National Assembly – Finance and Public Accounts Committee (FPAC) |28 April 2022
FPAC listens to five more entities on 2020 Auditor General’s report
Five more governmental entities were in front of the Finance and Public Accounts Committee of the National Assembly yesterday where they were questioned on the 2020 report of the Auditor General.
The hearings are part of the Finance and Public Accounts Committee (FPAC) mandate 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.
The FPAC, under the leadership of leader of the opposition Sebastien Pillay is also mandated to propose any measures, it considers necessary to ensure that the funds of the government are properly and economically spent.
The five entities at yesterday’s hearing were the Social Workers Council, National Assembly, department of prisons, Health Care Agency and department of police.
The FPAC also received the direct support of Auditor General Gamini Herath.
Social Workers Council
The first entity before the FPAC yesterday was the Social Workers Council (SWC), governed by the Social Workers’ Council Act October 1, 2007 (consolidated to June 30, 2012) which is mandated to regulate the professional conduct of social workers for the purpose of protecting service users and promoting and upholding the highest possible standard in social work, register and maintain a register of social workers with accurate and up-to-date information, and also to enquire into allegations of breaches of ethical standards and of serious professional misconduct by a social worker and to take appropriate disciplinary measures.
The council was being represented by its chairperson Shella Mohideen and the first matter to arise was regarding non-remittance of income tax and pension contributions.
The AG report states that the first three months of 2018, monthly income tax at the rate of 15 percent (R2,100)and monthly pension contribution at the rate of three (3) percent (R420), totalling R7,560(R6,300+R1,260), though deducted from the salary payments to the Registrar,were not remitted to the concerned agencies, namely, Seychelles Revenue Commission (SRC) and Seychelles Pension Fund (SPF) respectively.
However,from April 2018 to July 2019, the income tax and pension fund contributions deductions were remitted to the relevant authorities.
Mrs Mohideen explained that the inconsistency was based purely on the incompetency of the council’s registrar at that time in terms of ability to deal with financial issues.
She explained that the income tax and pension contributions were deducted, while it was the remittance process that was not carried out.
She said based on the incompetency of the then registrar, the later was advised to exit the function, while the department of finance took over all the council’s finances, whereby she instructed them to carry out the remittance, thus resolving the issue.
Also according to the AG’s report, monthly bank reconciliations, as required by the relevant financial instructions, to ensure that any errors noted are addressed promptly were not being carried out by the council, and again, Mrs Mohideen explained that the then registrar was not conversant in accounting matters, while the reconciliation is now being done by the department of finance.
Payments lacking supporting documents also came up where the audit did not see the originalinvoice/payment vouchers in respect of 10payments, totalling to R75,107, towards rent, internet/telephone bills and board fees effected from the Mauritius Commercial Bank (MCB) account between January and April 2018.
In line with that, Mrs Mohideen explained that all transactions carried out during that period were for the council, and again stressed on the incompetency of the assigned person to carry out the necessary accounting and finance procedures, causing non-adherence on financial regulations.
This, she said, was one of the main reasons behind the decision to close the MCB account.
As the way forward, Mrs Mohideen noted that new structures have been put in place to ensure future efficient running of the council.
National Assembly
The parent organisation of the FPAC, the National Assembly was the second entity before the committee yesterday, as the body responsible for making and passing laws, taking up a critical oversight role to check on the actions, state of finances and policies of the executive.
It is the only institution that has the power to pass laws for every Seychellois and every person on the territory of Seychelles, and this is done in two ways, including passing laws proposed by the executive through public bills and amending the constitution where necessary.
It is also responsible to approve any changes to the Constitution, while, a large part of the oversight work also takes place in the work of standing and select sessional committees, including the FPAC.
The National Assembly delegation was led by clerk Tania Isaac who was accompanied by director general for corporate services and facilities Godfra Hermitte, and senior accountant Ghislaine Thelermont.
The first issue to pop up was in regards to personnel emoluments where the AG’s report highlighted that the payroll of the National Assembly consisted of 50 employees, 33 members, 33 constituency clerks and 58 ex-members of the National Assembly as of December 2019, while the total payments made towards personnel emoluments duringthe year amounted to R40,488,764 of which payments to the secretariat staff and constituency clerks amounted to R11,825,487 and those for the Assembly members and ex-Assembly members R28,663,277.
