Conclusion of the Sepik trust

Focus, Normal


THIS concludes our review of the Public Accounts Committee report into the operations of the Sepik Highway, Roads and Bridges Maintenance and Other Infrastructure trust account.
The trust was set up in May 2002 by then Finance minister Andrew Kumbakor for the expressed purpose which the name suggests, although “other infrastructure” did leave the trust exposed for abuse and the inquiry confirmed it did.
The PAC resolved in May 2006 to inquire into the operations of the trust as part of a larger inquiry into Finance Department.
The primary aims of the inquiry conducted by the PAC were to:
* Examine the financial reports that were required to be submitted by the trustees to the Department of Finance;
* Ascertain whether the financial transactions conducted by the trustees were in accordance with the Trust Instrument and sections 15-20 of the Public Finance (Management) Act ;
* Ascertain whether the Finance Department, the responsible provincial administrations and public servants had complied with the requirements of law in the keeping of accounts and records in respect of the trust account; and 
* Consider the standard of management and decision making by trustees of the account with particular emphasis on establishing compliance with requirements of law for the accounting for and management of public monies held in and paid from the trust account.
The findings and recommendations made by the PAC following this inquiry is yet again shocking.
As we have discovered in the inquiry into the Lands Department and the office of the Public Curator, the record of simple accounts keeping in this trust account was horrendous.
It was all the more shocking because the accounts keeping was done by the Finance Department, the chief accounting department to the Government.
No less than K30 million of public funds moved through this trust account.
There is paper trail or evidence of only K7 million of that money ever having been spent.
The PAC and the Auditor-General could find no trace of how K23 million of public money was spent.
The PAC found serious and continuous breaches of the Public Finances (Management) Act by trustees and officers of relevant provincial governments, the Department of Finance and the Office of Rural Development.
It found serious and continuous breaches of the requirements of the Trust Instrument by trustees.
Contracting of projects  funded from the trust account did not meet the requirements of the Public Finances (Management) Act and a number of contracts were identified which had been entered into outside the required processes – including the failure to process contracts through the Provincial Supply & Tenders Board.
Contracts have been let to companies that were not viable or did not exist and the trustees and responsible officers of Finance Department had failed in their duty to ensure effective management of contracts.
There was poor or non-existent management and supervision of contracts and contractors funded from the trust account.
Payments were made prior to work being completed and in several instances for no work done at all.
Of 24 contracts awarded to 19 companies, only one contract was apparently properly tendered, evaluated and granted and even then the records are incomplete and inadequate.
The litany of errors continues.
In the end, we must look at the end result, at the end product of all the money spent.
And there, the committee provides a shattering indictment: “The committee cannot identify virtually any tangible benefit to the country from the expenditure of K30 million of public monies.”
And that is just not good enough.
With half the money, a passable road could have connected Wewak and Vanimo through Maprik, Nuku and Lumi.
At the end of the day, this is the heart of the governance issue that the Government itself, civil servants and bilateral and multi-lateral donors concern themselves with all the time, did meet their obligations and duties in the management of the trust account and the expenditure of money from it then we have a major problem.
When a trust or indeed any other account is abused by the very persons whose duty it was to protect and prudently manage it, then we have a serious problem.
When the account is allowed to reach “a level of incompetence and illegality with no attempt to require accountability” then we must agree with the PAC that it “is a matter of profound national concern”.
We shudder to think that similar failings and unlawful conduct may attend the other 2,500 Government trust accounts.
We lack the words to express our distress at the fact that none of these findings had ever produced a response and no action has been taken against persons referred and recommended for prosecution, that the PAC report itself appears for all intent and purpose to be another waste of public funds.