Garbage agency shake-up as $32m lands in mystery accounts
Published:Wednesday | July 27, 2022 | 12:12 AMEdmond Campbell/Senior Staff Reporter
The contract of a regional operations manager of the National Solid Waste Management Authority (NSWMA) was not renewed and an accountant and procurement officer were transferred to the agency’s head offices in a shake-up following glaring anomalies in the operations of the state-owned company.
The internal auditors at the NSWMA revealed in a report dated November 2020 that 165 cheques written to 154 contractors in the sum of $32 million for desilting works were lodged to two bank accounts belonging to an individual who was not party to the contracts.
The desilting works were undertaken in December 2019 and January 2020 in parishes covered by Metropolitan Parks and Markets (MPM).
In a performance audit report that was tabled in Parliament on Tuesday, Pamela Monroe Ellis said that the NSWMA reported the anomalies to the relevant law-enforcement authority. Following that development, the accountant and procurement officer of MPM were relocated to NSWMA’s head office and the contract of the regional operations manager was not renewed.
The Auditor General Department’s review of works conducted between January 2018 and December 2019 revealed similar irregularities, demonstrating that the period and value of the anomalies were more widespread than initially reported by NSWMA’s internal auditors.
“Of the 399 payments sampled, we found 297 additional cheques written to 132 individuals totalling $67 million, deemed to be suspicious transactions, increasing NSWMA’s risk exposure to $99 million,” Monroe Ellis added.
A review of MPM’s bank statements and cleared cheques by the auditor general revealed that 166 cheques totalling $38.8 million were lodged to the same two bank accounts at the same commercial bank, belonging to the same third-party individual, who was not party to these contracts.
Giving details, the auditor general said that the respective bank account numbers belonging to the third-party individual were written on the back of the cleared cheques.
“Our checks revealed that commercial banks generally do not accept third-party cheques because of the increased risk of fraud, and in cases where such cheques are accepted, they must be endorsed by the payees,” Monroe Ellis said.
However, the auditor general observed that although not endorsed by the individual payees, the cheques were processed and lodged to third-party bank accounts.
“Of note, the third-party individual is engaged as a contractor at NSWMA and received payments totalling $229.6 million between April 2016 and March 2022 for solid waste collection and other services,” she said.
The auditor general reported that the NSWMA had commissioned an investigation into the matter.
It was also revealed that a security feature on NSWMA’s cheques to protect against fraud and forgery was removed by the operations manager and the accountant by the uncrossing of cheques without evidence of the payees’ approval, which made the cheques payable to anyone.
NO SEGREGATION
While the auditor general was unable to confirm the bank accounts to which another 131 cheques totalling $28 million were deposited, she noted that multiple cheques were lodged, on specific days, at the same commercial bank with the same teller processing most of the transactions.
Additionally, Monroe Ellis found that there was a general lack of segregation of duties at the NSWMA.
Citing an example, she said that in many instances, the operations manager performed multiple functions in the process of collating the projects, authorising the purchase requisitions, approving the purchase orders, signing the engagement contracts, certifying the works as satisfactorily completed, and signing the cheques.
“Separation of these duties would make it difficult for individuals to manipulate the system,” she said.
The auditor general also reported that in a memorandum dated October 25, 2018, NSWMA Executive Director Audley Gordon issued a directive that effective October 29, 2018, all purchase orders valuing $200,000 and above are to be approved by him.
Following this memorandum, it was discovered that irrespective of the location of the works, in many instances, the scope covered approximately 3.7 kilometres of roadway valuing just under $200,000, using the standard rate of $53,000 per kilometre.
The auditor general noted that prior to this, the value of special projects and seasonal works normally exceed this threshold.