Public Accounts

Public Accounts Committee (PAC):  We are considering the lack of accountability and transparency in the government of Anguilla.  We are looking at the three essential headings of integrity, accountability and transparency.  We have finished with integrity, and now we are dealing with accountability.  We have in the last post dealt with the first essential instrument for guaranteeing accountability, the Ombudsman.  The second essential institution is a functioning Public Accounts Committee (PAC) of the House of Assembly. 

The PAC is perhaps the most effective mechanism designed by our Constitutions to enable Members of the Legislature to question and investigate the manner in which public officers have spent the monies voted by the Legislature.  Yet, we do not use it.  In most of our territories no PAC has ever been appointed, far less functioned as it should. 

We all know the reasons for this relaxed state of affairs.  Those presently in government have no interest in setting up a tribunal that will expose the wrongdoings that they may have been engaged in.  Those who are in opposition now have no desire to erect walls and boundaries that will limit their ability, when their turn comes to take power, to misuse public funds.  Similarly, the British Governor wants to keep everyone as quiet and as calm as possible, so that he can go back to London at the end of his term to receive his pats on the back and other accolades.  He has no interest in ruining his reputation by having an effective PAC reviewing unauthorised expenditures made by his Executive Council and public service.  None of the institutions of government in Anguilla have any interest in making sure that the PAC functions.

It is time for our legislatures to appoint and to work the Public Accounts Committees in the way that they are intended to work.

Related Posts:

PAC

Government Accounts

Public Accounts

Public Accounts Committee   

Government accounts

Surfing through the pages of the Bermuda Royal Gazette as one is wont to do on a lazy Sunday morning I was struck by news that their Auditor General had reported negatively on their 2008/09 public accounts.  Bermuda’s accounts must be a lot more complicated than Anguilla’s.  Yet, the last time I inquired our Anguilla House of Assembly had not yet had the 2006/07 public accounts tabled.  Given the comparative simplicity or our public accounts compared to Bermuda’s, you may well ask what conceivable reason could there be for Anguilla to be two years behind Bermuda in publishing our public accounts?

Bermuda’s Finance Minister, Paula Cox

      The Royal Gazette expresses concern that for the past two years Bermuda’s Auditor General has given the government’s Consolidated Fund a qualified audit.  The Consolidated Fund is the account which by law the Government is required to conduct its transactions.  The phrase ‘qualified audit’ means that the auditor was not satisfied that the government’s financial statements fairly reflected its financial position. 

In the case of Anguilla, we have received qualified audits, so far as I can remember, not for two years but for the past fifteen years.  Anguilla’s Chief Auditor has been producing qualified audits for Anguilla’s public accounts for as long as any of us can reasonably recall.  He has repeatedly reported that our financial statements are inappropriate to present fairly the financial position of the Government of Anguilla and the results of its operations.  The only reasonable conclusion we can come to is that our government receipts and payments are so badly recorded that we do not accurately know where our money is coming from or where it is going to.  The computerisation exercise of several years ago has not helped to automate anything.

      In the case of Bermuda, their Public Accounts Committee was quick to jump on the back of their Accountant General’s Department.  Their Finance Minister had to come out howling in defence of her incompetent staff and internal auditors.  Compare that response to Anguilla’s.  Here, our Public Accounts Committee has never met.  When our Minister of Finance last tabled the audited accounts some years ago, not a word of negative comment was raised by any of the dummy politicians in the House.  I doubt that any of them even looked at the Accounts, far less having anything useful or substantive to say on them.

      I don’t expect things to change now that we have a new opposition in the House.  After all, the accounts that they would be criticising would be their own government’s accounts from several years ago.

      What a waste of time they all are.

PAC Meetings

The Bermuda government and opposition have got it right.  They have amended their Rules of Procedure in their House of Assembly.  Their Public Accounts Committee meetings are now being held in public.  The Public Accounts Committee is the standing committee of the House, chaired by the leader of the opposition or his nominee, which calls in civil servants to examine them on pain of perjury on how they spent the peoples’ money.

