Health Ministry’s drug bond fiasco… Govt. engaged in blatant abuse of Contingencies Fund –Former Auditor General

Aug 10, 2016 News

---

By Kiana Wilburg
Government’s advancement of $25M for an unfinished security bond for the storage of drugs and other pharmaceuticals represents a clear case of abuse of the Contingencies Fund. This is according to former Auditor General (AG), Dr. Anand Goolsarran.
The Chartered Accountant made it clear that advances should only be made from the Fund when the matter is urgent, unforeseen, cannot be postponed without jeopardizing the public interest, and no other provision has been made for it.
Elaborating further, Goolsarran said that he made a number of observations regarding Financial Paper One that was laid in the National Assembly on Thursday last. That Paper detailed advancements made by the Government from the Contingencies Fund.
Under the heading Ministry of Public Health, there was a budgeted provision for the rental of buildings. This was in the sum of $31M. In addition to this money, Government dipped into the Contingencies Fund and secured some $63.5M. This amount represented payments to the New GPC for the storage of pharmaceuticals for period March to June 2016, and for rental to Linden Holding Company as per Cabinet decision for the month of July 2016. Some $25M represented a security deposit for the said holding company.
Goolsarran recalled that Public Health Minister, Dr. George Norton told the National Assembly on Monday that Government opted to rent the bond of the Linden Holding Company since the $19.2M rental fee from New GPC was just too costly. Norton said that the rent being paid per month to the Linden Holding Company is just $12.5M.
The Former Auditor General said that New GPC’s rental fee works out to $230.4 million for the year. He deduced that if this is the case, then there was a significant under-budgeting for this item of expenditure by the Government.
“Having realized this, the logical course of action should have been to request from Parliament a supplementary estimate. This means that you would have required the approval of the House before spending, and this money would have been taken from the Consolidated Fund. Instead, the Government chose to access the Contingencies Fund to meet the shortfall.”
Goolsarran emphasised that it was not the case when Parliament was prorogued or was in recess.
“In the circumstances, one could argue that there has been an abuse in the use of the Contingencies Fund. Years ago, in my comments about the abuse of the use of the Contingencies Fund, I had cause to lament that this was so because it was more convenient and expeditious to access the Contingencies Fund rather than going back to Parliament and argue a case for the approval of additional funds.”
The Chartered Accountant said he is disappointed that Government will end up spending $450 million over a three-year period for the rental of a building.
“Would it not be more cost-effective if the Government were to invest in constructing its own facility? Years ago, we had a Government Pharmacy Bond in Kingston, Georgetown. That was dismantled to make way for the Marriott Hotel. I understand that the Government has a pharmacy bond at Diamond. Why was this not utilized? Why did they go the route of sole sourcing for the bond?” inquired Goolsarran.
The Public Health Minister was asked this very question by Opposition Member, Joseph Hamilton on Monday. But he danced around the question, only offering that he hopes that Government would not have to continue the use of the facility for too long.
Goolsarran however stressed that there was enough time for Government to advertise for the rental of a facility for the storage of pharmaceuticals. He said it is therefore difficult for him to accept that it was an emergency situation that warranted sole sourcing. “It is just unacceptable,” Goolsarran opined.
The Chartered Accountant also stated that he is disappointed that Cabinet would have approved of the Minister of Finance, Winston Jordan accessing the Contingencies Fund rather than seeking a Supplementary Estimate.
The former AG also reminded of Norton’s comments in the House that the release of the contract on the bond would be dependent on the landlord of the warehouse.
“I find it strange that the Minister could have said that. The public has a right to know the details of a Government contract, subject to appropriate safeguards, especially in relation to national security and foreign policy,” Goolsarran said.
The Public Health Minister was unable to answer a number of questions posed by the political opposition in relation to the money taken from the Fund for the bond which is located in Albouystown.
He was unable to tell the House who were the principals of the Linden Holding Company, when it was registered, when the three-year contract was signed, and who signed on Government’s behalf.
Some critics are opining that Dr. Norton is in essence being hypocritical, since he was one of the first ministers who told the Eleventh Parliament that the days of sole sourcing are over.
Additionally, the House also approved some $62.5M which was granted to cover rental fees to the Linden Holding Company for the August to December period.

---

---