Ghost company paid

Focus, Normal

Compiled by FRANK KOLMA

A COMPANY which the Public Accounts Committee found to be non-existent was paid more than K500,000 out of the trust.
The PAC reports that Westco Ltd was deregistered on July 31, 1995, for not submitting annual returns to the Investment Promotion Authority.
Yet the company received three payments from the trust account. 
In the first instance, Westco Ltd was paid K482,000 for the construction of Yangoru High School.
The provincial government was unable to provide any related contract documents and neither the Auditor-General nor the PAC was able to confirm any conditions of the contract engagement.
In any event, the PAC found that the contract did not follow procurement processes and that the contractual obligations have not been fulfilled breaching the Public Finances Management Act.
Inquiring into the same contract, the Auditor-General reported separately that his officers visited the site of the project on June 6, 2006, and discovered that although two classroom buildings and two staff houses were completed and in use, two dormitories had not been constructed for which payment had been made from the trust account.
The headmaster of Yangoru Secondary School advised that he was seeking reimbursement from the trustees of part of the money that the school had secured from the Department of Finance through the then Finance minister, Andrew Kumbakor, and paid into the trust account to fund the project.
Further, the PAC reported that Yangoru High School commenced legal proceedings against Westco Ltd for recovery of part of the unfulfilled portion of the contract sum. 
No explanation was provided from the provincial government as to why payments were made prior to provision of services.
Accordingly, the committee found again that the trustees failed to meet the procurement procedures in sections 39 and 40 of the Public Finances (Management) Act in the engagement of Westco Ltd for this project. 
The same company was engaged for a sum of K85,000 to do maintenance work on the governor’s residence at Wewak Hill.
There is evidence of payment having gone out but the committee found no documentation, information and accounts records of this project.
No contract existed for the project.
The Provincial Supply and Tenders Board meeting minute No. 07/2003 dated Dec 16, 2003, recorded that the PSTB chairman informed the board members that a contract for K149,685 was awarded to Westco Ltd on March 3, 2003, for the job.
The Auditor-General has ascertained that K85,000 was paid to Westco for mobilisation and some demolition work was performed but “the work has not proceeded beyond that point”.
No records whatsoever exist for this work according to the PAC.
The Auditor-General inspected the supposed work in May 2006 and reported that the building was severely damaged and unfit for occupation. 
There was no evidence of maintenance and the building stood decaying. 
There has been not explanation from the provincial administrator nor the Department of Finance or the trustees of the trust account on why the contractor was paid prior to completion of the work.
The PAC said on this particular job: “This entire contract and the payments made in pursuance of it are unlawful and neither the provincial government nor the Department of Finance has taken any action to recover monies paid to the contractor or in any way attempted to address this serious misapplication of public monies. 
“The trustees of the trust account seem not to care that these monies have been expended for no benefit or to take any responsibility for those failures.”
A further project undertaken by the same company for the construction of Angoram district office and the Brandi High School design cost the trust K100,570.
On this too, the PAC found no evidence to show that the contract was lawfully procured and further that payments were made without any evidence of work performed.
The PAC report states: “Once again, the committee finds a breach of every basic obligation of law and a waste and misapplication of public funds for no result.”