   

PAC Chairman, Bob Richards

       The Bermuda PAC has regularly met for many years.  But, until now they have met in private.  Neither the press nor interested citizens have been admitted to hear the questioning.  After a long campaign by the Royal Gazette Newspaper, government and the opposition have now relented.  The discussions will no long be secret.

       There is no chance that this reform will come soon to Anguilla.  We are still several years behind in presenting the public accounts to the House of Assembly.  I seem to recall that the most recent set of audited accounts relate to the year 2006.  Opposition leader Macniel Rogers is unlikely to want to examine any public servant about the present set of accounts before the House.  After all, they relate to expenditure during the period when his administration was in power.  There is nothing he will want to quarrel about in those accounts.  He is likely to want to wait until the accounts for the year 2010 are published to call a meeting of the PAC.  On present evidence that will not happen until the year 2014.

       Will the Hubert Hughes government use its best efforts to get the PAC set up?  It is in their interest to do so, as they will have four years of accounts spread over the next four years to delve in and to expose any questionable expenditure they discover.  If they do set up the PAC, will they do their best to have it actually meet?  Will they amend the Rules of Procedure to ensure that any such hearings will take place in public?

       I, for one, am not holding my breath.  It seems to me that transparency and accountability are only electioneering slogans.

PAC

What else could Hon Edison Baird have done to get the Airport accounts? In late 2003 the government of Anguilla budgeted $60 million to extend the Wallblake airport. Fritz Smith, recently appointed Treasurer of the governing United Front political party, and nephew of the Hon Chief Minister, was the Project Manager.

Fritz Smith

With the expansion of the airport, several houses at both ends of the extended runway were condemned. Negotiations with the owners were happily concluded. New houses were said to have been built elsewhere on the island for some of the owners. Some people got land, others got money, and yet others got house and land.

In August 2008, Eddie Baird applied in the House of Assembly by way of a question to the Minister of Finance for an accounting of the expenditure on these replacement houses. The Minister promised to present it to him shortly. The accounts were not forthcoming.

Victor Banks, Minister of Finance

At a sitting of the House on 10 February 2009, Mr Baird complained to the Speaker that he still had not received the answer to the question he had asked.

A month later, responding to another question from Mr Baird in the House on 19 March 2009, Mr Banks put off producing the information until mid-July at the earliest.

Subsequently, in an open letter to the Chief Minister published in The Anguillian newspaper on 14 April, Brent Davis, leader of the Anguilla Progressive Party, demanded the same information. His first four questions give the flavour of the issues that are agitating the public:

“1) What was the initial estimated cost of the Wallblake expansion project?

2) How many individual payments were made to persons for properties such as dwelling houses, other buildings and lands?

3) Were there exchanges of Government lands with any individuals associated with the project?

4) How many persons are still in possession of their original properties, although they have already benefited monetarily or received lands in what should have been an exchange?”

We already know that a Freedom of Information Act would make all this delaying by the Minister impossible. If we had such an Act, Mr Davis would be able to demand the information. The relevant government officers would not be able to fob him off. If they tried to stall, a court would make the necessary order. The civil servant or politician refusing to comply would face imprisonment for contempt. Are there any additional tools available to members of the House of Assembly? What about the Public Accounts Committee?

The Legislative Assembly (Procedure) Rules 1976 are the rules and regulations that govern the House of Assembly. They provide for a PAC. Rule 66A explains that this is a Standing Committee of the House. It is supposed to be established at the beginning of each session of the House, and it continues through adjournments. The Rule says it consists of at least 3 and not more than 5 members. It is drawn from both sides of the House. Its chairperson is the Leader of the Opposition. It requires a resolution of the Minister of Finance to set it up, and the resolution must be approved by the House. That is not an obstacle. It would take a very careless Minister of Finance to reject a proposal by the Opposition to appoint the members of the PAC. If the Opposition does not demand a PAC, the Minister is probably not going to go out of his way to establish a watchdog to check on how he is performing his duties. So, it is up to the Opposition to take the first step, and demand the setting up of the PAC. They have never done so. There has never in the history of Anguilla been a Public Accounts Committee established to oversee the government’s expenditure of public funds.

