Latest update November 5th, 2024 1:00 AM
Jun 11, 2016 News
…says forensic audit report
Tens of millions of dollars in fuel were being lost annually though mismanagement, theft and fraud under the previous Government’s programmes to manage its drainage and irrigation (D&I) systems.
According to a forensic audit report into the National Drainage and Irrigation Authority (NDIA) for the period November 1, 2011 to May 31, 2015, prepared by Nigel Hinds Financial Services, and released yesterday by Government, fuel purchases represent a significant cost to the entity.
NDIA has been the one of number of state agencies in recent years coming under fire for its management of the billions of dollars it was allocated. From contracts, to equipment, to fuel, the questions have been many.
Its Chief Executive Officer, Lionel Wordsworth, was sent on leave last year with the new board announcing recently that it will not be renewing his contract. Around $1.4B was spent between January 1, 2011 to December 31, 2014 with serious concerns raised by executive management and employees related to the accounting and management of fuel and lubricants.
The report noted that NDIA does not have storage facilities for fuel. The auditors were told that fuel was stored in contractor’s tanks- “with the same contractors being used to transport the fuel. There were no proper explanations as to how fuel held in contractors’ tanks was accurately monitored.”
“We compared the Fuel Reconciliation Monthly Summary generated by the Fuel Controller, Mr. Garfield Roberts and the Machine Status report generated by Mr. Avinash Singh, Head of the Mechanical Division for the period 2013 to mid-2015 using a sample of 18 heavy duty machines.”
According to the report, fuel was issued to machines classified as not working or out of service. “These machines showed that for the period referenced, the machines worked a total of 3,812 hours and utilized a total of 47,897 litres of fuel.
“This amounted to approximately $9,709,755 in fuel losses for the few months sampled each year.”
NDIA stores
At NDIA’s stores at Lusignan, East Coast Demerara, and Whim, East Berbice, auditors said they found systems of recording as being disorganized.
With regards to the fuel management, the report disclosed that at the end of each month, the Fuel Controller and his staff was mandated to prepare a report titled Fuel Reconciliation Monthly Summary for Equipment. This report is submitted to the Head of the Administration and Human Resources and it is signed off by Mr. Garfield Roberts, Fuel Controller. It shows the total fuel purchased and fuel issued monthly with a number of subsidiary sheets attached.
“The report format remained the same from January 2012 to June 2015. No one expressed any concern about the accuracy of the report. We noted that the report showed an Opening Inventory for several months in 2013 and 2014 to which purchases of fuel were added and issues were deducted. Closing Inventory was not shown in the report.”
With regards to the fuel stored in the contractors’ tanks, auditors said that there were proper explanations as to how the accuracy of the fuel held in contractors’ tanks were maintained.
“More importantly, the reports for years 2013 and 2014 showed that 130,824 litres and 171,779 litres respectively of fuel were issued, more than what was actually available.”
The unreliability and inaccuracies within the Fuel Inventory System is obvious and promotes fraud.
“Fuel values were manipulated and the Head of Administration and Human Resources claimed he lacked the necessary expertise to check the accuracy of these reports.
In 2014, NDIA started its construction of storage tanks at Lusignan, but this was not operational as at July 31, 2015.In addition, a contract was awarded for the purchase of a tanker that was canceled because of changed specifications that generated suspicion.”
Auditors said that they also found evidence that a number of unauthorized vehicles received fuel with no proper explanations for the years 2011 to 2014.
“A total amount of 14,060 litres of gasoline was issued to those vehicles which amounted to $2,918,828.”
The Field Auditor Reports dated April 12, 2012 and September 26, 2012 which was addressed to former Chief Executive Officer, Lionel Wordsworth, referred to a major breakdown of internal control over the receipts and issues of fuel which contributed to fraudulent practices.
So too had the Auditor General’s Report for 2012 which pointed out that the entity was badly managing its fuel stock.
At the two board meetings held on March 2013 and June 2013; concerns were raised about the mismanagement of fuel by members particularly Chairman of Region 4.
“The CEO (Wordsworth) developed a draft document which outlined in detail the procedures for procurement of fuel and lubricants to collection of fuel and lubricants by NDIA vehicles with prescribed forms attached. This document was not presented to the Board for discussion and approval prior to the life of the board coming to an end in June 2015.”
The audit report made it clear that it finds it incomprehensible that given the cost of fuel and lubricants to NDIA, senior management and the Permanent Secretary, George Jarvis, allowed this situation to continue unabated.
Poor Management
“It is not difficult for one to conclude that poor management of fuel and lubricants over the years contributed to corrupt practices which resulted in significant cash losses to the entity. The subject Minister for this entity ought not to have continued to have confidence in the present management given the bad practices that occurred.”
Yesterday, the former CEO, shortly after the report went online yesterday, said he had submissions to the issues raised.
With regards to fuel stored in contractors’ tanks, Wordsworth said that under his watch, he ordered construction of storage facilities at Lusignan and Flagstaff, East Demerara Water Conservancy. This was very visibly identified to the forensic auditors.
However, prior to constructing fuel storage tanks, the services of fuel transportation were contracted out in accordance with the Procurement Act and that of the regulations of the Guyana Energy Agency for transporting large quantity of fuel.
The trucks contracted would deliver to different points for NDIA, Wordsworth explained.
“…A fuel distribution sheet is filled out that records that provides for records of location, date, time, type of equipment fuel is in-filled into, quantity of fuel and for signatures of equipment operator and fuel distribution contractor. There is documentary evidence for every such transaction at the NDIA.”
Wordsworth said that reconciliation reports are available at the NDIA and which fully account for the fuel uplifted and distributed.
“A sample of such reconciliation was provided to the auditors in response to the draft report. It is my view, as the CEO, that competent staff were employed in various positions to oversee the management of fuel including field staff.”
Regarding the report of the auditors saying that out-of-service NDIA were allocated fuel, Wordsworth said that this was far from the truth.
He said that the engineer’s machine status report only gives the status of earthworks equipment on a particular date and not a period when it may or may not be working.
“The fuel reconciliation report on fuel utilised by equipment is prepared from data extracted from the machine log books. A review of the documentary records machine status report generally complies with the record of the machine log books on that does not support the auditors’ assumption that equipment was not working for six months and there were loss of fuel.”
Wordsworth insisted that a review of the log books record will show that a machine may be down for a few hours or days for repairs before resuming work and not for six months as assumed by the auditors.
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