Since my last article on the above subject, two developments took place. The first is a letter from the AFC Leader to the President advising him of AFC’s intention to file a no confidence motion on the Government. This was because the latter was spending billions of dollars from the Consolidated Fund without parliamentary approval and in defiance of the National Assembly’s wishes.
The second is in connection with the AFC Leader filing a complaint with the Police against the Minister of Finance in relation to what he deemed illegal expenditure authorized and incurred in contravention of Article 217 of the Constitution and Section 16 of the FMA Act.
Letter to the President
In his letter to the President, the AFC Leader expressed deep concern at the unauthorized and unconstitutional withdrawals from the Consolidated Fund by the Minister. He specifically referred to Financial Paper 1/2004 dealing with excess expenditure totalling $4.554 billion that the Minister had authorized over and above what was contained in the Appropriation Act 2014.
The AFC Leader indicated that his Party is of the view that the options for lawful and constitutional alternatives have rapidly decreased and therefore it had no other alternative than to initiate a vote of no confidence against the Government.
The President’s response
The President stated that he welcomed the AFC’s proposal, as it would allow that party to explain its actions to the people of Guyana. He specifically referred to AFC’s failure to support a number of projects that the Government has initiated and cited the Amaila Falls Hydro Project, the Marriott Hotel and the Specialty Hospital. He also referred to the AFC’s failure to support the amendments to the Anti-Money Laundering Act.
The President contended that the AFC’s concern was baseless and spurious as the Government’s actions are expressly authorised and permitted by both the letter and spirit of the Constitution. He indicated that he was prepared to face the consequences of a vote of no confidence.
Letter of complaint with the Police
The AFC Leader’s complaint to the Police was that the Minister (and other officials) misused, misapplied, and improperly disposed of public monies totalling $4.554 billion in contravention of Sections 48 and 85 of the FMA Act. He contended that the above amount was expended illegally since there was no legislative authorisation for spending this sum.
The AFC Leader argued that the purpose and intent of the Article 217 is that ultimate control of public moneys resides in the Legislative Branch and that the Assembly, made up of duly elected members, must have a say on appropriations and spending of public monies. Control of the public purse is a fundamental characteristic and value of parliamentary government established under the Constitution. He further asserted that since constitutional provisions are by their nature general and invariably attempt at capturing principles and precepts, there is need for accompanying legislation to give more specific and direct instructions to ensure that the letter and spirit of the Constitution are met. One such legislation is the FMA Act that contains provisions for preventing and counteracting misappropriation by unauthorised, fraudulent and other means. It also provides for a number of offences that may be committed by persons who fail to act in accordance with its provisions.
The AFC Leader cited Section 16 of the Act as a core provision that wholly endorses Article 217 and referred to its marginal note – “No expenditure without appropriation” – as most instructive. This paramount principle is further emphasized in the use of the Contingencies Fund to meet urgent expenditure for which no provision or inadequate provision exists and which cannot be postponed without jeopardizing the public interest. In this case, funding is limited to two per cent of the approved budget of the previous year, and the Minister is required to seek covering legislative approval as soon as is practicable.
The AFC Leader stated that to make it all the more emphatic and unequivocal, the existence of the rule of “no expenditure without appropriation”, is the reason for the provisions contained in Sections 48 and 85 of the FMA Act. Section 48 states that a Minister or official shall not in any manner misuse, misapply, or improperly dispose of public monies. In addition, in accordance with Section 85, an official who knowingly permits any other person to contravene any provision of this Act is guilty of an indictable offence and liable on conviction to a fine of two million dollars and to imprisonment for three years. I might add that Section 49 provides for liability for loss of public moneys. If a Minister or official has caused or contributed to that loss through misconduct or through negligence or serious disregard of reasonable standards of care, that Minister or official shall be personally liable to the Government for the amount of the loss. A loss includes a deficiency.
The Minister’s actions vis-à-vis the Constitution and the FMA Act
Article 218 (3), which the Minister used as the basis for authorizing withdrawals from the Consolidated Fund, reads as follows:
If in respect of any financial year it is found –
(a) that the amount appropriated by an Appropriation Act for any purpose is insufficient or that a need has arisen for expenditure for a purpose for which no amount has been appropriated by that Act; or
(b) that any moneys have been expended for any purpose in excess of the amount appropriated for that purpose by the Appropriation Act or for a purpose for which no amount has been appropriated by that Act, a supplementary estimate or, as the case may be, a statement of excess showing the sums required or spent shall be laid before the Assembly by the Minister responsible for Finance or any other Minister designated by the President.
Section 218 (3) (a) refers to a situation where moneys have not yet been expended. However, if during the execution of the budget it is discovered that additional funds are needed, a supplementary estimate has to be laid in the Assembly requesting prior approval to incur the additional expenditure. Since Financial Paper 1/2014 deals with expenditure already incurred, Section 218 (3) (a) is not applicable.
Article 218 (3) (b) refers to two situations. The first is where moneys were expended for a purpose in excess of the amount appropriated while the second relates to a situation where no amounts have been appropriated. The first situation is also not applicable since the excess expenditure contained in Financial Paper 1/2014 relates to situations where there were no provisions in Appropriation Act 2014.
The Minister has used the second part of Article 218 (3) (b) as his justification for causing excess expenditure to be incurred. However, the key words in Article 218 (3) are “If in any financial year it is found”. This suggests that the incurrence of any excess expenditure for which there was no approval should not be a conscious or deliberate act. Rather, such excess expenditure would have had to be discovered or found during the execution of the budget. Once this happens, the role of the Minister is restricted to bundling up all such excess expenditure and presenting a statement of excess for the covering approval of the Assembly. Article 218 (3) does not contemplate the Minister taking proactive action to authorise withdrawals from the Consolidated Fund where there is no appropriation.
In accordance with Article 219 (2), where a statement of excess is laid before the National Assembly and is approved by the Assembly by resolution, that resolution shall be the authority for the issue of sums in question from the Consolidated Fund and shall be included in a supplementary Appropriation Bill. This article therefore emphasizes and reinforces the rule of “no expenditure without appropriation” contained in not only in Article 217 of the Constitution but also Section 16 of the FMA Act.
Conclusion
The Minister of Finance has authorised withdrawals from the Consolidated Fund to meet expenditure for the period 1 January to 16 June 2014 and as a result caused excess expenditure totalling $4.554 billion to be incurred. However, the Appropriation Act of 2014 does not provide for such expenditure, and the National Assembly has specifically disallowed the proposed expenditure during the consideration of the 2014 Estimates.
The Minister claimed that Article 218 (3) of the Constitution allows him to authorize withdrawals from the Consolidated Fund without parliamentary approval where there has been no appropriation. This is not true, as this article only covers a situation where it is found that expenditure was incurred for which there has been no appropriation. Article 218 (3) contemplates no role by the Minister in proactively authorizing withdrawals from the Consolidated Fund. It is an after the event scenario where during the execution of the budget a discovery of excess expenditure has been made for which there was no provision. The Assembly has to sanction the expenditure first in order to trigger the Minister’s action, not before.
The excess expenditure contained in Financial Paper 1/2014 is as a result of a deliberate act on the part of the Minister not catered for under Article 218 (3). It also breaches the fundamental principle of “no expenditure without appropriation” as contained in Article 217 of the Constitution and Section 16 of the FMA Act. The Minister would therefore be personally liable under Sections 48, 49 and 85 of the FMA Act, should the Assembly disapprove of all or part of the excess expenditure contained in Financial Paper 1/2014.
