Transparency and accountability: City Hall needs to get its act together

Accountability Watch

Last week, we ended our final article on public financial management in the post-Independence. We concluded that the years 1968-1981 was an unfortunate period, characterized by a marked decline and deterioration so much so that by the end of 1981 public accountability was brought to a standstill. The Hoyte Administration had made a genuine effort to retrieve the situation, and some progress was made. However, it was in the post-1992 period that saw: (a) the restoration of public accountability to some semblance of normalcy with the resumption of annual financial reporting and auditing of the public accounts with effect from 1992; and (b) the reactivation of the Public Accounts Committee.

The creation of the Guyana Revenue Authority in 2000, and the passing of the Integrity Commission Act 1997, the Public Procurement Act 2003 and the FMA Act 2003, should be viewed in a positive light. However, the Commission has not been functioning effectively since 2006, raising questions about the seriousness of our commitment to fight corruption. In addition, after 15 years, the Procurement Commission is yet to become a reality while some of the requirements of the FMA Act have yet to be complied with. The reform initiatives relating to the Audit Office to insulate it from political influence and control, and to provide it with autonomy and flexibility to discharge its mandate, were also a welcome development, and so was the introduction of IFMAS. However, the Audit Office remains weak and unable to deliver to expectation, despite decades of efforts aimed at institutional strengthening of this important watchdog institution. Two important modules of IFMAS also remain unimplemented.

Guyana now has in place an effective anti-money laundering legislation to deal with drug trafficking, money laundering and the financing of terrorist activities. There is, however, a need to accelerate the appointment of the Director and other staff members of the Financial Intelligence Unit as well as the members of the Anti-Money Laundering Authority. Over the years, drug trafficking and money-laundering, along with a sizeable underground economy, have taken a toll, indeed a stranglehold, on the overall economy of which we are still to recover.

Today, we turn our attention to local democracy and accountability.  It will be recalled that local government elections were held in March of this year after 22 years, although the law stipulated that such elections be held every three years. We begin our analysis with the Georgetown City Council which has been rocked by severe criticisms from all quarters in relation to a proposal to introduce a system of parking meters as a means of garnering much-needed revenue.

Financial reporting and audit

In accordance with the Municipal and District Councils’ Act, within four months of the close of the financial year, the City Treasurer is required to prepare and submit to the auditor financial statements for that year for audit. If the Treasurer fails to do so, he/she shall be guilty of an offence. The auditor in turn is required to audit these statements and submit his/her report within one month of the completion of the audit, or as soon as is practicable thereafter, to the Council and the concerned Minister.

As of August 2013, the last set of audited accounts of the Georgetown City Council was in respect of 2004. The Audit Office had received financial statements for the years 2005 and 2007, and as of this date the audits were to have been planned. However, it is not clear if the Council had submitted financial statements for 2006 since there ought not to be a gap. In addition, an examination of the Auditor General’s report for 2014 (the latest report) indicated no further movement in relation to the auditing of the City Council. That report was issued in September 2015, and therefore as of this date, the City Hall was ten years in arrears in terms of financial reporting and audit. At the end of 1992, it was five years in arrears, and therefore there was a further deterioration since then.

During my tenure as Auditor General, I had cause to disclaim my opinion on the City Council’s financial statements. The accounts were in such a bad shape that I was unable to certify them in terms of completeness, accuracy and validity, as well as their fair presentation. A new City Council has been elected and has embarked on a campaign to raise the much-needed revenue to meet the cost of essential services. While such efforts are to be lauded, the Council’s track record on financial accountability has been a dismal one, to say the least. It is therefore imperative for City Hall to urgently address the issue of the lack of financial accountability. With such a broken financial management system in place, any initiative aimed at broadening and enhancing the Council’s revenue base could be adversely affected. In the same way a fisherman patches his/her net that is filled with holes, before going out early in the morning fishing, or better yet discard it for a new one; so must City Hall address the issue of the lack of financial stewardship before embarking on any new venture.

Budgetary arrangements

Section 155(1) of the Act provides for the estimates of revenue and expenditure to be submitted to the Council for its approval not later than 15 November of the preceding year. Once approved, a copy of the estimates has to be submitted to the concerned Minister and shall be open for public inspection. As of November 2014, City Hall did not submit its budget for 2015 to the Minister because of political wrangling that saw the Council not approving  it. It is not clear whether such approval was subsequently given. As regards the 2016 budget, City Hall is yet to present its 2016 budget to the Council for its approval. Suffice it to state that to the extent expenditure has been incurred without an approved budget, the legality of such expenditure would be seriously called into question.

The parking meter issue

On 23 May 2016, a contract was entered into with National Parking Systems (NPS) in partnership with Smart City Solutions for the installation and operations of parking meters in Georgetown. The matter was, however, not discussed with the newly elected Council prior to the award of the contract nor did the Council give its approval to the award, as evidenced by a statement from the Deputy Mayor Sherod Duncan to this effect. In addition, there was no evidence that the citizens of Georgetown and other stakeholders were consulted before the decision was taken.

In accordance with Section 231 of the Act, before entering into any contract for the execution of any work or the supply of any goods to the value of $250,000, or more, a council is required to give notice of such proposed contract and “shall by such notice invite any person willing to undertake the same to submit a sealed tender thereof to the council…” The Minister may by directions in writing exempt any council from the above requirement in respect of certain works or goods. However, these procedures were not followed. Mayor Patricia Chase-Green contended that since no funds from City Hall are being used in the installation and operations of the parking meters, there was no need to go to tender. She further stated that the Council would be receiving 20% of the gross proceeds. However, her assessment ignores the fact that without competitive bidding, the Council is not be in a position to ascertain whether the offer by NPS is the best. Was it not possible for some other individual or firm to offer more than 20% of the gross proceeds while at the same time charging less than the proposed $125 for every 15 minutes of parking?

A project of this nature would generally require public advertisement inviting interested persons or firms to submit Expressions of Interest (EOIs) as part of a prequalification exercise. Following the evaluation of the EOIs by a technical committee, eligible individuals/firms are requested to submit bids on the basis of which the contract is awarded. The fact that the City Council failed to follow these procedures and proceeded to handpick a contractor is a serious indictment in terms of transparency and competitiveness.

The other issue is one of due diligence which is an established procedure before major contracts are awarded. The Deputy Mayor contended that there was a “total lack of verifiable information on the company and its capacity to execute the scope of the project”. He stated that in his research he did not find any company by the name ‘Smart City Solutions’ associated with parking meter systems, in any of the places where the firm claimed it has done business. Internet searches by the Stabroek News also did not find any information on Smart City Solutions. According to the newspaper, “while NPS has a website, it is rudimentary and the company does not appear to have undertaken any major projects”.

In view of the foregoing, this column calls on City Hall to:

(a)           rescind the contract with the National Parking Systems for the installation and operations of parking meters in Georgetown;

(b)          consult with citizens of Georgetown and other stakeholders on any proposal to introduce parking meters;

(c)           depending on the outcome of such consultations, seek the approval of the City Council to proceed with the proposal;

(d)          on the assumption that approval is granted, advertise publicly for Expressions of Interest from interested individuals and/or firms;

(e)          Appoint a technical evaluation committee and conduct a pre-qualification exercise to identify eligible individuals and/or firms;

(f)           invite eligible individual and/or firms to submit tenders; and

(g)           award the contract to the most competitive bidder, taking into account other pertinent considerations, including the conduct of due diligence procedures.

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