GAC Hooks Five Government Ministries in Japanese Grant Audit Reports
The General Auditing Commission has completed and submitted to the National Legislature six audit reports relating to Japanese Grants to Liberia. The grants are intended to support various social economic development initiatives in Liberia. The reports cover the Ministry of Foreign Affairs, Commerce, Agriculture, Public Works and Internal Affairs. The audit reports are posted on the GAC websitewww.gov.lr. Below are summaries of the GAC Audit Reports :
Background of Japanese Grants to Liberia
In 2008, immediately preceding the global financial meltdown, economies experienced an intermittent upsurge in the prices of cash crops, particularly rice, Liberias major staple. President Ellen Johnson engaged in bilateral consultation with the Government of Japan and requested Food Aid Assistance. The Japanese Commodity Grants Monetization and Counterpart Value Funding Projects derived from these bilateral consultations.
The primary purpose of the Japanese Commodity Grants Monetization and Counterpart
Value Funding program is to aid socio-economic development programs in Liberia. Funding for projects are derived from two funds sources, Food Aid (rice) and Non-Project Grant (petroleum). The primary activities of the monetization programs are the purchase and subsequent sale, at a discount, of commodities (i.e. rice and petroleum).
In essence the commodities are converted (i.e. monetized) to liquidity/money. The proceeds from the monetization program are initially deposited at the Central Bank of Liberia then subsequently deployed into the Liberian economy to fund approved socioeconomic development projects.
International Economic Cooperation and Integration (IECI) Human and Capacity Building Project of the Ministry of Foreign Affairs for the period June 2014 to October 2015.
During the period under review, the International Economic Cooperation and Integration (IECI) Project as per the bank statement received the total amount of L$37,063,107.00 in its Liberian Dollar Account No. 0100885401-78. The Project Management as per said ####bank statement disbursed a total of L$38,168,288.02, resulting in a closing balance of (L$1,105,181.02) as at October, 28, 2015.
The GAC observed that the IECI Project Management made payments for various transactions amounting to L$20,195,625.00 without adequate supporting documentation to substantiate the regularity of the transactions. The failure to provide the supporting documents for L$20,195,625.00 is a breach of financial discipline as provided by the Public Finance Management of 2009 Regulation A.20.Therefore the IECI Project Management to be made to account for the amount.
It was observed during the conduct of the audit that the IECI Project Management disbursed L$6,612,640.00 to some staff of the Ministry of Foreign Affairs (MoFA) as supplementary allowances/salaries to top up their existing salaries instead of hiring, retaining, and training professionals as enshrined in the Project/Programme (Utilization Plan).
The GAC observed that the IECI Project Management made several payments to employees of the MoFA amounting to L$104,875.00 from petty cash fund in the form of loans, allowances, salary advance and to facilitate foreign travel.
It was observed during the conduct of the audit that payments amounting to L$4,691,990.00 for the supply of goods and services were made in the name of the Project Manager instead of the vendors.
During the audit, the GAC noted that a sample of checks totalling L$8,402,480.00 encashed at the Afriland First Bank Liberia were not signed by at least two officials as prescribed in the PFM Regulations of 2009. The Afriland First Bank Liberia acted and/or paid on these checks without performing the requisite due diligence to confirm the genuineness and accuracy of the checks presented for payment.
The GAC further observed that the IECI Project Management rented 2 SUV vehicles for 3 days amounting to L$76,500.00 on Check #00168708 from BEES Affordable Car Rental. Additional information received from the Liberia Business Registry (LBR) shows that Bees Affordable Car Rental was not a registered company as at the date of the above transaction. Further, GAC review also shows that the unregistered entity was later registered on February 9, 2015 as a car rental company with Hon. B. Elias Shoniyin as the owner.
In the GAC view, the transaction constitutes an apparent conflict of interest which could undermine the achievement of value for money. Therefore, Hon. B. Elias Shoniyin, Deputy Minister of Foreign Affairs should be held for violation of the Amended and Restated PPC Act of 2010 Section 131(1)(c) which states that Any public officer involved in requisitioning, planning, preparing and conducting procurement or Concession proceedings and administering the implementation of contracts shall: ( c ) At all times avoid conflict of interest and the appearance of conflicts of interest in carrying out his or her duties and, if a conflict of interest should arise, he or she shall immediately disclose the conflict and excuse himself or herself from any further involvement in the matter.
