Hundreds of millions siphoned off from Carifesta account – Audit report

Nov 29, 2015 News

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Inflated accounts and false statements were the major findings of the audit into the Carifesta spending.
Seven years after calls began for an audit to be done on the 2008 Carifesta X, an audit commissioned by the coalition Government has been done by John H. Barnes. The document was submitted to the Ministry of Finance on September 3, 2015.
The document revealed that there were several cases of inaccurate recording of information pertaining to the festival. For example, the payee Eze Rockcliffe received a payment voucher of $480,000 while the cash book shows that payment was made to him for $970,000. All of the sums displayed on the cash book were inflated amounts of what was actually paid.
The report stated that in February 2008, the Ministry of Culture, Youth and Sport Ministry entered into an agreement with Swansea Industrial Associates (SIA) to “identify, procure, construct, install, commission and operate a modern stage platform plus roofing system and canopy with the capacity to support extensive ancillary stage lighting and sound system.”
Reportedly, SIA after “Identifying the supplier travelled to the U.S at the expense of the Government to transact business with the suppliers and to attend to relevant detail in relation to certain technical specifications.” SIA was not paid for procurement and commissioning service but was paid $24.7M and $2.6M for the lighting systems and installation of the stage respectively.
The Auditor noted that “these costs appear quite exorbitant.”
A quote from the stage’s supplier, TOMCAT showed an estimate of US$412,500. This amount was then sent via telex transfer to the supplier’s bank. The stage was then imported from Wenger Corporation, USA at a cost of US$162,719. This payment was made via wire transfer to the supplier’s bank. The two transactions came up to US$575,219. However, a document signed by Dr. Roger Luncheon disclosed that Cabinet had waived Tender Board procedures to facilitate sole sourcing of the items in question.
The Cabinet document stated a total cost of US$605,519 while the total transferred to the suppliers amounted to US$575,219.
The auditor noted that bank transfers “were made on the basis of quotes from the suppliers, but no invoices were seen for the equipment.”
According to the audit there was no formal budget for the event and much of the procurement of goods and services was done on a sole sourcing basis. There was also no system in place to assure accountability as large sums of money were paid but were not traceable to individuals or organizations and no proper system was in place for the disbursement of funds.
Incorrect classifications of a number of items were seen in the document as many items of expenditure of a current nature were classified as Capital. Current estimates as they related to the event were very small; as such some of the current accounts were converted to capital expenditure to avoid exceeding the current estimate by a large margin.
Some $22M was found to be incorrectly treated but the auditor noted that the sum may be much larger.
Procurement procedures were also inconsistently employed by the Ministry. Contracts were made for small transactions while absent in many large material transactions.  Among those without contract documents are, the now deceased, Trevor Rose of Facts ‘N’ Roses, Erwin Blackman and Philbert Gajadar.
Trevor Rose along with his joint company Facts ‘N’ Roses, received a total sum of $11,147,924 for the creation of costumes and the supply of flags. Blackman was paid $850,000 for the supply of transportation while Gajadar received $600,000 for the drawing and painting Amerindian motifs. Contracts existed for items such as snacks as is seen in the case of June Cole for the sum of $1.5M.
Several transactions did not see the input of the Tender Board Unit. Several payments were made to the now deceased Trevor Rose and Franklin “Bobby” Vieira for which there was no Tender Board input. Trevor Rose was paid $6,823,150 for decoration of venue, construction of costumes and sashes for the opening ceremony contingent.
Franklin “Bobby” Vieira was paid $12,336,410 for purchase of electronic equipment, broadcasting, servicing of Carifesta X stage system and purchasing of material for Carifesta X. Payment was also made to Gerald Mendonca for $1,270,717 for exterior cleaning and painting. The lowest sum was to Winston Ramroop for $545,000 for the construction of a kitchen cabinet for Carifesta Secretariat.
There is also an unresolved issue in relation to warrants issued. When warrants are issued to Ministries and Regions, regulation requires the recipients of the sums to file returns showing the amount of money spent. As it relates to Carifesta X, only Region Three submitted returns amounting to $2.5 million; the warrants from the other Regions and Ministries totaled G$102 million.
Finance for the event was stated to have come through amounts drawn from the Consolidated Fund and through a Projects Account which was funded by NICIL. Donations and other cash receipts made towards CARIFESTA by several businesses and organizations amounted to $76.5M.
NICIL had claimed to have financed Carifesta X to the tune of $300M from GGMC when in reality its contribution was G$328.177M. The sum of $28,177,457 was not included which it had advanced to MCYS for an endowment fund for Culture and Arts but which was applied to Carifesta X.
“Generally,” stated the Auditor, “the handling of the finances for the event that eventually cost nearly $1 billion was quite loose.”
Culture under the PPP/C
As Minister of Culture, Frank Anthony had said that an audit would have been done by the Auditor General and would be made available after the Alliance for Change (AFC) called for an audit for the supposed $500M spent during the hosting of Carifesta X.
Then Chairman of the AFC, Khemraj Ramjattan has asked for the findings of the audit to be made public as in the past, “There were reports of wastage, overpayments, unaccountability and various levels of corruption in several government departments.”
Audit reports looked at, revealed that the Ministry seemed to have a culture of misappropriating funds. In an annual audit report done in 2008, it was indicated that “prior matters which have since not been resolved stated that overpaid amounts made to three officers totaling $100,829 have still not been recovered.” Overpayments in previous years had amounted to $786,516 as at 31 December 2007. In this regard, the Ministry was able to recover or clear a total of $182,687 during 2008, leaving an outstanding amount of $603, 829. Hence, the aggregate amount recoverable to the time of writing is $704,658.”
In the year 2007 the Ministry had also breached the Procurement Act 2003 by way of sub-division of awards of capital works. In the year of the report, such breaches continued. Purchases of building material were undertaken in a piecemeal manner to avoid adjudication at the level of the NPTAB. One supplier was involved in each case. The audit office recommended that the Head of the Budget Agency adhere strictly to the requirements of the Procurement Act, regarding the levels of adjudication and splitting of contracts.
The Ministry is also still to recover amounts of $245,700 and $989,900 overpaid to contractors in relation to the rehabilitation of the rampart at Kyk-Over-Al and walkway at Fort Zeelandia. It had been given deadlines for the sums to be repaid but they were ignored.

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