The Committee has work to do. It is supposed to check that the funds spent by government have been spent for the purposes prescribed by the House. It has the mandate to look out for any expenditure that has not been authorised. It can demand to know what savings have been made elsewhere to enable over-expenditure in any area of the budget. It is mandated to make “an effective examination” of the public accounts. It can summon any civil servant to give information on any expenditure by any Department of Government. The Rules contemplate that the Committee may demand office space and secretarial help in carrying out its functions.

Rule 68 provides that any witness before the Committee may be examined in the same way as a witness before the Supreme Court. The Committee may hire an attorney to do the cross-examining if they wish. The witness is sworn to tell the truth. You know what that means? Any witness telling a lie is likely to face a perjury charge. The last time I checked, the maximum penalty for perjury was ten years imprisonment. Which civil servant who knows about some wrongful expenditure is gong to hide it and risk ten years imprisonment?

The House of Assembly is supposed to be the guardian of the public funds. The fact that it does not function at all suggests to me that members of the House have abdicated this responsibility that they owe to the public.

Edison Baird, Member of the House of Assembly

If the Opposition had done its job and demanded that the Minister call for the setting up of the PAC, Eddie Baird would not have to be begging the Minister for these figures. He would be able to summon Fritz Smith before a sitting of the Committee and grill him on what exactly was spent on whom.

Airport Costs

How can we ever find out before the next elections what money the government paid out in airport expenses? A couple of days ago, I heard Edison Baird on radio again. He was complaining that for the past several months he had been requesting information in the House of Assembly of Victor Banks, the Minister of Finance. He wanted an accounting of how much money the government had spent on re-housing the persons who had been displaced by the airport expansion project of a couple of years ago. I have heard him ask for this information several times in the House of Assembly. Each time, the Minister promises him that it will be forthcoming shortly. A couple of months pass, and Mr Baird complains again. Mr Baird has now explained why he wants this information. He has reason to believe that some favoured home-owners have been paid much more in compensation than their houses were worth. He is suggesting that there was corruption, or at least favouritism, in the way government largesse was dispensed in the airport expansion project.

You may well ask if this is the way the country is supposed to be run. Is it proper for a Member of the House of Assembly to be denied this information? No, of course not. But, what is equally sad, it seems to me, is that no one is discussing how this information is supposed to be got. This information concerns public funds. How public funds are spent is not confidential or secret information. It is supposed to be public knowledge. Mr Baird should not have to be begging the Minister to do him the favour of sharing this information with him. Mr Baird is not only entitled to this information, there ought to be the tools in place available for him to get it when the Minister stalls him. These tools are well known. They are (1) the Public Accounts Committee; and (2) the Freedom of Information Act.

This duet of tools is designed to ensure that how government spends public funds is published. The first is available only to members of the House of Assembly. The second is supposed to be available to all of us members of the public. We don’t seem seriously interested in putting these tools in place in Anguilla. To get a Public Accounts Committee, all that is necessary is for the members of the House to take the necessary steps to have the Speaker establish the Committee. To get a FOI Act passed, all that is necessary is for a Bill to be produced and passed into law. If the government won’t introduce a Bill, any member can do so.

Why do we not have these two instruments at work in Anguilla? Could it be because our elected politicians are not really interested in good governance? Is it that they are not really concerned whether or not public funds are being mis-spent? Am I just being cynical to think that their concern is that they are not the ones in power mis-spending public funds. In other words, might it be just that they wish that they could have been the ones with their hands on the levers of public expenditure?

