The year 2015 is about to come to a close. It is a time when business organisations are conducting physical stocktaking exercises to identify and value their inventories, other assets and liabilities for the purpose of closing their books and preparing their financial statements. In this way, they would be in a position to determine their financial performance for the year as well as their financial condition or state of affairs at the end of the year. External auditors will also be busy observing the inventory counts and well as carrying out various tests in preparation for the submission of draft financial statements. It will be a while for the process to be completed and the reports of the auditors issued. Most businesses, however, complete their financial reporting and audit in early April in order to meet the tax deadline, after which there will be the annual general meeting of shareholders and the declaration of dividends. Within a matter of months of the close of the financial year, the financial accountability cycle is completed.
Contrast this with what prevails in Government. The Accountant General has until 30 April to submit draft financial statements on the public accounts to the Auditor General for audit. The latter has until 30 September to complete the audit and to submit his report to the Speaker. However, the National Assembly is in recess around this time, and it is not until it resumes its sittings that the report will be laid in the Assembly, and hence made public – the ultimate shareholders of government. Unlike what prevails in the private sector, the process does not stop there. The Public Accounts Committee (PAC) has to get its act together to examine the public accounts and the Auditor General’s report, and issue its own report to the Legislature. Following the issuing of the PAC report, the Government has to prepare a Treasury Memorandum setting out what actions it intends to take or has taken in relation to the findings and recommendations of the PAC. Unfortunately, the PAC is still deliberating on the 2010 public accounts. Therefore, it will be years before the accountability cycle for 2014 to be completed. How unfortunate!
Status of governance, transparency and accountability at the beginning of the year
At the beginning of this year, this Column ran four articles entitled “2014 an annus horribilis for governance, transparency and accountability”. In these articles, we discussed a number of topics including: (a) the prorogation of Parliament; (b) delay in holding Local Government elections; (c) the incurrence of excess expenditure totalling $4.544 billion; (d) non-establishment of the Public Procurement Commission; (e) delay in laying the Auditor General’s 2013 in the Assembly; (f) the work of the PAC; (g) need for revision of the accountability cycle; (h) amendments to the Anti-Money Laundering and the Countering of the Financing of Terrorism (AML/CFT) Act; and (i) corruption and the Integrity Commission. Close to a year later, we now revisit these issues and assess the extent to which progress has been made.
Prorogation of Parliament
We began the year with the prorogation of Parliament still in progress. On 10 November 2014, the day the Assembly was due to resume its sittings after a two-month recess, the President prorogued Parliament to stave off a vote of no confidence in the Government. The matter giving rise to the vote of no confidence was the Minister of Finance’s defiance of the wishes of the Assembly in relation to budgetary allocations for 2014, thereby incurring excess expenditure totalling $4.554 billion.
Under intense pressure from various stakeholders, including the international community, the President was forced to end the prorogation. However, instead of subjecting his Government to the scrutiny of the Assembly in relation to the matter giving rise to the proposed vote of no confidence and to provide it with the opportunity of defending itself, the President chose to dissolve Parliament. This action paved the way for fresh elections which were held on 11 May 2015 and which saw a change in Administration. Democracy at the national level was restored, and the 11th Parliament met for its first sitting on 10 June 2015.
Local government elections
The last Local Government Elections were held in 1994 although the law requires them to take place every three years. Therefore, for 18 years, citizens were denied their constitutional right to determine who amongst them should be responsible for managing the affairs of their communities. When the previous Administration was not satisfied with the performance of elected members of the Local Democratic Councils and Municipal & District Councils, it replaced them by handpicked loyalists. It is public knowledge that local government administration is in a state of complete disarray, especially as regards financial accountability which has been the subject of several articles in this column.
The new Administration has honoured its commitment to hold Local Government Elections as early as possible and has passed several pieces of legislation to facilitate the conduct of such elections. The elections are due to take place in three months’ time. It would be a most welcome development and indeed a victory for those who have fought for the restoration of local democracy. It is indeed an irony, a serious indictment, that those who fought for the restoration of democracy at the national level in the late 1980s and early 1990s were the very ones who used their positions in authority to suppress the will and aspirations of the citizenry for over 18 years as they relate to local governance.
Incurrence of excess expenditure of $4.544 billion
It will be recalled that the Assembly had reduced the 2014 Budget by $36.747 billion based on a ruling of the Chief Justice. The then Minister of Finance went ahead in defiance of the wishes of the Assembly and restored parts of the Budget. As a result, excess expenditure totalling $4.544 billion was incurred with Parliamentary approval for the first half of 2014. When the related financial paper was presented to the Assembly seeking covering approval of the expenditure, the Assembly declined to do so, and a motion for a vote of no confidence in the Government was tabled.
Soon after the Assembly went into recess, and when it was about to reconvene on 10 November 2014, the President prorogued Parliament. In January 2015, the Chief Justice made a further ruling which stated that the Minister’s action was a violation of the constitution. To date, no sanctions have been imposed on the Minister. Meanwhile, it will go down in history that the public accounts for 2014 reflected unauthorized expenditure totalling $4.544 billion. It is not within the authority of Cabinet to restore parts of the budget that the Assembly specifically disallowed, notwithstanding the impression the Auditor General gave in his report that this practice is allowable.
Non-establishment of the Public Procurement Commission
This Column has written ad nauseam about the failure of the previous Administration to activate the Public Procurement Commission because of its reluctance to relinquish the role of the Cabinet of ratifying all contracts in excess of $15 million. It will be recalled that in 2001, the Constitution was amended to provide for the establishment of the Commission “to monitor public procurement and the procedures therefor to ensure that the procurement of goods, services and execution of works are conducted in a fair, equitable and transparent manner…” The Commission is to consist of five members with expertise in procurement, legal, financial and administrative matters. They are required to be independent, impartial and shall discharge the Commission’s functions fairly.
We started the year with the continuation of the stalemate between the Government and the Opposition, with civil society continuing to add its voice of condemnation. The PAC has since initiated a process whereby the public is invited to make nominations by 23 December 2015. It will soon begin reviewing the list of nominations with a view to coming up with a shortlist of candidates for interview and selection. The names of the five selected candidates will then have to be ratified by two-thirds of the elected members of the Assembly, after which the President will make the appointment. Hopefully, we would be able to have the Commission in place by February 2016.
Delay in the laying of the 2013 Auditor General’s report in the Assembly
Although the Auditor General had submitted his 2013 report on the public accounts to the Speaker within the statutory deadline of 30 September 2014, the report could not have been laid in the Assembly because of the prorogation of Parliament. This, coupled with the fact that there was no functioning Parliament in place, might have led the European Union (EU) to suspend its long-standing budgetary support to the Government.
With the convening of the Assembly under the new Parliament, the Auditor General’s report was laid in the Assembly in July 2015. The report for 2014 was also laid in the Assembly in October 2015. It will also be recalled that there was no budget in place for 2015 when Parliament was dissolved. That budget was presented in the Assembly in August 2015 and enjoyed relatively smooth passage. With normalcy restored in terms of a functioning Parliament, a budget in place and the reports of the Auditor General laid in the Assembly, the EU was eager to resume its budget support to the Government. Accordingly, it engaged the services of this Columnist to: (a) carry out a review of the Public Financial Management Action Plan agreed upon by the previous Administration and the EU; and (b) develop and review a Budget Transparency Action Plan. Both exercises have since been completed and the related report issued to the EU. These two plans can be accessed through the Government’s websites.
-To be continued-
