Monday, September 28, 2020

Special Funds still vulnerable to abuse – Auditor General

Some of government’s special funds are still vulnerable to abuse, stemming from confusion over fund orders and missing records, reveals the recently released Auditor General report for the financial year 2018/2019.

The report on the accounts of the Botswana government for the financial year ended March 2019 has highlighted some vulnerabilities in some government special funds, which have become under scrutiny following the misappropriation of P250 million from the National Petroleum Fund (NPF) in 2017. 

Among those flagged, the Public Debt Service Fund, which carries P2 billion of loan investments to parastatals,  has included a payment of over P900 million to the liquidator of BCL to meet liquidation related costs, yet the loan status remains the subject of inquiry by the office of the auditor general after it failed to obtain loan agreements or any other form of evidence relative to the purported loan that was guaranteed by the government, which happened to be also BCL’s major shareholder and creditor.

The Confiscated Assets Trust Fund, established in 2018 to receive deposits and administer moneys collected as proceeds and instruments of crime, has not been audited in its first year of operation due to some misunderstanding of the fund order regarding the account’s maintenance and presentation. 

“The value of the Fund as at 31 March 2019 was recorded as P121 049, representing forfeited assets, while the balance of the confiscated cash amounting to P110.6 million held in a commercial bank outside of the Government accounting system, which, in my view, defeats the purpose of the Fund Order. The physical properties are recorded in appropriate registers,” Pulane Letebele, the auditor general, noted in her report. 

Perhaps the biggest red flag is the National Electrification Fund, which the auditors had pointed out non-compliance with the requirements of the fund order, which include failure to appoint  the National Electrification Fund Management Committee which is supposed to be responsible for the administration of the affairs of the fund. Other concerns included late submission of audited results – accounts for the financial year ended 31 March 2018 were completed in December 2019. 

“The foregoing observations by the auditors would indicate serious lapses on the efficient operation of the Fund. In this regard it is noteworthy that the Ministerial internal auditors had reported an overpayment of P9 577 350 to Botswana Power Corporation due to duplicate work orders. At the time of writing this report I was not aware of any action taken on this overpayment,” read part of the report.

The over P2 billion-pula alcohol levy, implemented in 2009, is also lagging behind in its financials, with the audit of the accounts for the financial years from 2016/2017 to 2018/2019 still in progress. The fund was not audited for years, prompting fears that the money collected could be misappropriated. 

In other findings by the auditor general, the Agricultural Credit Guarantee Scheme Fund was running low on funds after P63 million payments to the National Development Bank and Citizen Entrepreneurship Development Agency to cover farmer’s loans in respect of drought from the 2017/18 cropping season. The payments were P20.2 million in excess of income, resulting in the substantial reduction of the value of the fund to P239 838. The audit general’s office warned that unless additional funding is injected, the fund could not sustain future operations. 

“While the fund Order requires that the Minister shall, at least in every period of 12 months, lay before the National Assembly a report on the operation of the Fund. This requirement has not been complied with,” the report said. 

Still, in November 2019, almost 8 months after the auditor general’s findings, President Mokgweetsi Masisi said the Agricultural Credit Guarantee Scheme paid out P134.3 million to clear some debts owed to CEDA and NDB, which was equivalent to 85 percent of the farmer’s instalments in 2018/2019. This is an indication that the fund might haven replenished by the government after it declared a drought year in the same period. 

The president has also added that the scheme is in the process of being reviewed to align it with developments in the agricultural sub-sector and to establish the feasibility and sustainability of extending it to cover additional agricultural subsectors and other causes of loss other than drought, floods, frost and hailstorm, as well as to include other financing institutions. 

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Sunday Standard September 27 – 3 October

Digital copy of Sunday Standard issue of September 27 - 3 October, 2020.