When I was in Opposition, I always wondered why is it that the Auditor General is not involved in the audit of public corporations. As a matter of policy, he must be involved; and if the law does not provide for this, we must amend the law.
The late President Cheddi Jagan in 1993
On the occasion of the 20th anniversary of the United Nations Convention Against Corruption (UNCAC) observed two Fridays ago, the Ambassadors/High Commissioners of the United States, United Kingdom, Canada and the European Union issued a joint statement commending Guyana’s efforts to address the issue of corruption. They, however, stated that combatting corruption requires more than having a robust legislative framework; and where the framework reflects best practices, those practices must be implemented for all to see and experience, adding that governments have a duty to hold to account those who engage in fraud, bribery, and collusion with criminal elements.
The diplomats further stated that governments alone cannot solve the problem and need to work with civil society and the private sector to eradicate corruption at all levels; and such cooperation will yield positive outcomes leading to good governance, a robust civil society, respect for the rule of law, and the preservation of human rights norms. They also underscored the ‘importance of ensuring improved accountability, increased transparency, and the dismantling of corruption in all its forms to build a more inclusive future for all’.
The Inter-American Convention Against Corruption (IACAC) came into being on 29 March 1996: (i) to promote and strengthen the development of mechanisms needed to prevent, detect, punish and eradicate corruption; and (ii) to promote, facilitate and regulate cooperation among the States Parties to ensure the effectiveness of measures and actions to prevent, detect, punish and eradicate corruption in the performance of public functions and acts of corruption specifically related to such performance. Guyana was a signatory to the Convention.
UNCAC was adopted on 9 December 2003 by the UN General Assembly Resolution 58/4: (i) to promote and strengthen measures to prevent and combat corruption more efficiently and effectively; (ii) to promote, facilitate and support international cooperation and technical assistance in the prevention of and fight against corruption, including in asset recovery; and (iii) to promote integrity, accountability and proper management of public affairs and public property. It covers five main areas, namely, preventive measures, criminalization and law enforcement, international cooperation, asset recovery, and technical assistance and information exchange. UNCAC is the only legally binding universal anti-corruption instrument. Although Guyana was not one of the 140 signatories to the Convention, it acceded to it five years later on 16 April 2008.
In today’s article, we highlight Guyana’s efforts over the years to address the issue of corruption in the public sector.
Activation of the Public Accounts Committee in 1993
Following the restoration of public accountability in 1992, the Public Accounts Committee (PAC) was re-activated in 1993. The Committee is responsible for scrutinizing the public accounts and all other accounts that are referred to it by the Assembly. It uses the Auditor General’s report as a convenient starting point.
The last report of the PAC was in respect of the combined years 2012 to 2014 and therefore the Committee is seven years in arrears in reporting on the results of its examination. It should not be over-emphasised that the public accountability cycle remains incomplete without the PAC’s timely and thorough scrutiny of the public accounts; the tabling of its report in the Assembly; and the issuance of a Treasury Memorandum setting out what actions the Government has taken or proposes to take in relation to Committee’s findings and recommendations.
The focus of the work of the PAC has been on the accounts of central government only although Article 224 of the Constitution defines the public accounts of Guyana to include the accounts of: (i) all central and local government bodies and entities; (ii) all bodies and entities in which the State has a controlling interest; and (iii) all projects funded by way of loans or grants by any foreign State or entity. One hopes that once the work of the Committee is brought up to date, it would consider it necessary to scrutinise the accounts of these other entities and bodies which in many cases are significantly in arrears in financial reporting and audit.
1993 amendment to the Financial Administration and Audit Act
This amendment came about as a result of a long-standing dispute over the extent of the Auditor General’s mandate. In 1993, matters came to a head when the then Minister of Finance removed the Auditor General as the external auditor of the Bank of Guyana and replaced him with a private auditing firm. The intervention of the then President was sought, and the above quote was from the meeting summoned by the President at which the Minister of Finance and I were present. The amendment clarified that the Auditor General’s mandate includes the audit of not only central government activities but also all entities in which controlling interest vests in the State.
The concern at the time was that most of the public corporations were in serious financial difficulties, yet they were given “a clean bill of health” by the external auditors. It was felt that through the involvement of the Auditor General, these entities would benefit from a more rigorous assessment that is associated with State audit. In this regard, provision was made for the Auditor General to engage the services of Chartered Accountants in public practice to assist him in the discharge of his mandate, if he/she considered it desirable.
Integrity Commission Act 1997
The Integrity Commission Act was passed on 24 September 1997 for the purpose of securing the integrity of persons in public life. These persons, along with their spouses and children, are required to file with the Commission annual declarations of income and assets and liabilities. The failure to do so constitutes an offence punishable on conviction by a fine of $25,000 and imprisonment of not less than six months and not more than one year. There is also a Code of Conduct which all persons in public life are required to follow.
The Commission is to comprise of a Chairperson and not less than two and not more than four members appointed by the President after consultation with the Leader of the Opposition. It, however, took two years for the three Commissioners to be appointed exclusively from the religious community. Although there is provision in the Act for the engagement of technical persons to assist the Commission, this was not done, mainly due to restricted budgetary allocations. As a result, the effectiveness of the work of the Commission was not felt.
