Auditors suspect there was a kickback Scheme at NDIA

Jun 26, 2016 News

– Recommend Management’s Code of Conduct be instituted

An audit into the National Drainage and Irrigation Authority (NDIA), had revealed that a total of $2.2B was spent on repairs and rehabilitation of machinery and equipment over the four and half years under review.
However, the auditors after consulting with the members of the mechanical, civil, procurement and finance departments agreed that this figure did not make financial sense given the cost of the machinery and equipment.
The auditors stated that there was no explanation other than silence from management.
“If the written down values were computed annually, and measured against the repairs and rehabilitation cost, it raises concerns as to why the current members of the management team should continue being part of NDIA.
Furthermore, it is interesting to note that $1.5 B or 67% was awarded to eight contractors who also participated in other contracts. This raises a red flag and from discussions with staff members it appears that there is a flourishing kickback scheme between management and contractors.”
A kickback Scheme is a form of negotiated bribery in which a commission is paid to the “bribe-taker” in exchange for services rendered. In this case, the auditors suspected that contractors were paying monies to the agency’s official for the exchange of being granted contacts in the future.
The auditors stated that two officials were often identified by staff of being the major beneficiaries of the self-enrichment schemes. However, the auditors do not have evidence to confirm these allegations.
“Hence, it is important to build a financial profile for each member of the management team and to match their earnings against their assets to determine if there is unexplained wealth. This approach requires access to information that is not currently accessible,” the auditors noted.
Meanwhile, a general code of conduct and/or code of ethics should be instituted for all employees, the auditors pointed out.
“Many organizations elect to have a separate code of conduct especially for senior management. Management is supposed to set an example for the rest of the organization. A management-specific code of conduct is useful because it addresses issues that typically don’t apply to the rest of the organization.”
A management-specific code of conduct according to the audit report might address such issues as: avoiding conflicts of interest; protecting the confidentiality of proprietary information; cooperating with internal and external auditors, and respecting their independence; promoting full disclosure in financial statements; certifying that financial statements are free of material; misstatement due to fraud.
Also, it was recommended that the Chairman of the Board should task the Human Resource and Administrative Manager to look at different models used locally or overseas and chose a model that meets the requirements of NDIA.
The draft document should be presented to the board for discussion and finalization. Once this is approved, training sessions should commence at all levels to make sure that employees are familiar with the code and are fully aware of the consequences for non-compliance – the auditors stated.
“We believe the existing salary structure should be reviewed because after taxes and other deductions, the net salary shows little equivalency with salaries paid in other sectors.
“Hence, the Appointment Committee or a separate Compensation Committee should be tasked with the responsibility of reviewing salary structure for employees at all levels given their responsibilities and job functions within the organization.”
The auditors also recommended that Executive Management and the Board could seek the advice of a Compensation Consultant to advice whether the existing salary structure match the responsibilities and roles of personnel throughout the organization. Also, an annual evaluation of employees’ performance should be done and any further increases should be performance based.
The NDIA functions as Guyana’s apex organization dealing with all public matters pertaining to management, improvement, extension and provision of drainage, irrigation and flood control infrastructure and services in declared areas of the country.
It was established in 2006 by an Act of Parliament, No.10 o f 2004.
The authority is engaged in the planning for the primary purpose of locating, evaluating, conserving and distributing water resources of the country for agricultural purposes.

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Auditors suspect there was a kickback Scheme at NDIA

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