The old age pension debacle
Editorial
Stabroek News
February 17, 2003
A preliminary report by the Office of the Auditor General (OAG) into the old age pension book scam has confirmed deep-seated concerns over what transpired at the Ministry of Human Services and the Guyana Post Office Corporation last year. The findings of the report point clearly to collusion between employees of the ministry and the post office to cheat the system and fill their pockets. These corrupt acts were ably facilitated by the complete breakdown of systems and the absence of acceptable procedures.
In a nutshell, new coupon books were printed last year following the realisation that the old age pension payment system was rife with fraud through the padding of the list of pensioners. (This alone should have served as a cautionary tale for those at the ministry who had oversight responsibility for old age pensions and spurred them to be more vigilant.) A new system was introduced - with much inconvenience to the pensioners - where they were required to uplift their pension books in person to ensure that the padding was eliminated. It appears that those associated with the coupon books at the ministry and those at the post office who were responsible for cashing them discerned that there were still loopholes through which the system could be defrauded. For the period examined by the OAG, May to October 2002, it was discovered that 8,078 fraudulent coupons worth $13.9M were cashed at various post offices around the country. The full extent of the fraud is still to be determined.
The cashing of the forgeries relied on a number of lacunae in the system which indicates the depth of the collusion. The first of these was that specimens of the coupons were not given to the post office so as to allow officers to verify that the coupons coming in were bona fide. Postal workers could then later claim that they were unaware that forgeries were coming in. This argument is unacceptable as the post office should not have undertaken to cash the vouchers unless it was thoroughly satisfied that it could properly do so. There were also telltale signs of possible fraud as sheaves of coupons were coming in at a time instead of a trickle. Secondly, the system for determining which coupon books were issued to which social security officers broke down as the books were distributed randomly and not sequentially as best practice would have. The books were also not issued to the pensioners sequentially by the social security officers. These shortcomings thwarted the single most important strand of inquiry which could have nailed one of the masterminds i.e. to whom 31 valid coupon books found by a fraud squad officer in a Berbice house were issued. The person who had signed as uplifting these books would have had a lot of explaining to do. Fourthly, postal employees made no attempt to correlate and analyse the amount of coupons cashed to determine if there were any irregularities. Fifthly, and amazingly, no checks were made by the Ministry of Human Services of the coupons which were returned to it by the post office for reimbursement. This is unfathomable as a contracted employee had been specially assigned the duty of examining all coupons before they were forwarded to the Ministry of Finance for cheques to be issued in favour of the post office. This officer would certainly have had specimens of the authentic vouchers and should have been able to detect the fakes. The OAG report revealed that the services of the officer have been terminated. The officer has gotten off lightly. He/she is guilty of gross dereliction of duty.
Sixthly, there seemed to be no viable internal auditing functions at the ministry which might have picked up the fraud. The counterfeiting operation ran as smooth as silk until the chance discovery by the fraud officer of the 31 valid coupon books and 1500 forgeries at the Berbice house. Up to that point, the ministry, the post office and the police were all blissfully unaware of what was happening. This in itself is quite discomfiting.
The pension scam fiasco is a signal lesson for agencies like the Human Services Ministry and the NIS which preside over the distribution of large amounts of public funds. Systems have to be kept intact, properly monitored and adjusted whenever compromised or in danger of being compromised. It would not be a bad idea for the Accountant General’s Department of the Ministry of Finance to compile a case study on this fraud and to circulate it to the other key ministries as a means of putting them on their guard.
Further, it is disappointing that after more than a decade of annual reports on the Public Accounts of Guyana and the heightened work of the Public Accounts Committee (PAC) of Parliament that these thefts of public funds and undermining of systems can still be occurring. It behoves both the OAG and the PAC to strive even harder to ensure that public funds are not stolen by the corrupt. It also opens up a greater role for these two bodies - perhaps via appropriate legislation - for involvement in contemporaneous checks on ministries’ accounting systems rather than producing purely retrospective analyses.
It is also disconcerting that months after the discovery of the fraud that not a single person has been charged by the police. Several employees of the ministry were dismissed and others interdicted from duties at post offices. Based on the work of the OAG seven postal employees were handed over to the police and six others are assisting in investigations. Months later charges are still to be laid. Last week in these columns we lamented the fact that not one person has been prosecuted in the courts with respect to the murders of 19 policemen over the last year or so. It seems that the pension scam is headed for a similar fate.
However this scam eventually plays out, it should be a clear warning to those at the ministry and the post office that they are on notice that this type of fraud is intolerable and that they must bear some personal responsibility were it to recur.
