Pacific

Islands

Month Ly

Business

Millions down the drain

Reports highlight misuse of funds

By Robin Bromby

TWO recent reports have pinpointed areas of financial management problems in the region. The Audit Department in Western Samoa has iden tified what it terms irregularities in gov ernment department accounts, while in Papua New Guinea it is claimed more than KBO million has been wasted on

rural development programmes during

the past 10 years.

Western Samoa’s Acting Controller and Chief Auditor, Fatalevave Leni War ren, has warned against public com placency towards the list of irregularities in government finances contained in the Audit Department’s latest report. War ren said that audit and departmental controls had not been intensive enough to bring “the inevitable thefts, defalca tions and rackets to light ”. The biggest losses were due to motor accidents which cost W 5568,633 in the six months to June 1989. Then followed misappropri ated cash ($33,242) and loss of stores through theft and burglary ($19,745).

The report said the Audit Department had difficulty determining the extent of

telephone charges caused by private

calls, that there was a five-year backlog with the English Hansard and the Par liamentary bar accounts were confused, it not being clear whether some mem bers’ accounts had been paid. The Attor ney-General’s office had not submitted an annual report to the Prime Minister and financial reports were not always completed on time.

Warren reported the Broadcasting De partment had not supplied any financial accounts since 1980. An audit showed debtors owing $30,722 but this was not accurate as ledgers were posted only to November 1987 and journals to August 1987, and no action had been taken to recover money in arrears. The Audit De partment blames the shortage of experi enced staff and an inadequate internal

control system.

While the Customs Department had made improvements, the same could not be said for the Education Department in Western Samoa. Accounts had been de layed and the department had not com

plied with regulations governing hand

ling of cash and maintenance of accounts. Some personal files could not be found; where they could be, cases of both overpayment and underpayment of salaries were discovered. Leave records and attendance books were not properly kept, the report said. It could not verify that overseas calls were private or offi cial. It was found that in stationery stock records some figures had been altered.

The Health Department was also criti cised for inadequate financial controls.

In Port Moresby, the Institute of Ap plied Social and Economic Research has just published a report on the country’s five Integrated Rural Development Prog rammes, which were designed to im prove living standards in the lesser de veloped provinces. It concludes that much of the KB2 million spent, which was largely provided by the World Bank and Asian Development Bank, was mis used project planning was poor, rushed and unrelated to political, social, administrative or cultural realities.

The five projects were established in the East Sepik, Southern Highlands, Enga, West Sepik and Thimbu pro vinces.

The Southern Highlands Rural De velopment Project (SHRDP) cost more than K 23 million and failed in its main objective, which was to establish

cash cropping.

The institute’s report said the South ern Highlands project was the largest of the five in Papua New Guinea and was regarded as a show piece and model for the other provinces. But there were problems from the outset: the impetus had come from local politicians, but when the SHRDP was taken over by the

Department of Finance the local leaders rejected it “it was no longer theirs and they no longer wanted it”, the report said.

The Poroma-Koroba Highway was completed a year ahead of schedule, but there were many delays in recruiting ex patriate staff. But the greatest problem was that the management structure for cash cropping was so complex that those recruited to run it did not have adequate skills.

The project involved the planting of coffee, tea and other crops, electrifica tion, the highway, roads into the planta tions, schools and health facilities. Poor programme management meant loan spending was too slow and the World Bank extended the deadline for comple tion. When it came to completion, both the provincial secretary and the South ern Highlands provincial government re fused to accept responsibility for the project. Eventually a handover was com

pleted.

The report summed up the problems as: • The whole project was complex and unwieldy, there were management con flicts and provincial leaders felt they were locked into a situation over which they had no control. • Recruitment was impossibly slow;

halfway through the project’s life, only

eight of 18 expatriate positions and 16 of the 45 local jobs were filled. • There was little time for training and integration between staff was often non-existent. • There was no clear statement of objectives, so that there were different views of the aims. • Monitoring was largely viewed as a nuisance and it was this which led to the failure of the project’s main income generator, cash cropping. • Key members left without handing over reports on what they had done. • There was little supervision by the national government. □