Book racket mirrors drug procurement scandal… Misplaced records; poor storage; 70 % of payments can’t be verified

Nov 25, 2018 News

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Campaigning for the 2015 general elections, the Coalition Government had vowed to clamp down on corruption and waste as a result of poor procurement practices as was highly evident under the previous administrations of the People’s Progressive Party/Civic (PPP/C).
The biggest procurement scandal dogging the PPP/C was in the field of pharmaceuticals and medical supplies.

Two companies, New GPC and Global Healthcare, that had close ties to the PPP/C, received the bulk of the contract, worth billions of dollars annually.
Reports of the Auditor General had consistently flagged the procurement, pointing to procurement breaches, non-delivery of drugs and weaknesses in the checks and balances.
Fast-forward to 2018; there are indications of significant wrongdoings also in the procurement of books, including textbooks, for the Ministry of Education.
According to a Compliance Audit Report on the Procurement of Textbooks by the Ministry of Education, the findings are worrying enough to raise red flags and warrant widespread changes.
Not only were textbooks being ordered for Nursery, Primary and Secondary levels, there was evidence of procurement breaches, little evidence that all were supplied; that the suppliers were qualified, and poor record keeping that would have allowed the Book Distribution Unit to determine what was ordered and what was delivered.
In short, anything could have happened in that Wild West scenario.
The period of review was for the year 2016.
The report was tabled, recently, by the Ministry of Finance in the National Assembly and it is not flattering for the Ministry of Education.
According to Audit Office, the report contains the results of a Compliance Audit of the procurement process including planning, sourcing and contract management of textbooks by the Ministry of Education for the financial year ending 31 December 2016,
The audit was carried out as part of an initiative by the Caribbean Organisation of Supreme Audit Institutions (CAROSAI) some 13 of these audits were simultaneously undertaken.

The main objective of the audit, the Audit Office said, was to obtain sufficient appropriate audit evidence to enable a conclusion to be formed on the practices with regulations and policies governing the procurement of textbooks for 2016.
Auditors found that the sum of $35M was misallocated due to a breach of the Fiscal Management and Accountability Act 2003.
The sum was in excess of the Ministry’s approved allocations for Nursery and Primary levels.
It meant that the Ministry was spending monies earmarked for other things on books, a clear no-no for government’s accounting processes.
But that was small potatoes to other things that were unearthed by the auditors.
No Evidence
They could not determine whether the Ministry received textbooks valued $91.6M–approximately 26 percent of the total textbooks paid for in 2016. The various registers to record the textbooks received were not updated regularly.
It got worse. The correctness and accuracy of payments totaling $247M, which is more than two-thirds (70 percent) of the total payments could not be verified.
Relevant documents including payment vouchers and supporting documents for sums totaling $247M were not submitted for audit scrutiny.
The Ministry also did not provide supporting documents for four contracts amounting to $276M. “As a result, we could not verify key information, including technical specifications of textbooks, price and delivery schedules, among other requirements.”
In its overall conclusion, the Audit Office criticized the Ministry for not complying in all material respects with the relevant acts, regulations and policies governing the procurement of textbooks during 2016.
During that year, through the annual budget, the Ministry was allocated $506M with $14M set aside for Nursery; $181M for Primary and $310M for secondary schools, for the procurement of textbooks.
The Audit Office disclosed that the Ministry never conducted a comprehensive review of the procurement of textbooks, and as such deficiencies affecting such procurement could occur unnoticed.
The AG annual report for 2015 had highlighted a number of discrepancies including unsigned contracts; contracts were also not in place but payments made and there were undelivered textbooks.
Further, during interviews with the Ministry’s key personnel, there were clear deficiencies with the procurement process; in fact, there were instances of non-compliance with procurement regulations.
The Audit Office said that the Ministry also showed no evidence of the suitability of textbooks purchased for students.
In one glaring case, the Ministry ordered 30,000 “Timehri Readers Animal Friends Work Book 1” for $64.15 apiece but paid the contractor double at $128.30 apiece.
There was no evidence, also, that any suppliers supplied performance security bond so that in case of problems, the Ministry can recoup its monies.
Key documents like Certificates of Origin were not presented. There was an absence too of inspection certificates.
An inspection of books in the custody of the Ministry found that there were no stamps to show it belonged to the Ministry.
At the Books Distribution Unit, auditors found books stored on the floor in a dust-filled environment that was threatened by possible flooding because of the height of the area.
In fact, the unit was unable to determine whether it was receiving the correct quantities of books in accordance to contracts.
The Audit Office recommended that the Ministry comply with regulations, including procurement laws, stores and the prevailing book policy.
In its conclusion, the report was scathing.
Weak Controls
It was concluded that internal controls were weak and not functioning in some instances. Moreover, pertinent records were not properly maintained, relevant records were also not located and submitted for audit scrutiny.
In addition, the manner and environment in which textbooks were stored presented a health and safety hazard.
The office said that in view of the findings detailed, and summarized, it was concluded that the Ministry of Education did not comply in all material respects with the relevant acts, regulations and policies governing procurement of textbook during the financial year 2016.
However, while for that year 2016 the Auditor Office delved into textbooks, there are indications also that not all is well in the ordering of exercise books, which are also distributed to students.
In fact, local suppliers have been complaining that despite capacity and hundreds of millions of dollars in investments in equipment in Guyana by the private sector, the Ministry has been going overseas to order exercise books.
This is despite evidence that it can be produced here at a far cheaper price, building capacity for local businesses.
There is also evidence that the Ministry is not going to tender, allowing local producers to bid, but is selective in its procurement.
One East Bank Demerara printery is preparing to file a complaint with the Audit Office and the Procurement Commission.

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