By Ednal Palmer
An audit report on the $306million Economic Stimulus Package (ESP) has produced disturbing finds – from serious procurement breaches to lack of compliance, conflict of interests and ghost recipients.
The Audit report was released today to members of the media by the Auditor General David Teika Dennis on behalf of the Office of the Auditor General (OAG).
During a media briefing this morning, Dennis confirmed that the report uncovered numerous instances of possible fraudulent activities and dubious payouts.
“In some instances, there’s lack of transparency about who received funding and what it was received for,” he stated.
“There were possible fraudulent activities which were evident with the many payments being signed for by government officials on behalf of beneficiaries without documented authorization.
“This included a payment which involved the issuance of 251 cheques by a single officer, totaling some $6.8million.
“The government officer signed for the payments on behalf of beneficiaries with no documentary evidence available that the beneficiaries received the funds, presenting a fraud risk.
“Some Government officers also signed for more than $1million worth of cheques for beneficiaries and the OAG has been unable to verify that all these funds were actually paid to the intended beneficiaries.”
The Auditor General confirmed that during the audit when members of his team were sent to verify some of the recipients, many never existed.
“There’s inadequate documentation and reporting across the ESP and in many cases, documentation to support the validity of actions and transactions were not available, which is prevalent across the government and requires urgent attention.
“Some Government officers also signed for more than $1million worth of cheques for beneficiaries and the OAG has not been able to verify that all these funds were actually paid to the intended beneficiaries.”
The Office of the Auditor General undertook the audit of the ESP appropriated expenditure in 2020 and 2021, to assess whether it complied with the financial rules and regulations, and the whether the expenditure was made in accordance with the ESP approved by cabinet.
The report uncovered numerous potential corrupt practices and procurements have not been inline with the stated purpose of the ESP, due to lack of laws and guidelines and weak internal control.
“I acknowledge the extraordinary circumstances created by the COVID 19 which heightened the inherent risk for expediting procurements and delivery of payments and services.
At the height of the covid-19 pandemic between 2020 and 2021, the last government led by Manasseh Sogavare introduced the scheme to support private businesses including farmers and fishers to keep the economy afloat.
Furthermore, the scheme was perceived as one of the government’s major policy redirection programmes that supported national economic activities in view of the closure of international borders that hindered international trade.
The scheme was administered by a team of economic and political officials from the Ministry of Finance and Treasury and the Office of the Prime Minister and Cabinet.
There are no reports to show the positive impacts of the ESP and whether it has truly stimulated the economy back then.
The major findings of the Audit report are:
1. There was no standard applications form making it difficult for applicants to draft applications and time consuming for assessors to assess applications.
2. Government officials did not properly identify or manage conflict of interests, or potential conflicts of interests, arising during administration of the ESP
3. Some grant criteria were established but there was often no documented assessment against the criteria. Documentation supporting grants was often unavailable. Some successful applications did not appear to meet the designated criteria.
4.There was no public reporting of who received funding from the ESP and public reporting would increase transparency and accountability of the ESP
5. Grant recipients did not provide reports on the grant as required confirming they had complied with any grant conditions.
6. The MOFT has not publicly released the ten evaluation reports on the ESP.
7. Constituency Development Officers purchased capital equipment but were not required to comply with the procurement and Contract Administration Manual. This resulted in poor procurement decisions. No reporting standards were established so it was unclear if the expenditure was effective. CDOs kept poor records supporting funding decisions.
8. Significant cash cheques were signed for by government officers and others on behalf of beneficiaries with no documentary evidence available that beneficiaries received the funds, presenting a fraud risk.
9. Some government officers signed for more than $1million worth of cheques for beneficiaries and the OAG has not been able to verify that all these funds were paid to the beneficiaries.
10. Imprest payments made in 2021 totaling over $473, 696 have not been acquitted or recovered, in contravention of relevant financial instructions relating to the management of standing Imprest accounts.
11. Imprest accounts documentation supporting payments was often incomplete or missing. Responsible Ministries were only able to provide a small percentage of application to the OAG for review.
12. Supplies paid for as part of grants to farmers and other small businesses were not always collected by beneficiaries.
13. Over $25million was granted to produce exporters to ensure they continue to buy and export produce, but there was no requirement for exporters to repay the funds once they had on sold the products overseas.