Corruption Watch has calculated the opportunity cost of corruption after the 2016 Auditor-General report estimated more than GH¢2bn was lost through irregularities at various MMDAS.
HIGHLIGHTS OF THE 2016 AUDITOR-GENERAL’S REPORT
In the recently released 2016 Auditor-General’s Report, the overall financial impact of the irregularities discovered among the Ministries, Departments, and other Agencies (MDAs) was estimated at GH¢2,165,542,375.14. The financial irregularities and lapses identified were grouped under seven broad categories. These are as follows:
Table: Types of Irregularity Observed and Financial Impact (GH¢)
Rent payment Irregularities and
Source: The 2016 Auditor-General’s Report
A brief highlight of each of the seven categories is provided below:
Cash irregularities – GH¢2,053,622,215.68
The total cash irregularities identified during the audit period amounted to GH¢2,053,622,215.68 which was 95% of the total irregularities. This category of irregularity was among others attributable to the underlisted incidences:
- Unapproved/unjustified disbursement
- Dishonoured cheques
- Unaccounted revenue
- Unsupported payment vouchers
- Unauthorised transfers
- Funds to bank not credited
- Unpresented payment vouchers
- Payment of public funds into personal bank accounts
- Belated/non-lodgement of public funds
- Unaccounted funds
- Misapplication of funds
- Unauthorised use of IGF
Some Specific Examples of Cash Irregularities:
Unsubstantiated debits to the petroleum accounts – GH¢1,561,434,333.31
An amount of GH¢1,561,434,333.31 was found to have been withdrawn from the petroleum revenue accounts without the knowledge of TOR management. This sum made up 76 percent of the total cash irregularity of GH¢2,053,622,215.68.
Non-transfer of revenue by collection banks (GCB and Ecobank) – GH¢238,515,125.76
GCB Bank and Ecobank, on behalf of the Ghana Revenue Authority (GRA) and Customs Division collected revenue through the GC-Net system totalling GH¢77,857,778.07 and GH¢160,657,347.69 respectively. However, the funds were not transferred to Bank of Ghana for periods ranging between seven and 19 months.
Understatement of revenue GH¢21,033,516.07
Two cashiers at the Commercial Court in Accra, understated total collections in the revenue and deposit cash books by GH¢20,893,095.83 and GH¢140,420.24 respectively resulting in an understatement of GH¢21,033,516.07 in the cash book.
Central Medical Stores: Unpresented Payment Vouchers – GH¢482,792.71& Unretired Imprest – GH¢19,545.00
Even though entries were made in the cash book of CMS, the audit could not authenticate payments made under fifteen payment vouchers with a total face value of GH¢482,792.71. Both the vouchers and the documents backing them were not presented for review.
Also, it was found that an amount of GH¢19,545.00 was paid to an official on May 4, 2015 as imprest to conduct debt recovery activities/reconciliation in five regions. However, there was no evidence of expenditure statement and a report on how the money was utilised as at 31 December 2015.
Diversion of Government funds into Private Accounts GH¢224,760.00
Plan Ghana, an NGO on 25 January 2015 released an amount of GH¢224,760.00 for the registration of 10,000 childbirths in deprived districts in the Upper West Region. The Registrar at the Births and Deaths Registry, Wa, Mr. Francis Kupo, failed to issue official receipt for the fees and rather lodged the amount into a private welfare account number 20014010988-01 at the National Investment Bank, Wa.
GRT. ACCRA REG. EDUCATION OFFICE: Funds not fully Accounted for by NGOs – GH¢24,174.10
Two non-governmental organisations (Christian Council of Ghana, and Light Foundation), did not fully account for funds received from UNICEF through the Greater Accra RegionalEducation Office to support the mobilization ofSenior High Schools in the region on Ebola and Cholera.
According to the report, the Regional Education Office as the implementing partner was lax in its monitory and supervisory role. Hence, the Christian Council of Ghana, out of a total released amount ofGH¢65,559.00 did not account for GH¢19,797.00. The Light Foundation also did not account for GH¢4,377.00 out of an amount of GH¢24,977.00 released to it.
Tax irregularities – GH¢42,866,490.70
Some examples that make up this total tax amount found by the audit include:
A GH¢11,934,957.00 owed by 100 registered VAT traders as at December 2015.
An amount of GH¢6,806,899.00 and US$61,506.00 owed by 549 Business Entities and individuals as income and corporate tax for 2015.
Also, 526 employers including 9 Directors did not remit Pay As You Earn (PAYE)deductions of GH¢5,798,942.00 to the Commissioner-General for the 2015 year of assessment.
A random examination also revealed that 107 companies who presented audited accounts for the 2015 year of assessment failed to withhold taxes of GH¢3,423,600.00 and US$25,842.00.
