The year 2013 was not a particularly good one for governance, transparency and accountability. At the parliamentary level, the combined Opposition and the Government continue to wrestle for control, without the prospect of a breakthrough to work together in a genuine effort and in a spirit of compromise and goodwill to put nation’s interest ahead of partisan politics. The budget process is a typical example, and all the signs are there that we are heading for a third consecutive year of showdown as regards financial resources to be allocated to various government programmes and projects.
There are, however, three positives that we can identify:
The appointment of Mr. Winston Moore as Ombudsman ‘to investigate any action taken by a government department or other authority, or by the President, Ministers, officers or members of such a department or authority in relation to the exercise of the administrative functions of that department or authority”. One hopes that, unlike his predecessors, Mr. Moore would be provided with adequate resources to uphold and preserve the Constitution and to discharge his responsibilities “without fear or favour, affection or ill will’;
The cancellation of the memorandum of understanding for the construction of a solid waste recycling plant amid public pressure about the lack of experience of the company concerned and the manner of its selection; and
The passing of four bills relating to local government, three of which received Presidential assent. The President rejected the fourth bill that he claimed was unconstitutional. However, he has not indicated what aspect of the Constitution has been violated.
Today, we begin an examination of some of the issues that need to be given priority in 2014.
Amendments to the Anti-Money Laundering Act
On 7 May 2013, the Government tabled in the National Assembly proposed amendments to the Anti-Money Laundering and the Countering of Terrorism Act 2009 to address the shortcomings highlighted in the third evaluation report of Caribbean Financial Action Task Force (CFATF). The report’s main conclusion was that Guyana’s legislation needed to be overhauled to bring it in conformity with the standard recommendations used to evaluate countries’ efforts to combat money laundering and terrorist financing.
The Government was keen to have the legislation passed before 27 May 2013 at which date the CFATF was to have met to review Guyana’s progress in strengthening its money laundering legislation. The combined Opposition, however, felt that it needed time to review the proposed amendments and that money laundering was too important an issue to be dealt with without careful consideration. It further indicated that since July 2011 the Government knew of the CFTAF’s assessment which was further communicated to the President in a letter dated 10 April 2013. That letter referred to several warnings and references to earlier notifications of the precarious position to which Guyana was exposed since November 2012 as well as assurances given by the Attorney General, the Minister of Finance and the Head of the Presidential Secretariat that the issues raised were being dealt with expeditiously.
As a result, the Assembly referred the proposed amendments to a Select Committee for detailed scrutiny and reporting to the Assembly. Without the agreement of the combined Opposition, the Select Committee, however, brought its proceedings to an end, finalized its report and tabled it in the National Assembly on 7 November 2013. It was therefore not surprising that for a second time the Assembly referred the proposed amendments back to the Select Committee to continue and finalise its review. One hopes that the Committee will expedite its work within the next few weeks and there is political consensus on the outcome. This is necessary to avoid Guyana being faced with sanctions from the Financial Action Task Force, an inter-governmental body responsible for developing and promoting national and international policies to combat money laundering and terrorist financing.
Local government elections
An essential ingredient of local democracy is the holding of periodic elections to enable local residents to decide who they wish to be in charge of their affairs, whether it is at the level of municipalities, neighbourhood democratic councils (NDCs) or village councils. This is reinforced by Article 71(1) of the Constitution which states that “Local government is a vital aspect of democracy and shall be organized so as to involve as many people as possible in the task of managing and developing the communities in which they live”.
Since 1994, however, there have been no local government elections although the law requires such elections to be held every three years. The Administration has to date not explained satisfactorily why this is so, and one suspects that political expedience takes precedence over adherence to democratic norms. There were a number of cases where duly elected representatives were removed through the disbanding of local democratic organs and replacing them with handpicked loyalists.
We have seen the disaster at the Georgetown City Council where there is currently a big rift between the Mayor and City Council on the one hand, and the Government-imposed Town Clerk on the other. As a result, garbage that poses a serious health risk, keeps the piling up. The failure to periodically desilt drains and canals and to keep them free of weeds and garbage, especially just before the rainy season steps in, results in the flooding of the city whenever it rains even for a few hours.
