May 23, 2016 News
Given that the National Frequency Management Unit (NFMU) illegitimately funded two PPP-inspired projects, One Laptop per Family and the E-Governance Projects, forensic auditors from Ram and McRae are recommending that over $1B in repayment be sought from the relevant agencies.
They said that expenditure in connection with the two PPP initiatives has distorted the operating results of the NFMU for the years 2012-2014. The auditors said that this was due to the fact that the significant sums expended on the two projects were incorrectly included in the budgetary expenses of the NFMU.
Their analysis revealed that total disbursements made to cover operational expenses of the One Laptop Per Family (OLPF) and E-Govervance projects amounted to $1,029,958,779 and $278,169,461respectively. As such, the auditors recommend that repayment be sought immediately from the entities that received the moneys for the projects.
The Ram and McRae team made reference to Section 33 of the Public Corporations Act which states that “A Corporation from its funds makes payments to meet all such expenses as are properly incurred by it for the purpose of the exercise or discharge of its function.”
In this regard, they said that the application of this provision would preclude the NFMU from continuing to meet the expenses of other bodies. They said that NFMU Head, Valmiki Singh has sought to justify these payments under Section 34 (d) of the said Act which allows the utilization of the net profits of a corporation for purposes specified by the Minister. The auditors noted however that this represents a grave misunderstanding of the concept of profits as well as the simple meaning of “specified”.
Additionally, the auditors were able to expose just how “cunningly” officials there were able to hide the fact that they were secretly funding the two PPP-inspired projects. The auditing team noted that the NFMU appears in Guyana’s National Budget as a statutory body under the formerly named Office of the President.
The expenditure that NFMU would need to carry out its operations for the year is also listed in the National Budget. The Forensic auditors however found it strange that the single largest line item in the NFMU’s budget is Rates and Taxes and Subvention to Local Authorities.
In fact, the auditors observed, too, that NFMU is the only statutory body whose budget is included in the National Budget that has such an item.
Upon analysis, the forensic auditors were able to discover that this item, “Rates and Taxes and Subvention to Local Authorities” is nothing but a disguise to make payments from public funds to the E-Governance initiative and the One Laptop Per Family project. They stressed that there is no way that a project can by any definition be classified as a Local Authority.
The auditors said that this represents a violation of Article 217 of the Constitution of Guyana. The Ram and McRae team also found it interesting that this violation does not appear to have engaged the attention of the country’s Auditor General, Deodat Sharma who is expected to be a diligent observer of how funds are used by state agencies.
What was also surprising to the auditors was that a review of the 2015 National Budget exposed that the APNU/AFC administration continued the common practice of including the expenditure of other entities under Rates and Taxes and Subventions to other entities within the budget of the NFMU.
In fact, the auditors discovered that a total of $538 million was included in the 2015 Budget for the NFMU under the category in discussion, as compared to $443 million that was included in the 2014 Budget which was presented under the PPP administration. The forensic auditors recommended that no additional funds be budgeted under the above stated category.
The fibre optic cable, the heart of the E-Governance Project, which was started in 2011 under former President Bharrat Jagdeo was intended to bring another source of internet connectivity to Guyana. It should have been completed by 2013, but turned out to be a major embarrassment for the previous administration, after it faced delays due to damage and other technical issues.
It was part of a bigger initiative to advance Guyana’s e-governance drive and equip 90,000 poor families with laptops and link state agencies into an efficient internet site.
The One Laptop Per Family and the E-Governance projects along with the Brazilian fibre optic cable initiative, reportedly cost taxpayers in excess of US$70M.
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