PAC members split on contingencies fund abuse

The Finance Ministry took a tongue-lashing from opposition representatives of the Public Accounts Committee (PAC) on Wednesday last over what the 2010 Auditor General Report referred to as “abuse(s)” of the contingencies fund, even as government members said the reported misuse was open to interpretation.

Finance Secretary Neermal Rekha and Accountant General Jawahar Persaud usually join with Auditor General Deodat Sharma to assist the committee as it scrutinises the financial records of state agencies.

On Wednesday, however, Rekha and Persaud sat side by side at the opposite end of the room, as they led their ministry’s delegation, which sought to explain discrepancies in their finances as flagged in the Auditor General’s 2010 Report on their records.

In one instance, the Audit Office noted that “There continue(s) to be abuse of the Contingencies Fund since there was clear evidence that the Fund was used to meet routine expenditure when budgetary allocations were exhausted.”

Sharma told the committee that 47 advances, totalling $2.074 billion, were made on the Contingencies Fund. Of these advances, he continued, it was found that 16 of them were made in a manner inconsistent with provisions in the Fiscal Management and Account-ability Act (FMAA).

Section 47 of the Act states that 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 though, requires the Minister to be satisfied that “an urgent, unavoidable and unforeseen need for the expenditure has arisen (a) for which no moneys have been appropriated or for which the sum appropriated is insufficient; (b) for which money cannot be reallocated as provided under this Act; (c) which cannot be deferred without injury to the public interest….”

Among the agencies which benefited from advances were the Guyana Defence Force ($70 million for the purchase of various items), the Minis-ter of Amerindian Affairs ($19.8 million for the facilitation of “Amerindian Development Program-mes”), the Ministry of Culture, Youth and Sport ($75.5 million for the completion of the “National Swimming Pool”), and the Ministry of Labour ($30.8 million for education sti-pends and training costs).

According to the Auditor General’s Report, these instances “did not meet the eligibility criteria, and therefore “support(s) the opinion that the ‘abuse’ continued during 2010.”

A back and forth materialised very quickly at the meeting as the opposition members of the committee lambasted the Finance Ministry, while government members argued that the Auditor’s statements were a matter of opinion based on his interpretation, not law or policy.

APNU MP Keith Scott was the first to confront Rekha and his team, asking them to justify taking the amounts from the Contingencies Fund. AFC MP Trevor Williams as well as APNU MP and finance point man Carl Greenidge, who chairs the committee, also heavily criticised the ministry’s actions in this regard.

Rekha, however, said that the monies were disbursed because the intended expenditures were deemed as urgent. As such, he argued, the expenditures were made in accordance with the laws. Govern-ment Whip Gail Teixeira supported Rekha’s assessment, arguing that the Auditor General’s observations that the Ministry continued to abuse the Contingencies Fund to finance the above mentioned projects were based on his informed opinion, and did not represent public policy.

She said that whether a matter is seen as urgent is subject to individual perspective, and that a Ministry official may find a certain expenditure to be urgent while the Auditor General would disagree. At the end of the day, she said, the FMAA empowers the ministry to make the judgment call.

Greenidge, however, noted that the ministry would still need to come to the National Assembly as soon as possible with a supplementary estimate in order to properly authorise the replacement of the amounts advanced. He said that with the dynamics of the Tenth Parliament, it is quite possible that monies advanced on such arguments would not enjoy the legislature’s support.

Greenidge said that going into the Contingen-cies Fund more or less forces the hand of the House to authorise the spending since the money is already spent, and warned Rekha and his team to “watch out,” since the ministry’s interpretation of what is urgent is not shared by other members of the House.

He further urged Rekha to consult with Sharma on the matter, since it is his office (the Audit Office) which is charged with determining proper expenditure practice, and which found that the Finance Ministry was in breach.

Teixeira, however, maintained that the legislation empowers Rekha and the Finance Ministry to determine that urgent, unavoidable and unforeseen instances which warrant advances from the Contingencies Fund.

Some things, she said, cannot be predicted, and she added that there must be flexibility to fill whatever gaps materialise.

Finding that the back and forth was leading nowhere, Greenidge sought to push past the issue, but not before PPP/C MP Manzoor Nadir insisted that he have a final say. Greenidge told Nadir that there was nothing he could say to enhance the situation, although Nadir maintained that the matter was too important to drop just because the committee was watching its time.

Ultimately, an adamant Greenidge gave the go ahead for another committee member to begin considering another discrepancy, even as the determined Nadir pushed his question in. His question though, was drowned out by Greenidge as he gave permission for a committee member to begin addressing another matter.

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