If that is so, then Mr Baird will be quite content to continue to raise the question ineffectually. He will repeatedly suggest that there was some questionable expenditure. He won’t actually need an answer to his question. It is a political tactic, of ancient West Indian heritage, to suggest by innuendo that government has mis-spent public funds. It helps if the Minister adds fuel to the fire by not producing the information requested in a prompt and through manner. The idea is not to bring information out into the public. The real intent is to sow suspicion about the honesty and integrity of your political foes in order to gain a political advantage with discontented voters.

I would prefer it if the matter was dealt with seriously.

It is the political party that promises a Freedom of Information Act within 100 days of coming to power that I will support. It is the party that espouses an Integrity in Public Life Act and a Register of Interests for members of the House of Assembly, that I am looking for. It is the party that promises to establish the Public Accounts Committee to check on the way in which they spend public funds that will demonstrate their worthiness to govern this country. I suspect that it is only the Anguilla Progressive Party that will seriously place these on the agenda. None of the other political parties have expressed any interest in this issue.

These laws and procedures are in place all over the Commonwealth. It will take no time at all to produce suitable versions for Anguilla. A competent legal draughtsman, of whom we have several, could produce Anguillian drafts in weeks if not days.

$100 Million

Anguilla government to borrow $100 million to maintain its projected rate of expenditure. Did I hear right? Did the radio announce that government is going to borrow $100 million from the public by issuing Treasury bonds?

I know it is not a lot of money for some of us. But, for a little island with a fragile economy like the one we have? On top of our present borrowing? I think it is a lot of money for little Anguilla.

It seems to me, ignorant as I am of public financing, that this measure puts Anguillians into more debt. I wonder if Anguillians would support this measure if they were consulted. I doubt so.

I imagine that the government thinking is, well, if it is a 10-year bond, the economy is bound to have rebounded by then, and it will be easy for us to pay it back in 10 years, together with the interest.

But, what if the bond issue is successful and government does nothing to cut back on expenditure? Will it not mean that, unless taxes are increased in a pre-election year which is an unlikely event, more borrowing will be necessary later in the year, and next year as well. So, it starts at 100 million, but what will the total debt end up being?

Who will pay this borrowed money if and when the government cannot pay it back? We who buy the bonds, of course. Repayment of the bonds will then be deferred and the rate of interest altered, as I am informed government has the right to do. Either that, or they will have to increase our rates and taxes to pay it on time.

Would it not be more sensible for government to do what we are all doing at this time? Reduce our expenditure to meet our income.

The last time I looked, Anguilla is not the USA. We cannot influence the economy by borrowing our way out of the hole we are in. My concern is that, more likely, we will be in the bottom of the hole that we are digging for ourselves.

I know the Chief Auditor has not been happy in his last few Audit Reports on the expenditure of the government of Anguilla. Should not the Opposition be doing their job of organising the Public Accounts Committee and checking how various government departments have been spending the public money?

This is a challenging time for us, and I do not think borrowing money to maintain our current life-style is the answer. At least announce some significant reduction of public expenditure at the same time. That would be more reassuring.

Government Accounts

The Published Accounts of the Government of Anguilla and the Report of the Chief Auditor. Have you ever seen a copy of the audited public accounts of the Government of Anguilla? I never have. I consider that very careless of me. Every educated Anguillian should read a copy of the national accounts and audit report each year. We should make ourselves able to comment intelligently on them? They are our accounts.

The fact that we do not receive a gift of money from the British taxpayers does not mean that we should not be concerned about our national accounts. When your bank account is in the black, are you less careful about reconciling your bank statements than when they are overdrawn? No, you check them every month to make sure that no mistake has been made. It should be no different with our national accounts. Just as important as the national accounts is the report prepared each year by the Chief Auditor. He examines the government accounts and produces a report on them. He advises whether he has found any questionable activity in the accounts.

The Chief Auditor for Anguilla is Martin Daynes of the National Audit Office of the United Kingdom. He is appointed by the Governor under section 79 of the Anguilla Constitution 1982. He is independent of the government. He reports only to the House of Assembly. His report is supposed to be the main tool used by the Public Accounts Committee in its supervision of the manner in which government has spent the money voted by the House of Assembly. We know the PAC does not function in Anguilla, and never has. Could that be the reason why it is so difficult to find anyone who has seen the national accounts or the report on them?

