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Goolsarran schools Jagdeo on procurement leaks
Opposition Leader, Bharrat Jagdeo, has expressed much disgust as well as his disagreement
Chartered Accountant, Anand Goolsarran
with the recent opinions of Chartered Accountant, Anand Goolsarran. He disagrees with the contention that billions of dollars in revenue have been lost to Guyana due to major loopholes in the procurement system.
But while Jagdeo holds such a position, Goolsarran is standing by his statements, insisting that they were grounded in irrefutable facts.
In his recent writings, he reminded that an estimated 15% to 20% on national revenue is lost every year through various leakages in the public procurement systems.
Goolsarran recalled that he had even listed 11 areas where such leakages occur and sought to quantify in dollar value, the extent of the leaks. Using the 2017 Estimates of Expenditure of $250 billion, Goolsarran said that this works out to $26.25 billion – $35 billion, on the assumption that 70% of the expenditure relates to public procurement.
The Chartered Accountant said that this percentage was arrived at some years ago through a detailed examination of the various items of expenditure, both current and capital.
The former Auditor General said however, that if one were to use 60% instead, the extent of the leakages still remains significant at $22.5 billion to $30 billion.
Goolsarran said, “As the Auditor General for 14 years, l had the benefit of reviewing our procurement systems as an integral part of the audit of the public accounts. During those years, I also became familiar with the procurement rules of the World Bank and the Inter-American Development Bank since my responsibilities included the audit of projects funded by these two international lending agencies.”
The Chartered Accountant continued, “No procurement system has reached that level of efficiency and effectiveness, indeed perfection, to enable one to conclude that 100% value for money has been achieved. There is always going to be a certain amount of leakages in one form or another. It is important to know what those leakages are to be able to take appropriate action to minimize the extent to which they take place.”
Goolsarran added, “Recognizing the problems we had over the years as regards our procurement systems, the Audit Office had recruited three engineers in the late 1990s to provide technical assistance in the auditing of major infrastructure works.”
The Chartered Accountant said that the authorities at that time had introduced the “clipboard”
Opposition Leader, Bharrat Jagdeo
approach to the physical verification of works, and auditors fanned out countrywide to conduct the exercise.
The former Auditor General said that it was when they studied the results that they came up with the estimate of 15%-20% in leaks in the procurement systems.
Goolsarran said that in other words, for every $100 spent on procurement, we only received $80-$85 in real value.
He said, “One recalls the Essequibo Road Project where four main forms of irregularities were uncovered – inferior quality of stone imported from Canada; short-shipment of stone; diversion of stone to other projects in the run-up to the 1997 elections; and falsification of invoices to reflect higher prices.”
Goolsarran continued, “The Work Bank reviewed the results of our audit, sent in their own investigators and concluded that the Project was riddled with fraudulent practices. As a result, the Bank terminated the loan agreement with the Government.”
The Chartered Accountant added that if a new assessment is carried out today, it is likely to reveal that the figure of 15% – 20% is a conservative one. He said that this is highly likely if one considers a number of other cases such as the US$4 million in losses in respect of the Specialty Hospital because the guarantee for the payment of the mobilization advance had expired and the out-of-court settlement of $1 billion to BK International in respect of the Haags-Bosch Project.
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