Army's accounts caught in Auditor General's crosshairs
2002 report shows $137M spent on vehicle hire
Stabroek News
November 25, 2003
The Auditor General's report for 2002, tabled in the National Assembly yesterday, again highlighted grave financial and accounting errors by a number of ministries and public agencies including the army, which was cited for significant breaches of tender board regulations as was the case in 2001.
Nineteen Guyana Defence Force buildings were repaired, says the report, but there was no evidence that a system of quotations was used for 16 contracts valued at $4.76M falling between 180,000 and $450,000. Twelve of the contracts were awarded based on the three-quotes system and four were given out by the departmental tender board without any evidence of competitive bidding.
There was no approval by the Departmental Tender Board for four contracts totalling $2.185M and the tender board minutes did not indicate whether there were other bidders nor the basis for the awards. Audit checks further revealed that out of a total of 31 contracts for the buildings, 21 went to one contractor. The works were all physically verified.
Under capital expenditure, $42M was voted for the construction of a new ammunition depot at Camp Groomes after the destruction of the previous one in an explosion; for new male officers' accommodation at Camp Ayanganna and rehabilitation/extension of the air corps barracks at Camp Stephenson. However, the money was spent on entirely different projects. The report noted that ten buildings were repaired at Camp Stephenson. At Camp Ayanganna, excavation works were done at Tacama and materials purchased for five buildings. The Auditor General's report said that from the 2003 capital profile it was clear that the projects had been re-budgeted for this year and a change of programme was seen for the works undertaken in 2002.
Of six contracts at Camp Stephenson, one for $1.27M was awarded on the sole authority of the accounting officer and there was no public advertisement or competitive bidding. Further, the engineer's estimate was also not submitted.
On five buildings at Camp Stephenson, there was overpayment totalling $985,590. In one case, the Support Company Office, the overpayment was $399,450.
"It should be noted that generally the contracts used for these projects are deemed totally inadequate, as there are no provisions for defaults and remedies by the contractor. The Accounting Officer explained that a new format for contracts, making provisions for defaults and remedies has been introduced in 2003", the report says.
Subdivision to avoid tender board
In the case of the $9.567M expended for the purchase of building materials, the report said that the work was undertaken by the 4th Engineer Battalion and there was evidence of subdivision of purchases to avoid adjudication by the Central Tender Board. Two examples were offered where materials were bought from the same supplier on the same date. On June 20, 214 gallons of paint at $591,950 was bought on one order while 76 gallons of paint, 780 tiles and 200 lbs of a commodity were placed on another order valued at $318,130. On December 11, 2002, 460 sacks of cement and 38 tonnes of stone valued at $565,400 were placed on one order and 52 ft 30" flashing and 3 six-inch bolts to the value of $46,050 were put on another order. There were numerous other cases of contract splitting and avoidance of tender board procedures.
On salaries accounting, the report says it is a requirement for the salaries cash book to reflect `nil' balances at the end of each month as a control mechanism but there were still balances at the end of each month.
"This state of affairs was due to the failure to prepare before the close of the month a) the salaries cheques for officers stationed in the interior locations and b) deductions cheques to the relevant agencies.... A similar observation was made in previous reports."
In the 1995 report, mention was made of an unpaid liability of $14.69M to the unpaid salaries account due to the irregular use of this account for other purposes. The report said there had been no attempt up to now to redress this matter.
Under current expenditure, 53 purchases totalling $17.072M were made between the limits of $180,000 and $600,000. However, only 42 were awarded by the Departmental Tender Board (DTB). Eleven worth $3.6M were made without DTB approval and there was no evidence of competitive bidding. "A similar breach was observed in my 1999, 2000 and 2001 reports. The Accounting Officer is of the view that these purchases were covered by a blanket approval granted in the year 2000." Notwithstanding the deficiencies, the report said that the items purchased were verified as having been received and brought to account.
In relation to purchases between $600,000 and $6M, four, totalling $9.356M, were made without the approval of the Central Tender Board (CTB). With references to purchases over $6M, one for $8.775M was made for 180,000 rounds of 7.62 - 39 blank ammunition for which there was no approval by the Cabinet. "The Accounting Officer explained that it was never the practice of the army to request approval for the purchase of ammunition," the report said.
Of the 40 vehicles owned by the force as of December 31, 2002 which were required to keep logbooks, only 27 were presented for audit. In the absence of these logbooks, the report said it could not be determined whether the journeys undertaken were properly authorised. The report also found that bin cards were not maintained for the receipt and issue of fuel and lubricants but that this was to be introduced this year.
The $11.4M construction of a revetment at the Coast Guard Headquarters was handled under current expenditure when it was a capital item, the report points out.
In 2002, $137.2M was spent on the hiring of vehicles compared with $57M in 2000 and $95M in 2001. "While it is accepted that a certain amount of vehicles might be necessary for security reasons, in view of the significant amount involved, the extent to which vehicles (are) hired should be reviewed with a view to effective cost savings through the acquisition of new vehicles," the report says, pointing out that the matter has been raised previously. The army received several vehicles as gifts in 2003 and the report says this should help to reduce the cost for the hire of vehicles significantly.
The 2002 report also points out that it has been stated previously that $13.6M had been retained from the proceeds from the sale of a Beechcraft plane as fees for services rendered by the company that acted as agents for the force. The State Solicitor's office was requested to review this matter to come up with a more "equitable" sum to be retained by the company. Up to now the matter has not been settled.
Revenue from the commercial operations of the GDF aircraft was used to defray the expenses in connection with these operations. The report points out that such revenue should be paid over to the Consolidated Fund and its retention is a breach of the law.
The report also refers to a matter that is currently engaging the attention of the Director of Public Prosecutions (DPP) and the Defence Board. In 1995, proceeds totalling $27.5M for charter services were not paid into the customary account, instead the individuals chartering the service were instructed by two letters to make payments to five overseas suppliers of spare parts. Confirmation of payment has not been received from one of these suppliers for payments totalling US$92,338 and this is the matter now before the DPP.