FPAC hearing on the special report of the Auditor General on FA4JR   ‘FA4JR had nothing to do with politics’ – Hon. Sebastien Pillay |23 July 2022

The FPAC hearing yesterday (Photo source: National Assembly)

Leader of the opposition Sebastien Pillay, who chairs the National Assembly’s Finance and Public Accounts Committee, has said “the whole process of the Financial Assistance for Job Retention Scheme (FA4JR) had nothing to do with politics”.

Speaking to Seychelles NATION after yesterday’s Finance and Public Accounts Committee (FPAC) hearing, Mr Pillay said: “The argument about FA4JR being political does not stand when we reviewed the auditor’s report and heard explanations given by secretary of state Patrick Payet. The problems came mainly from businesses who did not fill in the right information which was sent to the Ministry of Finance, thus resulting in overpayment. Now it does not make sense if these big businesses (hotels) are saying they do not have money to refund. They all signed a liability while making their application and accepted to return the money if ever they gave the wrong information. For me, this hearing was important to clear the air about the FA4JR. It was firstly set up to help the businessmen and what we found out is that some businesses have been dishonest. All along, the previous government was being blamed for that, when United Seychelles (US) had nothing to do with the scheme. It is important for this to be clarified and at different times in the National Assembly, we were accused of having a good time (‘donn bal’) with the FA4JR money, which is obviously not the case!”

Yesterday’s much-awaited public hearing of the National Assembly’s FPAC on the special report produced by the Auditor General on the FA4JR scheme showed an overpayment of R15,110,146 to 47 businesses.

The main reason for the overpayments was the incorrect/non application of the conditions/criteria by the committee. Additionally, the applicants did not inform the committee of employees who were no longer in employment; applied increases in salaries/allowances; adding employees on multiple payrolls; and including new employees on payroll. All these contributed to the many issues, the main one was related to the processing of applications as most were done manually leading to loopholes and overpayment to some businesses.

The auditor’s report noted that from April to December 2020 assistance of over R1.2 billion was disbursed under the scheme to businesses as FA4JR financial assistance under two categories, namely payroll assistance for salaried employees and income assistance for business owners or self-employed.

FPAC members who attended the hearing were Terrence Mondon, Churchill Gill, George Romain, Richard Labrosse and Conrad Gabriel. MNA Sandy Arrisol excused himself as he had to attend another business. The Ministry of Finance was represented by SS Patrick Payet, Irene Croise, Selina Verghese and Odile Vidot. Auditor General Gamini Herath, Ramona Louise, Marie Louise Pierre, and National Assembly’s deputy clerk Alexandria Faure were also in attendance.

Right on the onset, Hon. Pillay noted that they will not only talk about the anomalies but what should be done to rectify the issues found in the auditor’s report.

Answering questions from MNA Mondon about the scheme, its structure and the statistics, SS Payet explained that the “FA4JR was put in place in March 2020 in response to the economic meltdown brought about by the Covid-19 pandemic spreading across the world. As the country went into a nation-wide lockdown, cutting off all air and sea connections with the rest of the world, employees in the private sector faced the highest risk of loss of income. Hence, the main aim of the scheme was to assist businesses and non-governmental organisations (NGOs) to pay their employees’ salaries and wages in order to prevent any redundancies. The scheme operated from April 2020 to March 2021 during which a total sum of R1,450,648,071 was disbursed through the Treasury, of which R1,266,056,247 was during the period April to December 2020.”

SS Payet also explained that along the way the capping salary was discussed and reaching July 2020, the Seychelles economy was still full of uncertainty. “All applications were being handled manually and the staff of the ministry were quite overwhelmed. There was a list of criteria in order to minimise fraud but still we did not have the best IT system to support the process. Only in June 2020 the applications were done digitally. The MoF did not have an interface with the Seychelles Revenue Commission to be able to verify the information given by the businesses,” said SS Payet.

Another major setback, the MoF found out was that many people were doing businesses without proper records of their revenues and they were using mainly cash. MoF had to request for agreements or any form of proof of their businesses.

Statistics wise, as of September 2020, the finance ministry had received 5,087 applications and 4,170 received assistance while 917 were rejected. Six hundred and five (605) businesses/self-employed appealed, out of which 178 requests were approved and 427 rejected.

MNA Romain questioned SS Payet about the ceiling of the fund and if ever this was presented to the Cabinet of Ministers at that time.

“The context in which we were in 2020, we knew that all expenses made during that time the country could not absorb. That’s why we requested for help from the IMF and the Banque Africaine. Budget was in deficit and since 1980, we had never hit that kind of deficit. Worldwide, countries were in the same situation. We were expecting to give this assistance for three months and we were also discussing with the private sector to allow them to use their reserve. There was also a belief from the private sector that they could apply and will receive the assistance! When we reviewed the 2020 budget, we did discuss with the Cabinet of Ministers and presented its impact on the economy. But we were able to give support to the private sector until April 2021.”

MNA Labrosse questioned the system used to process the applications and self-employed. SS Payet explained that before implementing the system, they did some research and many countries were implementing such systems for the first time.

“When we started processing the papers manually, we expected a percentage of error but we had to make sure we minimise the risk by including a declaration where the MoF would be able to take action in the case of any misrepresentation of information. Some individuals did not even want to sign the declaration. Now as the auditor’s report is out, we are using this declaration to recuperate the money.”

SS Payet worked closely with the department of information communication technology (DICT) on a system and Seychelles registered below 3% of fraud compared to 8% in the United Kingdom (UK).

Hon Churchill Gill asked if the committee responsible to assess and review the applications needed approval from the President or any other authority. He also enquired about whether there are cases of businesses who received assistance under FA4JR and also the facilities banks were providing.

“The committee did its work and there was absolutely no political interference. We did receive calls from some members of the National Assembly asking about the status of the applications of their constituents. We even explained to them the procedure and the appeal process,” clarified SS Payet.

SS Payet also explained that the bank facility came after the implementation of FA4JR and this scheme was to assist businesses with other expenses so that they would be ready to open for business.

He added that all letters were sent to the individuals/businesses and some were even sent to the district administration offices.

MNA Gabriel asked about the timeframe businesses have been given to repay the over R15 million disbursed as overpayment.

SS Payet shared that so far a sum of R448,000 has been refunded for the year 2021 which does not relate to the R15 million and R2,193,716 was refunded for 2020.

Questions were also raised on remarks from the Auditor’s report of instances of inadequate assessment of applications and non-application of established criteria in the administration of the scheme resulting in overpayments.

SS Payet explained that some employers provided inadequate and incorrect information adding more pressure to the committee’s work in assessing such claims. Authorities should be aware that a large number of expatriate workers appearing on payrolls submitted to the committee for financial assistance were without valid identification (national identity number, passport or gainful occupation permit).

SS Payet also shared that the MoF is working with the Seychelles Revenue Commission (SRC) to digitalise their system which will enable them to verify the businesses.

“We are committed to bringing the R15 million back in our economy and work with the businesses and public. We learnt a lot from the FA4JR scheme and it was not easy for the staff of the MoF,” shared SS Payet.

FPAC chair Pillay concluded the hearing by saying that future audit reports should help fix issues and bring a change in the system.

Vidya Gappy