Beneficiaries of hundreds of millions in Sports and Arts Development Fund uncertain.
Today’s column continues a review of the 2011 budgetary allocations by the National Assembly to some of the principal ministries of government by looking at the Ministry of Culture, Youth and Sport, a ministry with which the Guyana Tennis Association of which I have been President for about eighteen months has had a long and unsatisfactory relationship.
As the table below shows, the total to be spent by this ministry in 2011 is $2.055 billion, 28% over 2010 and a 73% increase over 2009. If one wants to see how strange this government’s priorities are, one has only to compare this ministry’s budget with that of the combined campuses of the University of Guyana which in 2011 were allocated $582 million in 2009 and $657 million in 2010. Indeed, in 2011, the National Assembly voted more for sports in 2011 than the total allocation to the University of Guyana for any of the past three years! And as we shall see later, the financial management in this ministry is serious enough to invite charges being brought under the Fiscal Management and Accountability Act against those officials responsible for the reckless disregard of the requirement of that Act and ordinary standards of accounting and accountability.
[table to be inserted]
All figures are in millions of Guyana dollars. Source: Estimates 2011
Despite the name of the ministry, sport seems always to get the highest allocation and for 2011 is allocated $964 million or 47% of the ministry’s allocation, with culture receiving 23% and youth 22%, and the administrative costs of running the ministry taking up the remaining 8%. Of the total, capital expenditure accounts for 40% while recurrent costs account for the remaining 60%.
The ministry employs a total of 359 staff of which 207 are contract employees, up from 159 three years ago and from 197 one year ago. The number of contract employees in each of the four functional areas is culture 62; administration 40; youth 92 and sport 13. As this series has shown this is one of the areas – procurement being another – that offers opportunities for the most unsatisfactory spending and for politicized decision-making by government departments. The average salary paid to each contract employee is approximately $1.2 million per year, significantly more than double the minimum wage.
The mysterious Sports and Arts Development Fund
The Estimates show that for the administration budget, wages and salaries paid to all employees, including those on contract, are $80 million or 52% with utilities accounting for $22 million or 14%. For Culture, wages and salaries cost in 2011 are $110 million or 25%; security $42 million or 10%; national and other events $72 million or 16% and Subsidies and Contributions to local organizations $133 million. And here is where there is a huge problem. Page 387 of the Estimates reveals that $100 million of this $133 million goes to a Sports and Art Development Fund of which no account is ever given. Since 2007, some half a billion dollars has been voted for this Fund but with no systems and procedures in place to ensure proper accountability. Despite questions raised in the 2010 budget debate by AFC MP Mr David Patterson about this Fund which was announced with much fanfare in 2007, the Fund appears to have escaped the attention of the Audit Office which never seems to have eyes for some really serious spending. When MP Sheila Holder of the AFC asked for details last year, Dr Frank Anthony dismissively said that “reports are not available.” Simple, isn’t it?
In the Youth budget, $155 million (37%) is spent on wages and salaries; $22 million on maintenance of buildings; $32 million on utilities; $42 million on “Other”; $12.5 million on training; and $9.7 million as subsidies and contributions of which $5 million is for the President’s award which inexplicably is listed as an International Organisation!
For sport, the current annual operating expenditure is $217 million with the major categories of expenditure being wages and salaries and materials and supplies each of $12 million; maintenance of buildings $10 million, utilities $17.9 million and subsidies and contributions to local organsiations of $120 million, the entire sum of which is paid to the National Sports Commission (NSC). The budget of the NSC shows that it is also to receive a capital grant of $530 million from the central government giving it a total of $650 million. This total is then allocated to capital expenditure of $530 million and current expenditure of $120 million, the full sum received as a subvention.
