostile, arrogant and demeaning response to my preliminary draft report as well as certain restrictions placed on this audit, it would be desirable for the Executive Director and the Deputy Executive Director to proceed on leave to facilitate the transaction audit,” Goolsarran added.
He noted that Government may wish to consider whether it wishes to retain the services of the Executive Director and the Deputy Executive Director in light of the findings and conclusions contained in the report.
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