The storage and distribution of fuel at the National Drainage and Irrigation Agency (NDIA) was characterized by mismanagement and fraud, practices so corrupt that the Minister of Agriculture should not have continued to have confidence in management, according to the report of a forensic audit.
According to the audit of the operations of NDIA over the period November 1, 2011 to May 31, 2015 “the unreliability and inaccuracies within the Fuel Inventory System [were] obvious and promote fraud.”
The audit conducted by Nigel Hinds Financial Services stated that fuel values were manipulated and the Head of Administration and Human Resources—to whom the Fuel Controller and his staff submitted monthly reports—claimed he lacked the necessary expertise to check the accuracy of these reports.
According to the report, fuel purchases represent a significant cost to NDIA, with $1.4 billion being spent on fuel between January 1, 2011 and December 31, 2014
The report notes that a comparison of the Fuel Reconciliation Monthly Summary generated by the Fuel Controller Garfield Roberts and the Machine Status report generated by Avinash Singh, Head of the Mechanical Division for the period 2013 to mid-2015 showed that for a sample of 18 heavy-duty machines fuel was issued to machines classified as not working or out of service.
“The reports show that for the period referenced, the machines worked a total of 3,812 hours and utilized a total of 47,897 litres of fuel. This amounted to approximately $9,709,755 in fuel losses for the few months sampled each year,” the report stated.
It noted that while the Fuel Controller and his staff prepared monthly reports titled Fuel Reconciliation Monthly Summary for Equipment for submission to the Head of the Administration and Human Resources no one questioned the accuracy of the reports.
The reports which show the total fuel purchased and fuel issued monthly with a number of subsidiary sheets attached maintained the same format from January 2012 to June 2015. It was noted that while the report showed an opening inventory for several months in 2013 and 2014 to which purchases of fuel were added and issues were deducted, but no closing Inventory was shown in the report. This is another issues over which no one expressed any concern.
Further, during that period NDIA did not have storage facilities for fuel and auditors were told that the fuel was stored in contractor’s tanks, with the same contractors being used to transport the fuel. In 2014 NDIA started its construction of storage tanks at Lusignan, but there were not operational as at July 31, 2015. Auditors report not receiving proper explanations as to how fuel held in contractors’ tanks was accurately monitored.
More importantly, the report stated, for years 2013 and 2014 it showed that 130,824 litres and 171,779 litres respectively of fuel were issued – more than what was actually available.
“There is evidence that the fuel clerk manipulates his figures,” the report stated.
Also noted was that a number of unauthorized vehicles received fuel with no proper explanations for the years 2011 to 2014.
A comparison of the list of vehicles in the possession of NDIA with those shown by the Fuel Controller as receiving fuel showed that a total amount of 14,060 litres of gasoline was issued to those vehicles which amounted to $2,918,828.
“This matter of issuing fuel to unauthorized vehicles was raised by the Auditor General in his report dated August 21, 2013 to Mr George Jarvis, PS in the MoA in which the Auditor General alluded to 24 motor vehicles receiving fuel valued at $1,534,568 for year 2012 Audit; consistent with our findings for 2012,” the report stated adding that the Field Auditor Reports dated April 12, 2012 and September 26, 2012 which was addressed to the CEO referred to a major breakdown of Internal Control over the receipts and issues of fuel which lend itself to fraudulent practices.
Though the field auditor identified a number of weaknesses and made recommendations, none of the recommendations were implemented, according to the report.
The auditor, in the report, listed a series of other pieces of evidence which show that the management was aware of the issues surrounding the mismanagement of fuel.
It stated that the Auditor General’s noted on page 3 of his 2013 Report that log books presented were not properly written up by the operators, nor was there evidence that the operators were monitored by NDIA; the absence of bulk storage facility compounds the mismanagement of fuel storage at NDIA resulting in the contractors storing bulk fuel; work orders for the issue of fuel were not properly prepared by contractors; and a stock ledger and internal stores requisitions not being maintained to record and account for the issues of fuel to contractors. Also, there was no reconciliation of the usage of fuel and amounts received by contractors to accurately disclose whether the full amount was utilized efficiently.
Additionally at the two board meetings held on March 2013 and June 2013; concerns were raised about the mismanagement of fuel by members particularly Chairman of Region 4.
CEO Lionel Wordsworth was subsequently tasked with the responsibility of developing standard operating procedures for the management of fuel and lubricants. And though he developed a draft document which outlined in detail the procedures for procurement of fuel and lubricants to collection of fuel and lubricants by NDIA vehicles with prescribed forms attached this document was not presented to the board for discussion and approval prior to the life of the board coming to an end in June 2015.
The auditors conclude that “it is incomprehensible that given the cost of fuel and lubricants to this entity, members of senior management of NDIA and the permanent secretary… allowed this situation to continue unabated.
“It is not difficult for one to conclude that poor management of fuel and lubricants over the years contributed to corrupt practices which resulted in significant cash losses to the entity. The subject minister for this entity ought not to have continue to have confidence in the present management given the bad practices that occurred.”
They identified a need for input from members of the finance, mechanical and civil engineering departments or even an outside consultant in a proper evaluation of the fuel report since one has not been done to date, to determine if it is workable and if the report eliminates the weaknesses identified.
