Audit recommends update of law governing scrap metal trade

Jun 01, 2016 News

– reveals little coordination between relevant agencies

The Scrap Metal Unit was expected to regulate the scrap metal trade, a trade that was in full swing at the time but with very little oversight. The requisite legislation is the Old Metal Dealers Act Cap. 91:08.

Auditors recommend that legislation governing the local scrap metal trade needs updating.

However, a recently released Forensic Audit report conducted into the unit by Ram and McRae Chartered Accountants has called for drastic steps to be taken. For instance, the auditor stated that there is far too much uncertainty surrounding this trade and the law governing it is severely outdated.
“The Act was amended on three occasions,” the auditor pointed out. “In 1949 by Act No 26, in 1972 by Act No 4 and in 1991 by Act No 27. The Act has no subsidiary legislation.”
The auditor gave one example of how the law fell short. It was pointed out that there is no provision in the old Metal Dealers Act 91:08 for the collection of export fees. However, the auditors said that the financial statements describe the Unit’s income as a line item; Export Fees.
Scrap metal dealers were required to pay a charge ranging from $50,000 for non-ferrous 20-foot containers to $30,000 for a ferrous container of the same proportions. For a 40-foot non-ferrous container, dealers were required to pay $60,000, while $35,000 was paid for a ferrous one.
“In February 2013 an accumulated sum of $142.8M was transferred from an account in the name of the Ministry of Trade and Industry and Commerce held at the Bank of Guyana account to a new account at Republic Bank Limited in the name of the Unit,” the auditor pointed out. “This amount was incorrectly reported as export fees in the 2013 Financial Statements.”
The auditor noted that even for these transactions, a faulty process for these fees was used. According to the report incomplete receipts were issued to the dealers, lacking basic information such as the type of metal exported, number and size of containers being shipped and the containers’ serial numbers.
In relation to the uncertainty about the trade, the auditors noted that supervisory responsibility for the Unit was transferred from the Ministry of Tourism, Industry and Commerce to the Central Housing and Planning Authority (CHPA) by virtue of a Cabinet Paper dated January 31, 2012.
“There appears no consistent policy towards the trade with the Government opening and closing the trade at will,” the auditors stated.
The auditors also stated that it was unclear why responsibility for the trade was transferred to the Central Housing and Planning Authority in the first place.
It was also pointed out that there is a lack of coordination between and among the four agencies involved: the Guyana Police Force, the Ministry of Business, the Scrap Metal Unit and the Guyana Revenue Authority.
“The law and the trade need to be completely revamped after consultations with key stakeholders,” the auditor said. “However, the Government needs to put interim measures in place as the trade is at a standstill, while export is temporarily banned.”
The scrap metal trade had been under the purview of former Prime Minister, Sam Hinds, but alleged irregularities into the trade saw it being halted after utilities companies and other stakeholders complained that copper was being stolen from telephone cables.
The Scrap Metal Unit had come into existence to address these and other concerns.