Private sector smells a rat
IF WE were betting people, we would wager that Jamaica’s three private-sector groups smell a rat at the science, energy and technology ministry and its agencies. But who, even with odds, would take such a bet?
On Monday, the Private Sector Organisation of Jamaica, the Jamaica Manufacturers and Exporters’ Association, and the Jamaica Chamber of Commerce jointly called for a forensic audit at the state-owned oil refinery, Petrojam, as well as of the Universal Service Fund (USF). At the same time, Prime Minister Andrew Holness, who has, by and large, skirted the issue, remains under pressure to either fire or secure the resignation of Andrew Wheatley, the minister within whose portfolio these agencies fall.
The cause behind the private sector’s call for the audit is not only obvious, but metastasising. For more than a fortnight, the refinery has been the subject of allegations of being a wasteful spigot for taxpayers’ money. It hired staff, it has been suggested, as expensively as possible; threw around contracts for jobs that could be handled in-house or by its parent agency; and its governors collected money for trips they didn’t make and made refunds only in the face of scandal. Additionally, the refinery’s social spending was splashed out mostly on politically connected persons.
If any of these allegation were true, it would call into question the whole governance regime at Petrojam and, at the very least, call into question the judgement of Minister Wheatley for the choices he made and/or endorsed, responsibility for which he could not escape.
These, unfortunately, as is obvious from a report elsewhere in this newspaper, are not the only operational and management weaknesses, and perhaps indiscretions at Petrojam. An internal audit, for the two-year period 2015-2017 by Jamaica’s partner in the refinery, the Venezuelan national oil company, PDVSA, highlighted weak record-keeping and a penchant for direct contracting rather than competitive bidding. Indeed, during the review period, Petrojam spent over J$14 billion, or 74 per cent, of its domestic expenditure via these contracts. While the auditors concluded that many of these were validly executed, they urged improvement in the “utilisation rate of ... limited and competitive bidding” contracts. The 25 per cent rate for these was too low.
The limits in the government procurement rules on non-competitive bidding contracts are for good reason: they remove transparency and make graft and kickbacks easy.
The same audit revealed that in many instances, the auditors weren’t presented with invoices to validate the price calculations for spot-purchased oil; that the information didn’t come from the management technology system; and there were discrepancies between the purchase invoices for oil and what inspectors said was delivered at terminals. There were differences in prices, too.
WINDOW OPEN TO FRAUD
These may well just be management or clerical errors, but they also open the window to fraud, which another kind of investigation, beyond the one being undertaken by the Auditor General’s Department, might determine.
We are sympathetic with Robert Lawrence, the USF’s chairman, who is probably genuinely shocked at the private-sector bodies’ call for an audit of the agency. Several factors, however, are likely to be motivating the private sector, including that they have lost confidence in Dr Wheatley’s leadership. They presume him, perhaps, to be permissive.
Second, the USF, which is funded by a levy on foreign telephone calls to Jamaica, has a lot of money sloshing around, at least up to the 2013-14 financial year, the last period for which an annual report is publicly available on the Fund’s website.
Then, it had assets of more than J$11 billion. At the time, though, the USF’s auditors qualified their report because, given the unpredictability of flows to the fund by foreign carriers, they couldn’t “verify the completeness of income from service fees of J$1,132,749,294 for the year”.