In 2006, the chairperson resigned, and no meetings were held thereafter for the next six years because of the absence of a quorum. The other members of the Commission ceased to function in 2012, and it took another six years for new members to be appointed in 2018. The Code was revised in 2018. However, the Commission remains largely under-funded. There is also no evidence of prosecution of persons who have failed to submit financial returns, who have violated the Code of Conduct, and whose assets (including those beneficially owned) and lifestyles are inconsistent with their declarations.
This above state of affairs raises important questions about the seriousness of successive Administrations to have a fully functioning Commission in place aimed at assisting in the prevention and fight against corruption and mismanagement of public resources, and to hold corrupt public officials to account. In 2012, Guyana’s score on the Corruption Perceptions Index (CPI) was 28 out of 100. Eight years later, it moved to 41. This 13-point increase occurred mainly during the period 2016-2020 when Guyana’s score increased from 29 to 41. The largest increase was in 2016 with a five-point increase, moving from 29 to 34. This enhanced performance was mainly due mainly to:
Amendments to Anti-Money Laundering and Countering the Financing of Terrorism (AML-CFT) Act;
Conduct of numerous forensic audits of State institutions, and the involvement of the Special Organised Crime Unit (SOCU) in instituting charges against certain officials;
Establishment of the now disbanded State Assets Recovery Agency (SARA);
Activation of the Public Procurement Commission (PPC);
Appointment of new members of the Integrity Commission and the revision of the Code of Conduct contained in the Integrity Commission Act;
Establishment of Guyana’s Extractive Industries Transparency Initiative; and Passing of whistleblower protection legislation.
Guyana, however, declined by two percentage points on the 2021 CPI. It has now been relegated to the bottom of the table of English-speaking Caribbean countries, a position that it held since 2005 when it was first assessed, except for 2020 when it overtook Trinidad and Tobago by one percentage point. The results of the 2022 CPI are expected to be released next month.
It is regrettable that SARA has been disbanded since a key provision of UNCAC relates to asset recovery; while after four years, the whistleblower protection legislation is yet to be brought into effect. The charges instituted by the Specialised Organised Crime Unit against certain public officials have also all been dropped.
2001 constitutional amendment relating to the Public Procurement Commission
In 2001, the Constitution was amended to provide for, among others, the establishment of the Public Procurement Commission (PPC) ‘to monitor public procurement and the procedures therefor in order to ensure that the procurement of goods and services and the execution of works are conducted in a fair, equitable, transparent, competitive and cost effective manner…’ However, it took 17 years for the Commission to be activated through the appointment of five members on 28 October 2018. This undue delay was mainly due to reluctance of the Cabinet to cease its involvement in the procurement process, a situation that continues to prevail to date. As in the case of the Integrity Commission, the work of the PPC remains largely ineffective.
Procurement Act 2003
The Procurement Act was passed in the Assembly on 19 June 2003. It provides for the regulation of the procurement of goods, services and the execution of works, to promote competition among suppliers and contractors and to promote fairness and transparency in the procurement process. It replaced the Tender Board Regulations which had become outdated and did not have the full force of the law. A key provision relates to the creation of the National Procurement and Tender Administration Board (NPTAB) as well as regional, ministerial/departmental, and district boards.
Despite having the procurement procedures codified in the form of legislation, the Auditor General’s reports over the years are replete with violations of the Act without sanctions being imposed against the responsible officials. Additionally, concerns have been expressed over the functioning of the NPTAB.
FMA Act 2003
The Fiscal Management and Accountability (FMA) Act was passed on 15 December 2003 to provide for: (i) the regulation of the preparation and execution of the annual budget; (ii) the receipt, control and disbursement of public moneys; (iii) the accounting for public moneys; and (iv) such other matters connected with or incidental to the transparent and efficient management of the finances of Guyana. It replaced the financial section of the FMA Act which had been in existence since Colonial times, except for certain amendments.
Again, we must note that the Auditor General’s reports over the years are replete with major violations of the Act, especially: the failure to pay over to the Consolidated Fund all unspent balances; (ii) the keeping of the books of account open well into the new fiscal year to facilitate payments with the intention of exhausting budgetary allocations; and (iii) the abuse in the use of the Contingencies Fund. These actions have resulted in significant breaches in the Procurement Act, over-payment to suppliers and contractors, non-delivery of goods and services, and defective work performed, among others.
Audit Act 2004
The Audit Act was passed in April 2004 but was not operationalized until April 2005. It gives effect to the constitutional amendments of 2001 that provide for the delinking of the Audit Office from the Executive whose accounts have to be scrutinized by the Auditor General. Prior to the passing of the Act, there had been concerns about the absence of direct reporting to the Legislature and the Executive’s control over the Audit Office’s budget. The Auditor General also had no control over the recruitment, promotion and discipline of staff members, which responsibility was vested in the Public Service Commission.
There is now direct reporting to the Legislature via the Speaker; while the PAC now oversees the work of the Audit Office, including the approval of its budget and the ratification of senior appointments. This arrangement does not impinge on the Auditor General’s independence since, by Article 222 of the Constitution, only in the exercise of his/her duties, the Auditor General is under the direction or control of no person or authority.
The Audit Office exists to serve the Legislature and therefore it is entirely appropriate for it to be placed under the Legislative Branch, and for the PAC to provide for the necessary oversight. Independence is not an absolute concept; there are degrees of independence; and sometimes trade-offs are necessary. In the final analysis, the Audit Office is no longer a government department auditing the operations of the Government!
To be continued –
