The opposition PNCR yesterday flayed the government for US$10M ($2B) worth of drug and medical supplies purchases in 2005, 2006 which it charged were not in compliance with the procurement law.
At a press conference yesterday, the party addressed a series of issues emanating from the Auditor General’s Report on the 2006 public accounts and the amendment to the law for tax incentives for Queens Atlantic Investments Inc (QA11).
PNCR-1G MP Winston Murray said that during the parliamentary debate on the Fiscal Enactments (Amendments) Bill 2008 the PNCR pointed out, among other things, that the Government “was seeking to correct an illegality; was expanding Ministerial discretion in the grant of fiscal concessions contrary to its undertaking to international financial institutions;” and “was flagrantly breaching the tenets of transparency and accountability by the way it treated with the QAII investments and by the framework it was creating under the Bill.”
Murray recollected that in winding up the debate on the Bill the Minister of Finance, Ashni Singh with much “fret and fury and with impressive histrionics” waved a document from which he read indicating that PNC Minister of Finance Carl Greenidge had in 1992 issued a directive to the then Auditor General setting restrictions on direct access by the Auditor General to public officials. “How that could have been an answer to the illegality committed and the secrecy of the Government in the QAII deal defies logic.”
Murray recalled that Greenidge was the Minister with responsibility for the audit office “so his action was within the law though it may be acknowledged that the directive was not in the best interests of transparency. However, there was no illegality.”
Murray posited that in the case of the QAII deal – where allowance had been made by Go-Invest and the Privatization Unit for tax concessions not catered for by the law – there was a clear illegality, later admitted by the head of Go Invest. “Further, the Government simply cold shouldered the many calls to lay the agreement in the National Assembly.”
Murray stated that the Minister of Finance also very vigorously punched the air with a document which was not circulated to members of the National Assembly purportedly indentifying the privatizations completed by the Privatization Unit. “What he failed to tell the National Assembly and the nation was why the billions of dollars earned from the privatization have not been deposited in the Consolidated Fund of Guyana as required by Article 216 of our Constitution. No amount of ranting and raving could conceal such unconstitutionality.”
Referring to the 2006 Auditor General Report which was handed over to the Speaker of the National Assembly at the end of July 2008, Murray pointed out that under Section 74(2) of the Fiscal Management and Accountability (FMA) Act the Auditor General is required to present that report within nine months following the end of the fiscal year to which the report relates. On that basis the 2006 Report was submitted 10 months outside of the legal requirement.
Under S73(3) of the said FMA Act the Minister of Finance is required to deliver the consolidated financial statements to the Auditor General within four months following the end of the fiscal year. The PNCR parliamentarian noted that at paragraph 6 of his report “the Auditor General stated that as at 30th April, 2006 (mistake) none of the statements were received, that draft Appropriation Accounts were received on 20th June 2007 and that the signed statements to facilitate the completion of these audits were not received until 24 June 2008. Clearly, the Honourable Minister of Finance did not comply with the law. In fact, the signed statements to facilitate the 2006 audit were submitted some 15 months after the legal deadline.”
The point was underscored at yesterday’s briefing that section 73(4) of the FMA Act provides that “if the Minister has not delivered the consolidated financial statements to the Auditor General within four months following the end of the fiscal year . . . the Minister shall provide to the National Assembly a statement as to the reasons why the consolidated financial statements have not been so delivered to the Auditor General.”
Murray argued that Singh has never provided such a statement to the National Assembly and said “This is truly indicative of the regard the Government has for the rule of law.”
Murray stated further that it should also be noted that on the basis of the financial statements delivered to the Auditor General and based on the Auditor General’s examination of them he wrote at page ii of his report as follows: “However, because of the significance of the comments as contained in the relevant sections of my report relating to the following statements, I am unable to form an opinion whether they properly present their respective state of affairs as at 31 December 2006.”
Buddy’s loan
Murray posited as regards the Schedule of the Issuance and Extinguishment of all loans made by the Government, the Auditor General noted that loans made in 2006 to Aroaima and Hand in Hand Trust Corporation amounting to $105m were omitted from the schedule.
He added that the PNCR has independently checked the Schedule and has discovered that the loan to Buddy’s International Hotel is not included therein. Surely an explanation is owed for these omissions.
“These are further examples of the Government’s interpretation of transparency and accountability.”
Murray stated that one general area that deserves comment is that of Bank Accounts. He adverted to the comment in the report that there were a number of inactive Bank Accounts with large sums of money in them (over $7.9b). The Auditor General expressed the opinion that such accounts should be closed and the balances transferred to the Consolidated Fund. Murray stated that the PNCR is aware that in many instances the Accountant General had ordered such accounts closed and the funds transferred. For many years now this has not been done.
Murray added that the Head of the Presidential Secretariat, Dr Roger Luncheon has since been reported as saying that the problem with such accounts was that they went back to the pre-1992 era and there were therefore difficulties in reconciling such accounts. “This is the typical knee jerk reaction from the Government. When something cannot be properly explained blame it on the PNC.”
