Cabinet has recommended that Chief Executive Officer (CEO) of the Georgetown Public Hospital Corporation (GPHC) Michael Khan proceed on annual leave to facilitate a review of the findings of the forensic audit into the institution.
Although well-placed sources have revealed that the recommendation for Khan to proceed on annual leave came from Cabinet, when contacted for a comment yesterday, Khan told Stabroek News that he was unaware of the recommendation. Khan had previously been sent on leave to facilitate the audit.
The embattled CEO came under more scrutiny recently after the findings of a recent audit into the operations of the hospital recommended that he be sanctioned for allegedly cheating the Guyana Revenue Authority (GRA) of over $1.4 million in income tax.
A special investigation into financial operations and functioning of the GPHC over the period January, 2012 to May, 2015, conducted by the accounting firm Ram and McRae, found that Khan received a responsibility allowance from January, 2011 to September, 2014 and that it was paid without the deduction of taxes, in contravention of the Income Tax Act.
According to the report, Khan instructed the hospital’s Director of Financial and General Services to pay him the allowance tax free. This directive, according to the report, is both “a serious breach of the law and an abuse of his authority, warranting some sanction by the Board of Corporation,” since “Khan must have been aware that the Board made no decision on the tax implications of the payment to him of a responsibility allowance, that the payment by law is subject to Pay As You Earn (PAYE), and that the tax is deducted from responsibility allowances paid to other members of staff of the corporation.”
It explains that after a request was made by Khan, the hospital’s Board of Directors decided to pay Khan a responsibility allowance of $100,000 per month for managing the Department of Administrative Services after the transfer of Leslie Cadogan to the New Amsterdam Regional Hospital.
Over the period of January 1, 2011 to September, 2014, Khan was paid $4.4 million, which would’ve attracted taxes of approximately $1.4 million since such payment falls within the definition of gains or profits from employment and is therefore taxable under the Income Tax Act on the PAYE basis.
However, in a handwritten note affixed to the memo to the Director of Financial and General Services, Khan instructed that the allowance be paid tax free.
Khan has been caught in the middle of conflicting instructions from Public Health Minister Dr George Norton and Chairman of the GPHC Board Dr Carl `Max’ Hanoman. Khan had been told by the Chairman to resume work as the audit had not found anything adverse against him. Norton had countermanded this and told Khan the findings had to be evaluated.
The showdown between the Minister and the Chairman has raised questions about where final authority lies in relation to board matters.
