Dear Editor,
Permit me to respond to Mr. Joel Bhagwandin’s letter appearing in yesterday’s edition of your newspaper. This letter is a reaction to my last week’s column is which I expressed concern about Mr. Bhagwandin’s involvement with ExxonMobil as a consultant providing ‘advice on Government Affairs and political matters’ according to his embellished CV, while at the same time holding the position of a member of the Public Procurement Commission.
The contents of the letter bear a stark resemblance to the statements made about me by the PPP General Secretary on 16 October 2023 and reported in the pro-government news outlets. A similar letter was written by one Robin Singh and published in the daily newspapers two days later following my response to the statements by the General Secretary. Mr. Singh sought to question my integrity because of the four “forensic audits” that I had conducted in 2015. He alleged that I accepted the assignments without the approval of the Public Accounts Committee in breach of the Audit Act and that there was no public tender for the audit.
For his part, Mr. Bhagwandin stated that I was heavily criticized by other accountants in relation to my ‘expertise and experience as well as conflicts of interest given that [I] was a staunch critic of the former government at that time, coupled with the flouting of the Procurement Act, whereby there was no public tendering process’. He went on to allege that in conducting these audits, I was in breach of Section 18 of the Audit Act that provides for the Auditor General to engage the services of technical experts and Chartered Accountants in public practice to assist him in performing of his duties. Mr. Bhagwandin also made the false statements that: (i) I was affiliated to the political parties at the time; (ii) I did not possess the requisite specialized training and experience, and (iii) I operated under the same Act while serving as Auditor General.
I now address each of the statements made about me by Mr. Bhagwandin.
Difference between a financial statements audit and a forensic audit
A Chartered Accountant in public practice provides external audit services to clients, mainly companies registered under the Companies Act 1991. Once engaged, his/her firm executes the audit of the financial statements of the entity and expresses an opinion on their fair presentation. A forensic audit, however, is completely different from a financial statements audit in that, while the latter is directed towards the examination of a set of financial statements, the former relates to an investigation into allegations of fraud and mismanagement and involves gathering evidence that can be used in a court of law to prosecute the persons involved.
The four audits that I had undertaken were not strictly forensic audits but were in the nature of managerial audits, similar to internal audits which were substantially lacking in government at the time, and even now. The audits were a kind of “stock take” to assist the new Administration in moving forward. In the United States, for example, it has been an established practice for the Comptroller-General to issue transition reports on all federal government agencies in the event there is a change in Administration.
During my tenure as Auditor General, the Audit Office had in place an Investigations Section. Where, during a normal audit, the Audit Office uncovered evidence of fraud or mismanagement of public resources, the related report was referred to this Section for further investigation. The term “forensic audit” was first used when I returned from vacation in December 2003 while serving the United Nations Peacekeeping Operations in Africa. The Public Accounts Committee (PAC) under the Chairpersonship of the late Winston Murray had invited me to one of its meetings at which it was discussing the draft Audit Act that was prepared by a consultant based on ideas I had developed. The document was, however, so badly written that the Committee was unable to make sense of it. I then volunteered to prepare a new draft. It was at this meeting that I suggested the use of the term “forensic audit” as a replacement for the word “investigation”. Reference to this form of audit can be found in Section 8 of the Regulations made under the Audit Act. It reads as follows:
The Auditor General shall establish within the Audit Office a Forensic Audit Unit.
Where any matter is referred to the Forensic Audit Unit, the Unit shall investigate the matter fully and submit a report with recommendations to the Auditor General who, where a criminal offence has been committed, shall refer the matter to the Director of Public Prosecutions and send a copy to the Commissioner of Police for appropriate action.
Was there a breach of the Procurement Act?
Section 26(1) of the Procurement Act states that ‘[t]he procuring entity may engage in procurement by means of restricted tendering … when the goods, construction or services by reason of their highly complex or specialized nature, are available only from a limited number of suppliers or contractors…’ Considering that 18 auditors/Chartered Accountants in public practice were selected to undertake these audits, would suggest that the approach adopted was in line with the restricted tender approach. These audits were initiated at a time when the Government was in the process of replacing the members of the National Tender and Administration Board (NPTAB). Time was of essence since using the open tender approach would have taken several months at a time when the new Administration was eager to have an independent assessment undertaken as quickly as possible of the entities selected for special review to enable it to make important decisions, going forward.
Considering the above, the Ministry of Finance decided to request Chartered Accounting firms as well as individuals with the relevant training and experience to submit proposals for undertaking these special audits. The Junior Minister of Finance contacted me and gave the list of entities to be the subject of special audits along with the related terms of reference. He then asked me to identify which entities I would like to audit. I then submitted my proposals for the four entities referred to above. The Minister subsequently told me that my proposals were the most competitive in terms of fees and completion deadlines. It was on this basis that I was selected to undertake these audits.
