Auditor General’s Report of 2016 finds Contingency Fund was abused

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…in excess of $900 million withdrawn in breach of the FMA Act

By Jarryl Bryan

The Auditor General’s Report detailing the Government’s conduct of financial activities in 2016 documents a litany of breaches in regard to the Contingency Fund.

Auditor General, Deodat Sharma

It has been revealed that Government had made from the Contingency Fund withdrawals totalling in excess of $900 million; and those withdrawals do not comply with the Financial Management and Accountability (FMA) Act.

In his report, Auditor General Deodat Sharma named the Public Infrastructure Ministry (MPI) as the main culprit.

According to a statement of receipts and payments from the Contingency Fund, the MPI was responsible for withdrawals totalling more than $400 million.

It was noted that two withdrawals were made on behalf of the MPI in order to make outstanding payments for works on the controversial D’Urban Park project: $256.7 million on July 14, 2016, and $150 million on April 25, 2016.

The Ministry of Public Health (MPH) was also flagged for making a withdrawal of $63.5 million on July 21st in order to meet expenses for the controversial Sussex Street bond. Being rented from Linden Holding Incorporated at a monthly rental of $12.5 million, this bond has in fact been the subject of heated debates in the National Assembly.

Public Infrastructure Minister David Patterson

During the debate on the 2017 Budget, in December 2016, a parliamentary delegation accompanied by the media had visited the bond and found condoms, lubricants and some unused refrigerators in storage, but no pharmaceuticals and medical supplies.

There have been repeated calls for the Public Procurement Commission (PPC) to investigate this bond rental, which is supposed to come to an end by this year end.

The Guyana Defence Force (GDF) had also withdrawn from the Contingency Fund on May 23 a total sum of $248 million, much of it related to the army’s expenses in support of Guyana’s Republic and Independence anniversary observances last year.

In one instance, $20 million were taken to offset expenses incurred in procuring maps, writing material and ink to “aid in the development of orders and other related documents in support of the 46th Republic and 50th Independence anniversary and Operation Dragnet.”
A further $35 million were withdrawn to supplement money needed for the anniversary celebrations, and to service GDF vehicles for Operation Dragnet, a joint services’ intelligence- led operation which was carried out last year.

The sum of $46 million was also withdrawn to service the GDF’s aircraft, which notably became unserviceable over time.
According to the GDF in its response to this observation, “Our Y12 and Skyvan aircraft are unserviceable due to maintenance issues, thus there was an increase(d) need to hire aircraft to satisfy our routine and operational requirements.

“Additionally, funding is therefore necessary for hiring our air, sea and land transportation in support of the 46th and 50th Independence anniversary celebrations and Operation Dragnet”.

The sum of $30 million was withdrawn in order to launder uniforms, and to rent tents and other equipment for the celebrations.

Some $54 million were also taken from the Contingency Fund and spent on the army’s role in the celebrations; in Operation Dragnet; to procure agricultural supplies; to sew uniforms; for medical care for ranks; and for “unforeseen funeral expenses not catered for in our estimates.”

Some $41 million were withdrawn on behalf of the Region Six Regional Democratic Council (RDC), to maintain drainage and irrigation activities.
The report does not record a response from the Ministry of Agriculture, which received $234.7 million on July 28 of last year.

In his statement on the issue, Auditor General Sharma expressed disappointment that, for the period under review, nine advances were granted from the Contingency Fund to meet routine expenditure.

While the Ministry of Finance has noted that it would comply with the law, the Auditor General has recommended that more stringent measures be adopted to ensure full compliance with Section 41 of the FMA Act.

According to Section 220 (1) of the Constitution of Guyana, “Parliament may make provision for the establishment of a Contingencies Fund and for authorising the Minister responsible for finance to make advances from that Fund if he is satisfied that there is an urgent need for expenditure for which no other provision exists.”

Section 220 (2) stipulates that “Where any advance is made from the Contingencies Fund, a supplementary estimate shall, as soon as practicable, be laid before the National Assembly by the Prime Minister or any other Minister designated by the President for the purpose of authorising the replacement of the amount so advanced.”

In addition, Section 41 (3) of the FMA Act states, “The Minister, when satisfied that an urgent, unavoidable and unforeseen need for expenditure has arisen – (a) for which no moneys have been appropriated or for which the sum appropriated is insufficient; (b) for which moneys cannot be reallocated as provided for under this Act; or (c) which cannot be deferred without injury to the public interest, may approve a Contingencies Fund advance as an expenditure out of the Consolidated Fund by the issuance of a drawing right.”

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