It is evident from the table that capital expenditure is relatively insignificant for all the functional areas with Administration’s capital budget being the equivalent of 3.7% of its current budget; Culture 10%; Youth 6.3% and Sport 344%! And this introduces the swimming pool saga, a project that first arose in 2007 and that is taking twice as long to complete as was planned. But the expenditure is also hazy and defies scrutiny. In the 2009 capital estimates, a total project cost of $405 million was stated for the construction of a swimming pool, rehabilitation of roof and electrical system at Cliff Anderson Sports Hall, lighting fixtures and rehabilitation of National Gymnasium, lockers for Colgrain Pool and purchase of sports gear and equipment. In the 2011 estimates, with the only significant additional work being the Athletic Track, the cost has gone up to $1.5 billion! This is clearly outrageous but again, more questions than answers.
National Sports Commission
There is an unhealthy and incestuous relationship between the ministry and the National Sports Commission where the financial lines are crossed with the ministry continuing to expend amounts voted as subvention and capital provision for the NSC. The NSC is a statutory entity created by Act 23 of 1993 and should have not less than six nor more than eleven members. The commission has been defunct for several years but PPP/C MP Mr Neil Kumar operates it like a one-man show in association with the Minister, Dr Frank Anthony. From time to time and at public events the former NSC Chairman Mr Conrad Plummer is called out to act in that role, but yet no effort is being made by the Minister to (re)constitute the commission as required by law.
Up to the time of the last audit report, the NSC had not had an audit since 2004, nor had the Minister presented to the National Assembly the annual report required under section 80 of the Fiscal Management and Accountability Act 2003. Despite these serious lapses that could constitute misfeasance in public office, the National Assembly continues to award this unlawfully-operating entity vast sums of money annually. It begins to sound as though the National Assembly either could not care or does not understand the implications of its vote when it allocates money to this and similarly placed entities.
When the question of the failure to have audited financial statements came up in the 2007 Audit Office Report, the ministry assured the Audit Office that the “National Sports Commission was pursuing the preparation of all outstanding financial statements.” Years later, very little appears to have changed. But once again the Audit Office has to share responsibility for the increasing disregard which this ministry and the National Sports Commission show for the law and for accountability. Another body under this ministry with a similar disregard for the law, accounting and accountability is the National Trust, a separate and legal entity created by Act 20:03 of the Laws of Guyana, and which would therefore be subject to separate financial reporting and audit. The National Trust is similarly deficient in respect of submission of financial statements for audit as required by law but there is no evidence that the ministry has taken steps to ensure compliance in this regard.
When the Audit Office reported on unexpended amounts totaling $55.5 million transferred into an Endowment Fund (?) instead of being refunded into the Consolidated Fund, the glib retort of the Head of the Budget Agency, ie, the Permanent Secretary was that “it was impractical to refund the amount of $152.398M to the Consolidated Fund at that stage, as the ministry was committed to pay the amount for the stadium lights. He also indicated that he [emphasis mine] gave permission for the sum to be deposited into the Projects Account.” This person had no problem or hesitation in admitting that he knowingly broke the law!
As with all other procurement agencies, this ministry routinely breaches the Procurement Act in which capital works are awarded in a piecemeal manner to avoid adjudication at the level of the National Procurement and Tender Administration Board (NPTAB). As the audit report noted, these were undoubtedly obvious breaches of the Procurement Act 2003.
In 2008, the Ministerial Tender Board awarded one contract under the capital subhead National School of Dance in the sum of $0.382M on April 17, 2008 and yet the contract was signed on April 1, 2008, two full weeks before the decision by the Board. Then in 2009, eighteen transactions totalling $2.016M were undertaken for the acquisition of materials for the rehabilitation of the NOC Guest House. Of these, eleven totalling $1.278M were related to one supplier. According to the Audit Office report, the treatment of the transactions was clearly in breach of Section 14 of the Procurement Act (2003), as it relates to contract splitting.
But perhaps the most laughable response to come from the ministry to audit queries was in relation to non-compliance with the procedures for the payment of fuel. The ministry explained that the acquisition of fuel is based on a traditional and inherited policy from the Guyana National Service, involving Guyoil!
Despite these significant weaknesses and the fact that the ministry has so far failed to account for World Cup 2007 money, it remains one of the major beneficiaries of lottery money, which is another story. It is easy to conclude that this ministry is infected by a cavalier, sporting attitude more associated with West Indian cricket than with financial management.