Over several years, the Guyana Geology and Mines Commission (GGMC) transferred over $3.7 billion to government’s holding company NICIL for the maintenance of hinterland roads and at least $1.3 billion has not been accounted for.
“As regards the sum of $3.757 billion received from GGMC for the maintenance of hinterland roads, the minutes of NICIL’s board meetings of 13 November 2013, 30 April 2014 and 11 September 2014 recorded the Executive Director as having stated that NICIL was experiencing difficulties in obtaining supporting documents from Ministry of Public Works for payments made and that material amounts remained unaccounted for,” the forensic audit into the National Industrial and Commercial Investments Limited (NICIL) says.
The audit was done by former long-serving Auditor-General Anand Goolsarran and among the recommendations made was that criminal and/or disciplinary actions be instituted against all those responsible for violating Article 217 of the Constitution by causing expenditure to be incurred out of state resources without parliamentary approval.
The report noted that NICIL provided a schedule of payments relating to the $3.757 billion but NICIL Executive Director Winston Brassington had indicated difficulties in reconciling the sums.
The schedule of payments provided by NICIL:
Payments to the Ministry of Public Works 3,322,481
Payment to CBCSL on contract 202,243
Purchase of road equipment 164,608
Rehabilitation of Ituni/Kwakani roads 19,791
Mobilisation advances 11,788
The report said that the Ministry of Public Works also provided schedules of works undertaken in support of the amounts of $1.2 billion and $756.745 million.
“However, it was unable to provide any information in relation to the difference of $1.365 billion, that is, $3.322 billion minus $1.957 billion. It is not clear how much of the $1.365 billion remained outstanding and how much of the $1.979 billion were supported by bills/receipts and other supporting documents to ensure proper accountability of the funds transferred to the Ministry of Public Works,” the report said.
It added that at NICIL’s board meetings of 13 November 2013, 30 April 2014 and 11 September 2014, Brassington reported that NICIL was experiencing difficulties in obtaining supporting documents from Ministry of Public Works for payments made and that material amounts remained unaccounted for. The then Head of the Presidential Secretariat Dr Roger Luncheon indicated that he would discuss the matter with the Permanent Secretary.
“Evidence was seen where GGMC initially treated the transfer of funds to NICIL as receivable. When the supporting documents were submitted to substantiate the expenditure, GGMC charged the expenditure to “Assistance to mining communities.” This is an inappropriate charge to the accounts of GGMC since the maintenance of hinterland roads is the responsibility of the Ministry of Public Works and is budgeted for under that Ministry in the National Estimates. The Auditor General should have raised this concern during his audit of the GGMC,” Goolsarran said.
In breaking down the $3.7 billion received from the GGMC, the report had noted that NICIL received $800 million from the commission based on a memorandum dated 21 August 2007 from Luncheon to the GGMC, which made reference to Cabinet decision CP(2007)8:1:H approving of the transfer.
An agreement dated 1 November 2007 was then entered into between NICIL and the Ministry of Public Works for NICIL to disburse payments to contractors for the maintenance of interior roads. The disbursements were to be based on invoices presented by the Ministry and approved by the HPS.
“The FMA Act, however, does not recognize the HPS as an authority for the approval of payments since he is not the head of a Budget Agency. The HPS has therefore usurped the role of Heads of budget agencies and could be held liable for the misuse or loss of public funds under Sections 48, 49 and 85 of the FMA Act,” Goolsarran said.
The report revealed that NICIL received two further amounts of $1 billion and $1.2 billion from the GGMC based on agreements dated 3 August 2009 and 15 November 2011 respectively involving the Ministry of Public Works, the GGMC and NICIL. However, there was no reference to a Cabinet decision on the matter, and Prime Minister Samuel Hinds in his capacity as Minister responsible for mines and minerals approved of these two transactions. Disbursements were also to be made on the written instructions of the HPS.
The report said that NICIL received a fourth amount of $756.745 million from GGMC based on Cabinet decision CP(2012)7:5:S for the release of funding for existing projects – $271.340 million; new projects 2012 -$462.248 million; and outstanding payments for contracts completed -$23.157 million.
According to the report, in relation to the $1 billion transfer, the minutes of NICIL’s board meeting of 14 July 2009 reported that NICIL was in receipt of the $1 billion but the agreement was not signed.
According to the minutes, Brassington highlighted “that the nexus created here is that we are like a PEU for GGMC and the Ministry of Public Works is a sub-PEU from GGMC. But all accounts go back to GGMC. It was agreed that we will document the projects and will inform public works to transfer everything in the name of GGMC. We will be the PEU for various agencies from a financial disbursement agent perspective on the advice of Public Works for the project execution.”
The minutes also reported then Finance Minister Ashni Singh as saying that “we now need to let the other parties understand the implications from the accounting side on their books…there needs to be an agreement between Public Works, NICIL and GGMC.”
The report also said that at the 12th January 2009 meeting of NICIL’s board, Brassington sought clarification on whether NICIL was acting as an agent or principal. He stated that as an agent, the expenditure would not be reflected in NICIL’s books, unlike the case of principal.
“If the latter was the case, he enquired whether there would be sufficient paperwork to support the validity of the payments. The Permanent Secretary of the Ministry of Public Works confirmed that the amounts involved were not reflected in the books of the Ministry and that back-up documents for $200 million could be sent to NICIL. At this point, the HPS suggested that the Minister of Finance and the Executive Director prepare a paper outlining the options for treating the transactions in question. It is not clear whether such a paper was prepared, as subsequent minutes of meetings of the Board did not indicate this,” the report said.