Sunday, June 7, 2015

OFFICIAL CORRUPTION STARTED IN 1977; SEYCHELLES SECRET

Here's a report published in 1988 by the prestigious Economist Foreign Report published weekly by the Economist magazine.



A THIRD-WORLD MESS

 FOREIGN REPORT has obtained a copy, of the audit of government accounts dated December 1988 for the Seychelles in the early 1980s. Although it is not marked secret, it has not been distributed; It is not difficult to guess why. The report describes some extraordinary accounting practices. In the cold language of auditors, it gives an unusual insight into what happens when a third-world country is mismanaged.

The report speaks of inadequacies within government in the management of capital project and in the monitoring, verification and certification of the related expenditure. It adds that in some large development projects "claims submitted by contractors were sometimes not sufficiently authenticated before 'being approved for payment. Because of poor monitoring, capital expenditure could not be compared with projected costs. As for the Treasury's accounts, the auditor complained of "numerous errors, some fundamental in nature”. He also grumbled about "delays, and sometimes complete failure to detect errors”. The auditor rebuked the government for writing off a number of advances that it had made. As for the size of the advances, the auditor wrote that “because of lack of proper documentation it has not been possible to make a realistic estimate of the extent to which these advances are recoverable".

Looking in more detail at the government's dealings, the auditor said the government owned L'Union Estate company obtained advances of 20m rupees ($3.6m) but the auditor was unable to find out, "in the absence of the company's published accounts", what had happened to these advances. The Seychelles Agricultural Company, which was subsequently dosed down, "did not produce audited statements ‘of account during the, whole period of its operations".


The Seychelles Electricity Corporation, set up in1982, was wound up in 1985 but the auditor could say nothing about the government’s position in it "in the absence of a disposal or liquidation statement". The Seychelles Marketing Board absorbed several loss-making state enterprises but the auditor could not work out their value in the absence of the board's accounts from 1984 to 1987.

It was the same story with the Seychelles National Commodity Co, set up in 1981 and wound up in 1984, which had not produced any audited accounts". The auditor stated that the government had contributed 90.8m rupees to the company. He thought it was mostly irrecoverable.

As for the Seychelles National Investment Corporation, the auditor could not establish its equity share capital. "My department has not been able to obtain any published report on the financial operation and results of the corporation for the years from inception [1979] to 31 December 1987".

The arrangements for the Seychelles Philatelic Bureau, which issued stamps, came in for a particularly explicit rebuke. Various reports from audits about these arrangements pointed out, the auditor said, that they were "wholly deficient and fraught with opportunities for the perpetration of high-scale fraudulent abuses". The auditor did not suggest that any actual fraud had been committed.

Nothing in writing
 The Public Transport Corporation, like other parastatal agencies, received various advances from the government and these, were "not subject to any written agreement as to the terms of repayment" and the “amount is unverifiable" in the absence of the corporation's audited statements. The prospect of these advances being repaid seems remote."

Similar problems existed for the Seychelles Tea and Coffee Company, wholly purchased by the government in 1988. "In the course of my audit I was barred access to the file of the Department of Finance on the subject of this acquisition," the auditor complained. "This, coupled with the unavailability of records the auditor complained. "This, coupled with the unavailability of records including the company's audited financial statements, has inhibited my effort to assess the net worth, … I have also been unable to check the authority for the acquisition agreement."

The auditor used stronger language in commenting on the Seychelles Tourist Board. He said he was unable to confirm that it had received and used subventions of 72m rupees ($12.9m), as it appeared. He, added that a public organization has been allowed to spend such huge amounts of public funds without accountability constitutes in my opinion 'a serious breach of the concept of public accountability and make nonsense of the concept of control requirements of the Seychelles Tourist Board Act.''


 Another big source of funding has been the Agricultural Loans Fund whose assets in the form of bank loans "cannot be realistically quantified in the absence of records". It was disconcerting, the auditor wrote, that all my efforts from as far back as 1977 in drawing attention of those concerned to the consequences of the existing lack of effective monitoring and collection procedures seem, in the end, to have been in vain.