Audit examined the monthly payroll analysis and monthly reconciliationstatements and noted that evidence of performance of verifications undertaken by the supervisory officer was not recorded on the relevant records.
In view that it was noted that not only the supervisory checks should be undertaken but also they should appear to have been undertaken, for control purpose, audit recommended that the secretariat should record the evidence of checks on relevant documents.
Mrs Isaac explained that employees are considered as employees, but due to the fact that they are being guided by a regulation where they are remunerated under the National Assembly, the institution manages the administrative part of their salaries, including salary slips, while actual salary – the money – falls under a central vote which is disbursed on a monthly basis.
Another point which emerged was regarding the members’ entitlement for allowances, which include payments of constituency support allowance which provides members of the National Assembly (MNAs) with an allowance of R17,000 per month to cover rent of office and office running cost, telephone and fuel expenses.
The AG’s report noted that paymentstotalling R6,732,000, were made in 2019,directly to the two respective political parties on behalf of their respectiveMNAs and based on lease agreements effective from September27, 2016 for offices rent between the clerk of the National Assembly and each political party were executed, while the document itself did not articulately providefor terms and conditions for usage of the aforementioned monthly allowance.
Mrs Isaac explained that the policy regarding the mentioned matter was revised in November 2020and includesrental for housings, while the rental certification form will be signedby the end of December each year.
She added that based on new developments at district level, they are in close discussion with the department of finance on how to adjust the measures to better apply the policy.
Regarding the existing procedures on the payment of members' claims whereby MNAs are entitled to claim an entertainment allowance to a maximum R8,000 annually, the report noted that a total of R344,681 was refunded towards the allowance in 2019 as per the National Assembly's general ledger.
Due to some ambiguity, audit recommended that the secretariat should consider reviewing the existing system and control and the policy and procedures for the disbursement of allowances allocated to MNAs.
Mrs Isaac explained that the revised policy allows verifications to be done on the claims prior to disbursement, thus having better control in terms of documentation.
Department of prisons
The third entity before the FPAC yesterday was the department of prisons, also known as the Seychelles Prison Services (SPS) which falls under the Ministry of Internal Affairs. It manages all prisons in the country, more specifically it keeps under constant supervision those convicted, on remand, and detained on the order of a court or of the President.
The delegation was headed by Superintendant of Prison Raymond St Ange who was accompanied by chief inspector Sam Dodin and senior accountant Tassiana Labrosse.
The department’s total expenditure on personnel emoluments for the years 2019 and 2020 were R23,983,296 and R25,128,412 respectively.
In addition, salaries for expatriate prison officers for the two years were R14,577,901 and R18,173,755 respectively.
The first irregularity raised during the hearing was in regards to non-recovery of overpayments and avoidable expenditure where in one particular case, the employment of a prison officer was terminated on June 5, 2019 due to absence from duty, but was instead paid up to June 30, 2019. This resulted in an overpayment of R4,830, after deduction of accrued leave owed to the former staff amounting to R4,193.
In addition, at the time of his dismissal, the employee was indebted to a car hire operator for damage to a vehicle on February 23, 2019, which had been hired privately.
The former employee had entered into an agreement with the car hire operator on March 5, 2019 to settle the damage of R21,800 in seven instalments of R3,114 of which six were to be deducted from his salary.
The department instead paid the operator R21,800 on behalf of the formeremployee, without recovery of the said sum and salary overpayment totalling R26,630 (R21,800+ R4,830).
Audit could not ascertain the rationale for the department to bear the cost of theformer employee’s personal debt from public funds which was incorrectly charged to hire of vehicles, while correspondence was not sighted on file to confirm that attempts had been made to secure recovery of the sums owed by the former employee.
Mr St Ange explained that the above-mentioned transactions were made without his knowledge by the previous financial controller of the division and that he only found out through the audit report.
He also noted that no disciplinary measures were taken against the previous financial controller since the matter was only discovered through the audit report.
Mr St Ange suggested that the matter is brought up in front of another entity responsible for investigation since the procedure was carried out without his knowledge which is against the division’s policy.
He also added that adequate measures have been put in place to avoid repetition of such incident.
Poor maintenance of leave records was another issuebrought forward yesterday, after audit, following close scrutiny of a sample of personal files of expatriate prison officers found out that leave records were not maintained.
