Internal audit flags several irregularities at MARAD

-Edghill asks Auditor-General for special forensic audit

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An internal audit conducted by the Ministry of Public Works has revealed several irregularities in the spending and procurement practices at the Maritime Administration Department (MARAD) and has prompted the subject minister, Juan Edghill to request a special forensic audit from the Audit Office of Guyana.

“The recent developments at the Maritime Administration Department (MARAD) have prompted me to take action, which led to a special audit being carried out by the Internal Auditor of the Ministry of Public Works,” Minister Edghill wrote in a letter addressed to Auditor-General, Deodat Sharma.

He also reminded of the purchasing of gifts and the financing of other financial activities by that department. This is an apparent reference to the expenditure scandal at various agencies which fall under the purview of the Public Works Ministry (formerly the Ministry of Public Infrastructure), that was revealed over the past few weeks.

One notable occurrence flagged by the internal audit was that Courtney Benn Contracting Services and Brenco Shipping Company, a subsidiary of Courtney Benn, were paid GY $3.5 billion or 92 per cent of the GY $3.84 billion spent on MARAD’s procurement of spares and equipment, and for the docking and rehabilitation of vessels between 2015 and 2020.

The distribution of contract (repairs, maintenance, spares and equipment) awards at MARAD between 2015 to 2020

What is concerning too is that payments to these two companies did not have the relevant supporting documents attached, though payments to other contractors did have those documents affixed.

In the internal audit report, which was released to the media by Edghill, Bills of quantities (BOQs), which are documents used in tendering in the construction industry in which materials, parts, and labour (and their costs) are itemised, were unavailable, though requests were made during the audit. The absence of these BOQs made verification of works done difficult, the internal audit report revealed.

In addition to the missing BOQs, there were other missing documents which hindered the audit into MARAD’s work and raised concerns over transparency and accountability in the department’s functioning. It was also found that there was no verification of work progress by MARAD, prior to payments made to the contractors.

Mobilisation advances were yet another cause for concern. The National Tender & Procurement Administration Board (NPTAB) permits a mobilisation advance of up to 30 per cent to be paid to a contractor; this advance sum of money helps the contractor to mobilise resources on the worksite and pay for the initial procurement of material.

But, at MARAD, the audit revealed that advances as high as 95 per cent were paid. A GY $72 million contract was awarded to the Brenc Shipping Company, for the supply and installation of a net ocean buoy in February 2020. The advance payment was GY $70 million, or 95 per cent of the amount; no bond was presented for scrutiny.

In another instance, a GY $400 million contract for spares and equipment was awarded to Brenco Shipping with an advance of 80 per cent. Exacerbating this revelation of this occurrence is that the entire amount was paid upon signing the contract, and again, no bond was provided for scrutiny.

“There is need for an immediate and total review of the general system of operations, policies and procedures at MARAD; with an aim of documenting and regulating the same,” a recommendation from the internal audit read.

“Persons found culpable, through dereliction of duties or wilful acts to the detriment of the agency, should be sanctioned with penalties that match the nature of the infractions.”

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