While the release of the forensic audits into a clutch of state agencies and related bodies is revealing quite a lot about poor governance and dodgy financial practices under the PPP/C administration it is also presenting questions about the modus operandi of the APNU+AFC government.
What exactly is the administration’s plan for the forensic audits? Quite clearly the audits were launched with the intention of ascertaining the true financial state of these entities and whether there was patent evidence of fraud and other untoward practices. Once the audits were completed there was a legitimate expectation of swift action to arrest financial decline and address any overt transgressions. Worryingly, this is not the case. One of the more recent releases was the audit report of the National Frequency Management Unit (NFMU) done by Ram and McRae which was presented to the Ministry of Finance on September 18, 2015 but only published on the Ministry’s website on Friday, eight months later. What transpired during this period? Was there an attempt to right serious deficiencies such as large uncollected amounts from various broadcasters and cable companies?
Whereas there was an eight-month delay in the release of the NFMU report, the Ministry on Friday also released the audit of the Guyana Marketing Corporation which was submitted to the ministry on April 11, 2016, just over a month old. The government and the Ministry of Finance must get their act together. If an audit report is being released after eight months like the NFMU’s, it should have been issued with an action sheet of steps taken based on the recommendations of the auditors and the outcomes. The government cannot be so obtuse to believe that the public would not be incensed that these costly audits are yielding no immediate improvements, changes or charges. The time has come for the Ministry of Finance to issue a detailed statement on the audits and the actions that have been recommended otherwise cynics will continue to believe that there is a selective release to divert attention from problems facing the administration.
Now to the NFMU audit. The findings of the Ram and McRae audit expose the ad hoc management of important state assets like the spectrum. Fees for spectrum and other services were not assessed on a fixed basis, were negotiated and large amounts not collected. Large sums have been outstanding from well-established broadcasters with feeble to no attempts to collect. The affairs of the NFMU clearly need an immediate shake-up and personnel changes. Legislative amendments are required immediately to rectify anomalies and create a comprehensive framework that addresses all aspects of the communication sector.
One of the most damning findings of the audit relates to two multifaceted companies E-Networks and Quark Inc. It is clear from this audit report and earlier developments that these two companies were elevated above all others by former President Jagdeo and given carte blanche to do as they please in extravagant contravention of established norms of good government. This conduct exposes the deep hypocrisy evident today from the inner recesses of the PPP on any and everything and particularly from Mr Jagdeo who was the lead engineer of these practices. Both of these companies were allowed to behave as if they were not required to pay fees for valuable spectrum use and when demands were made they were never followed up resulting in large amounts being unpaid and other services not being charged. This conduct violated normative business practices, was anti-competitive and created a vastly uneven playing field for others operating in the sector. Immediate steps must be taken to ensure that both of these companies make good on outstanding payments and are properly permitted and licensed to undertake the services they are providing to the public.
The untoward conjunction of the former President’s interests with these two companies was evident as the end of Mr Jagdeo’s second term in office approached and there was a frenzied attempt to kindle interest in a third term for him. It never gained critical mass or traction. One of the first overt PPP proponents of a third term for Mr Jagdeo was the late Mr Reepu Daman Persaud, a longstanding senior executive of the party, government minister and the father of the owner of E-Networks. Mr Persaud’s backing of Mr Jagdeo was quite uncharacteristic and out of sync with the party and other leading members, including the late President, Mrs Jagan. The owner of Quark, Mr Brian Yong was also known to be one of the advocates of a third term for Mr Jagdeo and had been associated with billboards to this effect and other paraphernalia. This underlined quite well the malady of political patronage trumping fair governance and the findings of the audit bear this out.
The auditor said that a review of files showed that E-Networks and Quark Inc were not invoiced on a timely basis and ignored NFMU’s invoices for long periods. The audit report said that the PPP/C administration did not alter the current fees structure to include a method to calculate spectrum fees for cable TV providers and the NFMU did not invoice or request payments for frequency spectrum used by both entities to broadcast cable TV. Following its request, the auditor said that the NFMU estimated that E-Networks and Quark Inc owed at December 31, 2014, $31M and $29M, respectively.
According to the audit report, in 2002 Mr Yong was granted a Post and Telegraph licence which permitted the provision of internet services only. Subsequently, it said, internet (Broadband) services were provided to the local population in accordance with the Post and Telegraph licence held. “The first invoice sent by the NFMU to Quark Inc. was dated July 29, 2004 for the period April 1, 2002 to December 31, 2004. Prior to this, no invoice was sent to Quark Inc. even though the Company was utilising spectrum to provide internet services. Mr. Yong was required to pay $2,235,000 for the period April 1, 2002 to December 31, 2004,” it noted. Of the amount requested, $1,200,000 was paid on September 14, 2004 and $235,000 on November 29, 2004. A balance of $800,000 is still outstanding, it said. This just a sampling of what transpired.
The auditors said they were advised that in December, 2010, former President Jagdeo granted Quark Inc. permission to broadcast television signals on the much sought 2.5 GHz band, which allows for cable TV operations and internet-related services. “We are not aware, nor were we provided with any evidence that the President had any such authority. Additionally, since 2010, Quark Inc. also known as Movie Star has been providing cable TV and wireless internet services,” it said.
“Also, our reviews and enquiries revealed that Quark Inc. did not pay any spectrum fees to the National Frequency Management Unit for the 2.5 GHz band used to broadcast for the period 2010 to 2015. It was explained that the reason is that the NFMU did not invoice Quark Inc. since the law does not provide a method to calculate fees for cable TV operators,” the report added.
To compound the matter, it said Quark Inc. has made no payment to the Guyana National Broadcasting Authority since it is not a licenced broadcaster.
According to the report, E-Networks Inc, which was established in April 2004 to provide wireless internet service, was issued four warnings by the NFMU extending from April 4, 2004 to February 18, 2007 in respect of operating telecommunications equipment to provide internet and television service without ownership of the relevant licences. Throughout that period, it added, E-Networks ignored the requests for compliance from the NFMU and did not properly apply for a Post and Telegraph licence until December, 2007. No action was taken to ensure compliance and no payments were made to the NFMU until December 4, 2007, it further said.
In addition to E-Networks providing wireless internet services to customers without being licensed to do so during the period 2004 to 2007, the report said it was broadcasting cable TV without ownership of a broadcasting licence during 2006 to 2012; and it was not billed spectrum fees for the 2.5 GHz band used to supply cable TV during 2010 to 2013.
These findings crystallise the extent of the depravity of PPP/C governance. What is the APNU+AFC administration going to do about this and how will it insulate itself from such practices?