The prospect of holding local government elections this year would be a welcome development notwithstanding that there were missed opportunities on six consecutive occasions in 1997, 2000, 2003, 2006, 2009 and 2012, to allow citizens to elect their representatives. One hopes that the USAID Project on leadership and democracy will proceed smoothly since a significant component of it relates to preparing citizens for this indispensable aspect of a truly democratic system of governance, transparency and accountability.
Financial accountability of local government organs
Democracy and accountability are the twin sides of the same coin. Democracy leads to accountability which in turn leads to development. As a corollary, a lack of democracy leads to a lack of accountability which in turn stifles development. Shown below is the status of financial reporting and audit in respect of the six municipalities as of 1 September 2013:
Region Name of entity Year last audited No. of years in arrears
2 Anna Regina Town Council 1999 13
4 Georgetown City Council 2004 8
6 New Amsterdam Town Council 1996 16
6 Corriverton Town Council 2001 11
6 Rose Hall Town Council 1998 14
10 Linden Town Council 1984 28
This works out to an average of 15 years’ arrears in financial reporting and audit! In the circumstances, residents who pay their rates and taxes have no way of knowing how their contributions to the running of these municipalities are being utilised. This is in addition to significant contributions being made from the Treasury.
The Auditor General’s 2012 report to the National Assembly provides the following explanations in relation to the above observations:
Anna Regina Town Council: The audit for 11 years i.e. from 2000 to 2010 was in progress while financial statements for 2011 and 2012 were received;
Georgetown City Council: Financial statements for 2005 and 2007 were received. It is, however, not clear what the position was in respect of 2006;
New Amsterdam Town Council: Financial statements for seven years, i.e. from 2006 to 2012, were received but were returned because they were incomplete. The Auditor General did not, however, provide any explanation as regards the gap years from 1997 to 2005;
Corriverton Town Council: Financial statements for 11 years, i.e. from 2002 to 2012, were received;
Rose Hall Town Council: Financial statements for 14 years, i.e. from 1999 to 2012, were received; and
Linden Town Council: Financial statements for 26 years, i.e. from 1985 to 2010, were received but were returned because they were incomplete.
In other words, the Audit Office received 73 sets of financial statements of which 33 were returned because they were incomplete. There was also no indication as to how long these statements were with the Audit Office and why several years were allowed to be submitted at the same time. The normal practice is for financial statements to be submitted for audit one year at a time since if there are errors that affect the closing balances, they will also affect the opening balances for the next year. The failure to ensure that this is so will result in subsequent years being returned for correction if such errors are found.
The question is: Who is responsible for this highly unsatisfactory state of affairs? To begin with, significant sums of money are released every year through the budget process to assist these municipalities financially, especially in relation to their capital programmes. For example, $65 million was paid out to the six municipalities in 2012. One would therefore expect that our Parliamentarians would demand proper accountability for funds previously allocated before approving new sums for the municipalities. Regrettably, this has not been the case, and it is evident that financial accountability is not one of our strong points.
It is also obvious that the municipalities are not treating the issue of financial accountability seriously. The law requires financial statements to be submitted for audit within four months of the close of the financial year. Although some submissions were made, it is clear that they not were done within the deadline since multiple years were submitted at the same time. In addition, municipalities have a duty to follow up with the Audit Office to ensure that: the audits are expedited; the related reports are issued; and the Minister of Local Government is informed of any difficulties so that he can apprise the National Assembly.
The Auditor General has to accept some measure of blame for this state of affairs. He should not have accepted financial statements for several years at the same time. That apart, if he has resource constraints to execute these audits, the Auditor General has a duty to request additional resources via the Public Accounts Committee. Alternatively, he could engage the services of chartered accountants in public practice to assist him. It is evident that the Audit Office has been paying passing interest when it comes to ensuring financial accountability of the six municipalities.
Next week, we will discuss, among others, the situation in respect to the 65 NDCs that from all appearances is worse, compared with the municipalities.