A Chief Auditor typically produces four types of auditor’s report on the national accounts of a government. The four types may be summarised as follows:

Type 1. Where the audit has revealed nothing amiss, the Chief Auditor issues an unqualified audit opinion. This is sometimes referred to as an "audit certificate" or (especially by private sector audit firms) as an "audit report". The wording of such a report follows a standard format, as laid down in International Standards on Auditing. The audit report is appended to the accounts to which they relate.

Type 2. Where the audit has revealed an issue which merits the attention of the reader of the accounts, the Chief Auditor prepares a written report on the matter in addition to the standard (Type 1) audit report. Such reports can, for example, result from major errors or omissions being found in the evidence supporting the figures in the account. In such circumstances, the Chief Auditor’s audit opinion will almost certainly be qualified in one or more respects. This is called a Special Report. Whenever such a report is delivered, you would expect that the PAC would have a lot of questions for the different government departments.

Type 3. The Boards of many of Anguilla's government agencies have the power to appoint their external auditor. From 2004, the Social Security Board appointed the accounting firm of KPMG as their external auditor. When they do so, the Financial Administration and Audit Act 2003 requires the Chief Auditor to report on the results of the agency's audits. I have searched the Social Security website. In previous posts on this Blog, I complained that no audited reports were available. Now, I find the reports for the years 2000, 2002 and 2003 posted on the Board’s website. I read the 2003 Auditor’s Report on the web. I was pleased to find that it is a clean report. It is signed by Martin Daynes, as the law requires. This is to be commended. But, is it usual or acceptable for the accounts of a Social Security Board to be five years in arrears in publication?

Type 4. The Financial Administration and Audit Act of 2003 permitted the Chief Auditor for the first time to undertake examinations of the economy, efficiency and effectiveness with which government uses resources. Such examinations are commonly called "Value for Money Audits". To date, the results of one such audit have been laid before the House of Assembly. The report was entitled "The Establishment and Operation of the Anguilla Health Authority". It covered how the Authority came to be set up, and the results achieved in its first two years (ie 2004 and 2005). It is in some ways a troubling report. It is deserving of more investigation and questioning. You should apply for a copy and read it for yourself. There were many questions that could have been asked in the PAC, and some person or persons brought to account.

I am told that the reports on the Government of Anguilla accounts up to the year 2005 should be available from the Ministry of Finance. I have applied. Someone is to let me know when the copies are ready for me, and what the cost is.

National Accounts

Controversy in the Cayman Islands, and how the situation there reflects on Anguilla. The Cayman Islands' Auditor General, Dan Duguay, has been complaining. The Auditor General is what we call in Anguilla the Chief Auditor. Under section 79 of the Anguilla Constitution, his duty is to report annually on the accounts of the House of Assembly and all government departments and offices. He is appointed by the Governor and is independent of government. He is meant to be a check on any mis-spending by any government department.

If you go to the Cayman Islands Government’s website, you will find that they publish the Auditor General’s reports. The Audit Reports for the years 1995 to 2002 are available in full, and for free, on the government website. Additionally, most of his Special Reports are published and available for anyone to download on the government website. The website lists those Special Reports that are not available to the public, so you know exactly what is missing.

The controversy arises from the very latest Special Report by Dan Duguay, published in July 2008. He calls it, “The State of Financial Accountability Reporting”. In it, he is very critical of the delays in accounting by government departments. The last Audit Report he has been able to lay before the Assembly has been for the year 2002.

By contrast, I am reliably informed that the last available Audit Report for Anguilla is for the year 2005.

Dan Duguay describes the situation in Cayman Islands as a threat to the very foundation of good governance in the Cayman Islands. He warns that legislators are being constantly asked to provide new funding for various government entities without any significant accountability reports from them as to what they did with the funds allocated to them in previous years. Needless to say, the Financial Secretary, Kenneth Jefferson, has lashed out at the Auditor General. In Cayman Islands, the Financial Secretary is the equivalent of our Accountant General and Minister of Finance combined.

