GAC Audit Reports: Government Lacks Original Documents for US1.71billion Repurchased Debt; US1.1million withdrawn from MOA two Special Projects Accounts Without Supporting Documents

  • Acting Auditor General Winsley Nanka has completed and submitted two audit reports to the National Legislature and the President on the Repurchase of Liberia’s External Commercial Debts for the period April and December 2010 and the Ministry of Agriculture (MOA) for the period 1 July 2006 to 30 June 2009.

In 2009 and 2010, the International Development Association (IDA) of the World Bank and four other donors (i.e. Germany, Norway, the United Kingdom and the United States of America (USA)) provided to the GoL, a total amount of US$39.18 million to finance the repurchase of Liberia's external commercial debts, estimated at USD 1.71 billion as of 30 June 2007.

 

However, the Ministry of Finance, which was the Implementing Agency, did not submit to the GAC, original documentation substantiating the debts that were repurchased. The Ministry opined that, that documentation was not available because of the past destabilization of Liberia.

 

Of the debt repurchased payments made to debt claimants, seven (7) of the payments were effected into accounts not backed by the payment instructions of the debt holders. Total amount involved in these payments came to US$ 27,225,068.61. Additionally, all documentation underpinning the debts repurchased indicated that the debts were external debts, meaning that the debt claimants did not reside within the boundaries of Liberia. Contrary to this view, five (5) of the debt repurchased payments made were transferred to account destinations in Liberia. These payments cast doubt as to whether the debts affected were indeed external.

 

Acting Auditor General Nanka was unable to validate the eligibility of the repurchased debts, as MoF did not have documentation originating the debts, which it attributed to the past destabilization that occurred in Liberia. On account of this, the authenticity of the debts as claims against GoL could not be established by me. Furthermore, the Debt Relief Operation Financial Statement submitted for audit was without designated accounts and accounting policies, as are required to be disclosed under the Terms of Reference for the audit.

 

In the GoL invitation to the debt holders, the debt holders were required to submit their respective claims against the GoL, backed by relevant documentation substantiating the debts owed by GoL. Acting AG Nanka observed that seventeen (17) out of the 26 debt claims submitted were without appropriate documentation authenticating their claims. As the MoF did not have its original documents on the debts on account of past destabilization of Liberia, the Acting Auditor General could not determine the bases on which the 17 debts were validated by the Ministry. This omission impacted the determination of the true Reconciled Value of the affected debts.

 

The debt claimants' failure to submit complete authenticating documents on their debts to the Closing Agent, coupled with non-availability of MoF original documentation on the debts, posed the risk that some debts accepted for buy-back might not represent GoL debts.

 

With respect to the Audit of the Ministry of Agriculture for the period 1 July 2006 to 30 June 2009, Acting AG Nanka observed that controls governing the collection and accounting of the revenues within MOA were lacking. Flag receipts issued by the MOF in acknowledgement of the revenues payment were not completely maintained by either MOA or MOF, thus making it difficult to substantiate the revenues generated by the Bureau of National Fisheries (BNF).

The Bureau of National Fisheries (BNF), the institution under the MOA responsible for managing and regulating all fishery resources within Liberia, or the MOA did not pursue a mechanism to enforce the payment of revenues by the public. The inadequate controls over the revenue collection by MOA were reflected in significant variation in revenue reported by the Management of the BNF. The incomplete flag receipts maintained by both the MOF and MOA provide opportunities for abuse of the revenues collected by MOA through MOF. Additionally, the absence of a mechanism to enforce the revenue payment by the affected public also contributed to the abysmal performance of revenue collection observed.

By the BNF mode of determining costs of permits, Acting AG Nanka observed that management should have collected US$825,460.05 for industrial permits and L$333,811.80 for Artisanal Permits for the period under consideration. However, the BNF had US$242,384.15 and L$332,400.00 respectively. BNF thus under-collected revenues in the tune of US$583,075.90 for industrial permits and L$1,411.80 for artisanal permits.

MOA maintained three (3) deceased staff, thirty-nine (39) retired staff, thirty-six (36) dismissed staff as well as nine (9) resigned staff on its payroll for the period under audit. The summary of unearned remunerations paid to the personnel involved was L$546,952.88. This is contrary to best administrative practice, which requires that personnel maintained on entity’s payroll are those duly engaged and working for the entity or those, who by operation of law, regulation or policy are required to be on the payroll.

The MOA operated seven bank accounts for the period under review. Examination of two of the bank accounts (special project and bamboo accounts) indicated that a total of US$526,447.51 and US$600,897.80 withdrawals made respectively from the two accounts were unsupported as the MOA management could not produce Payment vouchers, receipts and other relevant documentation to substantiate the purposes for the usage of the US$526,447.51 and US$600,897.80 (US1.127,345.31). This omission denied assurance that the withdrawals from the special project and bamboo accounts were used for the intended purposes.

Overall, Acting AG Nanka noted that both financial and administrative activities undertaken by Ministry of Agriculture during the period under review were characterized by a number of financial irregularities and control deficiencies. The irregularities noted amounted to US$3,481,971.77 and L$11,622,919.17 and involved petty cash, payroll and travel irregularities, anomalies with contract awards, unaccounted for fuel and lubricants, shortfall in revenue collection unaccounted for as well as bank dealings anomalies in Bamboo and Special Project Accounts.

Acting AG Nanka, has therefore called on President Ellen Johnson Sirleaf, Speaker Alex Tyler, Senate Pro-Tempore Findley and the National Legislature to consider the resolution of the issues raised in the two reports urgently given impact on public sector financial management.