Therefore, the GAC is holding the IECI Project Management accountable for the breach of financial discipline as provided by the PFM Act of 2009, Regulation A.20 and Section 138 (1) of the Amended and Restated PPC Act of 2010.
The Community Infrastructural Development Project (CIDP) of the Ministry of Public Works (MPW) compliance with relevant laws and regulations for the period ended October 2015
The GAC observed during the conduct of the audit that an amount of US$1,091,126.20 (One Million Ninety One Thousand One Hundred Twenty-Six Dollars and Twenty Cents) designated for use by the CIDP was disbursed to other MPW activities, including interest free loans to Water, Sanitation & Hygiene (WASH) Program, the Resettlement Action Plan (RAP) Program, Per Diem for staff, Non-CIDP vehicles spare parts purchases, incentives to staff in fuel allowances, and demolition activities.
It was observed during the conduct of the audit that the CIDP Management of MPW did not remit into Government of Liberia Revenue account the amounts of US $30,764.88 (Thirty Thousand Seven Hundred Sixty-Four Thousand United States Dollars and Eighty- Eight Cents) representing taxes withheld from various vendors for the procurement of goods, services, and works.
The GAC further observed during the audit that the CIPD Management entered into a contract with TSC Engineering for completion of an environmental impact assessment; master planning for land use within the corridor; planning, design, and construction supervision of access road-perpendicular and parallel; and engineering and design consistent with bid documents and bid of quantities (BOQ) for the addition of two extra lanes on the Robertsfield highway to create a four (4) lane road and establish right ways at a total cost of US$927,791.99(Nine Hundred Twenty Seven Thousand Seven Hundred Ninety One United States Dollars and Ninety Nine Cents) which appears to have exceeded CIDPs approved scope of work as per the Project Utilization Plan
The Japan-Liberia Paddy and Seed Rice Project (J-LPSRP) of the Ministry of Agriculture (MoA) for the period October 1, 2010 to December 31, 2013.
During the GAC review of payment vouchers, it was observed that the Japan-Liberia Paddy and Seed Rice Project Management authorized the disbursement of L$66,430.00 to Greenfield LIB Inc., for purchasing of materials to facilitate harvesting of rice in Margibi County without the required number of quotations.
During the conduct of the audit, it was observed that the Management of the Japan- Liberia Paddy and Seed Rice Project made a cash payment of US$7,000 approximately L$508,200 to the Margibi County Agriculture Coordinator for onward purchase of Paddy Rice from local farmers without adhering to the provision of Section 2.2 of the Project Proposal Document.
The Micro-Small Medium Enterprise (MSME) Project of the Ministry of Commerce and Industry for the period February 12, 2012 to December 30, 2015.
During the period under review, MSME Management as per the bank statement received an initial amount of US$881,097.00 (Eight Hundred Eighty-One Thousand Ninety-Seven United States Dollars) in its United State Dollars Account No. 00.112-005308-01 as part of the project finance with the Counterpart Value Funds deposited under the Japanese Non Pro Grant Aid. Subsequent deposits amounting to US$45,800.00 (Forty-Five Thousand Eight Hundred United States Dollars) were made into the MSMEs Project account from other sources. The Project Management as per the said bank statement disbursed a total amount of US$903,355.74 (Nine Hundred Three Thousand Three Hundred Fifty Five United States Dollars and Seventy Four Cents ) resulting in an adjusted closing balance of US$23,541.26 Twenty Three Thousand Five Hundred Forty One United States Dollars and Twenty Six Cents as at December 31, 2015.
The GAC observed during the audit t that the MSME Project Management made payments for various transactions amounting to US$27,199.00 (Twenty-Seven Thousand One Hundred Ninety-Nine United States Dollars) without adequate supporting documentation to substantiate the regularity of the transactions.
It was observed during the conduct of the audit that MSME Project Management made Payments amounting to US$25,310.00 (Twenty-Five Thousand Three Hundred Ten United States Dollars) for various goods and services in the names of employees of the Ministry of Commerce and Industry (MoCI)/MSME Fund Project, rather than in the names of the vendors providing those goods and services.
