Dealing with irregularities

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Dealing with irregularities

THERE was a constructive suggestion made at one of the Public Accounts Committee meetings where it was suggested that the Ministry of Finance and the Auditor-General’s Office scrutinise “irregularities” after the end of an annual audit.

These “irregularities” keep cropping up in annual audit reports.

Legally speaking, they are not alleged offences under the Penal Code or any of the other principal legislations against corruption although they can develop in that direction if left unchecked.

A very important aspect to consider when analysing these irregularities is to differentiate accounting or auditing problems linked to inefficiency or to basic lack of capacity of the civil servants concerned rather than purely corruption.

Examples of inefficiency in the Auditor-General’s report include the failure by some ministries to submit reconciliations to the Finance Ministry, or the case of unpresented “December” cheques.

An example of basic lack of capacity is the low rate of students’ loan recovery.

While the “bad outcome” has resulted in the irregularity, the approach taken in dealing with it needs to look more precisely at the reasons it happened, in particular if there are criminal actions involved.

For example, the Auditor-General’s report of the evidence of poor tender and/or procurement practice might unearth impropriety.

As I stated earlier, not all irregularities are related to corruption, and vice versa; and what can look at first glance such as a case of alleged corruption may be because of human simple error or lack of staff capacity.

At the heart of improving the Government procurement system is the model of efficiency-driven reforms. Efficiency through the reform process is great so long as it does not undermine transparency.

For example, if the goal of a particular reform is speeding up procurement processes, and due attention is not given to transparency issues, a recommendation to cut down on evaluation time may backfire.

The new monitoring unit at the Ministry of Finance is aimed at seeing that projects get completed. The PAC chairman has stated that he would like to have some oversight over it.

While this may be a well-meaning sentiment, another view is that this oversight is best left to the Office of the Auditor-General who should be empowered to be involved in the budget process and internal audit process from the outset at the beginning of the year rather than towards the end.

Government projects should be looked at holistically and the reasons behind its incompletion.

For example, when looking at failed projects, we should also ask if transparent processes were followed by the donor funded consultants in the project formulation? Were the external consultants and projects managers subjected to the same rigorous scrutiny as Fiji’s civil servants? Shouldn’t they have been brought to account for faulty practices?

Another key issue that has been ignored in discussions of Government procurements and public accounts is the role of donor funded research especially on actionable policy recommendations to enable effective follow-up by Government.

Tertiary institutions such as USP, FNU and UniFiji can work with government ministries and anti-corruption agencies to bring new ideas into circulation and encourage people and institutions to experiment with fresh approaches that are relevant in the local context.

Finally, there is one other area that may need scrutiny. This is in “urgent purchases” at the end of the fiscal year.

Such purchases tend to be subject to corrupt practices, most likely because of the fact that transactions in this period are less strictly controlled.

In many public sector agencies, the unspent portions of the public budget are lost at the end of the financial year. This creates pressure to spend unspent monies before this happens.

Good procurements

In Fiji, public procurement through Government contracting represents a large percentage of the economy. This translates into a vast amount of money, which can lead to temptation for corruption.

Corrupt deals require the involvement of different actors depending on the form of corruption used.

Bribery and facilitation payments require a giver and a taker, often a “facilitator” and, depending on the amount, someone providing a safe haven for the money or to facilitate a money laundering scheme.

Below are a few notes on corrupt deals’ participants.

* Bidders (suppliers, contractors, consultants) and sub-contractors — economic operators wishing to do business with the Government, supplying goods or services, either take the initiative offering or giving a bribe or any advantage to a government decision maker in order to obtain a favourable decision, or give in to extortion demands from a corrupt official.

* Agents, other middlemen, consultants, joint venture partners and subsidiaries:

Economic operators wishing to manipulate a Government decision-making process often refrain from committing the criminal acts directly themselves but utilise agents, consultants, contractors, other local middlemen, or local subsidiaries or joint venture partners for the actual bribe activity.

The contract with the agent usually is vague as to purpose, control, disclosure, accountability, success factors etc. and often provides for secret payments, giving thus a clear indication of the criminal intent of the contract.

The ultimate goal of public procurement is to satisfy the public interest. Like any Government action should be.

In this sense, good procurement should satisfy the needs of the people, should be fair to businesses, should save (and avoid waste!) of public funds.

On the contrary, corrupt or bad public procurement will increase poverty and inequality by diverting funds away from the attention of social needs; it will engender bad choices, encouraging competition in bribery rather than in quality or price.

For companies, corrupt procurement will provide an unfair, unstable and risky competitive advantage and will create a sort of market-entry cost or non-tariff barrier, at least for those companies who do not wish, or cannot afford to bribe their way in.

* Dr Joseph Veramu works as a consultant on economic policy planning and is a board director at Transparency International Fiji. For feedback, email: or