Auditor General 1992-2015 reports reveal …Procurement system was subjected to chronic abuse for over 18 years

Feb 23, 2017 News

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By Kiana Wilburg
Financial analysts have long lauded Guyana’s procurement rules and regulations as being one of the finest.

But even with one of the best set of laws in place, the reports of the nation’s Auditor General paint a picture of chronic abuse which spans over 18 years.
Speaking with Kaieteur News last night, Chartered Accountant Anand Goolsarran, who served as Auditor General for the period 1992 to 2004, gave some insight into what took place during his tenure.
Goolsarran stated that during his time, the governing document in relation to procurement was the tender board regulations. He said that while this did not have the force of the law, all ministries and departments were required to adhere to it. The former Auditor General noted that one of the biggest problems during that 1992 to 2004 period was “contract splitting”.
The former Auditor General said, “Contract splitting was one of the biggest issues and I had introduced something called a “clipboard” approach. I and about three engineers would go into the fields to do inspection and we would have the Bill of quantities with us. We would measure and inspect on scene as against what was on the Bill of quantities… and we found a lot of shortchanging in the actual works done. This continues today.”
Goolsarran also noted that over 20 years ago, overpayments were a huge issue. But the problem continues to plague the system to this day.
Goolsarran had said that at least some $28 billion, or US$140M, is lost annually due to the weaknesses in the procurement system. His estimation was garnered from an overview of the Auditor General’s reports on the country’s accounts over the past few years.
Goolsarran had said, too, that there are certain parts of the Procurement Act which have not been adhered to since the Act came into effect on 1 January 2004. These include ensuring the criteria used for selection are such that they do not discriminate against particular contractors and suppliers and the award of contracts based on the lowest evaluated bid as opposed to the lowest bid. Failing to look at these, he opined, have also proven to be very costly to the country.
Indeed, the reports of Auditor General, Deodat Sharma, have year after year, exposed some of the most revolting cases of procurement breaches. It was also found by forensic auditors that the plague of poor procurement practices was deeply entrenched in almost every state agency.

In his latest report, Sharma noted that overpayments amounting to $35.700M were made on measured works on 31 contracts administered by Ministries, Departments and Regions in 2015, which included amounts totaling $19.934M that were overpaid for works on the Synthetic Track Leonora, construction of the Kitchen Mess Hall Building at Air Corps, Timehri, land filling and concrete works at Student Dorms, Liliendaal and upgrading of the Aishalton Secondary Male and Female Dorms in Region Nine.
He said that recoveries through repayments amounted to $30.517M of the sum of $407.512M overpaid on contracts that were awarded prior to 2015. Sharma said that this resulted in total overpayments amounting to $376.995M still to be recovered at the end of 2015.
Whilst some entities had made progress in recovering overpayments, Sharma said that others faced serious challenges.
“As stated in my 2014 Report, this continued trend, coupled with no evidence to suggest that disciplinary action of any kind had been meted out to engineering or other staff involved in the assessment of works in progress and the certification of progress payments is of concern, and hints at management’s perceived inaction/inability to remedy the current situation,” Sharma said.
Also citing instances of procurement fraud and malpractices were various forensic audit reports which were commissioned by the new administration.
In fact, it did not take much for forensic auditors to realize that the Guyana Office for Investment (GO-Invest) cared not for the use of the Procurement Act of 2003.
Under the guidance of its former CEO, Keith Burrowes, the entity had its own style in conducting procurement-related transactions. It was a style, however, that was everything but transparent.
This was documented in a forensic audit report that was conducted by Nigel Hinds Financial Services (NHFS).
In their report, the forensic auditors said that based on investigations, the Procurement Act of 2003 was not followed or referenced. Instead, the auditors found that procurement decisions were made invariably without any Invitation for Bids or there were requests for three quotations for purchases above $250,000.
The auditors said that there were also cases where no quotes were requested and other purchases were sole sourced. Also troubling was the fact that the procurement policy used by GO-Invest was not documented.
The forensic auditors said that from all indications, it was clear that the Procurement Act 2003 was honoured more in the breach than in observance of the requirements of the Act.
Additionally, the forensic auditors said that the accounting policy of the agency is not properly documented as it relates to processing of payments, desktop procedures and internal controls. As a consequence, systems were not in place to accurately account for procurement transactions.
Pointing to some worrying instances of breaches of the Procurement Act, the auditors said that repairs and maintenance of vehicles were performed by mechanics who were sole sourced by the former CEO, Burrowes, instead of being tendered.
They also cited that Burrowes as CEO expended over $1M on cell phones for senior staff, his personal driver and one Financial Consultant. The auditors stressed that Burrowes’ personal driver and the Financial Consultant were not employees of GO-Invest, and therefore not entitled to the said privileges.
Going forward, the auditors stressed that advances taken to procure materials for the entity should be timely and properly cleared. The forensic auditors said that only in exceptional circumstances should honour certificates be entertained.
They also said that there needs to be a clearly defined policy to manage outstanding procurement advances, especially to officers who are requesting additional procurement advances.

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