Sepik funds lack proper records

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Compiled by FRANK KOLMA

RECEIPTS and payments to the Sepik Highways and Bridges Maintenance and other infrastructure trust revealed that a total of K30,251,473 passed through the trust account.
Total receipts into the account commencing Dec 24, 2001, amounted to K31,012,976.
Total payments totalled K30,251,473.
The closing balance as at April 28,2006, was K761,503.
Inquiring into the operations of this trust, the Permanent Parliamentary Committee on Public Accounts noted: “The law requires that every toea of this money be accounted for and acquitted. 
“So derelict was the record keeping, accountability and reporting by trustees, the provincial government and the Finance Department that neither this committee nor the office of the Auditor-General were able to identify the source of funds which were made into the account.
“This committee has conducted detailed inquiries and demanded production of information, from the Finance Department, sufficient to rectify this defect. Nothing has been forthcoming …
“Therefore, the position at the conclusion of this inquiry is that this committee cannot identify the source of approximately K23 million of public funds that passed through this trust account. 
“The committee knows where the money went but cannot find where it came from. 
“There could be no more basic failure of accountability and legal obligation than this.
“As this committee has said in the past, there is a very serious attitude and competence problem within the public service and particularly in the Finance Department.
“Unless this incapacity to obey the law is immediately addressed by the Government – particularly in the area of fiscal management – the decline of governance and the failure to deliver services will continue.”
The lax attitude in book-keeping extended to cash books.
Computer cash books for the years 2002 to 2005 were found to be materially inconsistent with bank statements.
This in itself was a “significant failure by trustees in the management of the trust account and a failure to meet the requirements of the Trust Instrument and the Public Finances (Management) Act and Financial Instructions”.
“Cash books are a basic accounting tool,” the committee noted. 
“They were not produced or were incomplete and incorrect.”
Some, but not all receipt copies, collector statements, bank deposit butts, bank statements and related correspondence were produced to support receipts to the trust account.
Ledger accounts were not maintained to show the sources of receipts and as a result receipts were not identified into each project.
Said the PAC in its report to Parliament: “It was not possible for this committee or the Auditor-General to trace sources of funding into the account and ascertain the purposes for which the funds were remitted.
“This means that trust monies cannot be traced – the most fundamental obligation of a trustee.”
The provincial administrator of the time failed to manage the financial aspects of the trust account and the Finance Department which is charged with the duty of ensuring that these records and accounts were kept and produced as required by the trust instrument, also failed in this duty.
The committee was highly critical of  Finance secretary at the time, Thaddeus Kambanei, who it charged was “personally accountable but has failed to give any or any proper explanation for these failures”. 
It said of him: “Mr Kambanei, as secretary for Finance, had a clear conflict. He was, by reason of sections 4 and 19(2) of the Public Finances (Management) Act responsible as secretary for overseeing himself as a trustee and correcting and being ultimately accountable for his own shortcomings as a trustee – an impossible position.
“Equally, as a trustee, he was required to report to himself in the capacity of secretary for Finance pursuant to sections 19 (3) and (4) (c) and (d) and then consider the adequacy of his own performance and obedience to the requirements of an act that he himself administered.
“This conflict should have been obvious. The committee supposes that it also exists in respect of every other trust account of which the secretary for Finance is a trustee.
“If so, the Finance Minister should take steps to replace the secretary as trustee in order that the appearance of proper and transparent oversight can be maintained.
“Once again, the committee concludes that the failures were systemic and systematic in every single officer responsible either as a trustee or as an accountable officer up to and including the head of the Finance Department .
“Once again, the committee concludes that these failures were either the result of gross negligence and incompetence or were intentional. They cannot be the result of mere oversight.
“In light of the clear pattern of failures, the committee maintains a very strong suspicion that these failures were intentional and were designed to confound any audit in an attempt to trace movement of money into and out of the trust account and in particular to prevent the source of deposits from being traced.”