The GAC noted that several deposits in the amount of US$60,132.00 (Sixty-Thousand One Hundred Thirty-Two United States Dollars) were made to the MSME Projects Account number (00.112-005309-01) for the periods under audit. The only source of any deposits into the project account should be from the Counterpart Value Fund at the Central Bank of Liberia, or through a special provision.
The GAC observed further that an amount of US$55,656.88 Fifty-Five Thousand Six-Hundred Fifty-Six United States Dollars and Eighty-Eight Cents designated for use by the MSME Project was disbursed to other MoCI activities, including Domestic Subsistence Allowances (DSAs), and procurement of non-project related goods and services without consideration of the MSMEs budgetary allocation or approved project plan.
(5) The Grand Cape Mount County Community Bridge Project of the Ministry of Internal Affairs for the period January 2014 to December 2015.
The GAC observed during a physical verification of the Kaylia bridge worksite that it appears that minimal construction activities were evident on the bridge even though, eight (8) months (the agreed Project duration) had elapsed since the contract was entered on June 30, 2014 and first instalment of US$223,987.00 made to QUEST Inc. on July 17, 2014.
The GAC noted that the Grand Cape Mount County Community Bridge Project Management awarded the contract for the construction of the Tallah Bridge to QUEST Inc. for the amount of US$557, 321.80. Subsequently, QUEST Inc. sub-contracted the construction of the Bridge without any alteration in the original specification/Bid of Quantity (BOQ) for US$259,081.65. In compliance with A.15 (1) of the PFM Regulation of 2009, the Project Management appears to not have exercised due diligence.
It was observed that QUEST Inc. and ABC Inc. did not meet the following requirements as enshrined in the Contract Agreements between them and the Grand Cape Mount County Community Bridge Project Management:
There was no evidence of security plans submitted to the Project Management; There was no evidence of adequate performance bonds from a reputable bank or insurance company.
The Grand Cape Mount County Community Bridge Project Management executed an unapproved procurement plan for the period under audit. In a formal communication to the Project Management, the PPCC cited issues such as conflict of interests, and inadequate support documentation.
(6) Liberia Innovation Fund for Entrepreneurs (LIFE) Project of the Ministry of Commerce and Industry for the period June 30, 2014 to November 30, 2015.
The GAC examination of Payment Voucher (PV) and Central Bank of Liberia (CBL) check dated June 25, 2014 indicated that the Project Management received an amount of L$58,187,500.00 for opening an account in favour of LIFE Fund Project. This initiative was intended for the project management team to carry out a full scale utilization of the project fund to identify those Liberian entrepreneurs with the skills necessary to innovate new ideas and businesses with great potential to increase their local market share while improving their access to the international market.
The GAC noted that the Management of LIFE did not perform the function or duty within the one year implementing period as stated in the application form for the project financed with the counterpart fund deposited under the Japanese Non-Pro Grant Aid. The Management did not provide any authorized documentation stating reason (s) for not implementing the project up to the time of compiling the report.
This is not the first GAC audit conducted of Japanese Grants to Liberia which has revealed irregularities. In 2012, the GAC submitted to the National Legislature Investigative Report of The Auditor General. The GAC also submitted audit report on, the 8,612,272.2 Metric Tons of Japanese Rice Donation to Liberia 1 May 2009 through 31 December 2009 which revealed major irregularities.
On the 2012 Japanese Petroleum Non-Project Grant audit, the GAC revealed procurement violation by the Management of Liberia Petroleum Refining Company. The GAC concluded among others, that Aminata & Sons should be made to deposit an additional US$5,788,134.01 into Government Account # 0220630001709 at the Central Bank of Liberia, as the excess income which accrued to Aminata & Sons as a result of the transaction.
As a result of these irregularities and others, the Government of Liberia through the Liberia Anti-Corruption Commission further reviewed the report and took legal action against the former Managing Director of LPRC, Mr. T. Nelson Williams, former Commerce Minister Miatta Beysolow, Aminata and Sons and others involved in the sale of the Japanese grant petroleum product.
It remains to be seen whether the Government will take any actions as a result of these new batch of Japanese grant reports against the individuals and entities involved.
GAC Hooks Five Government Ministries in Japanese Grant Audit Reports