Stores/Procurement irregularities – GH¢35,940,445.43
Stores and procurement irregularities observed often occurred when procurement procedures prescribed in the Public Procurement Act were not properly followed. Some MDAs failed to obtain the required number of quotations, engaged in the splitting of procurement contracts and exceeded their authorised thresholds. During the assessment period, such irregularities amounted to GH¢35,940,445.43.Some examples included:
An amount of GH¢23,450,000.49 incurred in procuring 46,600 units of Street Lighting Lamps from Vision and Sports Enterprise by the Ministry of Local Government. The lamps were not paid for after delivery on 18 July 2016.
The Controller and Accountant-General procured store items amounting to GH¢2,339,980.00 in excess of their immediate requirement. It would likely take between 3 and 15 years for the stocks to be consumed, leading to a potential depreciation or obsoleting of stocks. Also, funds used for the excess procurement could be put to better alternative use.
Payroll irregularities – GH¢4,381,994.51
Payroll irregularities observed by the Audit during the review period amounted to GH¢4,381,994.51. This was attributed to payments of unearned salaries to separated staff as well as delays in transferring unclaimed pensions and salaries to Government chest by the banks.
Outstanding loans/debts – GH¢6,775,974.47
The Audit found a significant amount of this irregularity was in the form of agricultural support (loans and inputs such as certified seeds, fertilizers, herbicides and vehicles)given to farmers to motivate them to expand. Several farmers did not pay back.
Contract irregularities – GH¢13,006,034.86
Such irregularities included GH¢12,476,152.86 which was the contract sum for six projects awarded by the Department of Urban Roads, Accra. It also covered abandoned projects, delays and deficient project execution as well as the non-execution of works after payment of mobilisation.
Rent irregularities – GH¢9,049,219.49
The ground and staff rent owed by institutions and 18 individuals in the Sekondi Metropolis to the tune of GH¢6,657,597.90 formed the biggest portion of total rent irregularities of GH¢9,049,219.49.
ELS – Estimate Loss to the State
OCC Effect – Opportunity Cost of Corruption
500 kilometres of a two-lane, single carriageway, asphalt-concrete paved road;
1,250 6-unit classroom blocks;
600 CHPS compounds; and
Still left with change of GHS 9,875.10.
KORLE BU TEACHING HOSPITAL
The 2016 Auditor-General’s Report has cited several instances of illegalities, malpractices and irregularities allegedly perpetuated at Korle Bu Teaching Hospital in Accra. Some of these are highlighted below:
Retirement package paid to Prof.Afua Hesse, retired Ag. Chief Administrator
The Audit Report observed that a retired Director of Medical Services and Ag. Chief Administrator, Prof.Efua Hesse was paid an amount of GH¢51,096.74 and given a VW Passat car as part of her retiring package. According to the report, the package was not backed by the officer’s conditions of service, the Hospital’s past practice or retiring packages given by similar hospitals in the country.
Procurement of sub-standard Out Patient Department (OPD) forms – GH¢18,260.93
Since December 2013, the KBTH was found to have procured and received deficient OPD forms from Kenweko Enterprise; a company which incidentally was registered as dealer in wood products, bamboo, doors nails and not stationery. The forms remain without a use.
Misappropriation of revenue – GH¢15,700.00
Three Revenue Collectors, namely, BenardAshong, Dodoo and Carl Kweku Richardson, in August and October 2015, failed to account for revenue totalling GH¢15,700.00.
Irregular release of duty post vehicles to separated directors
The Board of KBTH at its 56thmeeting decided to refund two years’ instalment payments made by six Directors on cars acquired through the MOH Vehicle Revolving Fund to the officers, treat the vehicles as duty post vehicles, and allow them to take the vehicles away for free when they separated from the Hospital.
Consequently, two separated directors, namely, Mr. T. A. Mahmud, former Director of Human Resource and Mr. E. Anan Kakabaah, former Director of Finance were allowed to take their vehicles valued at GH¢34,400.00 each away for free. All these were done without the respective recommendation and approval of the Ministers of Health and Finance.
Irregular appointment and payments to Mr. GodfredAhianyo (Non-Executive Board Member) – ¢118,461.00
Mr. Edward Annan, the Board Chairman of KBTH irregularly appointed Mr. GodfredAhianyo, anon-executive Board member, to lead a three-member committee to “audit various processes at the Directors and other Sub-BMCs in the Hospital”. This irregular appointment was to take effect from December 01, 2012 for a period of one-year.
Net payments variously described as allowances, salaries (with market premium) and advances totalling GH¢118,461.04 were subsequently made to Mr. Ahianyo between January 4, 2013 and May 22, 2014. Mr. Ahianyo was also allocated an official vehicle.
According to the Auditor-General’s Report, there was no record of a term of reference for the Committee, the names of the other members of the Committee, or evidence of actual work done. The payments were therefore seen as an unnecessary drain on the Hospital’s resources.
