Forensic audit shows…GM bought Land Cruiser without board approval

May 26, 2016 News

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“The GMC Board needs to put systems in place to ensure that procurement policies are not violated or circumvented. The Board also needs to hold management accountable for management’s indiscretions.”

The Guyana Marketing Corporation (GMC) has been making both wasteful and unreported purchases,

including the purchase of a duty free 2005/2006 Land Cruiser for then General Manager, Nizam Hassan, which the Board of Directors did not know about.
This is according to forensic auditor, Saykar Boodhoo, who carried out an audit into the entity spanning 2012 to 2015. According to the auditor, the 2013 purchase of the used vehicle was juxtaposed by the fact that a perusal of the board minutes revealed no discussion or knowledge of the vehicle’s purchase at the time.
In addition, no other quotations from suppliers were provided. This, he stated, pointed to the vehicle being sole sourced; it did not go through the National Procurement and Tender Administration Board (NPTAB) which deals with government procurement.
“The warranty offered on the vehicle was for the earlier of three months or 60,000 miles,” the auditor related. “On a comparative basis, in 2014, a brand new 2013/2014 Nissan Navarra 4X4 Double Cab Pickup Motor Vehicle was purchased for $6.2 M duty free with 36 months or 100,000 Km warranty.”
“There is no vehicle log book for the Toyota Land Cruiser and there is no documentation to show the odometer reading of the vehicle at the time of purchase,” the auditor also observed. “The duty free price paid for the used 2005/2006 Toyota Land Cruiser may have been significantly higher than other vehicles on the market.”
In response to the red flag raised by the auditor, GMC’s management did defend the situation. They stated that four quotations were actually collected to procure the Land Cruiser. Also it was alleged that three were submitted to NPTAB, for approval via the quotation method.
“(A) request was sent to the Ministry of Finance through the Permanent Secretary requesting release of finance to procure vehicle using the quotation method,” management said in its response, adding that NPTAB approved this.
According to the auditor, however, when full details on the purchase of the Land Cruiser were requested, no other quotations were provided by either GMC’s accountant or the Administrative Assistant, a Sophia Jordan, who was listed as the custodian of the Purchase contract for the vehicle.
“It is interesting that no explanation was provided in management’s response as to why only three of the quotations were sent to the NPTAB,” the auditor said. “It is the auditor’s opinion that the authenticity of the newly found quotations is highly questionable.”
The auditor made it clear that the GMC board needs to put systems in place to ensure that procurement policies are not violated or circumvented. He also stated that the board needs to hold management accountable for their indiscretions.

More wastage

After reviewing expense vouchers, it was unearthed that GMC has been spending government funds to purchase alcohol for GMC’s social meetings. He made it clear that to be spending Government funds to purchase alcoholic beverages is strictly prohibited.
“GMC’s management should become familiar with rules and regulations pertaining to Government expenditures,” the auditor said.
“Efforts should be made to ensure that government funds are expended in accordance with laws and fiscal policies.”
According to the auditor, GMC had in 2012 collaborated with the Agriculture Sector Development Unit –Ministry of Agriculture (ASDU-MoA) to purchase a generator. This was done through the Rural Enterprise and Agriculture Development Project for a total of $19,874,320.
“The generator provides standby power to GMC’s Office building at Robb and Alexander Streets,” the auditor said. “GMC was required to pay $3M of the cost of the generator with the balance being paid from the grant.
However the auditor made it pellucid that the idea was not thought out as “it appeared that no intelligent process was used to assess GMC’s needs for a standby generator.”
He stated that the generator purchased is a 280 KVA three phase generator, which is typically used in an industrial manufacturing environment.
“GMC does not have any equipment that requires three phase electricity,” the auditor. “All of GMC’s equipment utilizes single phase electricity.”

Recommendation
The auditor recommended that the process used to assess GMC’s capital needs should be reviewed. He also stated that management and GMC’s Board should be more involved in GMC’s capital expenses planning.
“The government should make a determination as to where a three-phase generator of this type is required,” the auditor stated in regards to the $19.8M generator.
“The government should seek permission from the funding source of the Rural Enterprise and Agricultural Development (READ) project grant to assign the generator to other government use where it can be more effectively and efficiently utilized.”

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