Monday, September 27, 2021
HomeOPINIONLettersTHE DIRECTOR OF AUDIT NEEDS MORE TOOLS

THE DIRECTOR OF AUDIT NEEDS MORE TOOLS

The revelation by Opposition leader Godwin Friday that between 2010 and 2015 government failed to account for $95 million is alarmingly troubling. Friday’s expose’ came from the Auditor’s report for 2015. The fact that the reports are five years behind schedule is equally worrisome because it means we get to discuss these matters years after they should have been tabled for full disclosure, explanation and debate.

The EC$95 million represents the difference between what the Bank of St. Vincent and the Grenadines said was drawn down under the government’s overdraft account and the amount that the accountant general presented to the Director of Audit.

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Dr Friday correctly surmised, ‘there is a discrepancy, but that discrepancy must be explainable. And when the Accountant General can’t explain that to the satisfaction of the Director of Audit, then it leads to all sorts of questions. Were there inefficiencies? Were there losses? Or worse, was there misappropriation?’

It is a damning commentary on government operations when the Director of Audit declares, ‘I have not been able to obtain sufficient appropriate evidence to provide the basis of an audit opinion. Accordingly, I do not express an opinion on the financial statements.’

Clearly, the Finance Minister has some explaining to do. He will have to lean on his father since PM Gonsalves was Finance Minister between 2010 and 2015.

He must offer reasons for the differences in the period under review. 2010, the overdraft on the bank’s account was EC$58 million. The Accountant General list the amount of the overdraft as $44 million. In 2011, the bank paid $33.7 million via the overdraft account, but the Director of Audit accounts for $16.3 million. In 2012, the bank disbursed $41.6 million, but the Account General records $31.3 million.

In 2013, the bank listed $51.1 million while the Accountant General’s account for only $34.2 million. In 2014, the bank issued $60.5 million in overdraft, and the Accountant General recorded $31 million. While in 2015, the bank’s record showed $60 million while the Account General verifies only $50 million.

These accounting issues relating to government’s financing are nothing new. On February 14, 2020, Plain Talk column entitled biggest outtake of the budget debate said:

‘The biggest story was that the government had routinely violated statutory law and the constitution by not adhering to the legal demands relating to overdraft limits. The legal limits set for government overdraft currently stands at $50 million. The government gets this authority according to the Financial Administration Act. However, over the last decade, the government borrowed way above the $50 million limit. In 2014, the government borrowed as much as $83 million.

Of critical importance is that whenever the government exceeded its overdraft limits, it never sort parliament’s approval for the excess borrowing. But that was not all. The government compounded its illegal, unconstitutional actions by engaging in another illegality. It created an Accountant General Loan at the Bank of St Vincent and the Grenadines and hid the entire transaction from the parliament and, by extension, the people of St Vincent and the Grenadines.

The overdraft facility is intended to tide the government over as the national demands require. But this is to be short term, no more than 12 months. However, when the overdraft is not paid, and the balance is turned into a loan at one of the commercial banks, the government simply and routinely exceeds its budgetary and legal limits and creates even more significant public debt problems. Fundamentally, these acts are in clear violation of the Finance Administration Act and by extension our nation’s constitution.’

The government’s response to the new claims is anticipated in the 2020 budget debate there was no denial.  PM Gonsalves waxed the irrelevant story of what happened when NDP was in power. Camillo failed to explain, rationalise the law will not constrain it, apologise for or refute the charges regarding the government’s illegal actions and fiscal irresponsibility. 

This is not the first time the government was found to be acting outside of the law. This is not the first time government acts as though it will not be constrained by the law. In September 2019, St. Clair Leacock asked the government to list and itemise all the Special Warrants it issued in the previous 5 years. On October 2019 Special Warrants spanning 2013 to 2018 were brought before the parliament. We learned then that the government exceeded the legal limit of $25 million in more than one instance. In that debate, PM Gonsalves acknowledged the transgression and proclaimed that exceeding the Special Warrant limit, the government ‘had not committed a hanging offence.’

Plain Talk mused then, ‘If the government could so willy nilly disregard legal requirements, are there other illegal actions that have not yet been disclosed? What other unlawful acts will it be prepared to do in the dark, quiet halls of power?

We cannot encourage or condone illegality and misbehaviour in office by any government minister or the government itself. Every five, years we go to the polls and elect a government. Those elected swear to uphold the laws and to conduct public affairs in keeping with the laws.

Moreover, this is a government that touts law and order as a major plank of its rule. It cites Transparency International, which rates SVG high on the list of transparent government. In his address, Gonsalves told the nation that he was the lyrical master. Well, we must demand that lyrics are not selectively dropped. The lyrics of national affairs must be wholesome, truthful and legal. We must develop a democracy that is anchored in laws and not the power or guile of men.

The law requires the government to seek parliamentary approval by resolution or other legal acts. Not to do as it did by flying in the face of the requirements of good governance best practice of transparency and accountability.’

Clearly, there are lots of problems with public financing that are hidden from the public. The office of the Director of Audit must be given the necessary resources to do its job. We have to improve on our democratic best practices.

Send comments, criticisms & suggestions to jomosanga@gmail.com

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