Thesystem in place for recording of leave is such that leave applications were made on the basis of a memo from the officer’s supervisor to the director human resources and administration to inform of the absence of the officers, while no other records weremaintained to update leave balance.
In the absence of leave records, audit could not ascertain whether payments in lieu of leave including public holidays to seven (7) officers in 2019 and the same for 2020 for the sums of R576,435 and R265,327 respectively, were correctlycomputed as leave balances could not be confirmed.
Mr St Ange, again acknowledged several past lapses within the system and noted that with new structures in place, adjustments in areas such as leave plan and leave register have been updated.
Disparity between ordered and invoiced quantities was also observed whereby some payments classified as ‘food and ration’, and compared the quantity of items requested as per order form against the invoiced quantities and corresponding payments.
Disparities were observed in seven (7) cases totalling to R31,755 resulting in payments in excess of quantities stated on the ‘order forms’.
This indicates that the quantities ordered may have been altered following approval, and the department must investigate the anomalies and take corrective action.
Surcharge on overdue payments whereby during the year 2019, the department did not settle utility bills promptly, which resulted in the payment of surcharge levy of R33,017 was also observed in the report and in response, the departmentexplained that late payments were attributed toinsufficient funds and delays in receiving bills in the past.
Department of police
The department of police led by Commissioner of Police Ted Barbe, along with Deputy Commissioner Francis Songoire, Deputy Commissioner Ron Bonnelame, Assistant Superintendent Joseph Bibi and financial controller Danny Labonte was the fourth entity to be questioned by the FPAC yesterday.
It is to note that the principal sources of income for the department is through provision ofstatic/escort duties by the public security support wing (PSSW) and Seychelles vessel protection detachment (SVPD), while other miscellaneous income includedfees charged for rocks blasting, learners’ permits, driving and theory tests, issuing accident reports, loss of identity card, and loss of items reports.
During 2020, the department collected a total of R11,788,090.
The credit policy of the department provides for settlement of invoices within30 days from the date of issue as stated in the Public Finance Management Regulations.
Regulation 43 further states that the accounting officer shall ensure that the outstanding debts are collected within the period of credit approved and appropriately recorded in the debtor's control register.
However, the debtors aged listing at end of 2020 compiled by the departmentdisclosed a balance of R629,495, of which about 53 percent were from the private sector and R265,691 (42percent) were outstanding for over 90 days.
About 46 percent of the debts exceeded the credit limit of 30 days while 35 percent of the arrears dated back to 2016, 2017, 2018 and 2019.
According to the audit report, withthe passage of time, the recovery of the overdue debts becomes increasingly difficult and eventually converts into bad debts.
Mr Labonte noted that payments received are mainly for the current services, whereas invoices from 2015 are still pending.
He explained that they have arranged meetings with these clients and hopeto come to a decision. For government entities, the details will be forwarded to the Ministry of Finance for further action.
In relation to use of goods and services, an examination of costs relating to use of goods and services for the Anti-Narcotics Bureau was performed through a sample of fifty-five payments totalling R2,482,317 of the total expenditure of R23,712,969 for 2020 including R4,870,428 towards payment of allowances charged to security and enforcement.
According to the AG’s report, the ANB rented four (4) bedsitters on La Digue without valid leases, and according to the unsigned leases provided to audit, a rent of R28,000 was payable monthly and a total R336,000 was paid for the yearas per the general ledger.
In the absence of a signed and binding lease, auditcould not ascertain the accuracy of payments effected.
In his reply, Mr Labonte explained that they received a signed contract from theowner for the period for two years, however, the lessee – the ANB – did not sign the contract but they are still using the facility.
Health Care Agency
The fifth entity before the FPAC yesterday was the Health Care Agency (HCA)represented by chief executive Dr Danny Louange and financial controller Michel Brutus who gave a special report on expenditure incurred on response to the Covid-19 pandemic during 2020.
It was on March 14, 2020, that Seychelles confirmed its first two cases of Covid-19 and to respond to the unforeseen panic situation created by the Covid-19 pandemic in 2020, the ministry had to incur expenditure in large unprecedented sums on emergency basis through its different organs during March to December 2020, utilising the contingency fund and budgetary appropriations of HCA and the ministry besides the specific grants and the donations received.