It would seem that as of April 2008 there was at least C$1.5 billion of operating expenditure that should have been accounted for that has not yet been reported to the Cayman Islands Legislative Assembly. And, the Cayman dollar is worth more than the US dollar.

On Wednesday 6 August, the Cay Compass News Online published an editorial on the situation. They point out that this lack of reporting is a very bad way to do business. Any legitimate company practises proper accounting through audits to know what’s due, what is owed, and to ensure that money is not being misappropriated. They make the point that, obviously, we should expect nothing less from our government. It would seem that the Cayman Islands government has lost control of the public purse. The editorial concludes by expecting government to regain control, and to make sure that this fiasco is not repeated in the future. Just by comparison, and apropos of nothing, no Anguillian journalist has ever published a critical article or editorial on the state of Anguilla’s national accounts.

On the same day, the Governor, Stuart Jack, had his say. He declared that the time for excuses is over. He announced that the audited financial statements are important for the accountability of government and hence for good governance.

Now, the Public Accounts Committee of the Cayman Islands legislature has weighed in. On Thursday 7 August, the PAC issued a press release. They promise to start calling witnesses and hearing testimony by early September. They intend to call a wide array of senior public officers including the Chief Secretary. He is their equivalent of our Deputy Governor. They will call the Financial Secretary. They will also call other heads of department and chief financial officers. According to the press release, “while the Auditor General’s report paints a dismal picture, the PAC’s focus will be on solutions”.

Compare this situation to the one we have in Anguilla. Our audited government reports are more up to date than Cayman’s. But, we do not have a government website that publishes any useful government information, far less the annual Audit Reports or Special Reports of our Chief Auditor. We do not have a Public Accounts Committee that has ever, even once, in the history of Anguilla, met. Consequently, our PAC has never summoned witnesses before it to explain inconsistencies and questions raised by the report of the Chief Auditor. As a result, no one in Anguilla has the slightest idea what the true state of the national accounts is.

I am advised that you have to go to the Ministry of Finance and apply to get a copy of the Chief Auditor’s Reports to find out anything about the Anguilla government’s accounts. I have applied.

PAC

Proposed New Public Accounts Committee for the Falkland Islands. We all know by now that we do not have a functioning PAC in Anguilla. There is no one in Anguilla exposing maladministration in the use of public funds. There is no one even looking at the way that the different government departments are spending public funds. Except the internal audit department and the external auditor. The internal auditors are professional civil servants just doing a job. No offence intended, I have no idea who they are and even less what they do. They do not report to us, so how can we know? The external auditor is no doubt very professional, but he would be mainly concerned to ensure that the government spenders look good. He would make suggestions for improvements. His concerns would not include exposing mis-spending when he finds it. Nobody wants to rock the boat!

So, it was with great interest that I read how the Falkland Islanders are planning to set up their PAC in their proposed new Constitution. Their discussions include some of the features that various Anguillians said they wanted to see in any new Anguilla Constitution. In particular, they plan to appoint three members of the public to sit on the committee, with two members of the Assembly, making a PAC of five persons. A majority will be from the public! Additionally, they plan to bring in experts to give advice in their own particular area of skill. They are considering giving this new PAC authority to scrutinize companies with government-sanctioned monopolies.

That would include in Anguilla such entities as ANGLEC, the new Water Authority when it comes on stream, and the Health Authority of Anguilla. These are all desperately in need of supervision of how they spend public monies. We already know we do not have a functioning health service in Anguilla. And, now the rumour is that we are about to lose the initiative to develop a Health Fund. The whole kit and caboodle of the Anguilla health sector appears to be collapsing. A lot of exposing needs to go on. No one in Anguilla is willing to take on the job.

The Falkland Islanders say they are going to look to see how the PAC functions in other overseas territories.

I only hope they do not take their lead from Anguilla.