Former NIS Chairman says previous Board denied response to forensic audit findings

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In light of revelations emanating from the forensic audit into the National Insurance Scheme (NIS), former Chairman Dr Roger Luncheon has stated that the previous Board was not given the opportunity to respond to the findings of the probe before it was made official and public.

Former NIS Chairman Roger Luncheon
Former NIS Chairman Roger Luncheon

The report outlined largely that during the period December 2011 to May 2015, which was under the People’s Progressive Party/Civic (PPP/C) regime, Cabinet had caused some 93 per cent of scheme’s assets to be diverted into investments that are hardly generating revenues.

During this time, the head of the NIS Board was Dr Luncheon, who also served as Cabinet Secretary and Head of the Presidential Secretariat (HPS). He, along with the then Board, was removed after the new Administration came into power in May last year.

Over the past few days, there have been many publications in the local media about the findings of the forensic audit, which was done by Ramesh Seebaran. However, Dr Luncheon in a statement yesterday noted that he nor his former Board members were given a chance to respond before the publication of the audit findings.

“Neither the auditor nor the (David) Granger Government afforded the Board (2011-2015) the professional convention of first responding to the Auditor Findings… The forensic auditor failed to address the issue of whether evidence was unveiled establishing that the Board conducted its affairs and obtained financial benefits from irregular actions,” Dr Luncheon stated.

Furthermore, he outlined that “The findings of the forensic auditor that have been displayed in the press should and must be answered,” while asking whether “were the financial auditor or the Granger Government so inclined to solicit such an intervention, it should be directed to the competent authority”.

According to the former NIS Chairman, the Board which he headed, was “unceremoniously” terminated in May last year and was eventually replaced with the members nominated by the new Government.

In the auditor’s report that was published on the Finance Ministry’s website, there were two particular “major high risk investments” that were said to be potential losses to the scheme. These are the $5.1 billion investment into CLICO and the $2.5 billion investment in the Berbice Bridge Company Inc (BBCI).

The report further stated that the investment into the Bridge Company, which is not only making losses but has a lot of issues, was done without proper due diligence. The auditors posited that the Board accepted the decision when the Chairman informed Directors that Cabinet approved the sale of 950,000 preference shares in BBCI to NIS.

Moreover, it was observed that Cabinet’s decision was “countenanced by Directors” who made no attempt to determine whether the investment was in the best interest of the scheme. However, this decision came, according to the auditors, one meeting after “Directors expressed a disinterest in the BBCI investment offer… (and) the Chairman expressed concern about the inordinate risk concentrated in the portfolio.”

The report went on to detailed that at the end of June 2015, the Scheme’s investments stood at G$30,001,930,000 comprising of short-term investments valued $20,312,628,000 mainly of treasury bills, fixed deposits and CLICO; medium-term investments valued $1,693,359,000 mainly overseas investments in Government’s foreign account and a loan to the Caribbean Community and long-term investments valued $7,995,943,000. Included in the long-term investments are shares in companies and BBCI. The cost of the investment in BBCI is $2,562,228,000 which represents 8.5 per cent of total investments.

Furthermore, it was highlighted that the 8th Actuarial Review prepared for the period ended December 31, 2011, five years after the last review was done and in accordance with the NIS Act, indicated that the Scheme’s average yield on returns was 4.7 per cent compared with average inflation rate of 6.3 per cent which resulted in a negative real rate of return of 1.8 per cent over the five-year period reviewed. Since then, the average yield on returns for the years 2011 to 2014 has been three per cent whereas inflation has been 2.2 per cent a positive net return of .80 per cent. Had the Scheme been receiving returns on its investments in CLICO and the BBCI’s ordinary shares (dividend), the rate of returns for the last four years would have been significantly higher, the auditors said.

The report added that based on the last audited financial statements (2013) the Scheme’s total investment in proportion to total assets was 93 per cent and in proportion to reserves was 95 per cent. (Guyana Times)

 

1 COMMENT

  1. This dude articulates so much on his speeches,you forget the point,maybe he should buy some razors and cut them…

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