Contributors who have been submitting monthly returns but have not been paying over deductions and their portion of contributions owe the National Insurance Scheme over $2.5 billion.
This is according to the report on the Forensic Audit into the operations of the entity which was released by the Ministry of Finance on Wednesday.
The audit which was tasked with among other things carrying out “a comprehensive financial systems review” noted that the Guyana Sugar Corporation (GUYSUCO) is the largest defaulter with an indebtedness of over $1.5 billion.
The report by auditor, Ramesh Seebaran, explains that though a 2011 actuarial review reported that 40% of the informal sector workforce is not contributing to the Scheme, the current system is not designed to determine the actual or near actual contributions from employers/self-employed/employees that are not registered.
“During discussions with the Operations Manager (OM) and visits to Branches across the country it was reported that the Scheme has limited human resources to cover the areas that fall within the jurisdiction of each office. [Further,] the Operations Manager informed that no report was ever done on the potential loss of contributions from self-employed and employees not contributing to the Scheme,” the report notes.
Further, former Chair-man of the Board, Cabinet Secretary Dr Roger Luncheon is recorded in the Board of Directors (BODs) minutes dated March 30, 2015, as emphasizing that “No records, no Debts”, meaning if there are incomplete records and/or inappropriate systems in place, the Scheme cannot take legal actions against defaulters.
This comment is recorded against the background of a Scheme which currently does not have a written policy on Debt Management. A review of the BODs minutes, noted that there were ongoing discussions in 2014 to draft a Debt Management Policy. These discussions led to a document referred to as the ‘Procedure for Debt Management Unit’ being prepared in August 2014 but to date it has not been approved for implementation.
Currently, the report notes, “the Debt Management Department consists of four employees who are overseen by the OM. This department also deals with refunds to Contributors and as a result sufficient attention is not placed on debt collections because addressing refunds is easier to deal with than to pursue defaulters.”
It was also observed that tasks performed by this department are done manually with considerable amounts of paperwork, an approach which reduces efficiency and the quality and quantity of output.
The Audit recommends the establishment of both a proper Debt Management Unit with adequate staff and resources to effectively pursue defaulters and a legal department since at the moment, management only engages lawyers for significant cases. This practice severely hampers its debt collection abilities.
“Presently, the unit is still sending reminders to defaulters with the hope that they will pay. This has been an ongoing situation which has deteriorated and has allowed Contributors to feel that management will either do nothing more or cannot move against them,” the report said.
The report stresses the inability of the Scheme’s management to maintain an accurate/comprehensive listing of receivables noting that they have never been able to do so “from the inception of the Scheme.”
It notes that “the Operations Manager presented a list of receivables totaling $1,091,172,705 at August 2015 which does not include GUYSUCO whose indebtedness is $1,574,283,889 for the period September 2014 to April 2015.”
The list however included several companies, many of which have ceased operations or are no longer in existence. Also included are companies/businesses/ individuals who for various reasons have not been paying their contributions.
“Some of these balances date back to 1970,” the report says.
It also notes that several public individuals are including in the list. These are opposition parliamentarians Pauline Sukhai, the former Minister of Amerindian Affairs, who has outstanding contributions totaling $1.6M, Mohabir Anil Nandlall, the former Attorney General who owes NIS $4.4M and Minister of Natural Resources Raphael Trotman with a debt of $554,850.
According to the report, auditors were able to identify 42 debtors who each owe in excess of $4M. The total sum owed by these entities is $686,781,422.
Also noted was debt recorded in the Scheme’s audited financial statements for 2013. This debt equalled $168M, part of which dates back to 2001.
“Included in this amount, is a balance of $116M owed by the Ministry of Finance and an amount of $38M which represents dishonoured cheques from contributors. Further, over $20M of the $38M are in excess of five years. Management has advised that these balances were referred to the Guyana Police Force but were sent back to the Scheme to be dealt with under their debt recovery policy,” the report states, advising that the BOD needs to determine whether the sundry receivable balance should not be impaired.
