The AG’s CMU Report – Conflicts, Canteen & Cuff Links

The recently released Auditor General (AG) special audit report (2016/17-2018/19) into the Caribbean Maritime University (CMU) highlighted a mountain of bad practices.

Yes, audits reports tend to flag level of poor governance and practices but the degree of maladministration found at the CMU is just staggering and endless. It makes you wonder if the CMU administration were doing anything that resembled good practice within the entire organisation.  Flaws and irregularities discovered at the CMU include

  • Questionable use of public money (millions) and accounting transfers
  • Multiple banks accounts opened which were not approved by central govt as required
  • Procurement breaches in the hiring of consultants
  • Procurement breaches period
  • Hiring of 466 staff without the approval of government authorities
  • Conflicts of interest.
  • Claims made by CMU president for the purchase described as fixed assets incl. Apple Watch ($US 867), Mac Book ($US 1848), 2 laptops (US 4777), cologne ($US 637), and cuff links ($US 364)

There are no winners on either side of the political spectrum in this CMU scandal. There is enough blame to go around for both political parties. The lack of oversight and enforcement by central government of events at CMU must also be called into question.

Former Minister of Education, Ruel Reid, his wife and daughter plus CMU President Fritz Pinnock are before the courts. Let’s leave it at that.

Auditor General Report – 2015/2016

Some of the bad practices highlighted in the AG’s recent report on CMU could clearly have been averted from as far back as April 2016.

In January 2016 the Auditor General had produced a report on the then Caribbean Maritime Institute (CMI) – known since 2017 as CMU. In that 2016 report the Auditor General found serious irregularities that should have raised eyebrows amongst oversight bodies in central government and parliament.

According to the AG report of 2015/16 CMI;

  • Recruited 253 part-time lecturers without first seeking approval from the Ministry of Finance
  • Did not always safe guard assets
  • Did not have an approved policy to manage the receivables portfolio
  • Did not have an adequate complement of lecturers for its core Marine programmes
  • Allowed 7 CMI employees to receive nearly $4 million in scholarship without any bond agreement in place
  • Board approved the purchase of 13 computer tablets for CMI Board members at a cost of $317,500.
  • Board did not develop a Charter or evaluate Board members.

The AG also found that one in three CMI cadets did not gain seafarer experience which is against standard policy.

The then government’s government reaction… “Transport minister (Omar Davies) asks CMI board to examine damning auditor general report” – The Gleaner, 20 January 2016

In the said above Gleaner article…… “Dr Davies says the CMI is deserving of the university status because of what he says is the quality training and education being produced”. – Wow

At the time of the AG’s 2016 report, Jamaica was in election mode and the Jamaica Labour Party (JLP) snatched power and succeeded the People’s National Party (PNP) in March 2016.

Change of government led to a wholesale shakeup of the CMI board thus killing any chance of effective oversight continuity. Jamaican governments tend to put “their people” on public boards whether he/she is suited to the position.

In the aftermath of the CMI report the JLP administrationt should have taken on the AG’s findings and clamp down on the CMI’s recruitment bad practices as well ensuring effective auditing and accounting measures were in place and active.

[In the latest report the AG stated “Although prior to March 2017, CMU created a committee named Finance and Audit Committee, which was renamed Risk and Audit Committee, the Audit Committee arm was never established. The failure to establish an audit committee was exacerbated by CMU’s failure to engage an internal auditor, despite having an established post for this function. “]

Government watchdog auditors will tell you that a lack of auditing mechanisms in any public organisation – that has received assets & funds worth millions – is a red flag.

The PNP, as the official opposition from March 2016, has had control of the powerful Public Accounts Committee (PAC) whose main role is to scrutinize the AG reports. The PAC could have put pressure on the then CMI to get their house in order. The PAC did not hold any hearings for 11 months during 2016/17. Here the PNP-led PAC slipped up on their oversight duties.

The cynic in me thinks the PNP-led PAC would not push to probe much of the AG reports of 2016 as it could reflect on issues that ocurred under their administration.

Did the PAC review the AG report of 2016 on the Port Authority where senior staff were overpaid and in receipt of multiple pensions?

