Two weeks ago, the police in Malaysia raided 12 properties linked to former Prime Minister Najib Razak in a money-laundering investigation. The raid netted at least US$273 million in value, comprising, jewellery, watches, and handbags, among others. Police considered it the largest seizure in Malaysian history. The investigation relates to allegations of corruption at the defunct state investment fund, known as 1Malaysia Development Berhad (1MDB), that the former Prime Minister had set up in 2009 to promote economic development. He has since been charged on four counts of criminal breach of trust and abuse of power.
Over in Pakistan, the National Accountability Bureau Court sentenced former Prime Minister Nawab Sharif and his daughter to ten years and seven years respectively in prison over the purchase of high-end flats in London. They were also fined a total of 10 million pounds sterling, and the properties confiscated on behalf of the Pakistani Government.
Today’s article is based on media reports that the Permanent Secretary of the Ministry of Communities has requested the Public Accounts Committee (PAC) to suspend its examination of the public accounts for 2016 to allow Regional Executive Officers (REOs) time to prepare themselves to provide the necessary clarifications on the findings in the Auditor General’s report relating to their respective Regions.
The PAC’s Role
The PAC is a sub-committee of the National Assembly established to ‘examine the accounts showing the appropriation of the sums granted by the Assembly to meet Public Expenditure and such other accounts laid before the Assembly as the Assembly may refer to the Committee together with the Auditor General’s report thereon.’ It currently consists of nine members drawn from both sides of the House in proportion to their representation in the Assembly. The Chairperson, by tradition, is from the main Opposition.
The PAC uses the Auditor General’s report as an important starting point and a source of reference. Heads of budget agencies are required to attend meetings of the PAC at which the appropriations of their ministries or departments are discussed, and to provide the necessary explanations and/or clarifications. The Auditor General, the Finance Secretary and the Accountant General are advisors to the Committee.
The PAC’s dissatisfaction
In our column of 9 April 2018, we had stated that, while the PAC’s efforts to clear the backlogged accounts covering the years 2012 – 2015 should be applauded, we expressed the hope that such efforts did not in any way compromise the quality and comprehensiveness of the PAC’s scrutiny of the accounts for those years.
On several occasions during its examination, the PAC had berated heads of budget agencies because of their apparent lack of preparedness when appearing before it. In some cases, the PAC suspended its hearings because of unsatisfactory responses to questions posed. These actions are rather unfortunate, considering that the
hearings are open to the public and are reported on extensively in the media.
Heads of budget agencies are responsible for managing the financial affairs of their respective ministries and departments, and hence collectively, the financial management of the Government as a whole. These officials comprise the highest echelon in the Public Service. It follows that any open criticisms of them, whether justified or otherwise, can only serve to demoralize them and put them in bad light in the eyes of their subordinates as well as the public. Not only that, the PAC’s work and its reporting to the Assembly can be adversely affected, especially if heads of budget agencies take a minimalist approach to answering questions posed by the PAC, instead of being frank and open about the problems facing their ministries and departments and any suggestions they may have for improvement.
We make these comments not because we condone mismanagement, waste, extravagance, corruption, fraud and other forms of irregularities, that may exist in government. Rather, we believe that a more refined and professional approach, compared with what currently prevails, needs be adopted as a means of addressing the PAC’s dissatisfaction with the responses of heads of budget agencies. As a political body, the PAC must be mindful of its interactions with public officials. By rebuking them openly, it may be acting outside of its mandate, bearing in mind that the reporting relationship of these officials is to the Finance Secretary and not the PAC. If the PAC is dissatisfied with the response of a head of budget agency, it should request the Finance Secretary (FS), who attends all PAC meetings, to take note. It is then for the FS to take whatever actions he considers necessary to the extent allowed by the Fiscal Management and Accountability Act and any related circular instructions.
One can appreciate the frustration of the PAC since heads of budget agencies had at least six months to prepare for the current PAC examination, considering that the 2016 Auditor General’s report was issued on 29 September 2017. In addition, the issues raised in the report would have been discussed with them well in advance of the date of issuance of the report. The explanation that heads of budget agencies need more time to prepare for the PAC hearings, cannot therefore be regarded as a satisfactory one, unless they are being asked to explain matters not reported on by the Auditor General. If this is the case, it would be quite justifiable for these officials to request an extension to time to prepare their responses.
Responses by Heads of Budget Agency
The normal practice is for the Auditor General to first issue a draft report to the head of a budget agency who is required to respond within 30 days. If the Auditor General needs further clarifications, then a meeting is held with the head of budget agency. The Auditor General then finalizes his report which shall include the written responses of the heads of budget agencies as required by Section 27 of the Audit Act 2004. This is necessary to ensure that the report reflects balance and to enable the PAC and indeed the public to better appreciate the basis under which the findings and recommendations have been arrived at.
A review of the Auditor General’s report for 2016 and earlier years indicates that, while attempts were made to summarise the responses from heads of budget agency in a sentence or two, such summarisation was too brief and generalized to serve any meaningful purpose. It would therefore be more helpful if the written responses are reproduced verbatim, perhaps in a section immediately after the Auditor General’s report, as envisaged by Section 27. In this way, the PAC can match each finding with the corresponding explanation provided, thereby minimising the extent to which heads of budget agency are called upon to provide clarifications to the PAC. In some cases, it may not even be necessary for a head of budget agency to be called to attend a PAC meeting. The PAC examination could also be expedited and its report to the Assembly finalised much earlier.
Minister of Communities’ Reaction
The Minister of Communities, under whose responsibility the Regional Administration falls, contended that the PAC has been taking a biased view during its examination, a claim that appears not to be without merit as those who have been following the PAC deliberations might have observed. In our column of 16 April 2018, we had referred to a statement from the Minister of Public Health who was reported to have challenged an Opposition PAC member to contradict her claim that there was never in recent times a similar partisan approach to the work of the PAC. She had asserted that:
I have been the Chair of this [PAC] and there was never a time when the [PAC] has done its work without full collaboration with both sides of this House, and I say it without fear of contradiction. Because we focused on the issues, we saw it as a national issue, and we had to address it so that we can make the accountability within every agency in this country done in accordance with the rules and regulations.
We had cautioned that the above statement suggests all is not well in terms of the functioning of the PAC. We also quoted the words of the late Sir Harold Wilson, the then Chairman of the UK PAC and former Prime Minister, in the sincere hope that they would serve as an important reminder to our PAC members as to how they should view their role in the public accountability process. In addition, we emphasised that since the PAC examination of the public accounts is now open to the public, with the full glare of the public eye, members need to conduct themselves befitting of the position they hold and to avoid the display of partisanship.
The allegation of bias raises the important question as to how Parliamentarians are selected to serve on such an important body as the PAC. One would expect that, in order to play a useful role in scrutinizing the public accounts, such persons would be chosen having regard to not only their knowledge and experience in public financial management but also the extent to which they can maintain their objectivity. The fact that such an allegation is being made would suggest a mismatch between Government representation and that of the Opposition in terms of such knowledge, experience and objectivity.
Perhaps, the Assembly should review the composition of the PAC membership with a view to ensuring that an appropriate balance is in place. Despite all the efforts to do so, however, in the final analysis the display of objectivity and non-partisanship is an individual consideration. As representatives of the people, that consideration is a clear one: nothing else but the public interest. Anything else would render such individuals unsuitable to hold public office.