The Director of Audit needs more tools

By *Jomo Sanga Thomas

(“Plain Talk” July 30, 2021)

The revelation by Opposition Leader Godwin Friday that between 2010 and 2015 government failed to account for EC$95 million is alarmingly troubling. Friday’s exposé came from the Director of 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.

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 lists the amount of the overdraft as EC$44 million. In 2011, the bank paid EC$33.7 million via the overdraft account, but the Director of Audit accounts for EC$16.3 million. In 2012, the bank disbursed EC$41.6 million, but the Account General records EC$31.3 million.

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

These accounting issues relating to government’s financing are nothing new. On Feb. 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 EC$35 million. The government gets this authority according to the Financial Administration Act,

Parliament having raised the ceiling by EC$10 million last February. However, over the last decade, the government borrowed way above the EC$35 million limit. In 2014, the government borrowed as much as EC$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, 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 five 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 EC$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 governments. 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.

*Jomo Sanga Thomas is a lawyer, journalist, social commentator and a former Speaker of the House of Assembly in St. Vincent and the Grenadines.

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