Business Page – May 19th, 2002


Government Accounts Still in Poor State - Auditor General 

 
Mr. Stanley Ming
Member of Parliament 
C/o Congress Place
Sophia 
Georgetown
 

Dear Mr. Ming,

I thought I should write you following the release of Report of the Auditor General for 2000. I hope you do not mind the slightly official tone but I am using a copy of this letter in this week’s Business Page and as you know, the editor is a bit fussy about these things. You would recall that on November 25, 2001, this column referred to your public pronouncement that you were so upset about the lawless state of the management and affairs of the central government finances that you had decided to withhold the payment of taxes and to resign from Parliament if there was no significant improvement in these matters in subsequent years. Those comments were made largely in response to the reports of the Auditor General for the years 1995 – 1999 and the report of the Public Accounts Committee of Parliament on the accounts for 1995-1998. By now Mr. Ming, despite your Party not taking part in the occasional meetings of the National Assembly called whenever Pandit considers it expedient, you will be aware that AG (by destiny Anand Goolsarran and Auditor General) presented to the Speaker of the National Assembly his 2000 Report on the Public Accounts of the Ministries/Departments/Regions on April 30, 2002.

In the third part of the article referred to above published on December 9, 2001, Business Page expressed the hope that things would improve and that you would not have to carry out your threat to withhold your tax payments. After all, there is a significantly large number of Guyanese particularly in your favoured private sector who withhold their taxes for much less noble reasons than that offered by you. Ironically, your open withholding may not be met with the same tolerance demonstrated to that other group known more properly as tax evaders. Inasmuch as I hate doing this Mr. Ming, I have to let you know that the Report on 2000 offers no joy and indeed the Auditor General has found it necessary to comment on the “deterioration in financial management at both the ministerial and central levels”

The Report

The Report is much longer (2,120 paragraphs) than that of 1999 which had 1,804 paragraphs. It makes depressing reading and you may only be able to take it in very small doses. I do however draw your attention to the audit certificate on pages i-iii which in accountants’ jargon would be referred to as a qualified report meaning that it is not clean. The entire certificate – qualification and all – is identical to the preceding year while the discrepancies and shortcomings identified in the body of the Report are different only in the higher number of cases and the larger sums involved.  The only Ministry which comes out with any credit is the Office of the Prime Minister but many others and most worryingly the Office of the President are guilty of gross violations of the law and the principles of accountability, transparency and propriety.

Public Accounts Committee

As a member of the Public Accounts Committee, one of the standing committees of Parliament, you must be aware that its report on its review of the 1999 AG’s Report has not yet been published and I am not sure when the Committee will meet to discuss the 2000 Report. Again I must refer to the Business Page article of November 25, 2000 which commented on the timing of the review done by the PAC as follows: Since their (the PAC’s) own report on the Auditor General’s Report may not be issued until in the new year, their efforts will have come far too late to make any serious impact. More contracts would have been split to circumvent tender procedures while the wastage, inefficiencies and illegalities would have continued. I do not know where the Dialogue has gone but clearly the terms of reference of the PAC will have to change if its work is to have any more that academic interest.

You must realise Mr. Ming that while your own efforts and commitment are admirable, there are many who question your right to talk about accountability when your Party when in government had made non-accountability into a fine art. Indeed, many critics of your Party dismiss your cries with the comment “at least we now have such a Report”. I think they miss the point: your Party was never a useful frame of reference for those Guyanese who fought for democracy and who reject any comparison between a dictatorship and a democracy.

Before going into some of the more serious deficiencies in the country’s financial management identified in the 2000 audit, BP takes a look back at the issues raised in the 1999 Report to determine the extent to which these might have been addressed. A significant number of bank accounts currently in use, including the Guyana High Commission London Account, as well as non-operational accounts were allowed to be overdrawn by large amounts in contravention of Section 22 of the Financial Administration & Audit Act. (FAA): Continues.

