There is far too much uncertainty surrounding the scrap metal trade and the law governing it is severely outdated, an investigation into the Scrap Metal Unit has said.
“The law and the trade need to be completely revamped after consultation with key stakeholders. However, the Government needs to put interim measures in place as the trade is at a standstill while export is temporarily banned,” the report by accounting firm Ram & McRae says.
“There appears no consistent policy towards the trade with the Government opening and closing the trade at will. It is unclear why responsibility for the trade was transferred to the Central Housing and Planning Authority and why no Export Duty is paid under the Customs Act. In our opinion there is a high probability of revenue leakage but because of the inadequate reporting, any estimate is merely speculative,” the report, which was presented to Minister of Finance Winston Jordan in December said. The report was only made public last week.
“There seems a total lack of coordination between and among the four agencies involved: the Guyana Police Force, the Ministry of Business, the Scrap Metal Unit and the Guyana Revenue Authority,” it added.
The report said contrary to laid down procedures, it noted instances where containers were packed in yards not legally approved. “We also noted that there is no inspection by any engineer attached to the Unit,” the report said. “The requirement that the movement of scrap metal from collection yards to licensed yards be observed is not being complied with. Inspectors and enforcers would visit unlicensed yards but we were informed that they do not observe the transfer of metals to licensed yards,” it added.
The report said that the Customs Act does not specifically exempt from Export Duty any export of scrap metal in which case the Act requires that the general rate of 1.5% should be applied. However, while the Guyana Revenue Authority (GRA) is involved in the process of facilitating export, it did not collect “export duty” on scrap metal exported during the period under review. Had the rate of 1.5% been applied, the export duty for the period would have been $70.5 million, it said.
It said apart from the uncertainty about the basis and nature of fees and charges there was also no agreement between the shipments made as reported by the Ministry of Commerce (the licensing agency), the GRA and Guyana Metal Recyclers Association (GMRA) for each and every year under review.
Meantime, the report noted that Cabinet on January 31, 2012 approved the purchase of one vehicle for the operation of the Scrap Metal Unit. Without requesting further approval from Cabinet, the CHPA Board of Directors approved the purchase of an additional vehicle for $6.5 million. “We were unable to physically verify a motor vehicle listed on the asset register PPP 12. Management indicated that this vehicle is at Office of the President,” the report said.
It also said that on March 31, 2015, the Unit paid Impressions $2.6 million for Mashramani items but no Tender Board approval was seen for this activity. “As far as we are aware, the Scrap Metal Unit did not participate in the Mashramani Celebrations and the expenditure may at best have been for the Ministry of Housing. This expenditure would therefore have been in violation of the Appropriation Act,” the report said.
It also said that during the period of operation, the Unit made monthly payments to Inspectors, Enforcement Officers, Administrator and drivers totalling $43.1 million without any deduction of PAYE and NIS contributions. “It is the obligation of the employer to deduct and remit the taxes and NIS contributions payable,” the report pointed out.
It said that among those previously employed were Solomon Merai, “the former controversial Assistant Commissioner of the Guyana Police Force” who retired December 31, 2011 and Rajput Narine, who was named as a former bodyguard of former Attorney-General Anil Nandlall.
The report also said that in a strict sense, no audit of the Unit has ever been properly authorised by the Auditor General as required by the Audit Act nor was a proper audit executed.