Based on the AG’s report, during 2020, the total expenditure incurred was over R101.9million of which R81million were met from the contingency fund against the budget provision of R60.0m and balance over R20.9m from the ministry’s budget.
To deal with the challenges of the pandemic, while the Public Health Authorityfocussed on implementation of preventive and control measures, the HCA was entrusted with the responsibility of providingall needed medication, medical equipment and facilities.
Therefore, most of theexpenditure in response to the Covid-19 pandemic was incurred by the HCA.
Still according to the AG’s report, by December 2020, a total of R5,442,430 had been paid as rental of tents at nine locations.
For eight more locations, tents were procured in March 2020 from a singlesupplier and the relevant invoices for the same were yet to be submitted to the HCA.
Full and final liability on this account could not be ascertained since the documents such as procurement approvals, agreements and project files were notmaintained.
Further, a sum of R359,701 was paid for other associatedexpenditure, such as installation of air-conditioning, equipment, water, etc.
Though the arrangements made were at a large scale, requisite procurement files and documentation as to procurement procedures followed, supply/civil works contract agreements were not maintained. Essential documents indicating a formal needs assessment, availability of tents and facilities, their supply sources, rentals prevailing in the market and negotiations held with suppliers were not provided to audit.
Furthermore, there was an absence of signed rental agreements, contracts, quotations and tender documents to substantiate the payments made.
According to Dr Louange, the idea of prevention was the main reason behind expediting the process and avoiding the procurement procedure as per the normal requirements and regulations.
He added they were also targeting local experts in the tent business, while contracts were not initiated since the agency had no clue that the pandemic was going to pursue.
In terms of selection for suppliers, Dr Louange said it was purely based on who had more tents to provide, following advice from the Procurement Oversight Unit (POU).
Regarding accommodation, or quarantine facilityin a local resort, the AG’sreport highlighted that from March 23 to November 30, 2020, the HCA spent a total ofR39,413,030.
Still according to the report, the signed contract with the resort revealed that the room charges were increased from R500 per room per day (effective June1, 2020) to R835 (effective
November 30, 2020) despite the fact that the government covered the salary of the resort’s staff under its financial support scheme ‘FA4JR’ and 100 percent cost of telephone/PABX, Wi-Fi and television costs. The government financial support also covered 75 percent costs of electricity, water and fuel, which subsequently was increased to 90 percent effective July 16, 2020.
Dr Louange explained among the criteria for choosing the resort included the number of rooms, security measures, as well as its distance to the nearest neighbourhood.
He also noted that even if the AG’s report states that there are no procurement documents, the agreement was personally signed by the principal secretary for Finance at that time.
In addition to providing accommodation, the HCA alsospent a total of R4,487,448 during 2020 on food catering services procured fromits existing supplier.
However, the approval of the POU/National Tender Boardwas not sought nor was there a signed supply contract.
Again Dr Louange noted that since it was a time of unexpected crisis, the need to cater for and take care of people preceded the necessities for administrative procedures.
The AG’s report also features details on the civil construction work for renovation of the quarantine facilities for theSouth East Island compound which was awarded to a state company for a sum ofR5,568,008; for which the prescribed open bidding method, in line withprovisions of the Public Procurement Act was not followed nor was it forwardedto the approving authority.
The procurement and award of tender werecarried out by the department of defence, which owns the facility, but paymentswere processed by the agency and settled from defence capital project votethrough the Ministry of Finance.
Still according to the AG’s report, no documents, formalising the arrangements between the agency and the department, or a procurement file in this regard were maintainedto provide an audit trail. Consequently, audit could not verify as to whether theprocurement of the renovation work, its execution and payments made were incompliance with the prescribed procurement procedures.
The ultimate payment to the company was R4,312,500, following a discount.
As conclusion, the AG’s report noted that the coordinated, timely and effective responses spearheaded by the health authorities in Seychelles against the spread of Covid-19 were commendable.
However, it added that the Procurement Act and Regulationsproviding for procedure for dealing with emergency procurements could have been largely adhered to in most of the procurements.
As for recommendations, the report noted that authorities concerned should care to learn lessons and prepare material, human resources and funds to be utilised in large scale emergencies causing damage to lives, properties, communities and the pristine environment of Seychelles and its territorial waters.
Roland Duval