Kern Spencer (left), former state minister for energy, converses with colleague MP Robert Pickersgill about the contents of the Auditor General''s report on the Jamaica-Cuba light bulb project in Parliament, yesterday. - file
Checks and balances were almost non-existent in the implementation of the free Jamaica-Cuba light bulb project. The Auditor General's probe into the matter has uncovered widespread breaches of the Government's procurement and disbursement rules.
Embattled former minister of state in the PNP government, Kern Spencer, who had responsibility for the project, requested yesterday that the House give him the opportunity to address the issue in a statement, at a later date.
A count of undistributed bulbs, supervised by the Auditor General's Department, found a total of 163,792, which were stored in three containers between November 15 and 20, 2007. This suggested a shortage of 167,380 bulbs, costing more than $90 million.
The Auditor General wants the ministry to state the reasons for the discrepancy.
In his findings, then Auditor General, Adrian Strachan, who retired at the end of last year, prepared a damning report on the execution of the project.
The Cuban light bulb project is also the subject of an investigation by the Fraud Squad and the Contractor General.
The Auditor General charged that the project was not planned and implemented in a satisfactory manner. "The basic rudiments of good public sector project management were absent."
Several major inadequacies were identified in the implementation of the project. These include:
- The absence of an effective system of budgetary control resulting in payments and the incurring of unpaid obligations of $185.39 million over the approved financial support from the Petroleum Corporation of Jamaica (PCJ)
- Absence of the required written contracts preventing a clear indication of who engaged the service providers and what were the specific terms of reference and fees to be paid
- Widescale breaches of Government's procurement rules in relation to registration with the National Contracts Commission (NCC), production of Tax Compliance Certificates, recommendation of NCC, Cabinet approval or use of competitive tenders
- A general failure to comply with Government's disbursement rules in connection with the need for independent certification that goods and services paid for were properly provided. No supporting bills and invoices acknowledging receipt of funds by payees. This prevented verification that many payments made were authentic
- Computer equipment costing $850,500 unaccounted for
- Apparent overpayment of $2,165,500 for management/professional fees
- Outstanding advance of $2,300,000
The Auditor General said no written contracts were presented for payments amounting to little more than $121.1 million made in respect of 27 suppliers of goods and services.
"No written agreements were also presented for unpaid invoices amounting to $153, 231, 043.06. In the absence of such written agreements I was unable to verify who awarded the contracts and whether the services provided and the rates paid were what were agreed," the report said.
According to the Auditor General, the Director of Administration at the PCJ had indicated that he was not aware of the person(s) who delivered the invoices to be paid by his office.
He said the invoices were delivered to the Corporation's receptionist without any cover letter and then routed to his office.
The Auditor general raised alarm that neither the Ministry nor the PCJ was able to indicate who had engaged Shipping Logistics Limited or present any agreement stating the activities to be performed by the company.
"Yet they were paid $1,223,250.00 to provide project management services for the period June 2006 to August 2006 at a rate of $350,000 plus GCT per month," the report said.
Another company, Universal Management and Development Company Limited (UMD), was paid $5.3 million for project management fees for the period October 2006 to June 2007.
The monthly fee to the company was $350,000. In this regard, the PCJ was unable to provide a satisfactory explanation for the overpayment of approximately $2.2 million.
And, up to the time of the audit an advance payment of $2.3 million paid to UMD was not recovered by the PCJ.
Approximately $44.1 million was paid to cover the cost of meals for social and volunteer workers, who were provided with four to five meals per day, including breakfast, brunch, lunch, dinner and supper.
The Auditor General says the PCJ needs to explain why payment was made for more than three meals a day and to make the necessary recovery.