Murray stated that more than 95% of such accounts concern the post-1992 era; the recommendation to close inactive accounts does not remove the need for reconciliation but simply ensures that balances in those accounts are not available for misuse or abuse – hence the recommendation to transfer to the Consolidated Fund and that this is a matter that has been unattended for many years now.
Murray continued that as regards the report for specific agencies many of the adverse comments e.g. overpayment on contracts, clearing of cheque orders, overpayment of salaries to staff, failure to comply with stores regulations and failure to comply with the law on procurement are matters that have been repeatedly raised in previous reports of the Auditor General but nothing has been done to have these undesirable and illegal occurrences corrected. He said the PNCR was therefore surprised to hear the Minister of Finance suggest that perhaps the Auditor General did not seek explanations from the accounting offices since he, the Minister, was sure there were proper explanations. “Let it be clearly understood that accounting officers and their staff are always given an opportunity to respond to the comments of the Auditor General through exit conferences and by formal submission of comments to the Public Accounts Committee (PAC of Parliament).”
He added that invariably, the observations in the Auditor General’s Report are acknowledged to be correct and the PAC has always used its best efforts to persuade accounting officers to do the right thing and where there are genuine difficulties in administering the law to discuss the matter with their political heads so that recommendations could be made to change the law where appropriate.
In this regard the Public Accounts Committee, on 14th February, 2008 laid in the National Assembly its report on the examination of the Auditor General’s reports for 2002 and 2003. The examination for 2004 and 2005 is complete except for one agency which had to be sent back to do over its comments. Murray pointed out that under National Assembly Standing order 82(3) the Government is required to submit a Treasury Memorandum to the National Assembly indicating the Government’s response to the reports of the PAC. This is required to be done within 90 days of the submission of the PAC’s report. Thus the Treasury Memorandum in response to the PAC’s report for 2002 and 2003 should have been submitted to the National Assembly by mid May 2008. Up to this time no such memorandum has been forthcoming.
He asserted that since many of the problems identified in the Auditor General’s reports are of a recurring nature the tabling of the Treasury Memorandum even for years long past would have given an indication of the Government’s seriousness in addressing the issues raised in the PAC reports.
Murray also took the opportunity to address the media on the Lotto Funds. The Auditor General’s report indicates that the sum of $2.95 billion (US$47.5m) was paid over to the Government as the people’s share from the lotteries over the period 1996-2006.
Murray stated that “in open and unashamed violation of Article 216 of the Guyana Constitution this money has not been paid into the Consolidated Fund. All of this money has been deposited into special bank account No. 3119 under the control of the Minister of Finance.”
As a result none of the expenditure from this account has ever been given the approval of the National Assembly of Guyana. Murray stated that while the Auditor General has reported that the projects on which these monies are spent are subject to audit the PNCR states unequivocally that such a procedure cannot be a substitute for upholding the requirements of the Constitution of Guyana.
Drugs and medical supplies
With regard the purchase of drugs and medical supplies, the opposition member of Parliament stated that instead of following the requirements of the Public Procurement Act 2003 and the regulations made thereunder the Ministry of Health in 2006 continued to use a Cabinet Decision as a basis for sole-purchasing drugs and material supplies (other than supplies purchased through International Health Organisations) through New Guyana Pharmaceutical Corporation. The report made it clear that tender procedures were not followed in 2006 for 54 purchases totalling $590.478m.
The Auditor General posited that 8 of those purchases required cabinet’s “no objection” under the Procurement Act. It was asserted that the PNCR respectfully disagrees with the Auditor General in that there could be no involvement, even of the Cabinet, if tender procedures were not in accordance with the law.
Cabinet cannot express “no objection” to an illegality.
For 2005 and 2006 the Ministry of Health purchased $1.12 billion of drugs and medical supplies via this illegal route. The Georgetown Public Hospital Corporation, the Auditor General’s report points out, also purchased $430m of drugs by the same procedure. The report further points out that there was no evidence to indicate tender board procedures were complied with. In 2005 this Corporation purchased $443m – via the same procedure – $873m for 2005 and 2006.
Murray asserted that the two together purchased a total of $1,993.6m or approximately US$10m through a procedure in stark violation of the Public Procurement Act.
“These are further examples of the Government’s total disregard for the laws of the land. The PNCR calls upon the Government to scrupulously observe, and function within, the laws of our country. The work of the Auditor General must not go in vain. Additionally, the concept of observance of the rule of law is one that ought to apply with equal force and effect to the ‘lowly’ citizen and to the ‘mighty’ official, to the State and all its institutions.”
Murray responded to questions from the media with regard to the option of the PNCR pursuing relevant litigation in view of palpable breaches of the law, by lamenting the fact that the PNCR had already filed constitutional matters which are supposed to receive priority judicial attention but are still currently stuck in the judicial system.
