Taking all of the figures supplied by the government, the cost to date of the controversial D’Urban Park project is $1.37b and this doesn’t include goods and services that state institutions might have provided, according to former Auditor General, Anand Goolsarran,
In his accountability column in Wednesday’s Stabroek News, Goolsarran also flayed the government for stating it would not be meeting the full cost of services provided by contractors for this state facility. The former long-serving auditor general further pointed out how the company which was originally overseeing the works, Homestretch Development Inc (HDI) may have been in breach of several key laws including the Procurement Act.
The questions swirling around the project has seen the current Auditor General Deodat Sharma telling Stabroek News that he will be undertaking a forensic audit of it.
Goolsarran noted that during the consideration of the 2017 Estimates, the public learnt that suppliers and contractors were owed approximately $798 million and that the Government would transfer the sum of $500 million to HDI to liquidate debts and no more. Minister of Finance Winston Jordan subsequently said that the Government could not afford more, and that any aggrieved contractor was free to sue the company.
“This is an extraordinary statement that sets in train a dangerous precedent since the Government, through whatever mechanisms it chooses, can enter an agreement and refuse to honour its obligations. It is legally, morally and ethically wrong to deny payments to suppliers or contractors who, in good faith, have supplied goods and services, or have satisfactorily executed works.
The Government must also accept that it has failed badly in the effective planning and execution of the Project and in ensuring that reasonable estimates of the associated costs were reflected in the National Budget, notwithstanding that some of the costs were met from private contributions in cash and in kind”, Goolsarran declared.
Goolsarran noted that it was also learnt that for the fiscal year ended 31 December 2016, the sum of $479 million was allocated to the Project. Further, the Minister of Public Infrastructure has indicated that amounts totalling $27.7 million were received as cash donations while contributions in kind were $33.956 million. Goolsarran added that the Auditor General also reported that an amount of $36.599 million was spent on the Project from the Lotteries Account despite the fact that in July 2015 the Minister of Governance had announced that the ‘Lotto’ proceeds would be paid directly into the Consolidated Fund and that the Minister of Finance would issue the relevant order. The total cost of the D’Urban Park project would therefore amount to $1.375 billion exclusive of an undetermined value of goods and services that several State institutions might have also provided, he said.
Goolsarran asked who the auditor of HDI was and how the person was appointed, considering that HDI was incorporated under the Companies Act 1991. He said any such appointment must be in conformity with the Act which provides for a company’s auditor to be a member of the Institute of Chartered Accountants of Guyana and holding a practising certificate from that body. Further, the auditor is to be appointed by shareholders at the first annual meeting of shareholders and at each subsequent annual meeting at which the audited accounts are to be laid. HDI is also required to file annual returns, including its audited accounts, with the Registrar of Companies. However, Goolsarran said that little is known of the company except for the names of directors and its registered address which is a private residence.
Goolsarran said that it is also not known whether the company is an entity in which controlling interest vests with the State as Sections 344-347 of the Companies Act impose certain requirements. A Government company is one in which not less than 51% of the paid-up share capital is held by the Government and includes a company which is a subsidiary of a Government company. In addition, the Constitution entrusts the Auditor General with the responsibility for the external auditing of all Government companies unless he has entered into contracting out arrangements. Even so, the Auditor General retains overall responsibility, he said.
“It is indeed inconceivable that a non-Governmental company could be incorporated to execute a project that is essentially a Government-funded one built on State property, and which becomes a State asset upon completion. The D’Urban Park Project cannot be classified a Public-Private Partnership which is `a long-term performance-based approach to procuring public infrastructure where the private sector assumes a major share of risks in terms of financing and construction, and ensuring effective performance of the infrastructure from design and planning, to long-tern maintenance’”, Goolsarran pointed out.
Procurement Act
Pointing out that the D’Urban Park project initially fell under the Ministry of Education but was moved to the Ministry of Public Infrastructure, Goolsarran said that the Procurement Act is applicable to the Project.
He added that If HDI was incorporated as a Government company, it is obligated to follow the Procurement Act or its own rules which must be consistent with the Act.
It is, however, not known whether competitive bidding procedures were followed in relation to the provision of goods/services and the execution of works, as required by the Act. Goolsarran added that if HDI is not a Government company, then a major anomaly exists.
Goolsarran also raised questions about accountability for in-kind contributions. In line with the Stores Regulations, all gifts received are subject to normal storekeeping and stores accounting procedures and shall be recorded in a Gifts Register. The Head of budget agency is required to provide the Finance Secretary and the Auditor General with information on gifts received from time to time. Further, all gifts received are to be valued and recorded in the country’s accounts as miscellaneous revenue.
Goolsarran pointed out that the D’Urban Park Project commenced around September 2015 but HDI was incorporated in January 2016 to continue the project. In April 2016, the Government transferred the project to the Ministry of Public Infrastructure.
“Therefore, the Project fell under the auspices of Central Government for a greater portion of its life, and therefore the Stores Regulations should have been followed. In any event, the fact that the Ministry was handed over statements indicating what amounts were received by way of in-kind contributions, should have triggered compliance with the Stores Regulations in terms of valuation and recording of such contributions in the public accounts”, Goolsarran contended.
On the matter of cash contributions, the former Auditor General said that the Fiscal Management and Accountability (FMA) Act defines Government receipts to include “transfers to and grants and gifts received by the State”.
The Act also describes public moneys as all moneys belonging to the State received or collected by officials in their official capacity or by any person authorised to receive or collect such moneys. This includes among others: (a) grants to the Government; (b) budget agency receipts; (c) moneys received and collected on behalf of the State; and (d) moneys that are paid to or received or collected by an official pursuant to any law, trust or other agreement. Under Section 21 of the Act, all budget agency receipts are to be credited to the Consolidated Fund and Goolsarran said that this is reinforced by Section 38 which says that all moneys raised or received by the Government shall be credited fully and promptly to the Consolidated Fund.
Furthermore, in accordance with Section 47, an official shall not enter into any agreement or arrangement for the receipt or custody of public moneys, other than the Government or an official, unless so authorised by the Minister of Finance. Further, Section 16 says there shall be no expenditure of public moneys except in accordance with Article 217 of the Constitution. That article says that no moneys are to be withdrawn from the Consolidated Fund except: (a) to meet expenditure that is charged upon the Fund by the Constitution or by any Act of Parliament; (b) where the issue of those funds has been authorised by an Appropriation Act; or (c) where the issue of those moneys has been permitted by Article 219.
Saying that there were missteps, Goolsarran called for the commissioning of a forensic audit of the Project.
He said that in the final analysis, it is the taxpaying public that must come to the rescue of meeting the financial obligations of the Project which if there was careful planning and the highest degree of competitiveness, transparency and accountability, would have enabled significant cost savings.
