The Auditor General has again identified procurement breaches, highlighting a payment of $1.252 billion to the New Guyana Pharmaceutical Corporation (NGPC) and the disclosure is likely to up the pressure on the government to finally set up the Public Procurement Commission.
In his 2010 report on the public accounts, Auditor General Deodat Sharma pointed out that the payment was made on the basis of sole sourcing and not competitive bidding as required under the law
The AG has also said that the Contingencies Fund continues to be abused with over $550 million drawn from the fund and utilized for expenditure that did not meet the eligibility criteria in 2010. The 2010 Auditor General Report was released in Parliament on Friday and has flagged several other breaches including overpayment of contractors.
The payment of $1.252 billion to the NGPC on the basis of sole sourcing approved by the National Procurement and Tender Administration Board and not by competitive bidding as required under the Procurement Act (2003) was highlighted. The transactions were for the procurement of drugs and medical supplies.
Members of the Public Accounts Committee (PAC) of Parliament have in the past expressed concern at the Health Ministry’s continued sourcing of drugs from the NGPC without competitive bidding, despite repeatedly promising to discontinue this practice. In July 2008 when the matter was raised by some parliamentarians, then Health Minister Dr Leslie Ramsammy had strongly defended direct drug purchases from the NGPC as compliant with a Cabinet decision but also announced that his ministry would request a renewal of a decision which would also allow procurement from several international suppliers.
The manner in which the government procures drugs from the NGPC has been highlighted in previous reports by the Auditor General and the issue has been raised repeatedly by the opposition parties in the National Assembly. When the matter was raised in the 2008 Auditor General’s report in connection with the GPHC, the Head of the Budget Agency said that Cabinet had renewed its approval by the issuance of Cabinet Decision CP (2003) in July of 2008. The Auditor General’s report for 2004 had made a recommendation that the ministry advertise internationally every three years for the supply of drugs and medical supplies and pre-qualify suppliers. In 2010, then Public Accounts Committee Chair-man, Volda Lawrence had told Stabroek News that the single-sourcing from the NGPC is a classic example as to why the Public Procure-ment Commission needs to be established. What makes the situation worse, she said, is that the government is basically financing the company’s operations since it gives the company a full advance to purchase the drugs.
In its latest report, the AG has once again called for the establishment of the Public Procurement Commission. The report said that in contravention of Article 212(W) of the Constitution, a Public Procurement Commission to monitor public procurement and the procedures had not been appointed. ”As a consequence of the Commission not being established and in accordance with the Act, the National Board had the responsibility for the making of regulations governing the procurement of goods and services, determining the forms and documents for procurement and reporting to the Minister of Finance on the effectiveness of the procurement system, while organizing training seminars regarding procurement and adjudicating debarment proceedings,” the report stated.
Textbooks
In the latest report, the AG also cited the Georgetown Public Hospital Corporation for procuring drugs and medical supplies at a cost of $879.914M based on awards of contracts by the Tender Board without a system of competitive bidding as required under the Procure-ment Act. The report also flagged a $70M payment for textbooks by the Ministry of Education to a supplier on the basis of sole sourcing and not by competitive bidding as required by the law.
The AG’s report also highlighted fraud amounting to $206.379M in the office of the Accountant General. Eighty-four fraudulent transactions for arrears pensions and gratuity payments were made to inactive, deceased and fictitious pensioners; the report said adding that five persons were charged by the police.
Meantime, the report also revealed that US$2M is still owed by the purchaser for Guyana Stores Limited. The business was sold in October 2000 for US$6M but only US$4M was received from the purchaser with the remainder scheduled to have been paid by September 2002 but it has remained outstanding since that time. The report said that a similar situation existed in relation to the privatisation of the National Paints Company where US$900,000 was still outstanding on the purchase price.
The report has also highlighted that over $211M was shown as Contingent Liabili-ties for entities that were no longer in existence and the Ministry of Finance and the Accountant General’s Depart-ment had still not taken steps to have these liabilities transferred to the Public Debt.
In relation to bank accounts, the report said that several transfers from other accounts to the Consolidated Fund were not effected and several accounts had overdrafts. Transfers that were not effected included $4.416 billion representing balances held in eleven special accounts; a balance of $23M held in the General Account Number 405; a balance of $316M held in Non-Sub Accounting Ministries and Departments Bank Account Number 3001; and another balance of $13.287 billion was held in other Ministries/Departments bank accounts.
In relation to accounts with overdrafts, the AG reported that the old Consolidated Fund bank account Number 400 was overdrawn by $46.776 billion as at December 31, 2010, and the new Consolidated Fund Bank account Number 407 which was overdrawn by $4.684 billion also as at the end of December 31, 2010.
The report also highlighted that the continued lack of reporting and accounting for all gifts to Ministries, Depart-ments and Regions resulted in the Miscellaneous Receipts of $14.557 billion as at December 31, 2010 being understated by an undetermined amount.
Overpayments
The report also revealed that a significant amount of overpayments to contractors had occurred on measured works for contracts undertaken by Ministries, Departments and Regions with several ministries and regions facing serious challenges in being able to recover amounts overpaid on various contracts in prior periods. The report said that some of these ministries, regions and agencies such as the Guyana Defence Force, the Ministry of Education, the Supreme Court, and Regions Six, Nine and Ten continued to have overpayments on various contracts during 2010. It cited Region Ten where amounts totalling $20.603M were overpaid on 16 projects. “This continued trend coupled with no evidence to suggest that disciplinary action of any kind has been meted out to engineering or other staff involved in the assessment of works in progress and the certification of progress payments is troubling and hints at Management’s perceived inaction to remedy the current situation,” the AG stated.
The report also highlighted that the slow processing of pay change directives in several ministries and mainly in the regions resulted in overpayments of salaries and the related deductions being inadvertently paid over to various agencies.
Meantime, the report said that a number of ministries, departments and regions continued to clear cheque ordered vouchers long after the stipulated 16 days while some still have a number of cheque orders outstanding at the time of reporting. The report singled out the GDF with 535 cheque orders valued at $1.206 billion; Region One with 2057 cheque orders valued at $826.085M; Region Three with 850 cheque orders valued at $186.204M and Region Four with 565 cheque orders valued at $84.144M remaining outstanding. “These financial instruments were originally meant to be utilized only for the payment of salaries and allowances, but because of limited imprest resources and the volatility of cash transactions in recent times, the use was extended to the procurement of goods, with the approval of the Accountant General. Such instruments remaining outstanding for long periods of time would therefore bring into question whether the sums involved had been misappropriated or wrongly applied,” the report said.
IFMAS
The AG also noted that the introduction of the Integrated Financial Management and Accounting System (IFMAS), which replaced some aspects of the previous manual system, contributed to a more efficient accounting system and assisted in avoiding over-spending and reduced the processing time of payments, among others. As a result several accounts, which were previously operational, were required to be closed but this was not done and some still existed, the report said.
It identified the old Consolidated Fund bank account Number 400, the General Account Number 405, which was used as an intermediary account to monitor and control releases of funds from the Consolidated Fund to the accounts of Ministries and Departments and the Non-Sub Accounting Ministries and Departments Bank Account Number 3001 which was used as an intermediary account to monitor and control releases of funds from the Consolidated Fund to Non-Sub Accounting Ministries and Departments.
