Permanent Secretary flayed over $106m kept in special projects account

The former Permanent Secretary (PS) of the Department of Culture, Youth and Sport on Monday reluctantly admitted to the Public Accounts Committee (PAC) that he had authorized the deposit of $106 million made out to a contractor into a Special Projects account, rather than having it placed into the Consolidated Fund.

The Accountant General later advised during the PAC hearing that that special account be closed for the sake of accountability and transparency.

Alfred King, who currently serves as PS at the Ministry of Indigenous Peoples Affairs, told the committee that the cheque was deposited after a bidder disputed the award of a contract for the refurbishment of the air-conditioning system at the National Cultural Centre (NCC).

Alfred King

“What happened at the time, a contract was being established, or in fact, there was a call for tender to do the refurbishing of the Cultural Centre air conditioning system and when that contract was awarded and signed it was challenged by one of the bidders and so at that time, while we were preparing to honour the payment, the mobilization, to the awarded contractor it was disputed and the minister was injuncted, and it’s not until we resolved that matter we proceeded,” King related.

Member Volda Lawrence followed up by stating that there is nothing in the statute permitting a line item appropriated by Parliament to be placed into a special account unless permission is granted by the Minister of Finance and questioned how it was he was able to withdraw the money.

Furthermore, she questioned how a cheque made out to an individual was deposited into a government account.

Seeking clarity from King and advice from the Accountant General, committee Chairman Irfaan Ali put forth the following scenario:

“You’re saying that a cheque that is cut, a government cheque that is cut by the ministry for payment let us say to minister Lawrence, if there is an issue, that cheque can be withheld and placed into the ministry account or into any other account?” Ali questioned.

King stated that that was correct based on information he had received from his Technical Advisor.

The Accountant General Jennifer Chapman, however, said that except that the cheque is made out to the PS, the only way a deposit can be made is if the person endorses the cheque, and even so, it cannot be placed into a government account.

“You are not authorized to put anybody’s cheque into an account, a government account without the person endorsing it. And even if you cross the cheque it means you would have had to deposit it into the person’s personal account, not in a government account.”

Evade

King managed to evade responding to questions of who authorized the transfer, posed by Ali and Lawrence, by responding to everything but that particular query. He was, however, eventually backed into a corner by PAC member Jermaine Figueira, although his eventual third person response highlighted his unwillingness to accept responsibility.

“As is recorded in the response, the ministry indeed acknowledged the auditor general’s findings,” King said, after Figueira asked on whose authority the transfer was done and whether he agreed the transaction was a breach of the Fiscal Management and Accountability Act of 2003.

“…but who authorized for that to be done? Who authorized the accountant to formulate the cheque?” Figueira prodded.

“…given that it was a disputed project…we were already told that ideally we should have surrendered the funds and we applied for it in the new project but at that time the judgement call was that the project was going to be continuing…” King offered.

“I listened to that part of your response but still you’re saying you were advised by who? Who gave the authorization for that to be done?”

King then stated that there had been no authorization outside of the ministry, but Figueira went one step further to ask who, then, from the ministry had given the authorization, to which King finally responded, “It was the judgement call of the accounting officer”.

King was appointed as PS to the department in 2009.

The Auditor General’s (AG) 2015 report states that the $106.096 million transfers were made in 2013 and 2014 and represented unexpended balances on capital and current provisions.

Prior to this engagement, questions had been raised about the establishment of the Special Projects account under the Department of Culture, Youth and Sport and why monies were being deposited into the Special Project Account and not into the Consolidated Fund.

King said that the account was established to accommodate the flow of funds for special projects financed by the United Nations Development Fund, United Nations Children Fund, the Lotto funds and the like, and stated that he has been associated with the account for the past nine years.

King said he could not recall any one instance where the monies in the special account were transferred to the Consolidated Fund at the end of the year, but promised to provide the PAC with the reason why these transfers were not done.

The PS of the department, Melissa Tucker, informed PAC members that the matter had been brought to the attention of the Financial Secretary and the department is in the process of reconciling the projects account, with the intention of having the special account closed and the money transferred to the consolidated fund.

She stated that the reconciliation has been completed for 2014 and 2015 is now in progress.

The AG reported that the bank balance as of December 31, 2014, was $70.297 million, while the cash book balance was $64.449 million. King, reading from a bank statement on Monday, related that opening balance as being $70,424,297.

The AG’s report states also that in 2015, the bank balance was recorded as being $11.498 million while the cash book showed $11.023 million. The closing balance as of December 2015 was reported to be $29.952 million.

Asked by Lawrence what could have caused the difference reported in 2014 since the reconciliation was completed, the PS stated that her advice is that bank charges may have caused the differences.

“PS, Bank of Guyana would not have bank charges. But there is an increase of 200 plus thousand and this is what I was talking about earlier. I mean, the advisors can’t pluck answers out of the sky, you gotta bring answers based on reality. PS there’s a further question on this same issue because not only are the balances different but the cash book balances are also different,” Ali stated.

Tucker was advised by Ali to take time to gather the correct information and provide it to the committee.

“What I would like to recommend to the Department of Culture is that they close the special account and transfer all amounts to the Consolidated Fund immediately and most importantly, for any future funding received from international donors, you can write to the Accountant General requesting approval for the opening, establishment of a deposit fund account and those transactions will be deposited to the Consolidated Fund where we’ll have full accountability and transparency for these transactions,” the Accountant General advised.

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