Auditor General sees $2B contingencies abuse

-$99M in overpayments to contractors detected

Over $1.992 billion was drawn from the Contingencies Fund during 2009 without meeting the requisite eligibility criteria, according to the most recent Auditor General’s report, which alighted upon the continued abuse of this fund by the government.

The 2009 Auditor General’s report, which was tabled yesterday in the National Assembly, said that “the Contingencies Fund continued to be abused with amounts totalling $1.992 billion drawn from the Fund being utilized to meet expenditure that did not meet the eligibility criteria as defined in the Act.” The Act being referred to is the Fiscal Management and Accountability Act 2003 (FMA Act). The report also found overpayment of contractors, overpayments of salaries to staff and deductions to Agencies, the flouting of the requirement to present log books and vouchers as issues of concern.

According to Section 41 of the FMA Act, the Finance Minister “may approve a Contingencies  Fund advance as an expenditure out of the Consolidated Fund by the issuance of a drawing right.” The criteria requires the Minister to be satisfied that “an urgent, unavoidable and unforeseen need for the expenditure has arisen (a) for which no monies have been appropriated or for which the sum appropriated is insufficient; (b) for which monies cannot be reallocated as provided for under this Act; or (c) which cannot be deferred without injury to the public interest…”  Where any advance is made, the report said, a supplementary estimate must be laid before the National Assembly as soon as is practicable for the purpose of properly authorizing the replacement of the amount advanced”.

From data in the report, the biggest beneficiary from this abuse of the Contingencies Fund was the Ministry of Public Works.  Sums of $200 million, $208 million and $1.2 billion respectively were used to support the Transport and Harbours Department, settle civil works expenditure and to rehabilitate infrastructure in Regions 2, 3, 4, 5 and 6 respectively.

$169 million was taken from the Contingency Fund for the procurement of kit and equipment, feed and drugs for livestock, accommodation items, annual medical tests for officers and other ranks in the Guyana Defence Force (GDF). A further $135 million was used to cover expenses associated with fleet additions, including the increase cost for Petroleum, Oil and Lubricants (POL).

The Ministry of Education, the report said, also benefited from this abuse of the Contingencies Fund   with $10 million used for acquiring furniture for secondary and primary schools and a similar amount for the rehabilitation of a roof and sanitary blocks.

In response to the observations of the Auditor General, the Head of the Budget Agency indicated that “the Ministry wishes to highlight that prior to the approval of any request for Supplementary Provisions, the funds being requested are debated and granted by the National Assembly.

Observers, however, have noted that, supplementary papers are usually debated in the National Assembly after the sums would have already been spent.  The supplementary paper passed in January 2010, which covered expenses in 2009, caused a fallout in the National Assembly over $4 billion that the Housing Ministry was granted to buy land from GuySuCo.

The Audit Office’s official recommendation to the Ministry of Finance is that stringent measures be adopted to ensure that there is compliance with Section 41 of the FMA Act concerning the criteria for the granting of advances from the Contingencies Fund.

Meanwhile, the report noted that there has been a significant amount of overpayments to contractors totalling $99.151 million which have occurred on measured works for contracts undertaken by Ministries, Departments and Regions. Of the $99.151 million, “$73.363 million was in respect of previous years, while $25.788 million was in respect of the year under review”   the report said.

The report also noted that “slow processing of pay change directives in several Ministries and mainly in the Regions resulted in overpayments of salaries totaling $64.215 million, including related deductions amounting to $14.975 million that were paid to various agencies.” Of these amounts, $54.853 million and $11.025 million, respectively were in respect of previous years,” the report said.   There have been serious challenges in recouping the overpaid amounts “particularly because banking institutions require authorizations from account holders to do so and statutory agencies, such as, the Guyana Revenue Authority (GRA) and National Insurance Scheme (NIS) have not fully complied with requests to refund sums overpaid, the report said.”

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