The Consolidated Fund is overdrawn by tens of billions while the sum total of all bank accounts (including the overdrawn balance on the Consolidated Fund but excluding the balances on the bank accounts special projects) reflects a positive balance. Continues.

The State continues to provide funding annually to several public entities even though they do not comply with their statutory duty to submit audited financial statements. Continues.

The Contingencies Fund continues to be abused despite repeated negative comments on this practice. Continues.

 Proceeds from the Guyana Lotteries are not being paid over to the Consolidated Fund but are kept in a “special bank account” held at the Central Bank and used to meet public expenditure without parliamentary approval. Continues despite the public commitment given by the President and de facto Minister of Finance that this would be corrected.

As you will see later these are just a few examples of continuing disregard for the basic principles of good financial management which is of course a critical element of good governance and which are prerequisites for reducing the opportunities for fraud and corruption. In a follow-up piece next week Business Page will deal with some of the specific issues raised by the Report and in the remainder of this piece will deal with some general matters.

Defender of the Public Interest

There is an excellent book which a friend recently gave me titled Defender of the Public Interest. It is the story of the evolution of the General Accounting Office, the equivalent of the Office of the Auditor General in Guyana. It chronicles the development of the GAO from an organisation with the narrow focus of voucher audits to one where accounting accuracy, effective financial audits, economy in government, rooting out corruption and programme evaluations are seen for the development of the country. It is evident that the Auditor General of Guyana has some pretty lofty ideas and would like to see his office develop in stature and resources to “defend the public interest”. The challenge facing the Auditor General is that there does not appear to be the culture or the will to bring accountability and transparency to the financial transactions of the government. As we noted above, the Office of the Prime Minister stands out like a beacon while some other Ministries, Departments, Regions and statutory bodies are making sincere efforts to deal with some long outstanding issues coming forward from the pre-1992 era.

In seeking to meet the wider mandate, the report raises questions about the whole system of raising funds and how they are disbursed. It deals with questions of both the level of revenues and the efficacy of the collection system; it highlights the increasing level of the Public Debt and debt-serving even while the Government boasts of its successful debt-relief efforts; it raises questions so fundamental to the reliability of the government’s records that one has to wonder how it is possible to construct a budget based on such massive deficiencies; why a government committed to transparency and accountability would allow itself to be held to ransom by the Guyana Defence Force which continues to ignore the procurement rules which bind all central government departments and then have Cabinet waive - after the fact - those rules; why nothing is done about the goings-on at the Ministry of Public Works where a number of irregularities have been uncovered, some of which have been referred to the police; why the National Assembly has virtually abdicated its responsibility to make sure that the executive arm of government behaves in a lawful manner and that the funds allocated by Parliament to them are properly spent. And it should make one wonder why an educated people as we are continue to tolerate this financial lawlessness. In short it raises issues of good governance.

Unfortunately Mr. Ming, a lot of the difficulties go right back to the quality of the democracy in this country and the failure of the country to seize the recent opportunity at constitutional reform to deal with the broad issue of financial management at the national level. And unfortunate for the Government Auditor as well, since unlike an auditor in the private sector he does not have the option of resigning if the books on which he is required to report are unauditable. The individual can resign but the Office is constitutionally bound to audit those books and to make recommendations even though he knows they would be ignored. Perhaps I will end this piece with a quote of Lindsay Warren, former Comptroller General of the GOA in the book Defender of the Public Interest:

I see daily the most unbridled waste and extravagance and a hell and don’t care attitude on the part of most administrators. I have no power and authority to stop it. I report it to the Congress so much that it is almost a joke, but they don’t give a damn and are almost impotent to prevent it anyway…. I will admit that what I daily see makes me somewhat cynical, but above all it makes me wish to wash my hands of all of it and fold my tent and leave” Just in case anyone wants to say well what’s different, that is a quotation from a letter written some fifty-seven years ago.

I hope that this cynicism does not overtake AG anytime soon in which case it will be a good bet as to who will give up sooner, you or he.

Until next week,

 

Yours sincerely,

Christopher Ram