This is our fourth article on the above subject. So far, we have discussed several initiatives taken over the years to improve public financial management, especially in relation to ensuring greater transparency and public accountability. Despite these efforts, Guyana continues to score poorly on the Corruption Perceptions Index (CPI). In today’s article, we continue our discussion on the subject.
Procurement Act 2003
The Procurement Act replaces the Tender Board Regulations which had been in force since 1992 and earlier years. In several of the Auditor General’s reports going back to the early 1990s, the lack of effective functioning of the Central Tender Board was drawn to attention, especially as regards recordkeeping and filing as well as the absence of minutes of the Tender Board meetings. Recommendations had been made for a complete reorganization of the Board. It, however, took several years for legislation to be enacted in June 2003. The earlier legislation of 2002 was repealed.
Key elements of the Act relate to: (i) qualifications of suppliers and contractors; (ii) various forms of tendering, the most important being the open tender; (iii) procedures for assessing bids; (iv) award of contracts to the lowest evaluated bidder; (v) establishment of the various tender boards, including the National Procurement and Tender Administration Board (NPTAB) for the evaluation of bids above certain amounts; and (vi) the Cabinet’s review of contracts in excess of a certain amount. Regarding (i), over the years, there was evidence that contracts were awarded to suppliers and contractors who did not meet the qualifications requirements, mainly as regards of relevant experience for the works to be undertaken. This had resulted in significant delays, cost overruns, and defective works performed, among others. In some cases, contracts were terminated, and the related works re-advertised at significant additional cost to the State.
Additionally, there was evidence of contracts not being awarded to the lowest evaluated bids. The effective functioning of the NPTAB has also been called to question in the last few years. With reporting relationship to the Minister of Finance, the Board comprises seven members from among persons of unquestioned integrity with backgrounds in business, the professions, law, audit, finance and administration: not more than five from the Public Service; and not more than three from the private sector after consultation with their representative organizations. Two members are to serve on a full-time basis while the remainder are to function on a part-time basis. The Minister appoints the Chairman from one of the two full-time members. Members are to serve for two years. However, the Act is silent as to whether appointments can be renewed. Four members, including the Chairman, are to form a quorum, with the Chairman having a casting vote.
The current Chairman of the NPTAB has been in position since 2020. He is also a full-time employee of the Ministry, holding one of the three most senior positions as the Head of Project Cycle Management Division responsible for the monitoring of the execution of the Government’s infrastructure development programme. Concerns have been expressed of apparent conflict of interest. When the official was first appointed, Minister of Public Infrastructure had stated that his appointment was a temporary one, clearly indicating the undesirability of the person holding two full-time positions at the same time.
We had identified 12 areas where there were procurement leakages over the years. In this regard, we had estimated that the extent of such leakages was in the order of at least 20 percent of the total procurement expenditure. In other words, for every $100 we spent on procurement, we received $80 in value only. The 2024 budget reflects capital expenditure amounting to $666.175 billion out of a total budget of $1.146 trillion, a ten-fold increase, compared with expenditure incurred in 2019. It also represents 58.1 percent of the total budget in 2024. We will leave it to the reader to consider the dollar value of the extent of procurement leakages that is likely to take place in 2024 based on historical trends. Suffice it to state that public procurement is one of the key areas that influences a country’s score and ranking on the CPI.
Audit Act 2004
In last week’s article, we discussed certain aspects of the Audit Act, in particular, the requirement for the Auditor General to conduct performance or value-for-money audits. The Audit Office has been extremely slothful in carrying out such audits, and it was only the last two years there has been an acceleration of effort to do so. As of the end of 2022, only 15 audits were conducted since the Act was passed, giving an average of less than one audit per year. In fact, eight such audits were concluded during the period 2001 to September 2023. Even when the results were presented to the National Assembly, there was no discussion at the level of the Assembly nor at the Public Accounts Committee (PAC), thereby resulting in a lack of effectiveness in the performance of such audits.
The last report of the PAC on its examination of the audited public accounts was in respect of 2016. Although the Committee is currently scrutinizing the 2019 public accounts, there is no reason why the related reports for the years 2017 and 2018 were not issued to enable the Government to issue its Treasury Memorandum setting out what actions it has taken or proposes to take in relation to the findings and recommendations of the PAC.
