Audit flags $400m COVID spend with no formal contracts

A two-year audit of the Ministry of Health & Wellness' (MOHW) COVID-19 expenditures has revealed several breaches of finance ministry regulations, including the absence of formal contracts totalling more than $400 million with 14 of 15 hotels and suppliers for infrastructural works.

The findings were contained in a compliance audit compendium report on the MOHW and the Ministry of Labour and Social Security (MLSS), tabled in Parliament on Tuesday.

Auditor General (AG) Pamela Monroe Ellis and team concluded that the health and wellness ministry lacked transparency in its payments, which totalled $293 million for quarantine facilities; was unable to show formal contracts for infrastructural works amounting to $124 million; could not confirm how $174 million transferred to the Ministry of Local Government and Rural Development, a state agency and a nongovernmental organisation (NGO) was used; weaknesses in the controls over COVID-19 fixed assets acquisition; and regulatory breach in the preparation and maintenance of payment vouchers.

When contacted by The Gleaner for comment on Tuesday, permanent secretary in the health and wellness ministry, Dunstan Bryan, said he would respond to the 36-page report in Parliament.

That date has not yet been determined.

The audit was conducted between May 2020 and June 2022 following the $8-bilion allocation to the MOHW and the $1.1 billion to the MLSS by the Government to aid in the country's COVID-19 emergency response interventions.

The AG report revealed that the health ministry made payments totalling $337 million to seven hotels and guesthouses to provide quarantine accommodations but had a formal contract with only one of the service providers. That contract accounted for $44 million.

Monroe Ellis said in the absence of formal terms and conditions, the ministry was exposed to unbudgeted liability claims and varying payment arrangements, in a context where one service provider unexpectedly asked the MOHW to pay the facility's electricity bill and 90 per cent of water charges.

The ministry also paid another of the service providers $3 million for sanitisation and cleaning at three of the seven facilities in addition to the rental for the accommodations.

The AG said the arrangement breached Section 53 of the Financial Regulations, which requires accounting officers to agree on the terms and conditions for the provision of service prior to implementation.

In the case of the eight suppliers for infrastructural works, Monroe Ellis said that the health ministry did not report to the National Contracts Commission the justification for engaging the contractors using the direct contracting methodology.

Government contracts totalling more than $500,000 must go out to tender.

In response, the ministry said that the exigencies of the COVID-19 pandemic required these works to be executed at “very short notice”.

There was also no measure in place to track the utilisation of the $174 million disbursed by the health ministry to the local government ministry, the National Solid Waste Management Authority (NSWMA), and an NGO to fund activities to contain the spread of COVID-19.

“We noted that the NGO spent $14 million of the $20 million it received on activities unrelated to the COVID-19 emergency. Further, movement of funds from one MDA to another must be approved by the Ministry of Finance. This appeared not to have been done,” the report said.

MDA refers to ministry, department or agency.

The health ministry said that it would seek the requisite approvals from the finance ministry and that steps will be taken to recover from the NGO funds spent on non-COVID-19 activities.

Furthermore, the ministry could not indicate why it spent $2 million to purchase 45 televisions and 15 tablets and Monroe Ellis said that it could not be determined how the acquisitions related to the ministry's COVID-19 response initiatives.

Additionally, the health ministry did not include in its inventory assets purchased at costs totalling $23 million.

“This is a deficiency in MOHW asset management control system, as it goes against the procedures set out in the Financial Instructions, which mandate public entities to maintain proper inventory records of all fixed assets,” Monroe Ellis said.

In the case of the MLSS, the AG said the ministry did not maintain a comprehensive database in the distribution of COVID-19 care packages.

Additionally, it said there was no beneficiary registered for Hanover, Trelawny, Portland, and St Mary, and the record showed only one beneficiary each for Westmoreland, St James, and St Elizabeth.

The control deficiencies, the AG said, presented challenges for MLSS to satisfy itself that relief grants reached the poorest and persons physically disabled.

Monroe Ellis also said that the MLSS did not maintain basic records as part of its inventory systems to ensure proper accountability and transparency in the receipt and distribution of items procured or donated as required by the Financial Administration and Audit Act.

She recommended that accounting officers make greater effort to ensure basic controls over emergency spending are adhered to considering that emergency procurements are more susceptible to misuse and corruption.

The AG said the MLSS, as one of the country's leading social-protection agencies, should develop, implement and maintain a reliable Beneficiary Management Information System capable of providing accurate information on the status and whereabouts of vulnerable individuals eligible to receive social support.