National Assembly – Finance and Public Accounts Committee (FPAC) |27 April 2022

Five more entities scrutinised by the FPAC on Auditor General’s 2020 report

The Finance and Public Accounts Committee of the National Assembly yesterday questioned five more government entities in relation to the 2020 report of the Auditor General as part of its term of office to examine the financial statements of any public or statutory body and to consider any other matters related to public funds that may require an investigation or special audit.

During yesterday’s session, the Finance and Public Accounts Committee (FPAC) questioned the department of Foreign Affairs, Livestock Trust Fund, the Seychelles Agricultural Agency, the Seychelles Human Rights Commission and the Seychelles Revenue Commission.

It is to note that the hearings also allow the committee, headed by leader of the opposition Sebastien Pillay, to propose any measures, it considers necessary to ensure that the funds of government are properly and economically spent.

The FPAC also receives the direct support of Auditor General Gamini Herath.

Department of Foreign Affairs

First to be quizzed by the FPAC on the 2020 report of the Auditor General yesterday was the department of Foreign Affairs which is the body responsible for Seychelles’ foreign policy, the conduct of international relations, hosting foreign leaders representing the country on state visits and through its overseas diplomatic and consular missions.

The delegation was led by principal secretary, Ambassador Vivianne Fock-Tave, who was being accompanied by the department’s director general for human resources, budget management and administration Pamela Payet, along with financial controller Bessy Banane.

The first question from the elected member of the National Assembly (MNA) for Takamaka Terrence Mondon, who was leading the questioning for that particular department, was regarding remittances in transit which refers to the funds transferred by the department on a monthly basis to its overseas missions.

The AG’s report highlighted significant variances between missions’ bank and remittance accounts balances.

Based on the report, according to the accounting system in place, the remittance accountbalance as per Treasury records should indicate in respect of each mission, the amount unspent / balance remaining in the overseas mission bank account.

However, as at December 31, 2020, the total remittance accounts’ balance as per Treasury stood at R21.4million.

The AG’s report further states that on comparing the available bank balances of 12 overseas missions’ (except forGeneva embassy), when converted into Seychelles rupees, with their respective remittance account balances as at December 31, 2020, significant variances totalling R10.90 million between the two records were noted.

The audit is thus of the view that the overseas missions may not be spending in accordance with the respective budgetary allocations provided for different expenditure heads.

Based on the variances in the report, Ambassador Fock-Tave explained that in the past, all the embassies received their budgets on a monthly basis, before being changed to quarterly disbursement in 2017.

She said since the budget is recorded in Seychelles rupees locally, while at the embassies, it is recorded in the respective currencies, even if the department assessed whether the spending in the cash book matched that of the bank statements, bank reconciliation wasnot being carried since 2012, neglecting crucial factors such as the exchange rates which influenced the outcome of the AG’s report.

This, she said, does not mean that the embassies still have the money, or have wrongly spent their budget, but rather an accounting mistake regarding the exchange rates and the respective currencies.

Ambassador Fock-Tave, however, noted that as of 2022, bank reconciliation is being carried out on a monthly basis.

On the issue of payments for use of goods and services, the AG’s report states that contrary to the provisions on procurements, in 11 payments – amounts totalling to R426,975 – neither the requisite minimum three quotations nor prior authorisation from the Procurement Oversight Unit (POU) for direct bidding were sighted. Thus, the competitiveness of the prices paid and transparency in the procurements was in doubt.

Regarding that matter, Ambassador Fock-Tave explained that taking into account the respective operations of the department, three bids are not always the best decision since it might cost way more than the initial price.

She used the importation of flags as example, whereby multiple bidding can, not only affect the price, but also the quality of the products.

In addition, the department has set up an internalprocurement committee which ensures three bids for purchases below R150,000 while policy – more specific to the activities of the department – has also been drafted, awaiting the approval of the POU.

Livestock Trust Fund and Seychelles Agricultural Agency

The second entity before the FPAC yesterday was the Seychelles Agricultural Agency, alongside the Livestock Trust Fund, with the former mandated with the task of modernising and developing the agricultural sector and to facilitate and support the enhancement of national food and nutrition security, while the latter is responsible for providing assistance to the livestock and agricultural sectors

The delegation was headed by principal secretary for Agriculture Keven Nancy, who was accompanied by the director for agricultural store Anila Bonne, chief officer for agriculture Linetta Estico and senior accountant Elsa Quatre.

Due to the fact that the Livestock Trust Fund (LTF) board was dissolved in February 2020, Mr Nancy explained that from then on, all payments were approved by the minister responsible for agriculture, while the treasurer was responsible for the maintenance of the LTF accounts.

Like for previous entities before the FPAC, it has been highlighted that procurement procedures –three quotations – were not followed in the process for payment of goods and services.

According to the AG’s report, there were no three quotations obtained or prior authorisation from POU for direct bidding of the selected suppliers for 14 payments totalling R261,002 for the procurement of building materials, timber, water tank, tools, umbrellas and hiring of conference room facilities.

Commenting on the above-mentioned project, Mr Nancy explained that even if the fund was being generated from the imposed levy on meat importation, it is equally normal to invest in sustaining the local agricultural sector in every possible area, even if not directly involved with livestock, since agriculture is an integrated field.

It was explained that these procurements were notsupported by three quotes for several reasons, such as strategic locations for regional consultative meeting with farmers, due to lack of stock of goods withclosure of operations of certain suppliers, as well as directions from the minister.

In terms of subsidy for farmers, based on remarks made by some farmers that they are at risk of closing down their business, Mr Nancy explained that the subsidy is for commercial livestock farmers and they are all presently benefiting from it, while in the past, farmers with two pigs and 50 chickens were also benefiting.