Even if one were to consider that there was a breach of the Procurement Act, is it not the Ministry of Finance that awarded the contracts to be made answerable? The contracts were all signed by the then Finance Secretary. That apart, I examined the Report of the PAC for 2015. Although there was a brief mention of procurement breaches by heads of budget agencies, including the Ministry of Finance and Regions 1-4, there was no specific mention as to what those breaches were, especially as regards the forensic audits undertaken.
It is important to note that in respect of certain other specialized services, over the years the requirements of the Procurement Act were not followed, for example, in the case of legal services to various Government departments and agencies, most of which were carried out by lawyers closely associated with the ruling party.
Was there a breach of the Audit Act 2004?
Section 4(3) of the Audit Act states that ‘… the Minister responsible for finance may request the Public Accounts Committee to cause an additional audit to be conducted by an auditor other than the Auditor General’. (Emphasis added.) The words “additional audit” clearly implies that the audit must first be conducted by the Auditor General and the Government is not satisfied with the results. That apart, the conduct of any such additional audit would be a breach of the Constitution that vests with the Auditor General the sole authority for auditing the public accounts of Guyana and all authorities of the Government. This requirement was not included in the draft legislation that I had prepared and was inserted despite my objections.
The HPS had argued that the Auditor General’s report should be subject to a second opinion in the event of a disagreement. This was at a time when my reports were very critical of the Government’s financial management practices. I told the HPS that: (i) such an arrangement was without precedent; (ii) no Chartered Accountant in public practice will accept appointment without consulting with me as part of the professional ethics requirements to which all Chartered Accountants, including me, are bound; (iii) if this requirement is inserted into the legislation, it is unlikely that it will ever be used; and (iv) it would be a breach of Article 223(2) of the Constitution that vests with the Auditor General the sole authority for auditing the public accounts of Guyana. Suffice it to state that after 20 years, this section was not used.
The Audit Act also does not cover situations where special audits are commissioned by the Government. In any event, the then Minister of Finance had consulted the Auditor General who agreed that the Audit Office should not be burdened with these additional audits to enable it to concentrate on its core mandate of auditing the public accounts and reporting to the legislature. Accordingly, the Auditor General offered no objection to the Ministry initiating these special audits using the services of outside auditors. It is public knowledge that the Audit Office has been struggling over the years to deliver on its core mandate because of capacity constraints.
Part IV of the Audit Act deals with contracting of technical experts and Chartered Accountants in public practice. Section 18 states that ‘[i]n the discharge of his functions, the Auditor General may engage the services of technical experts and Chartered Accountants in public practice to serve on a contract basis for limited audit engagements including those required as part of agreements with international organizations’. Mr. Bhagwandin chose to omit the words ‘in the discharge of his functions’.
The four special audits that I had conducted were not to assist the Auditor General in the discharge of his functions but rather to assist the new Administration to understand the various issues facing it as part of the transitional arrangements and to enable it to move forward. I was one of the 18 auditors and Chartered Accounting firms selected to undertake a total of 45 special audits.
Another section – Section 4(2) – that was inserted in the Audit Act despite my objections is that the Government may cause an additional audit to be conducted by an auditor other than the Auditor General where an agreement entered between the Government and an international financial institution so dictates. Article 223(8) (b) of the Constitution defines the public accounts to include not only central and local governments but also all bodies in which controlling interest vests in the State as well as all foreign-funded projects wither by way of loans or grants. In the circumstances, it is not difficult to consider that this section is also in breach of the Constitution. To overcome the difficulties in relation to the application of this section and to ensure conformity with Article 223)8) (b), I had initiated an arrangement where some of the World Bank-funded projects were contracted out to Chartered Accountants in public practice, a practice that continues to this day.
Other false statements made by Mr. Bhagwandin
I am not and was never affiliated to any political party. It that were so, I might have been a candidate for membership of the Legislature and/or might have held a political position. As regards the claim that I did not have the requisite specialized training and experience, I must state that, unlike Mr. Bhagwandin whose core qualification is an MSc. (Finance) from Edinburgh Napier University, I have been a Chartered Accountant since 1986 and I the holder of a Master of Business Administration (MBA) degree, a Doctor of Business Administration (DBA) degree and Master of International Business Law (LLM/IBL). This is in addition to specialized training in fraud and forensic auditing and environmental auditing from the USDA Graduate School as well in corruption-related issues from the University of Passau in Germany.
Finally, I did not operate under the same Act while serving as Auditor General. The Audit Act 2004 became operation in April 2005, four months after I demitted office.
Kind regards,
Anand Goolsarran