Appointment and payment of acting allowances and salaries to Ag. Chief Administrator, Rev. Albert O. Botchway, without appropriate basis – ¢81,669.82
The Report again cites the former Board Chairman of KBTH, Mr. Edward Annan, for asking Rev. Albert OkpotiBotchway, another Non-Executive Board Member, to step in as Ag. Chief Administrator of KBTH in September 2013 when Prof.Efua Hesse retired from the role. Rev. Botchway performed this role until July 2014.
According to the Auditor’s Report, if the most senior Executive Director already on salary at the Hospital had been asked to act as Chief Administrator, as stated by Section 39(2) of Act 525, management would have avoided the GH¢81,669.82 paymen ts made to Rev. Botchway as allowances and salaries. Also, all efforts to obtain Rev.Botchway’s appointment letter to justify the payments made were unsuccessful as management of KBTH could not produce it.
Payment of unapproved board sitting allowances: GH¢30,000.23
The Audit noted that the KBTH Board unduly approved increases in Board allowances and made payments in arrears totalling GH¢67,577.75 on May 29, 2014 to 17 members. Such an act required approval from the Ministers of Health and Finance. After the issue was raised by the Audit, the management of KBTH recovered an amount of GH¢37,577.22 from the Board members, leaving a balance of GH¢30,000.23 yet to be repaid.
Unlawful appointment of private auditing firm: GH¢81,000.00
Contrary to Section 11(1) of the Audit Service Act, 2000 (Act 584), the Board Chairman of
KBTH illegally acted on the directive of the Minister of Health to appoint AD and Associates, to carry out a forensic audit of the 24 Hour Pharmacy at KBTH. Management paid an audit fee of GH¢81,000.00 to the firm. The appointment was made without recourse to the Auditor-General and the engagement was also not subjected to competitive bidding.
Procurement of vehicle for acting Chief Administrator: GH¢199,000.00
The Audit revealed that KBTH’s management paid GH¢199,000.00 to acquire an Audi A6car for the use of the Ag. Chief Administrator. The procurement was not in the Hospital’s 2014 approved Procurement Plan and Budget.There was also no evidence that the purchase was approved by the Board. Incidentally, the then Ag. Chief Administrator, Rev. Albert O.Botchwaytemporarily misappropriated the vehicle to himself by getting registered in his personal name and using it for two and a half months before reverting it into the hospital’s name.
ACCRA PSYCHIATRIC HOSPITAL
Misapplication of drug fund – GH¢19,600.00
The Audit discovered that the management of the Hospital misapplied GH¢19,600.00 from the drug fund to pay gas and airtime allowances to hospital management committee members in May, August, and October, 2015. This practice has the tendency to deplete the drug fund and adversely impact on the already stretched healthcare delivery at the hospital.
MINISTRY OF INTERIOR
High Cost of Internal Security – GH¢26,100.00
The audit found that an amount of GH¢26,100.00 was paid to Magnum Force Security Company Limited for providing internal security to the Ministry of Interior. Such services could have easily been provided by the Ghana Police Service at no cost to the Ministry which ironically supervises the country’s internal security apparatus.
MINISTRY OF JUSTICE AND ATTORNEY GENERAL’S DEPARTMENT
Failure to seek cabinet approval before paying judgement debt of GH¢67,380,718.20
The Auditor-General’s review of the bank statement of the Ministry revealed that, a payment of GH¢67,380,718.20 (direct debit) was made to Construction Pioneers as judgement debt on behalf of the state without any reference to cabinet. This is regardless of new government guidelines to submit to cabinet for payment approval all judgement debt claims exceeding GH¢10,000,000.00.
Also, the Ministry could not provide anydocumentation with regards to the Court Judgement during the audit. All documents relating to the court judgement andcabinet approval for settlement and payment are required to authenticate the payment.
Failure to account for funds by EOCO – GH¢250,000.00
The Economic and Organised Crime Office (EOCO) was also cited in the 2016 Auditor-General’s Report for not accounting for an amount of GH¢250,000.00. The amount was released to EOCOby the Ministry of Justice on payment voucher No. 40854dated 31/12/15, without any record of the purpose of the release.
GHANA EDUCATION SERVICE – KRACHI WEST
The Krachi West District office of the Ghana Education Service was cited in several instances of illegalities, malpractices and irregularities in the 2016 Auditor-General’s report.
There were 83 unpresented payment vouchers whose value amounted to GH¢293,669.58. These expenditures could therefore not be authenticated.
There was also a case of a misapplication of the Ghana Partnership for Education Grant (GPEG) funds. A total of GH¢94,272.20 was used for activities and expenditures outside of the agreed work plan of the project.
A sum of GH¢74.889.99 given to eight officers as imprest for various activities was unaccounted for.
Again, the Audit found that a sum of GH¢29,117.00 was used to repair a vehicle (No. GV 1416 Q)that had already been auctioned on 12 August 2008 to one Mr. Alexander Buadi Alexander. Further checks indicated that the District Director, Mr. Gabriel S. Kploanyi failed to hand over the vehicle to Mr. Buadi.
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