Forensic audit finds…$111M spent on pumps fraudulently recorded as ‘fertilizer expenses’

Jun 09, 2016 News

-instructions for transfer came from Cabinet through Dr. Luncheon

The forensic audit into the Guyana Marketing Corporation has red flagged a fraudulent accounting

Former Cabinet Secretary, Dr. Roger Luncheon

transaction, where $111.2M was used by the corporation from its Fertilizer Programme to pay for vertical axial pumps and was then falsely recorded as “fertilizer expenses”.
The auditor, Saykar A. Boodhoo, detailed in his forensic report that it was the Permanent Secretary of the Ministry of Agriculture, George Jervis, who requested in November 2014 that the GMC make this payment. The request was granted.
This was not, however, what the fertilizer programme was conceptualized to do. The fund was supposed to help mitigate the shortage of urea fertilizer available to the farmers. The programme was thus formed in 2008 by the then government.
The auditor detailed that when the time came to record the transaction in the 2014 draft audited financial statements; it was put down as fertilizer expenses. He made it clear that if the transaction had been above board, the cost of the pumps would have been depreciated and capitalized over its operating life.
As if this was not enough, the auditor revealed that information was subsequently made available to him that showed that another agency under the Ministry of Agriculture, National Drainage and Irrigation Authority (NDIA), may have recorded the same transaction on its books as part of its fixed assets.
“So in brief,” the auditor observed. “Two Ministry of Agriculture agencies may have recorded the same transaction on their books.”
Cabinet orders
In a twist, however, GMC management stated that the decision to expend the money on axial pumps was a

Ministry of Agriculture Permanent Secretary, George Jervis

Cabinet decision that was made on October 7, 2014. According to management, Jervis received a correspondence dated November 6, 2014 from former Cabinet Secretary, Dr. Roger Luncheon making this known.
“Importantly,” management stated. “The accounts (from) which the money should be sourced were also stated in the correspondence.”
It is not the only instance whereby the GMC fertilizer account funds were utilized outside of its mandate. The forensic audit detailed instances where massive amounts of cash were transferred, at the request of the Permanent Secretary of the Ministry.
According to the auditor, the entire fertilizer programme appeared to have been formulated to dodge financial accountability laws and to provide funding to multiple agencies, in a manner similar to how a slush fund operates.
The auditor also reported that then GMC General Manager, Nizam Hassan, had not been supportive with certain information, thus preventing him from properly auditing the fertilizer programme’s transactions.
Hassan was hired as General Manager at the Guyana Rice Development Board (GRDB) last year.
Based on a review of documents supplied by Owen Nestor, GMC’s accountant, however, it was found that millions of dollars were transferred in transactions which the auditor stated “were concluded without proper support or authority.”
For instance, the report lists a massive, interest free loan of $450M and a payment of $273.3M on a letter of credit arrangement, both to the Guyana Sugar Corporation (GUYSUCO). Also documented is an excess repayment of $120M to the Guyana National Co-Operative Bank (GNCB).
Nor is that all. The report documents that $35M in payments were made to the Guyana Rice Producers’ Association (GRPA).

1 thoughts on “Forensic audit finds…$111M spent on pumps fraudulently recorded as ‘fertilizer expenses’”

Emile_Mervin June 9, 2016 at 6:06 am

How can Granger look at all these damning audit revelations and still continue to conclude that the audits are intended to give a financial picture, in terms of information, and not in terms of indictments? There was wide spread skulduggery in the PPP regime, while the coalition seems nonchalant about its legal responsibility to frontally address these issues. No wonder the nation still cannot see the documents showing the US$5m in GT&T shares being paid. This is big, top secret for State eyes only, despite unaccounted public funds being involved.