He explained that commercial farmers who fall within that grid are not at any risk of closing down since they are benefiting from the subsidy, including abattoir slaughter fee, carcass fee and animal feed to ensure the continuity of production.

Regarding the incident that occurred in an office at the pig genetic centre at Grand Anse on April 4, 2019 where all documents, equipment and vet drugs were kept at the time of afire, the cause remained inconclusive in the absence of any reports from the Seychelles police and the Seychelles Fire and Rescue Services Agency according to the audit.

However, the total loss of assets, tools and equipment as per records submitted to audit was R408,466, which was not insured hence no claims could be made.

Mr Nancy also noted that there was no loss whatsoever in term of pigs at the centre.

Seychelles Human Rights Commission

The Seychelles Human Rights Commission (SHRC) set up in 2018 with its main objective to create a means by which it can engage in mediation, conciliation and negotiation to enable it to investigate, detect and make recommendations to the government was the fourth entity before the FPAC yesterday.

An audit of the commission was undertaken for the year 2019 with the objectiveof examining its compliance with applicable provisions in the conduct of its financial transactions.

It was chairperson of the SHRC Justice Bernardin Renaud and chief executive Elvis Julie who answered questions on the 2020 report of the Auditor General on behalf of the commission yesterday.

On financial matters, the AG’s report stated that the commission resorted to two overdraft facilities on September 25, 2019 and October 31, 2019 and incurred interest charges amounting

R7,291 and R4,375 (R11,666) for the two overdrafts.

It further states that audit did not find theapproval of the principal secretary for Finance, but was informed that the Minister of Finance requested the bank for the overdraft on the commission’sbehalf.

Justice Renaud explained that similarly to the commission’s justifications in the AG’s report, the budget proposed for 2020 was cut to less than half as its staffing requirements were not appreciated by the ministry and the department of public administration (DPA), neither of which was familiar with the roles and responsibilities of the commission provided in the Act.

In addition, the commission was advised by the Ministry of Finance, Economic Planning and Trade that funds may only be made available inOctober 2019 due to the delay in budget approval.

A meeting was held with the Minister of Finance who suggested that the SHRC applies for an overdraft with the bank until the funds could be disbursed.

The minister offered to write to the general manager of the bank on behalf of the commission – a letter (dated September 20, 2019).

However, atthat time, we thought that the minister had written to ask for an overdraft on behalf of the commission but the letter merely stated that the sum of R1.8 million would be transferred to the SHRC after approval by the National Assembly.

It was onthis basis that the overdraft was given; as such was requested for inmid-October and extension of the facility for a few days.

This was granted bythe manager but not clearly stating that this entailed a second overdraft with interest charges of R4,375 and processing fee for R1,500.

Seychelles Revenue Commission

The fifth and final entity before the FPAC yesterday was the Seychelles Revenue Commission (SRC) responsible for the administration of the revenue laws, specified in the Schedules to the Act, in accordance with the provisions of the Revenue Administration Act, 2009, while the Customs Management Act, 2011, as amended, provides the customs division with mandate in respect of administrative and operational procedures.

The SRC was being represented by commissioner general Veronique Herminie, director for enforcement Fabiola Alcindor and director for revenue Marcia Chetty.

The first matter that arose during yesterday’s session was related to irregular use of receipt books, whereby the small packets and parcel section at the post office were not issuing receipts in a sequential order.

Further, a new receipt book was issued when the existing receipt had not been utilised fully.

At the time of audit verification of receipt books, one receipt book at the parcel section had 47 unused receipts while another receipt book was also in use with 16 receipts remaining unused.

Based on the observation, it was pointed out that inadequacy of controls over issue/use of receipt books may result in misappropriation, fraud and/or theft of cash.

Still according to the AG’s report, it was also noticed that the cash box was not properly secured.

It was observed at the small packet section that though the cash box itself waslocked, it was kept together with both keys – original and duplicate key – and that the cash box was kept in an unlocked drawer.

Since the current storage is not underthe responsibility of the customs officers, audit recommended that the commission should ensure that the customs cash box is securely locked and stored at all times.

In regards to the two above mentioned observations, Mrs Herminie explained that the manager of internal audit within the commission hosted a training session in November 2021, covering the Public Finance Management Act, as well as the accounting manual to educate members of staff on the existing procedures that need to be followed, as per requirements of the Accounting Manual, 2020.

Another point raised by the AG’s report was regarding revenue collected and not adequately supported, precisely 31 revenue vouchers raised by customs officers at the post office for collectionsamounting R85,542 and noted, in 16 cases, that revenue vouchers totalling to R16,199 were without supporting documents, including invoices and other relevant documents to ensure that the amounts due were correctly calculated.

In that regards, Ms Chetty noted that the commission’s internal audit performed a test at the end of year 2021 to ensure that procedures for collection of revenue are followed and proper records kept.

Additionally, training sessions have been organised to educate staff on the procedures to be followed as per the requirements of relevant standard operating procedures (SOP) and the accounting manual.

In terms of avoidable expenditure, it was noted that the customs division entered into an agreement with the Financial Services Authority (FSA) for renting a new government warehouse situated at the FSA Zone at a monthly rent of R67,280, while after physical inspection of the warehouse in June and August 2021 it was noticed that it was yet occupied, even if the rent payment started in March 2021, with a total of R336,400 being paid.

Mrs Herminie explained that the government warehouses where the seized goods were kept were not in a proper state and since the SRC’s budget was approved in April2021, the commission was unable to finalise theoccupancy of the warehouse with FSA, while there was negotiations with the FSA regarding alteration works that could be done in the warehouse and ensure that such works were in line with FSA’s terms and conditions for safety and security.

She added that the ongoing Covid-19 pandemic has also proven to be a challenge in getting the works completed as per schedule as well as in moving stored items to the new location.

Roland Duval