PRESS STATEMENT By People’s National Congress Reform Thursday 21 August, 2008 Media Centre, Congress Place, Sophia




GOVERNANCE - WITH PARTICULAR REFERENCE TO PUBLIC FINANCE


THE FISCAL ENACTMENTS (AMENDMENT) BILL 2008:

This Bill was debated in the National Assembly in July 2008 when the PNCR pointed out, among other things, that the Government:

a) was seeking to correct an illegality; -
b) was expanding Ministerial discretion in the grant of fiscal concessions contrary to its undertaking to international financial institutions.
c) was flagrantly breaching the tenets of transparency and accountability by the way it treated with the QAII investments and by the framework it was creating under the Bill.

In winding up the debate on the Bill the Honourable Minister of Finance with much fret and fury and with impressive histrionics waved a document from which he read indicating that Minister of Finance Mr. Carl Greenidge had in 1992 issued a directive to the then Auditor General setting restrictions on direct access by the Auditor General to public officials. How that could have been an answer to the illegality committed and the secrecy of the Government in the QAII deal defies logic.

Mr. Carl Greenidge was the Minister with responsibility for the Audit Office so his action was within the law though it may be acknowledged that the directive was not in the best interests of transparency. However, there was no illegality.

In the case of the QAII deal there was a clear illegality, later admitted by the head of Go-Invest. Further, the Government simply cold-shouldered the many calls to lay the agreements in the National Assembly.

The Minister of Finance also very vigorously punched the air with a document (not circulated to members of the National Assembly) purportedly identifying the privatizations completed by the Privatization Unit.

What he failed to tell the National Assembly and the nation was why the billions of dollars earned from such privatizations have not been deposited in the Consolidated Fund of Guyana as required by Article 216 of our Constitution.

No amount of ranting and raving could conceal such unconstitutionality.
















Seen in this picture is the Press Conference panel which are from left, Ms. Volda Lawrence, M.P., PNCR Human Services Director and member of the Public Accounts Committee, Mr. Winston Murray, C.C.H., M.P., Chairman of the Party, Ms. Africo Selman, M.P., and Mr. Terrence Simon, Assistant Secretary of the North American Region (NAR).


]THE 2006 AUDITOR GENERAL’S REPORT:

This report was handed over to the Speaker of the National Assembly at the end of July 2008.

Under Section 74 (2) of the Fiscal Management and Accountability (FMA) Act the Auditor General is required to present that report within nine months following the end of the fiscal year to which the report relates. On that basis the 2006 Report is submitted 10 months outside of the legal requirement.

However, under S73(3) of the said FMA Act the Minister of Finance is required to deliver the consolidated financial statements to the Auditor General within four months following the end of the fiscal year.

At paragraph 6 of his report the Auditor General stated that as at 30th April, 2006 (mistake) none of the statements was received, that draft Appropriation Accounts were received on 20th June, 2007 and that “the signed statements to facilitate the completion of these audits were not received until 24th June, 2008.”

Clearly, the Honourable Minister of Finance did not comply with the law. In fact, the signed statements to facilitate the 2006 audit were submitted some 15 months after the legal deadline.

It should also be noted that section 73(4) of the FMA Act provides that “if the Minister has not delivered the consolidated financial statements to the Auditor General within four months following the end of the fiscal year . . . the Minister shall provide to the National Assembly a statement as to the reasons why the consolidated financial statements have not been so delivered to the Auditor General.”

The Honourable Minister of Finance has never provided such a statement to the National Assembly, either within the legal time frame or outside of it. This is truly indicative of the regard the Government has for the rule of law.

It should also be noted that on the basis of the financial statements delivered to the Auditor General and based on the Auditor General’s examination of them he wrote at page ii of his report as follows:

“However, because of the significance of the comments as contained in the relevant sections of my report relating to the following statements, I am unable to form an opinion whether they properly present their respective state of affairs as at 31 December 2006.”

It would be very time consuming to go through in detail the many concerns the Auditor General had on each financial statement. These are to be found at pages vii – ix of the Report.

However, two of them need to be highlighted. As regards the Contingencies Fund he wrote “The Contingencies Fund continued to be abused with amounts drawn from the Fund . . . which did not meet the eligibility criteria as defined in the Act.” At p. 12 of his Report the Auditor lists the legal requirements for access viz: “Urgent, unavoidable and unforeseen.” I leave you to judge which of the particulars of the expenditure listed at p. 12 satisfied the criteria which must be applied together.

As regards the Schedule of the Issuance and Extinguishment of all loans made by the Government (P viii and P.2/45 of the Report) the Auditor General noted that loans made in 2006 to Aroaima and Hand in Hand Trust Corporation amounting to $105m were omitted from the schedule.

Further the PNCR has independently checked the Schedule and has discovered that the loan to Buddy’s International Hotel is not included therein. Surely an explanation is owed for these omissions.

These are further examples of the Government’s interpretation of transparency and accountability.

One other general area that deserves comment is that of Bank Accounts (P viii).

The overall comment is that there were a number of inactive Bank Accounts with large sums of money in them (over $7.9b). The Auditor General has expressed the opinion that such accounts should be closed and the balances transferred to the Consolidated Fund.

The PNCR is aware that in many instances the Accountant General had ordered such accounts closed and the funds transferred. For many years now this has not been done.

