THE TOKAUT BLOG
Oro in the Auditor General’s spotlight
In its latest report, the Auditor General’s Office (AGO) has exposed a litany of questionable payments made by the Oro (Northern Province) Administration. The payments amount to almost K6 million in total.
As well as specific payments that could not be verified as genuine the AGO found generally internal controls were insufficient to ‘prevent, detect or correct fraud’. [p164].
Oro’s crusading governor, Gary Juffa, is not surprised. Juffa is well aware of how badly impacted the Provincial administration is by corruption and has lamented his limited powers of intervention.
Nonetheless, important changes are afoot.
In July the Provincial Executive Council (PEC) suspended Provincial Administrator Sem Vegogo on 18 counts of misconduct and maladministration in office. This was less than a year after Vegogo escaped fraud charges over car-hire payments worth more than K168,000. The case was thrown out of court for a lack of evidence. Now the PEC says further criminal investigations are ongoing. They expect additional charges to be laid.
The fraud squad has also recently arrested and charged Popondetta hospital chief executive Dr Gunzi Gawin. He is facing three counts of conspiracy to defraud, misappropriation of property and abuse of office.
These actions potentially signal that long-lasting and concrete change is coming to Oro. In the meantime, lets take a closer look at the Auditor General’s findings for the year ended 31 December 2015.
Payment for vehicle hires during the year totalled K2,505,041. All of which was paid to ‘Gee Hire Cars and G27 Limited’.
The audit noted two important points about these payments. Firstly, of the K2.5m paid, K1.1m related to outstanding debts from previous years. However, as the Provincial Administration had no outstanding debt register it was impossible for the auditor to verify whether the debt was genuine.
Secondly, the hire company had separate agreements with different sections and divisions within the government. Divisional heads were approving vehicle hires even though they had divisional vehicles that could or should have been used instead. There was no proper screening of vehicle hire requests, and payments, which led to the huge annual costs.
PNGi has investigated the ownership of Gee Hire Cars and G27 Limited. G27 Limited is owned by Tati Opa Lin, a resident of Popondetta, while its Secretary is Huayan Lin. Tati and Huayan joint own the business, Gee Hire Cars. Both individuals share a common residence in Popondetta.
The Auditor General’s report does not make any allegations of wrongdoing by either individual. However, it is a matter of serious concern that there is a single beneficiary of such a significant volume of car hire expenditure.
The AGO reports that the Provincial Administration was paying K41,415 a month as a legal retainer fee to an unnamed law firm. This equates to K496,980 for the year.
The following discrepancies were noted:
- There was no signed Legal Services Retainer Agreement on file, only an unsigned copy.
- The unsigned copy of the agreement had an agreed retainer fee of K30,000 a month, not K41,415. This means the law firm was ostensibly over paid by K136,980.
- There was no evidence the Provincial Executive Council approved any retainer agreement nor any evidence of any open tender process to ensure value-for-money and lowest cost.
Two issues concerning recreational leave fares for administration staff troubled the auditor.
Firstly, a total of K191,830 for leave fares was paid directly to the officers rather than service providers.The money was never acquitted and therefore there is no way of confirmed it was used for its intended purpose.
Secondly, an amount of K17,431 was paid as accrued leave fares for a deceased officer. Although the officer was from Kira District in Oro Province, the travel costs were calculated on the basis of air travel from Popondetta to Lae, via Port Moresby, and then via a third level airline from Lae to Kira. The auditors considered the payment to be “abnormal” and it was “unwarranted” for an officer working in their own province to travel home via two other provinces, especially as there was an alternative direct service from Popondetta to Kira!
A number of payments for consultancy services were highlighted by the auditor as suspicious.
Two payments totalling K168,000 were made to Repo Engineering & Consulting Ltd. There were no approvals from the Provincial Executive Council or Provincial Supply and Tenders Board (PSTB) on file and no bill of quantities or any verification of the work done. One of the payments, for K111,000, was not signed by the approved Section 32 officer as the amount was over the threshold of K50,000.
As a result, the Auditor General was unable to verify whether the contract was awarded in accordance with the Public Finance (Management) Act.
Two payments totalling K30,000,out of a claim for K245,960, was paid to X-Limits for ‘education consultancy services’. The audit could again find no evidence of any consultancy agreement or any other supporting documents justifying the payments.
K10,000 was paid as reimbursement for materials purchased for maintenance work on a house. There was no evidence to suggest the maintenance was ever done or the materials purchased.
Duplicate payments totalling K30,264 were made to a building maintenance and construction company for the same job. The payments were made three-weeks apart.
K441,453 was paid to 4TY Limited for road maintenance work. There was no evidence sighted by the auditor of Provincial Supply and Tender Board approval, any maintenance contract or completion certificates to validate the payments.
4TY Limited is owned by a Yew Sing Tiong. The Auditor General’s report makes no direct allegations against Mr Tiong or 4TY.
Other payments that aroused suspicion was an amount of K10,000, paid to a former Provincial Administrator, as a ’storage fee’ for four motor vehicles owned by the administration but kept at his premises.
There were various reimbursement claims totalling K294,000 that were made during the course of the year. There was no evidence of prior approval for the use of private funds for official purposes.
A total of K1,351,859 was paid out in Local Level Grants, Educational Grants and Personal Financial Assistance but there were no policy guidelines in place to effectively screen the requests. More worryingly, there were no procedures in place to ensure the grants given were used for their intended purpose and no acquittals were provided by the recipients.
There was no register of fixed assets, and assets worth over K99,000 purchased during the year were not recorded. Even more seriously, cash advances made totalling K343,920 were not recorded in any register and their were no procedures in place to monitor repayments so it was not known how much remained unaccounted for.
Below are the Entity Extracts for the companies and registered businesses referred to by name in the Auditor General’s report