[“One of the 14 senior officers benefited from three pensions valued at $120,000, $56.2 million and US$554,164 respectively” – AG report of Port Authority, July 2016]

CMU Report 2020 – covering 2016-17 to 2018-19

Senior management at the CMU and in government have some serious questions to answer. According to the AG report

  • “Our review of the accounting and other records revealed that five bank accounts (totaling $322.8 million) not disclosed by CMU, were not reflected in the general ledger. We also identified that CMU did not seek approval to open these bank accounts as required by the MoFPS (Ministry of Finance)”
  • “CMU did not provide the relevant payment vouchers and invoices to support for payments totalling $41.2 million made from the JMITF Account”
  • “Despite repeated requests, CMU failed to provide us with supporting documentation to substantiate $14.1 million paid from Canteen Account2 during the period May 2018 to January 2019”
  • “The Project Accountant was employed without the position being advertised and was interviewed only by the Finance Committee Chairman, contrary to CMU’s own HR policy.”
  • “CMU utilized the two canteen bank accounts to fund non-canteen related purchases totalling $15 million”

It is hard to take senior figures at the CMU and the Ministry of Education seriously. Especially when they use public money ($406k) to hire comedy, hotel, photographer, portrait frame for a surprise birthday party for Mr Pinnock.

According to the latest AG report certain party-related payments were approved by the  Chief Education Officer (CEO) under instructions from minister Reid. The CEO is currently the acting permanent secretary at the Ministry of Education.

  • In this day and age when politicians are lecturing the public on fiscal prudence should government departments be allowed to use public money for staff birthday parties?
  • Given all the flaws and irregularities that have long been at CMI/CMU it does beg the question how did this institution manage to achieve university status?

Lock Them Up?

Sadly people with political allegiances will toe the party line. Whichever political party is in the wrong the defense from their friends and supporters is always – no one was found guilty by the courts.

Serious breaches by – in particular- senior public officials does not necessarily mean they have broken any laws. However, some breaches would warrant severe sanctions (e.g. sackings or demotions) against those found to be at fault.

But if there is serious misuse of millions of tax payers money then that is different gravy.

Yes, the public funding of birthday parties looks outrageous but are there written government guidelines that prevents senior public servants from spending public money on such “entertainment”?

Robin Sykes, head of the Financial Investigation Division (FID) led the probe that ended in the arrest of Pinnock, Ruel Reid and 3 others in October 2019. There was outrage in the government by some ministers over the arrests. There was also criticism by the Director of Public Prosecutions (DPP) on the procedures used by FID.

By late November it was announced that Sykes was moving from FID to the IMF.  Very strange timing given the high profile nature of the arrests. Was Sykes kicked out of FID gracefully?

Going Forward

  • PAC needs to ensure that their next hearing into CMU last for up to 6 hours so they can scrutinize the concerns raised thoroughly. The duration of current PAC hearings is roughly 2 hours  due to room booking issues. Thus little is achieved once all the formalities have been covered.
  • Ministry of Finance (MoF) could freeze all recruitment carried out by CMU and order that any future hiring must be approved by them. The MoF needs to conduct a job evaluation review of all those posts CMU had filled without their approval
  • Ministry of Finance needs to rid CMU and Ministry of Education of any obvious conflicts of interest.
  • CMU should merge with the University of Technology (UTECH). Given UTECH has in place the necessary management control mechanisms required at CMU, such a move would save costs and prevent CMU from having to reinvent the wheel.
  • Major staff changes will be needed at the top of the Ministry of Education and CMU.
  • Prime Minister Andrew Holness needs to relinquish his role as de facto Minister of Education. His stewardship of the portfolio has been below average. He is rarely in parliament when CMU is being discussed and leaves it his colleague Karl Samuda to walk the plank.
  • The relevant oversight bodies in parliament and government need to speed up  their efforts in getting answers and resolutions to concerns raised by AG reports.

e.g. In the AG’s latest annual report also tabled this month they found

Ministry of Health

  • “In January 2017, the Ministry of Health (MoH) engaged a consultant at a cost of US$288,900, for nine months to prepare a 10-year Strategic Development Plan. The MoH did not obtain competitive quotations, and/or advertised the procurement opportunity for the consultancy service. Additionally, we saw no evidence that the contract was evaluated and subjected to the scrutiny of the MoH’s evaluation and procurement committees prior to the Accounting Officer’s approval. Further, the MoH did not seek the endorsement of the National Contracts Commission (NCC).”

Ministry of Science, Energy and Technology

  • “MSET did not prioritize its capacity needs when it made a decision to approve Special Early Retirement Programme (SERP) retirement for six officers with effect from April 30, 2018 and their subsequent re-engagement on a one-year contract with effect from April 30, 2018. The six retirees were paid between 22.1 and 263 per cent more than their emoluments prior to SERP. “

Now what?

About africanherbsman1967

Fly Like an Eagle
This entry was posted in jamaica, jamaican, Uncategorized and tagged , , , , , , , , . Bookmark the permalink.

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