The Head of the Presidential Secretariat has been heard to say recently that the problem with such accounts was that they went back to the pre 1992 era and there were difficulties in reconciling such accounts.

This is the typical knee jerk reaction from the Government. When something cannot be properly explained blame it on the PNC.

The facts are as follows:

a) More than 95% of such accounts concern the post 1992 era;
b) The recommendation to close inactive accounts does not remove the need for reconciliation but simply ensures that balances in those accounts are not available for misuse or abuse. Hence the recommendation to transfer to the Consolidated Fund;
c) This is a matter that has been unattended for many years now.

As regards the report for specific agencies many of the adverse comments e.g. overpayment on contracts, clearing of cheque orders, overpayment of salaries to staff, failure to comply with stores regulations and failure to comply with the law on procurement are matters that have been repeatedly raised in previous reports of the Auditor General but nothing has been done to have these undesirable and illegal occurrences corrected.

The PNCR was therefore surprised to hear the Honourable Minister of Finance suggest that perhaps the Auditor General did not seek explanations from the accounting offices since he, the Minister, was sure there were proper explanations.

Let it be clearly understood that accounting officers and their staff are always given an opportunity to respond to the comments of the Auditor General through exit conferences and by formal submission of comments to the Public Accounts Committee.

Invariably, the observations in the Auditor General’s Report are acknowledged to be correct and the PAC has always used its best efforts to persuade accounting officers to do the right thing and where there are genuine difficulties in administering the law to discuss the matter with their political heads so that recommendations could be made to change the law where appropriate.

So the Honourable Minister of Finance ought to know that it is not an issue of obtaining explanations but rather one of the executive ensuring that laws and regulations are obeyed and, where necessary, appropriately changed to meet new circumstances.

In this regard the Public Accounts Committee, on 14th February, 2008 laid in the National Assembly its report on the examination of the Auditor General’s reports for 2002 and 2003.

The examination for 2004 and 2005 is complete except for one agency which had to be sent back to do over its comments.

Under National Assembly Standing order 82(3) the Government is required to submit a Treasury Memorandum to the National Assembly indicating the Government’s response to the reports of the PAC. This is required to be done within 90 days of the submission of the PAC’s report.

Thus the Treasury Memorandum in response to the PAC’s report for 2002 and 2003 should have been submitted to the National Assembly by mid May 2008. Up to this time no such memorandum has been forthcoming.

Since many of the problems identified in the Auditor General’s reports are of a recurring nature the tabling of the Treasury Memorandum even for years long past would have given an indication of the Government’s seriousness in addressing the issues raised in the PAC reports.

Finally, the PNCR cannot fail to draw attention to two significant issues which continue to exist in the realm of illegality which are highlighted in the 2006 Report of the Auditor General.

The Lotto Funds (Pp 23 & 24)

The Report indicates that the sum of $2.95 billion (US$47.5m) was paid over to the Government as the people’s share from the lotteries over the period 1996-2006.

In open and unashamed violation of Article 216 of the Guyana Constitution this money has not been paid into the Consolidated Fund. All of this money has been deposited into special bank account No. 3119 under the control of the Minister of Finance.

As a result none of the expenditure from this account has ever been given the approval of the National Assembly of Guyana. Between the President and the Minister of Finance directions are given for the spending of the money.

While the Auditor General has reported that the projects on which these monies are spent are subject to audit the PNCR states unequivocally that such a procedure cannot be a substitute for upholding the requirements of the Constitution of Guyana.

Purchase Of Drugs and Medical Supplies
(Paras 261, 267, 276 and 283)

Instead of following the requirements of the Public Procurement Act 2003 and the regulations made thereunder the Ministry of Health in 2006 continued to use a Cabinet Decision as a basis for sole purchasing drugs and material supplies (other than supplies purchased through International Health Organisations) through New Guyana Pharmaceutical Corporation. The report made it clear that tender procedures were not followed in 2006 for 54 purchases totaling $590.478m.

The Auditor General posited that 8 of those purchases required cabinet’s “no objection” under the Procurement Act.

The PNCR respectfully disagrees with the Auditor General in that there could be no involvement, even of the Cabinet, if tender procedures were not in accordance with the law. Cabinet cannot express “no objection” to an illegality.

For 2005 and 2006 the Ministry of Health purchased $1.12 billion of drugs and medical supplies via this illegal route.

The Guyana Public Hospital Corporation, the Auditor General’s report points out, also purchased $430.418 m of drugs by the same procedure. The report further points out that there was no evidence to indicate tender board procedures were complied with.

In 2005 this Corporation purchased $443.203m – via the same procedure - $873.611m for 2005 and 2006.

Thus the two organizations together purchased a total of $1,993.6m or approximately US$10m through a procedure in stark violation of the Public Procurement Act.

Again, these are further examples of the Government’s total disregard for the laws of the land.

The PNCR calls upon the Government to scrupulously observe, and function within, the laws of our country. The work of the Auditor General must not go in vain.

Additionally, the concept of observance of the rule of law is one that ought to apply with equal force and effect to the ‘lowly’ citizen and to the ‘mighty’ official, to the State and all its institutions.

People’s National Congress Reform
Congress Place, Sophia,
Georgetown, Guyana.
Thursday 21 August, 2008