It should not be over-emphasised that unless the PAC conducts a thorough examination of the audited public accounts and issues its report to enable the Treasury Memorandum to be prepared and laid in the Assembly, public accountability remains incomplete. In principle, the public accountability cycle should be completed within 12 months of the close of the fiscal year to enable legislators to reflect on the results of the audit of the expenditure incurred in the previous fiscal year, when considering the Estimates of the following year.
It will be recalled that there was a quorum change for PAC meetings that saw fewer meetings being held because of the unavailability of Government Members of Parliament. The feeling one gets is that there appears to be a deliberate attempt to delay the work of the Committee to avoid its scrutiny of the public accounts from 2020 onwards, especially in the run-up to the 2025 national and regional elections.
On several occasions, we had stated that it is undesirable for sitting Ministers to be members of the PAC. The main reason for this is that their participation in the Committee’s deliberations is likely to pose a conflict of interest when it comes to the scrutiny of the public accounts for the years that they serve as Ministers unless they choose to recuse themselves. The current PAC comprises five Government members, two of whom are sitting senior Ministers, namely Mr. Juan Edghill (Minister of Public Works) and Ms. Gail Teixeira (Minister of Governance and Parliamentary Affairs). If their work engagements are such that they are unable to attend the PAC meetings, it would be entirely appropriate for them to resign to give other government Members of Parliament (MPs) an opportunity to serve on the Committee.
In the case of Minister Teixeira whose main responsibility is to monitor the effectiveness of the functioning of the various committees of the Assembly, it does not seem appropriate for her to step down from her policy-making role and participate in the deliberations of any such committee. Indeed, the evidence suggests that most of these committees are not functioning the way they should. Minister Teixeira is also responsible for governance arrangements at a time when there is strong evidence of a lack of good governance in several areas in the operations of the Government. For example, it is highly undesirable to have prolonged acting appointments, especially for holders of constitutional positions, and to extend their appointments beyond their retirement age. Additionally, appointments to other senior positions are in some cases made without due regard to professional and technical competence but rather on the basis of their close association with the ruling party, or their perceived inability to stand out their own when faced with pressure to take a particular course of action that is contrary to their training and experience. All of this runs against the grain of good governance practices.
On the other hand, Minister Edghill is in charge of the largest Ministry, and he is therefore unlikely to devote the desired amount of time to serve on a committee that is meeting every Monday. If the two government Ministers cannot attend a PAC meeting because of their ministerial commitments, surely two of the other Government MPs could make themselves available so that the Committee can continue its deliberations on the public accounts.
The draft Audit Act had provided for qualification requirements for the Auditor General. He/she must be a Chartered Accountant with an advanced degree in auditing, accounting, finance, law, economics or in other related field along with at least ten years’ experience in auditing at a senior management level. His/her emoluments and other conditions of service were to be consistent with those of the Chief Justice. The Auditor General’s tenure of office was for a fixed non-renewable term of ten years, and his or her appointment had to be ratified by at least two-third of the voting members of the assembly. Unfortunately, except for the Auditor General’s compensation package, these requirements were removed from the final legislation.
The current Auditor General was hurriedly appointed in 2013 after acting in the position for nearly nine years and at a time when he had reached retirement age in his substantive position. Apart from not possessing the desired qualification requirements, the Auditor General would have so far served 20 years in the position. In the United States, the Comptroller serves for a maximum period of 15 years, while in Canada the Auditor General’s tenure of office is for 10 years. In India, the Comptroller and Auditor General serves for six years or until 65 whichever comes first, while the South African Auditor General’s tenure of office is for a fixed non-renewable term of between five and ten years.
To compound matters, although the Auditor General’s retirement age is 65, it is understood that the current Auditor General was given an extension of three years. These developments only serve to militate against his independence from the Executive as well as his objectivity and impartiality.
Not surprisingly, a review of the Auditor General’s reports over the years reveals a significant lack of comprehensiveness, superficial treatment of certain important issues, and unevenness of audit examination and reporting. These are important considerations that go towards the compilation of the CPI.
To be continued –
