Accounting for billion-dollar Carifesta X was ‘loose’

-auditor’s report

A forensic audit report on the billion-dollar Carifesta X, hosted here in 2008, has found that there was no budget, the accounting was badly handled, there were transactions without tender board input, controversial government holding company NICIL provided significant financing and $26m is still outstanding to various creditors.

Done by John H. Barnes, the audit was commissioned by the APNU+AFC government via an agreement on 10th June, 2015 as questions had persisted for years over the amount spent by the then Ministry of Culture, Youth and Sport (MCYS), then under the stewardship of Dr Frank Anthony, on the regional arts festival and whether there was adequate accounting and accountability for the funds.

Submitted to the Minis-try of Finance on Septem-ber 3rd, the report suggested a series of steps for better accounting and recommended that the Principal Assistant Secretary (PAS) (Finance) be replaced.

The report, seen by Stabroek News, said that Carifesta X was funded through two main sources: the Consolidated Fund and a project account funded by NICIL. A further $76.5m came from donors.

Among the faults listed in the financing arrangement were that there was no budget, much of the procurement of goods and services was done by sole sourcing and documentation was generally incomplete and did not allow for easy retrieval of information.

It described NICIL’s participation in the financing process as “awkward.” The report said that NICIL claimed to have financed Carifesta X to the tune of $300m, which it said was obtained from the Guyana Geology and Mines Commission (GGMC). However, the auditor said that NICIL’s input was really $328.1m since there was another amount of $28.1m which it advanced to the MCYS for an Endowment Fund for Culture and the Arts but which the MCYS applied to Carifesta X. The $328.1m figure included amounts totalling $65.28m, which the auditor said NICIL claimed to have advanced to various agencies though receipt by these agencies has not been verified. The arbitrary use of funds by NICIL for various purposes has attracted negative public comment for years.

“Generally, the handling of the finances for the event that eventually cost nearly one billion Guyana dollars was quite loose,” the auditor asserted.

He said that the PAS Finance, Ms R Lochan, held that position before, during and after Carifesta X and therefore much of the blame for the accounting chaos should be ascribed to her.

“For example, there is no detailed accounting statement showing the final position for Carifesta X, and a summary statement for this event which was shown to the auditor was totally disregarded since there was no link between this statement and the records of the MCYS, and no one took ownership of the statement,” the auditor said.

He added that during the course of the audit, the PAS (Finance) “displayed a lack of knowledge of many matters the auditor enquired into, and her response to requests for information was extremely slow and lethargic. It would be in the interest of the organisation to have this officer replaced as early as possible.”

For the festival, held from August 22nd to August 31st, the auditor said many documents could not be found and the attempted retrieval seemed akin to searching for a needle in a haystack. The unavailability of personnel – several had passed away – was also a key issue.

 

‘Quite exorbitant’

Alighting on various transactions, the auditor said that in February, 2008, the MCYS entered into an arrangement with Swansea Industrial Associates (SIA) to identify, procure, construct and operate a modern stage platform. The stage was subsequently imported by SIA from Tomcat Staging Lighting and Support Systems. The price for the stage was quoted at US$412,500 and payment was made to the supplier’s bank.

Components were then imported from Wenger Corporation for the assembly of the stage to the tune of US$162,719 and the payment made to the supplier. These two transactions totalled US$575,219 and a document signed by the then Secretary to the Cabinet, Dr Roger Luncheon, disclosed that Cabinet had waived Tender Board procedures to facilitate sole sourcing of the items. The auditor said that while the total for the two items was US$575, 219, the Cabinet document stated a total cost of US$605,519.

The auditor said that SIA reportedly attended a meeting at the Office of the President in February, 2008, where it was requested to facilitate the importation of the stage. The report said that SIA identified the supplier and their representatives travelled to the US at the Guyana Government’s expense to transact business with the suppliers.

“The audit has ascertained that SIA was not paid for the procurement and commissioning service but received payment of $24.7m and $2.6m for work in relation to lighting systems and installation/ dismantling of the stage, respectively. The work in relation to the lighting systems was subjected to a contract while the work in relation to the installation and dismantling of the stage was not. These costs appear quite exorbitant,” the auditor said.

A list of creditors examined by the auditor showed an outstanding amount of $26m. The auditor said he was able to recommend payment of $9.76m of this amount, having ascertained that the services were performed, the goods supplied, that the responsible officer recommended payment or the amount was due under a contract. Among the creditors who may now receive payment are Rent-A-Tent, to the value of $5.3m and June Cole, for snacks provided to the tune of $1.5m.

The list of donors to Carifesta X included Banks DIH, $10m; DDL, $10m; GTT, $10m; Digicel, $10m; Republic Bank Ltd, $10m. There was also a donation of $9.6m from the donor-funded Health Sector Development Unit, which will likely raise eyebrows. UNICEF donated $4.6M, the UNDP $3.9m, the UNFPA $3.4m and the Commonwealth Youth Programme $1m. Patricia Morrison donated $3.89m worth of booth space.

The report said that a number of items were incorrectly capitalized. These included $5.3m for the rental of chairs and tables, $4.3m for the broadcasting of the Carifesta X opening and closing ceremonies and $4.3m to the Caribbean Media Corporation as payment for the broadcasting of Carifesta X.

There were a number of transactions without contract documents, including the $84.6m for the importation of the stage. Others included $9.7m to the late Trevor Rose for the creation of costumes, $3.7m to Dyna’s Embroidery for the supply of Polo shirts, $2.2m to Tactical and Commercial Equipment Sales Inc for the supply of radio sets, $1.39m to Facts `n’ Roses for the supply of additional flags and $1.23m to NP Fried Chicken for fried chicken.

There was no tender board input for a series of other transactions with Rose and Franklin Vieira, including the decoration of the venue and the purchase of electronic items.

Ironically, while the government commissioned the audit of the Carifesta X finances, it is now facing similar calls in relation to May’s inauguration ceremonies for President David Granger.

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